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AMI Says Country-of-Origin Labeling Will Cost More Than $1 Billion Per Year With No Benefits To Consumers, Industry

Monday, March 22, 1999

The American Meat Institute (AMI) today estimated that country-of-origin labeling proposals for beef and lamb will cost more than $1 billion per year, with no benefits to either consumers or industry.

Last year, a bill that would have required such labels on beef and lamb was defeated by lawmakers. But a host of similar bills have been introduced in the new Congress. AMI’s cost estimates are the most detailed that have ever been developed. Specifically, AMI determined that in order for country-of-origin labeling to work, an entirely new mandatory animal dentification system must be designed. Such a system would likely use ear tags to separate domestic from imported livestock and would cost livestock producers at least $268 million to implement.

Livestock and meat segregation at slaughter would require new record-keeping procedures, separate accommodation in chilling, fabrication and storage, and a host of new labels at a total cost of $324 million per year to packers.

Product segregation at retail markets also would be required and would include separate storage, cutting and grinding requirements, as well as new labeling and signage at a cost of nearly $73 million per year to retailers.

Potential lost meat trade with Canada as a result of retaliation is estimated at $350 million per year in costs to packers and producers. Oversight of country-of-origin labeling requirements will cost the U.S. Department of Agriculture $60 million a year.

Cattle and sheep producers have advocated country-of-origin labels in the wake of low livestock prices due to oversupply and financially troubled overseas markets. These advocates have said that product labeled U.S. beef would be more appealing to consumers and prompt increased purchases and greater profitability for the industry. Pork producers have opposed such labeling, but pork is included in most bills introduced on this topic this year.

Beef, pork and lamb processors have said that such labels will be disruptive because processors, especially those who make ground beef, often blend U.S. and imported product. Some country-of-origin labeling initiatives have called for labels that would indicate percent domestic and percent imported.

Country of origin labeling requirements also would invite retaliation from trading partners, who are likely to perceive such an effort as a trade barrier. According to AMI, Canada has laid the groundwork for a trade complaint, should such a law pass.

AMI’s President J. Patrick Boyle called this kind of labeling meaningless, confusing and destined to harm U.S. exports. “While the proponents of these initiatives are well-intentioned in trying to help livestock producers who find themselves at the low-end of the livestock price cycle, this initiative will not address the real issues at hand: overproduction, weak exports and flat demand by consumers,” Boyle said. “Labeling a product does not provide a marketing advantage. American consumers welcome imported products. We need strategic marketing solutions, not ill-conceived market reactions with price tags of more than $1 billion per year that will not positively impact livestock prices.”

AMI represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Headquartered in Washington, DC, the Institute provides legislative, regulatory and public relations services, conducts scientific and economic research, offers marketing and technical assistance and sponsors education programs.

For more information contact:
Janet Riley
Vice President, Public Affairs
James Ratchford
Manager, Public Affairs

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