If mandatory country-of-origin labeling (mCOOL) for beef and pork is reinstated, it would cost the U.S. meat supply chain more than $1 billion annually — and consumers would bear most of that burden, the Meat Institute announced after the release of a new economic analysis by Decision Innovation Solutions.
mCOOL, a federal requirement that would obligate retailers to disclose the country of origin for beef and pork products, was last enacted under the 2013 USDA requirements before being repealed following World Trade Organization trade disputes.
“This study proves there are real and significant costs to mCOOL which would raise the price of meat for consumers already struggling to afford groceries,” says Meat Institute President and CEO Julie Anna Potts. “mCOOL would burden both packers and livestock producers with added costs at a time when beef packers are losing money due to the smallest herd size in 75 years causing record high prices for cattle.”
The study, “The Economic Impact of mCOOL on the Beef and Pork Value Chains,” updates previous USDA and industry research using current production, trade, consumption and market data to evaluate the potential impacts of reinstating the 2013 mCOOL requirements. The findings reveal that compliance costs associated with tracking, recordkeeping, product segregation, labeling and verification would substantially increase costs throughout the beef and pork value chains. Read the full report here.
Beyond trade retaliation, Potts notes the operational headaches mandatory labeling creates — segregating animals and products by origin, managing complex labeling rules and keeping up with extra paperwork. Potts says the new study essentially updates an earlier analysis for today’s market. The conclusion: the costs are still “astronomical.”
More Than $1 Billion in New Annual Costs
Reinstating mCOOL would cost the beef and pork industries approximately $1.02 billion in the first year alone, including $721 million for beef and $296 million for pork. Most of these expenses would be recurring operational costs rather than one-time investments, according to the Meat Institute.
Over time, those costs would continue to grow, reaching an estimated:
Timeframe Total Cost to Industry Year 1 $1.02 billion 5 Years $4.8 billion 10 Years $10.1 billion
“Enacting mCOOL now would raise consumer costs and could hurt consumer demand, the one force keeping the beef industry moving through a difficult cattle cycle,” Potts says.
Higher Food Costs for Consumers
Potts frames the issue bluntly as a consumer affordability problem. Hamburger, in particular, is in the crosshairs. It is the most common beef product in American households and also one of the most complex to label from an origin standpoint.
“Hamburger is still the go-to for most consumers who eat beef,” she explains. “Hamburger is particularly difficult to impose a mandatory country-of-origin label on because it’s a ground product and often is a mixed product with imported trim, which we don’t produce enough of here. So, as a net importer, we have to pay attention to the cost of the cheapest and most popular item on the menu for consumers. Simply adding additional cost to the system just does not make any sense.”
With consumers already sensitive to food prices, Potts calls it “kicking consumers when they’re down” to add billions in cost to core animal protein items. The study points out that compliance costs would largely be passed through the supply chain and reflected in higher food prices for families. Researchers estimate:
- Consumers would pay an estimated $835 million more annually for beef purchases.
- Consumers would pay an estimated $284 million more annually for pork purchases.
In total, this represents more than $1.1 billion in additional food costs for consumers every year.
Who Bears the Greatest Burden?
Meatpackers, processors and retailers are expected to “shoulder the largest compliance burden” because they would be responsible for tracking animal origin information, maintaining separate inventories, segregating products, modifying production schedules, updating labels and documenting compliance.
Among the study’s findings:
- Retail beef experiences the highest compliance costs in the supply chain.
- Beef processors and retailers account for the majority of implementation expenses.
- Retail beef compliance costs alone could reach nearly $488 million in the first year and exceed $5 billion over 10 years under one modeled scenario.
Livestock Producers Would Also Be Affected
While the analysis shows most of the direct financial hit landing on packers, processors, retailers and consumers, producers are far from untouched. The report finds producers would face impacts from reduced market efficiency, increased documentation requirements and less flexibility throughout the supply chain. Previous USDA analyses cited in the study found mCOOL can create market disruptions that reduce livestock value and increase overall system costs.
“If you have to prove your animal has been born, raised and slaughtered in the U.S., that’s extra paperwork,” Potts explains, adding this will probably mean using RFID tags and documenting traceability back to the farm or ranch.
While labels provide additional origin information, researchers found little evidence that mandatory origin labeling significantly increases consumer demand for beef or pork products. The primary measurable effect would be higher compliance costs, higher food prices and added operational complexity throughout the livestock and meat industries.
Voluntary “Product of USA” Label: A Different Path
“There is a new voluntary ‘Product of USA’ label that is already helping consumers to purchase beef and pork born, raised and processed in the U.S,” Potts says. “There is simply no need for a new label that will hurt the entire value chain.”
Potts stresses she is not opposed to country-of-origin information. In fact, she strongly supports the voluntary “Product of USA” label USDA implemented.
“There has been recent activity,” Potts says regarding the program, adding a number of companies across species have implemented the ‘Product of the U.S.’ voluntary label.
Her argument is the industry already has a tool in place to measure whether origin claims truly move the needle with shoppers — without the heavy-handed costs of a mandatory regime.
“We’ll have a chance to understand how that drives demand, prices and consumer behavior before we move into a mandatory label we know will add cost,” Potts emphasizes.
With legislative proposals circulating and political support for mCOOL resurfacing, Potts’ message to lawmakers and the beef chain is to slow down and look hard at the numbers.
“We thought it was useful to provide the real economic impact that we see, and it’s not based on conjecture,” Potts summarizes. “Before we do something expensive, let’s really take a look at what is possible under the voluntary label, and then take it from there and really investigate whether this policy is needed at this time.”
For producers following the mCOOL debate, that sets up a clear question: Do the perceived marketing benefits of a mandatory U.S.-only label outweigh a billion dollars a year in added cost — and $10.1 billion over a decade — on the beef and pork products consumers already say they want?
