More big news for meat labeling from the government: USDA is acting and has proposed a new rule. According to a USDA press release, “Under the proposed rule, the ‘Product of USA’ label claim would continue to be voluntary. It would also remain eligible for generic label approval, meaning it would not need to be pre-approved by USDA’s Food Safety and Inspection Service (FSIS) before it could be used on regulated products but would require supporting documentation to be on file for agency inspection personnel to verify.
“The rulemaking also proposes to allow other voluntary U.S. origin claims we see on meat, poultry and egg products sold in the marketplace. These claims would need to include a description on the package of all preparation and processing steps that occurred in the United States upon which the claim is made.”
It’s hard to figure out what USDA is thinking, rolling out this proposed rule for using “Product of USA” labeling. Yes, you guys that want a born, fed and harvested in the USA label, you got your way—sort of. Frankly, you always had the right to use that label, if you could back it up.
So how do you think processors of animal products are going to respond to a voluntary rule? They will more than likely ignore it. A voluntary rule for meat packers to identify every production step in animal agriculture just isn’t going to go far. This is a specialty product issue and will not add much value to live cattle prices, in general.
In order to justify this worthless rule, USDA conducted a consumer survey that suggests that consumers will pay up for labeling. The survey says, “The average consumer was willing to pay $1.15 (CI 95%: $0.92 to $1.38) more for a 1-lb. package of ground beef made from cattle that were born, raised, slaughtered and processed in the United States than an identical package of ground beef made from cattle that were only processed in the United States. Because the CI does not include 0, we can reject the null hypothesis that the difference between the amount eligible consumers are willing to pay for ground beef bearing different definitions of the ‘Product of USA’ labeling claim is not statistically different from 0.
“Based on the results of these analyses, the average eligible higher-income consumer and the average eligible lower-income consumer are both willing to pay more for ground beef, NY strip steak, and pork tenderloin labeled with the ‘Product of USA’ labeling claim compared with a product without this claim. When comparing the marginal (willingness to pay) values for the two income groups, we found that the differences were not statistically significant.”
They sure are attempting to tell us that labeling has a clear benefit to some segments of the beef supply chain. Product differentiation is important in many markets, but it’s already occurring. This will not have a major effect on the boxed beef cutout or fed cattle prices.
Last time we went through this exercise, Mexico and Canada complained to the World Trade Organization, who ruled they could place retaliatory tariffs on U.S. products to the tune of $1 billion, if my memory serves me right. Mexican cattle lost $40/cwt overnight and Canadian-fed cattle were discounted about $15/cwt. We always seem to forget this is a North American beef infrastructure and has been ever since I can remember. I get the idea that relabeling foreign beef as a product of the U.S. is not a good thing. So where is the label for that? Where is the label for commingled ground beef? Should it say “Product of NAFTA and Other Suppliers”? If you’re going to label, get serious about it.
Nearly everything the government has done lately has been about buying votes for the Biden administration and this supposed rule is no different. We have dozens of surveys that tell us that consumers want more transparency. But telling us versus how they actually spend their money are two completely different measurements. Consumers who want those transparent products can already find them.
I fear the day when they attempt to make meat labeling mandatory, and it will happen. Then we need to get serious about animal identification—one doesn’t go without the other. The cattle industry has been asking for a lot of favors over the past two years. The best government program has been risk insurance. You never want the government to determine cattle market values; that will be the demise of the cattle industry. What they do best is inspect our products for safety and consistency and report the market. Not make the market. By the way, I’m getting tired of winter, but keep praying for spring rains—it feels right. — PETE CROW
