October 1, 2008

 

 

Many logistical issues remain for the meat industry, from the farm to the retail meat counter, concerning the mandatory US country-of-origin labeling law, which became effective Tuesday.

 

The labeling law requires a country-of-origin label for all beef, pork, lamb, goat, chicken as well as fresh and frozen fruits and vegetables, among other commodities sold by retailers.

 

In the pork industry, companies such as Smithfield said they would process only US-born and raised animals, others will process a mix of US- and Canadian-born hogs and another group will take Canadian hogs along with US supplies but they will designate specific days or shifts to process the Canadian animals.

 

Gary Mickelson, spokesman for Tyson Foods, said the company had no comment on its plans for purchasing hogs as related to the COOL law. Livestock dealers and analysts, however, have said Tyson's plants will accept hogs of either US or Canadian origin and will label the meat as such.

 

Other major packers such as Cargill Meat Solutions, JBS Swift (JBS) and Hormel Foods have not announced plans.

 

Some analysts and livestock dealers said a premium price structure may develop for US-born hogs over their Canadian-born counterparts.

 

Rich Nelson, director of research at Allendale Inc., said potential exists for a price premium for US-born hogs of US$1 to US$2 per head over Canada-origin hogs to be paid by certain plants, mainly from simplifying the paper-work process.

A veteran livestock dealer said there the quality of US and Canadian hogs is the same.

 

John Lawrence, agricultural economist at Iowa State University, said case-ready fresh-meat products, which are packaged at the processing plants, would offer better control on proper labeling for country of origin, compared with store-packaged meats since there would be less chance of mixing the products at the plants.

 

However, he also said a "vast majority" of consumers are going to be more concerned about value, especially in times of economic crisis such as now.

 

Differentiation according to origin may play a heavier role on the more premium-branded products.

 

There may also be additional costs associated with transporting hogs of differing origins to specific plants or in keeping the product separated on the docks and in the warehouses.

 

Farms close to one another may have shared space on truck-load quantities going to a specific packer in the past.

 

Now, if they produce hogs from different origins, they may have to find other trucking arrangements and possibly pay more to get the animals transported.

 

Lawrence said meat processors and retailers are still trying to sort out what must be done to comply with the new rule. In the interim, some may use a "combo" label.

 

The USDA is giving the industry six months before penalties for violations kick in.