October 8, 2008

Canadian livestock industry groups said Tuesday they have notified the US government that the country-of-origin labelling, or COOL, law discriminates against its livestock producers.

The Canadian Cattlemen's Association and the Canadian Pork Council officially submitted joint comments to the US Department of Agriculture claiming the law discriminates against Canada's 100,000 livestock producers.

The USDA began implementing the law on Sept. 30, following its inclusion in the 2008 farm bill.

The law will squeeze more dollars out of Canada's 90,000 beef cattle producers and 9,000 hog producers, say the two groups, whose comments were echoed by the National Cattle Feeders' Association, which represents Canada's provincial cattle feeder organizations.

Travis Toews, CCA foreign trade committee chair, said the law violates World Trade Organization rules and there is a high degree of uncertainty over the extent of the impact as the playing field changes frequently.

"The law seems to be open to interpretation on a weekly basis, depending on comments and questions submitted to the USDA," Toews said, noting that the constantly changing regulatory landscape creates confusion among producers and packers.

"We have already seen disruption occurring in the markets and expect more negative impact on volume and prices, as some traders adopt a 'wait-and-see' approach to Canadian cattle markets," he said.

CPC President Jurgen Preugschas said the potential for trade-damaging effects with the law looms over North America's highly integrated markets.

"Already, one of our major US customers announced they will cease purchasing pigs born outside of the US when COOL enforcement begins," Preugschas said. "The industries in both countries stand to lose economic opportunities."

Toews said that a single sudden market shift is not expected from the law. However, the increased cost of record keeping for producers and processors, plus expenses incurred by animal segregation in processing plants, will eventually show in the market.

"Consumers don't want to pay more for their food, so the additional cost must be absorbed somewhere," Toews said.

He noted the US meat processing industry anticipates the US$3.9 billion price tag for instituting this practice is only the beginning of increased costs to the industry.

Both the CCA and CPC said there were some obvious flaws in the law.

Processed food labeling unfairly targets ground meat, hamburger and patties, drawing big concerns for US retailers and processors.

"We believe that meat which undergoes further processing in a US facility, whether ground or combined with other ingredients, should no longer be called Canadian," Toews said. "Also, the potential for inconsistencies within the paper trail exists, as it applies to domestic or imported animals, including animal identification requirements."

The two groups will continue to press the Canadian government to take action against the US at the WTO level, said Toews.