Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University

Proposed mCOOL rule changes released USDA released their response to the final ruling of the World Trade Organization’s findings related to the U.S.’s mandatory country-of-origin-labeling law. The proposed rule can be found in the March 12, 2013 release of the Federal Register (link). Comments on the proposed rule will be accepted until April 11, 2013.

In summary, retail muscle cuts would be required to provide the origin of the product at multiple stages of the production process (specifically birth, raising, and slaughter). Each stage can have a different country of origin. For example, an animal born in Mexico but raised and slaughtered in the United States would be labeled as “Born in Mexico, Raised and Slaughtered in the United States,” whereas the current law allows the label to be “Product of the United States and Mexico.” The intent is to provide more detail of origin on the package label. Additionally, commingling of muscle cuts will no longer be allowed. Under the current law, if commingling occurred, the label would state the origin of all commingled cattle even if the individual animal was from a single source. Finally, all retailers “subject to be licensed as a retailer under the Perishable Agricultural Commodities Act” would be required to carry mCOOL labels.

Fellow In the Cattle Markets author Glynn Tonsor and colleagues at Kansas State and Oklahoma State[1] released a report on the consumer demand impact of mCOOL in July 2012 that appears fitting to briefly outline. They attacked the issue on multiple fronts using grocery store scanner data, in-store consumer evaluations and other consumer surveys. The authors report four key findings:

1) There was no noticeable impact to consumer demand stemming from the implementation of the mCOOL law in March 2009.

2) Approximately two-thirds of U.S. residents do not know that a law mandating country-of-origin-labeling even exists.

3) While consumers generally responded favorably to knowing the origin of their meat products, specifically identifying the United States revealed no noticeable premium.

4) The findings were consistent across beef, pork, and chicken products.

The first of their findings is important due to the fact that a number of studies released prior to mCOOL’s enactment found that an increase in demand would be necessary to offset the increased costs. The author’s third point speaks to the heart of this proposed rule. The proposed rule seeks to provide more detail of the country of origin. In theory, this added detail should carry higher costs, while data show no impact on beef demand for such a specific label.

USDA estimates the costs of the proposed rule change to be $32.7645 million, with a range between $16.989 and $47.3265.

The Markets

Cash fed prices were mostly steady last week.  Both live and dressed prices were down marginally at 10 cents per hundredweight.  Wholesale boxed beef prices were much stronger with Choice carcasses finishing with a weekly average of $195.02 per hundredweight, up $9.53.  Oklahoma feeder steers were mostly steady and steer calves were higher compared to the previous week.  Corn prices were lower at $7.29 per bushel. Dried distiller’s grains were $5.70 per ton lower, while MWDGS were mostly steady.

Proposed mCOOL rule changes released

[1] Tonsor, G. J.L. Lusk, T.C. Schroeder, and M.R. Taylor. “Mandatory Country of Origin Labeling: Consumer Demand Impact.” Research Report.