COOL heats up – in Canada and Mexico

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Country of origin labeling hasn’t been getting much attention in the U.S. lately, but the issue is hot north and south of our borders as producers blame the policy for lower prices and lost revenue.

Participants in the Live Cattle Marketing Committee at the Beef Industry Summer Conference in Denver last week heard an update on COOL, including comments from representatives of Canadian and Mexican cattlemen.

Collin Woodall, NCBA executive director for legislative affairs, says COOL has been low on the agenda in Washington DC since USDA’s final rule took effect in March, as the economy and other priorities take precedence. He adds that the industry does not have any good data to indicate how the law has affected beef or cattle prices in the United States. NCBA is working with USDA’s Agricultural Marketing Service to develop an analysis, but progress is slow.

The impact on our NAFTA trading partners, however, is more clear, said Canadian and Mexican representatives at the meeting.

According to the Canadian Cattlemen’s Association (CCA), COOL has forced prices lower for fed cattle shipped to the United States, and added shipping costs and more shrink to Canadian cattle shipped to U.S. feedyards. Fed-cattle prices in Canada are based largely on the U.S. price, minus shipping costs, so Canadian cattle feeders are taking a hit whether they export cattle or not, according to CCA. The prices for Canadian beef shipped to the United States meanwhile, have been largely unaffected by COOL. In response, the Canadian government, with support of CCA, is pursuing action through the World Trade Organization. If the WTO rules in Canada’s favor, the country could impose retaliation in the form of tariffs on U.S. goods. Canada currently is our top export customer for food and agricultural products, purchasing $16.2 billion in American products in 2008.

Mexico is our second-largest customer for food and agricultural exports, and producers there say COOL has reduced the value of their fed cattle by $80 to $100 per head as a limited number of U.S. plants slaughter Mexican cattle, and purchase them at reduced prices. Like in Canada, the value of Mexican fed cattle is driven by their value in the United States, meaning the entire market is affected. Mexican officials say the difference in value between Mexican-origin and U.S.-origin beef in U.S. retail markets is small, suggesting processors and retailers are cashing in on the lower value of Mexican cattle.

Mexico also is moving forward with a complaint through the WTO. The country also is due to review its policy of duties on imported meats early next year, and there is some concern the government could decide to increase duties on U.S. meat in retaliation for COOL.

 



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