Tuesday, 23 June 2009

• Country-of-origin labeling: Does COOL leave You Warm or Frosty?

  
  

  So it has a pun-tastic acronym, but what exactly is COOL?

  In 2008, it became a mandatory requirement that certain foods sold in the US (some cuts of beef/veal, lamb pork, chicken, goat, fish/shellfish, perishable agricultural commodities, peanuts, pecans, macadamia nuts and ginseng) are labeled with their country of origin (COOL A-Z website). Products that fall under these categories must now display where they originate form, are processed and packaged, and will only be labeled as US products if all three of these steps occur in the US. While this initially seems like a great idea, with many benefits for the discerning consumer who wants to "buy locally", it is worth considering the logistical, economic and political ramifications of the labeling process for the food industry.

  Potential Benefits
  Supporters of COOL advocate consumers' rights to know exactly where their food comes from. Many Americans may have preference for US products, and food traceability becomes an especially topical concern during crises such as the BSE (mad-cow disease) epidemic.

  In addition, some producer groups are in favor of mandatory labeling, hoping that COOL will encourage consumers to buy US products, thereby boosting local sales and the economy. This effect is particularly desirable for producers who live near Canadian or Mexican borders, who often bear the brunt of competitively low prices for produce from their neighbors across the nation's borders. (Agricultural Marketing Services website, 2009)
  

  Economic Implications
  However, COOL faces much criticism for possibly contributing to the opposite, unintended economic effects, In a market as large as the US, the cost of implementing the new, regulated record-keeping procedure has been estimated as at least US$2.5 billion in the first year for producers, food handlers and retailers (critics fear this is a conservative estimate, and could cost up to double that amount), and a further $US 400-500 million to maintain each year after that. Unfortunately, most of these costs will probably be passed on from the retailer to the producer and consumer. If product prices rise, and demand decreases, so may competition – which means less variety of products to choose from, at higher prices. (AMS website, 2009; FoodNavigator-USA.com, 2009;Krisoff et al, 2004)

  Some analysts also criticize the COOL scheme for its possible effects on trade imports/exports between the US and other countries. Higher production costs may reduce US export competitiveness (Krisoff et al, 2004). In addition, under the World Trade Organization (WTO) regulations, countries may make country-of-origin labels mandatory, but only if they are not purposefully used to restrict trade. Countries such as Canada, Australia and Mexico are reportedly already requesting a WTO review of the US labeling process, citing negative impact on their livestock export markets. (FoodNavigator-USA.com, 2009)

  So is COOL worth it?
  Research shows that while many American consumers want to know the origins of their food, their willingness to pay for the privilege may not meet the extra demands placed on the market by the implementation of extra labeling costs (Krisoff et al, 2004; LP Canada, 2003). In simpler terms, people want to know where their food comes from, but this may end up costing them more, leading to a decrease in demand (especially in the current economic climate), and fewer product options.

  How do we know what the economic outcome and consumer response will be? Similar mandatory processes exist in countries such as Australia (FSANZ, 2006) and some parts of the EU. While little empirical research has been conducted on consumer response to COOL in Australia, a 2003 survey found that nearly one-third of respondents looked for Australian-grown/made products when given the option (Parliament of Aus, 2006). However, the smaller Australian market made the implementation of COOL far less costly than in the US.

  There are many factors to consider regarding COOL's implementation and reception. Does consumer demand for better labeling offset the costs associated? Does the American consumer psyche need to change, and will the COOL scheme help it in doing so? Is there enough benefit in knowing the origin of your produce – given that imported goods undergo rigorous safety tests when they enter the US, and US products face the same potential health risks as those produced overseas (LP Canada, 2003). What about the fact some people prefer imported goods (for example, New Zealand and Australian lamb, or Japanese Wagyu beef has been heavily marketed and well-received in the US (Krisoff et al, 2004). What about the grey areas in labeling? For example, how do you label a mixed meat product, with meats reared in various countries, processed in a separate country, then imported to the US for packaging? Finally, are these new labels sufficient – you may know that a product originated in Mexico, but is this really helpful to the average consumer?

  Either way, the new labeling system is at least attempting to provide more knowledge for consumers. Online sites (e.g. http://www.madeinnations.com/home) provide more detailed information about the origins of many products. As always, the more information you are armed with as a consumer lets you have more control over the food you choose to eat. Whether or not COOL in the US will be a success remains to be seen.

  Are you a COOL supporter?

  
  

  • 4:01 PM
  • 401 Views
  • 6 eProps
  • 4 Comments