May 22, 2015
CapitalPress.com
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13
Dairy/Livestock
Analysis: Economic benefits of COOL don’t pan out
By CAROL RYAN DUMAS
Capital Press
An analysis by universi-
ty ag economists contracted
by USDA has found that the
economic benefits of manda-
tory country of origin labeling
would be insufficient to offset
the cost of the requirements.
Although consumers desir-
ing COOL information bene-
fit from its provisions, there is
insufficient evidence to con-
clude such benefits translate
into measurable increases in
consumer demand for beef,
pork or chicken, the econo-
mists reported.
In addition, economic
models indicate consumers
over the long run face higher
beef and pork prices, leading
to fewer purchases, due to the
increased cost of production
resulting from COOL imple-
mentation, they reported.
The increased costs of
complying with mandatory
COOL “results in economic
losses to producers, packers,
retailers, and consumers and
leads to a smaller overall in-
dustry with higher consumer
prices and less product avail-
able,” the economists stated.
The analysis was done to
meet a congressional direc-
tive in the 2014 Farm Bill
that USDA conduct an eco-
nomic analysis of its 2009
and 2013 COOL rules and
report back to Congress.
The analysis was per-
formed by Glynn Tonsor
and Ted Schroeder of Kansas
State University and Joe Par-
cell of the University of Mis-
sissippi.
The economists’ findings
are consistent with USDA’s
prior analyses that measur-
able benefits from mandatory
COOL would be small despite
substantial interest in COOL
and consumers’ right to know.
COOL requirements apply
to retailers and their immedi-
ate suppliers, but the informa-
tion must flow down the en-
tire production and marketing
chain starting with farmers
and ranchers. Thus, livestock
producers face costs for im-
plementing the labeling re-
quirement even though cattle
and hogs are not COOL cov-
ered commodities.
USDA’s analysis of the
2009 COOL rule estimated
incremental implementation
costs to producers, packers
and retailers at $1.3 billion
for beef, $300 million for
pork and $183 million for
chicken.
Consumers fared no bet-
ter, with those costs shifting
to their grocery bill.
The agency estimated im-
plementation for all covered
commodities — which in-
clude other meats, fish, fruits,
vegetable, ginseng and some
nuts — at $2.6 billion. USDA
found the long-run impact of
cost shifts to the consumer
would result in a $212 mil-
lion reduction in consumer
purchasing power in the 10th
year following implementa-
tion.
The university economists
found those cost shifts result-
ed in economic welfare losses
totaling $8.07 billion for the
U.S. beef industry and $1.31
billion for the pork industry
from net present values.
The poultry industry,
however, which was assumed
to have no COOL implemen-
tation costs and expected to
benefit by substitution for
higher-cost beef and pork,
would see an increase of an
estimated $753 million in
economic welfare, the econ-
omists reported.
Impacts of the 2013
COOL amendments for la-
beling beef and pork muscle
cuts, at an industry cost of
$53 million to $192 million,
would also result in welfare
losses.
Those losses were esti-
mated at $494 million for
the beef industry and $403
million for the pork industry
over the first 10 years. The
poultry industry was expect-
ed to gain an estimated $67
million.
Again, consumers fared
no better with welfare losses
totaling $378 million for beef
and $428 for pork over the
first 10 years, resulting from
higher retail prices and low-
er volumes, the economists
reported.
More butter imports Groups divided over whether COOL
law should be repealed or repaired
needed, Japanese
dairy group says
By CAROL RYAN DUMAS
Capital Press
By RICHARD SMITH
For the Capital Press
TOKYO — The Japanese
government has not yet de-
cided to import more frozen
butter this year, but the Japan
Dairy Association — known
as J Milk — said the imports
will be necessary.
In the Uruguay Round
that led to the creation of the
World Trade Organization, Ja-
pan committed to “minimum
access” import purchases for
designated dairy commodities
of up to 137,000 tons in milk
equivalent.
The commodities include
butter, non-fat dry milk, edi-
ble whey, butter oil and dairy
spreads. Japan purchases the
products through its Agricul-
ture Livestock and Industry
Corporation.
Japan’s Ministry of Agri-
culture, Forestry and Fisher-
ies makes decisions to import
over the minimum access
commitment.
Last year, Japan made a to-
tal of 7,000 tons of extra but-
ter imports. New Zealand got
the lion’s share, with 4,602.4
tons. The Netherlands came
out second with 1,892.8 tons.
Other countries winning
bids were Australia with
238.8 tons, Germany with 216
tons and the United States and
Belgium with 25 tons each.
Japan also imported 4,178
tons of non-fat dry milk under
its minimum access commit-
ment.
MAFF decided on the
move to stabilize prices amid
a domestic shortage of the
product.
The ministry’s milk and
dairy products division depu-
ty director Yasue Fujioka said
based on supply and demand,
a temporary decision to not
import butter or milk products
was made in January.
The decision will be revis-
ited next month and in Sep-
tember, Fujioka said.
“A (final) decision has not
yet been made whether to im-
port or not (over the minimum
access commitment in this
fiscal year), nor of timing or
volumes of imports,” she said.
However, J Milk managing
director Tetsuo Ishihara said
extra imports will certainly be
necessary.
Ishihara said that as dairy
farmers are quitting farming,
the number of dairy cows in
use is getting smaller, reduc-
ing milk production.
And with a rising milk con-
sumption trend, milk becomes
more difficult to source, Ishi-
hara said.
“So as sufficient sup-
plies of raw milk cannot be
secured, butter and NFDM
production is lower than de-
mand,” he said.
The milk shortage amounts
to about 150,000 tons, Ishiha-
ra said.
MAFF decided to import a
total of 10,000 tons under the
minimum access program in
this fiscal year.
“If volumes could be a lit-
tle higher, we think we could
ensure sufficient stocks with a
margin,” Ishihara said.
April milk production
up by 1.7 percent
By LEE MIELKE
For the Capital Press
mproving weather in the
spring flush and moderate
feed prices are keeping
U.S. milk production above
year-ago levels, according to
preliminary data in Tuesday’s
April Milk Production report.
The Agriculture Department
estimates output in the top 23
producing states at 16.6 billion
pounds, up 1.7 percent from
April 2014. The 50-state total,
at 17.8 billion pounds, was also
up 1.7 percent from a year ago.
Revisions added 30 million
pounds to the original March
23-state estimate, now reported
at 16.9 billion pounds, up 1.3
percent from a year ago.
April cow numbers in the
23 states, at 8.62 million head,
were up 2,000 head from
March and 77,000 more than a
year ago. The 50-State count, at
9.3 million head, was up 1,000
from March and 65,000 more
than a year ago.
April output per cow in
the 23 states averaged 1,928
pounds, up 16 pounds from
April 2014, and the highest pro-
duction per cow for the month
of April since the 23 State se-
ries began in 2003.
California milk production
remains below year-ago lev-
els, down 2.1 percent in April
from a year ago, thanks to a
40-pound drop per cow and
2,000 fewer cows. Wisconsin
poured it on, up 4.0 percent, on
I
Dairy
Markets
The World Trade Organi-
zation’s ruling against U.S.
country of origin labeling
rules has divided farm and
ranch interests on whether the
rules should be repealed or
only tweaked.
Monday’s ruling is the
fourth time WTO has decided
COOL violates trade obliga-
tions, discriminating against
imported cattle and hogs from
Canada and imported cattle
from Mexico.
The rule requires meat sold
in the U.S. to be labeled as to
where it originated, where it
was raised and where it was
slaughtered.
The WTO appellate body
reiterated the October rul-
ing by the WTO compliance
panel that USDA’s 2013
amendment to its original
2009 COOL rule increased
the detrimental impact on
competitive opportunities of
imported livestock in U.S.
markets.
With Canadian and Mex-
ican retaliatory trade mea-
sures waiting in the wings,
organizations representing
U.S. farm and ranch inter-
ests are divided on whether
the rules should fixed or re-
pealed.
The National Cattlemen’s
Beef Association, Nation-
al Pork Producers Council
and North American Meat
Institute are calling for re-
peal, reiterating their posi-
tions that the rule is costly
and burdensome to livestock
producers, meat packers and
processors.
The National Farmers
Union, American Farm Bu-
reau Federation and U.S.
Cattlemen’s Association sup-
port changes to COOL that
will bring it into compliance
while allowing the labeling
program to provide consum-
ers with relevant information.
The groups stated their
Andrew Harnik/Associated Press
Meat labels are seen at a grocery store in Washington on May 19. Labels on packaged steaks and
other cuts of meat in the United States that say where the animals were born, raised and slaughtered
will have to be dropped or revised after a World Trade Organization ruling.
positions in a flurry of press
releases Monday morning.
In addition to violating
U.S. international trade obli-
gations, the labeling is costly,
burdensome and generally
ignored by consumers, said
Philip Ellis, NCBA president
and a Chugwater, Wyo., cat-
tleman.
“Now that the WTO
has ruled for a fourth time
that this rule discriminates
against Canadian and Mex-
ican livestock, the next step
is retaliation by Canada and
Mexico,” he said.
That will irreparably harm
the U.S. economy and rela-
tionships with its top trading
partners and send a signal to
the world that the U.S. doesn’t
play by the rules,” he said.
After years of grappling
with the onerous rule, it is
clear that repealing the statute
is the best step forward, said
NAMI President and CEO
Barry Carpenter.
“Any action less than re-
peal invites retaliation from
Canada and Mexico that
could cost the U.S. billions of
dollars,” he said.
USDA’s own economic
analysis shows it’s a burden
with no consumer benefit.
Data from the International
Food Information Council
Foundation shows COOL
holds a ninth-place spot in the
list of food labeling informa-
tion consumers use and its use
is declining, he said.
The WTO decision paves
the way for Canada and Mex-
ico to place tariffs on imports
of U.S. foods, a death sen-
tence for U.S jobs and ex-
ports, said NPPC President
Ron Prestage, a Camden,
S.C., veterinarian and pork
producer.
Retaliation is only relevant
if the parties cannot reach
agreement on how to move
forward and then only after
an arbitration process, NFU
President Roger Johnson said.
There is still ample oppor-
tunity for the administration,
Mexico and Canada to nego-
tiate an acceptable path for-
ward, he said.
Congress may well have a
role to play if a statutory mod-
ification is deemed warranted.
But those who find value in
greater information to con-
sumers want to see a resolu-
tion not a retreat from infor-
mation that helps consumers
make informed purchasing
decisions, he said.
WTO’s ruling is a disap -
pointment and contradicts the
growing trend by other coun-
tries moving to implement
COOL programs, USCA Di-
rector Emeritus Leo McDon-
nell said.
COOL provides consum-
ers a choice and U.S. cattle
producers the ability to dif-
ferentiate their product, he
said.
Congress required the la-
bels in 2002 and 2008 farm
laws, mostly at the behest of
ranchers in the northern Unit-
ed States who compete with
the Canadian cattle industry.
Originally, the U.S. Depart-
ment of Agriculture allowed
the labels to say simply
“Product of U.S.” or “Prod-
uct of U.S. and Canada,” but
the WTO rejected that ap-
proach in 2012.
So USDA made the labels
more specific in an attempt
to win WTO approval. Now
the labels say, for example,
that the animal that produced
the meat was “born in Mexi-
co, raised and slaughtered in
the United States” or “born,
raised and slaughtered in the
United States.”
The Associated Press con-
tributed to this story.
Lee Mielke
a 60-pound gain per cow and
9,000 more cows.
Idaho was up 2.4 percent,
on an extra 12,000 cows and
a 5-pound gain per cow. New
York was up 1.9 percent on a
30-pound per cow gain and
2,000 more cows. Pennsylva-
nia was up 2.8 percent on 1,000
fewer cows but output per cow
was up 50 pounds. Minnesota
was up 2.7 percent, thanks to a
50-pound gain per cow, though
cow numbers were down 1,000
head.
South Dakota again record-
ed the biggest gain, up 9.8 per-
cent, followed by Kansas, up 6.5
percent. Michigan was up 6.5
percent, thanks to a 25-pound
gain per cow and 20,000 more
cows than a year ago. Colorado
was next, up 6.1 percent.
The biggest loss was in Cal-
ifornia, followed by New Mex-
ico, down 1.4 percent, due to a
30-pound drop per cow. Oregon
was the only other state showing
a decline, off 0.9 percent, due to
a 20-pound loss per cow.
Looking at one other state
of interest, Texas was up 0.9
percent on a 10-pound drop
per cow and 2,000 more cows.
Washington State was up 0.5
percent despite a 25-pound
drop per cow, but cow num-
bers were up 5,000 head.
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