SPEAKERS CONTENTS INSERTS
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67–201 CC
2000
2000
COUNTRY-OF-ORIGIN MEAT LABELING ACT
HEARING
BEFORE THE
SUBCOMMITTEE ON
LIVESTOCK AND HORTICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
ON
H.R. 1144
SEPTEMBER 26, 2000
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Serial No. 106–64
Printed for the use of the Committee on Agriculture
COMMITTEE ON AGRICULTURE
LARRY COMBEST, Texas, Chairman
BILL BARRETT, Nebraska,
Vice Chairman
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
HELEN CHENOWETH-HAGE, Idaho
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
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JOHN COOKSEY, Louisiana
KEN CALVERT, California
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
CHARLES W. STENHOLM, Texas,
Ranking Minority Member
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
MARION BERRY, Arkansas
MIKE McINTYRE, North Carolina
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DEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
JOE BACA, California
——— ———
Professional Staff
WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director
Subcommittee on Livestock and Horticulture
RICHARD W. POMBO, California, Chairman
JOHN A. BOEHNER, Ohio,
Vice Chairman
BOB GOODLATTE, Virginia
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
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HELEN CHENOWETH-HAGE, Idaho
JOHN N. HOSTETTLER, Indiana
BOB SCHAFFER, Colorado
KEN CALVERT, California
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
COLLIN C. PETERSON, Minnesota,
Ranking Minority Member
TIM HOLDEN, California
GARY A. CONDIT, Pennsylvania
CALVIN M. DOOLEY, California
MARION BERRY, Arkansas
MIKE McINTYRE, North Carolina
DEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
LEONARD L. BOSWELL, Iowa
KEN LUCAS, Kentucky
(ii)
C O N T E N T S
H.R. 1144, to amend the Federal Meat Inspection Act to require that all meat and meat food products, whether domestic or imported, bear a label notifying the ultimate purchaser of meat and meat food products of the country of origin of the livestock that is the source of the meat and meat food products.
Chenoweth-Hage, Hon. Helen, a Representative in Congress from the State of Idaho, opening statement
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Prepared statement
Peterson, Hon. Collin C., a Representative in Congress from the State of Minnesota, opening statement
Pombo, Hon. Richard W., a Representative in Congress from the State of California, opening statement
Pomeroy, Hon. Earl, a Representative in Congress from the State of North Dakota, opening statement
Submitted material
Stabenow, Hon. Debbie, a Representative in Congress from the State of Michigan, prepared statement
Stenholm, Hon. Charles W., a Representative in Congress from the State of Texas, opening statement
Thune, Hon. John R., a Representative in Congress from the State of South Dakota, opening statement
Prepared statement
Witnesses
Cowan, Caren, executive secretary, New Mexico Cattle Growers' Association
Prepared statement
Hall, George A., president, National Cattlemen's Beef Association
Prepared statement
Hammonds, Timothy M., president and chief executive officer, Food Marketing Institute
Prepared statement
Hays, John V., president, Oregon Cattlemen's Association
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Prepared statement
Johnson, Hon. Tim, a Senator from the State of South Dakota
Prepared statement
Lilygren, Sara J., senior vice-president, legislative and public affairs, American Meat Institute
Prepared statement
McDonnell, Leo R., Jr., president, Ranchers-Cattlemen Action Legal Fund
Prepared statement
Rice, Loretta, consumer, Boise, ID
Prepared statement
Rigolizzo, John I., Jr., president, New Jersey Farm Bureau
Prepared statement
Sarasin, Leslie G., president and chief executive officer, American Frozen Food Institute
Prepared statement
Sims, West, president, Texas Farmers Union
Prepared statement
Wilcox, Caren A., Deputy Under Secretary, Food Safety, U.S. Department of Agriculture
Prepared statement
Submitted Material
Cady, John R., president and chief executive officer, National Food Processors
National Farmers Union, letter of September 15, 2000 to Secretary Glickman, and other material
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National Pork Producers Council
COUNTRY-OF-ORIGIN MEAT LABELING ACT
TUESDAY, SEPTEMBER 26, 2000
House of Representatives,
Subcommittee on Livestock and Horticulture,
Committee on Agriculture,
Washington, DC.
The subcommittee met, pursuant to call, at 11:00 a.m., in room 1300 Longworth House Office Building, Hon. Richard W. Pombo (chairman of the subcommittee) presiding.
Present: Lucas of Oklahoma, Chenoweth-Hage, Gutknecht, Peterson, Holden, Condit, Berry, Etheridge, Boswell, Lucas of Kentucky, and Stenholm, (ex officio).
Also present: Representatives Thune and Pomeroy.
Staff present: Pete Thomson, Lynn Gallagher, John Goldberg, Christopher D'Arcy, Wanda Worsham, clerk; Callista Gingrich, and Andy Baker.
OPENING STATEMENT OF HON. RICHARD W. POMBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. POMBO. Good morning. Today the subcommittee will receive testimony on H.R. 1144, a bill introduced by our colleague and a member of this subcommittee, Mrs. Helen Chenoweth-Hage. This bill would amend the Federal Meat Inspection Act to require that all meat and meat food products, whether it domestic or imported, bear a label notifying the ultimate purchaser of meat and meat food products of the country-of-origin, of the livestock that is the source of the meat.
This subcommittee has been studying the issue of country-of-origin labeling for some time. We have received reports from both the USDA as well as the GAO on the matter and held a hearing on the issue in April of last year. Through this process I have tried to provide this subcommittee with a broad overview of this complicated, many-sided, and often emotional issue. I have sought to explore the philosophies, the cost, the benefits, and the alternatives to mandated country-of origin labeling.
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Today I am looking forward to the testimony on H.R. 1144 so that Members can better understand and appreciate all of its aspects. In the final analysis I am most interested in whether or not country-of-origin labeling, mandatory or voluntary, is a tool for producers to earn more in the marketplace. If it is, then I want to know about the methods and costs of compliance and enforcement, as well as any potential trade impact. Only when we understand these points can we determine the value of any country-of-origin labeling proposal.
[H.R. 1144 follows:] "The Official Committee record contains additional material here."
Mr. POMBO. I would now like to welcome all of our guests and witnesses here today and to yield to the distinguished ranking member of the subcommittee, Mr. Peterson, for any statement he may wish to make.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
Mr. PETERSON. Thank you, Mr. Chairman, and thank you for holding this hearing today on H.R. 1144, Country-of-Origin Labeling Act. You have shown tremendous leadership on this issue, Mr. Chairman, by keeping industry and producer groups working together to resolve differences and to move forward on mutual goals. I have enjoyed working with you in this endeavor and look forward to hearing results of these efforts and the testimony at this hearing.
Mr. Chairman, I continue to have concerns about mandatory labeling legislation such as H.R. 1144 and the impacts it may have on trade and producer prices. I am not convinced that mandatory government solutions are a solution, and I am encouraged that by the recent petition by the industry and producer groups to USDA to implement a voluntary labeling program.
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There are still several questions about approach, implementation, and process and because of that I welcome the opportunity to further discuss this issue here today on country-of-origin labeling, and I look forward to hearing from the witnesses and look forward to the discussion and questions as we move through this process. Thank you.
Mr. POMBO. Thank you. At this point I would like to ask unanimous consent that Mr. Thune be allowed to sit with the subcommittee and participate with the subcommittee this morning. He has spent a great deal of time working on this issue over the past several years.
Mr. POMEROY. Mr. Chairman, I certainly don't raise objection. I am not a member of this subcommittee. I might ask for the same consideration. I am sorry I didn't alert you in advance of the hearing.
Mr. POMBO. I would also like to ask unanimous consent that Mr. Pomeroy be allowed to sit with the subcommittee. He is also a Member that has spent a great deal of time on this issue. Mrs. Chenoweth, did you have an opening statement?
STATEMENT OF HON. HELEN CHENOWETH-HAGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
Mrs. CHENOWETH-HAGE. I do, Mr. Chairman, and I want to thank you so much for holding this hearing. You are so well aware of how important this issue is to me. I have been in constant communication with you, and you have responded to my concerns, knowing that this is one of the issues that is most important to me before I leave Congress because this is an issue that just goes to the very, very heart of food safety. And it is a strong right-to-know issue.
As both parties wrestle with trying to understand how to attract the women's vote it is beyond me that this issue of labeling our meats is not front and center on some of our women's issues, concerns, because it certainly is. I am a mom and a grandmom and a wife, and I want to know where my food comes from before I feed it to our families.
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It is very interesting. I was examining the label that is already contained on some of our food, and I wanted to point this out to you, Mr. Chairman. We have everything on this label including, well, everything but the book of Genesis, including the fact that it is guaranteed meats, and this came from hamburger, this label. Guaranteed meats, guaranteed what? It states the store, and it states the store's address on there. It talks about the fact you have to sell it by a certain date. It gives a net unit of pricing and a full price. It has the barcode that contains the information that I think most consumers want to know, and that is where did this pound of ground beef come from. It is difficult for the consumer to read barcodes because these barcodes when the meat comes into the country already contains all the information that they need to translate into this label.
They have taken a lot of space in safe-handling instructions. The fact is that you have to wash your hands and you have to cook it to a certain degree and so forth but nothing is said about where that meat came from and how many countries or different kinds of carcasses are mixed up in one pound of beef. But we label everything, including the clothes that we wear. Here is a cap from the Hawaii Cattlemen in Idaho. Their cap is labeled made in Taiwan. We label the toys we buy our children. This set of Hot Wheels came from Malaysia. This dog bone that we feed our dogs, now, we are really concerned about the kind of food we put in our dogs' tummies. This is labeled as coming from Brazil but shipped from Canada. They have all that information on the dog bones. Here is more dog bones. They proudly displayed the American label, and another one.
So, we label the cars that we buy. Here is Jeep Cherokee Sports 4 WD, and it states for parts information for vehicles in this car line it is a U.S./Canadian parts content of 74 percent, major sources of foreign parts content for the Jeep Cherokee, Japan, 15 percent, a final assembly was in Toledo, OH, country-of-origin engine parts, United States, transmission parts, Japan. And I just have to ask, Mr. Chairman, as a mom, as a wife, as a grandmom, why aren't we labeling the meat that we put in our bodies and the bodies of our families?
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Right now over 22 percent of all the cuts that we are buying are imported, and every month Americans consume 23 million pounds of meat. Now, I am unabashedly ashamed, unashamed of the fact that I want to capture that 22 percent of the beef market for our American producers. And I know that from the Wirthlin studies where in the 90 percentile American women would prefer to know the country-of-origin, that if we could capture that 98 million pounds per month for the American market, it would help stabilize beef prices.
I recently had staff go to Hong Kong, and it is very interesting. They came back with a chart with the labels that are being displayed in China on American beef and American meat, American pork, chicken, and beef, and as you can see there they proudly display that this meat came from America. My staffers stood there and watched the Chinese women going to the meat market and seeking out that meat that had the American flag on it. It is very interesting. It is in Chinese, and we have translated it, under the U.S. pork label it says, your healthy choice, U.S. pork. It also says in another translation, U.S. Meat Export Federation. It displays the American flag. Again, over here it states, Pure Quality Choice U.S. Cereal Fed Beef.
OK. So they are not ashamed to display the American flag. They are not ashamed in China to advertise American beef. What is wrong with us, Mr. Chairman? Why are we ashamed or why have we been intimidated into not labeling our American beef, pork, and chicken, and lamb?
Again, I want to thank you very, very much, Mr. Chairman. You know how passionate I have felt about this issue. There are other countries who are now labeling their meat, among them Argentina, Canada, Dominican Republic, Egypt, El Salvador, Estonia, Honduras, Hungary, Malaysia, Mexico, Turkey, United Arab Amorites, Guatemala.
And furthermore with regards to our trade policy I do want to state in Europe the UK is now responding to consumers' demands for them to label country-of-origin on all of their meat in England. So I don't believe it will hurt our trade policy. The pricing is something I would like to get into later because it amounts to just tenths of pennies per month per consumer.
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And thank you very much for your indulgence and your patience, and thank you for holding this hearing.
[The prepared statement of Mrs. Chenoweth-Hage follows:]
PREPARED STATEMENT OF HON. HELEN CHENOWETH-HAGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
Mr. Chairman, thank you for scheduling this hearing to discuss H.R. 1144, the Country-of-Origin Meat Labeling Act. I appreciate your leadership and work on this issue. I would also like to thank the witnesses, many of whom have come from great distances to be here today. I think it is an indication how important this issue really is to America, that people are willing to travel here to Washington, DC to share their views.
Today we will hear testimony and have a discussion about H.R. 1144, legislation which would ensure that American consumers know where their meat products come from. Furthermore, it would recognize the American producer's commitment to ensuring the highest food safety and environmental quality in the entire world. Simply put, H.R. 1144 would provide for a country-of-origin label on meat and meat products.
Mr. Chairman, as you know, I have been pursuing country-of-origin labeling for more than 4 years now. I have traveled the Nation, meeting with proponents and opponents of country-of-origin labeling, to try to craft the best possible bill. Although I've worked very hard, I recognize that there are other points of view. Whether it is concerns about the complexities of the labeling process, the cost to the consumer, or concerns that a label may not increase safety, I've become well-versed in the arguments opposing my view. Nevertheless, I remain certain that American meat producers produce the very best and safest products in the world. And the American consumer wants to make an informed choice. So why don't we want to make that known?
As the author of H.R. 1144, I assure you that it has never been my intention to promote legislation which would place a financial burden on the retail industry or the agricultural community. Believe me, as a fiscal conservative H.R. 1144 is more than reasonable. Mr. Chairman, it is important to point out that opponents of country-of-origin meat labeling originally estimated the cost at $ 60million; then $100 million; then $1 billion. Now, the U.S. Department of Agriculture estimates the cost of labeling certain cuts of meat to be between $500,000 and $8 million. I must say, that is a big disparity.
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Nevertheless, let us assume that $1 billion is an accurate figure. Let us also consider that the National Cattlemen's Beef Association estimates that there are about 250 million Americans who consume meat today. That works out to be approximately $4 per consumer, per year—or 33 cents, per consumer, per month. That is it, just, 33 cents. I am absolutely certain moms and dads would be willing to spend up to 33 cents more per month—the cost of a first-class stamp—to know where the meat comes from that they put on their dinner table.
Still, others contend that meat labeling could adversely affect the relations with several of our trading partners. I find this point to be of great interest, especially since more than thirty of America's trading partners—including, Japan, Canada, Argentina, Egypt, Estonia, Guatemala, and Honduras—have laws requiring country-of-origin labels on the meat sold to their citizens.
Of those countries who do enforce a meat labeling law, the U.S. Department of Agriculture reports, and I quote, ''While the United States representatives have worked informally and cooperatively to oppose certain foreign country of origin labeling requirements, the United States has not formally challenged any such requirements within WTO.'' Clearly, if this was a threat to our relationship with our trading partners we would have challenged it already.
Indeed, without a country-of-origin label for meat, American consumers are at risk of purchasing a low-quality foreign product that could contain food-borne disease under the false assumption that they are buying high-quality American meat. For instance, imported meat is generally used in ground products like hamburger and sausage. Unfortunately, the ground meat products have the greatest risk and history of containing food-borne disease, and are the most difficult to trace.
Oftentimes when there is an outbreak of food-borne disease, the culprit is traced to the packer, but no further. In fact, during the numerous e-coli scares, tainted hamburger was tracked to various U.S. packing plants. But, because foreign meat was blended indiscriminately with domestic products, there was no way to determine the origin of the bad product. Salmonella in pork is equally hard to track in blended product such as sausage. My legislation would change this by helping to assure consumers have confidence in the meat they buy.
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The simple fact is, we do not know the full extent of problems with foreign meat, and the consumer will never know these full details until all imported meat is clearly and accurately labeled. This is especially important since every month Americans eat over 320 million pounds of meat raised in lands as far away as the Dominican Republic, Uruguay, Croatia and Hungary. Mr. Chairman, Americans should know how their meat comes to market—whether it has been produced domestically, or has come to this country on a truck or a boat.
Today, labeling the product of origin on most products is common practice. The country-of-origin is labeled on the clothes we wear, the cars we drive, the rawhide chew-bones we give to our dogs, and most of the other products we use. But that same information is absent from the meat products we eat and serve to our families. This astounds me, especially since approximately twenty-two percent of the meat Americans consume is imported today and much of that product from nations who label American product when it is sold in their own meat counters.
In fact, I have been told that many consumers in Japan prefer to purchase American-raised meat. Specifically, these consumers are going for the package in the meat counter that has the American flag affixed to it, first. It seems clear to me that even the Japanese consumer trusts the American meat producer more than anyone else in the world.
On a related note, a member of my staff recently traveled to Hong Kong and discovered that a deluxe supermarket proudly informed its consumers that it provided ''Pure Quality Choice U.S. Cereal Fed Beef'' and ''Your Healthy Choice U.S. Pork.'' If other countries are doing this, the United States should be able to do the same.
It's quite clear that American consumers want to know this information, Mr. Chairman. Polling data from Wirthlin Worldwide shows overwhelming support for country-of-origin labeling on meat products: 78 percent of consumers polled endorse country of origin labeling; and among the primary purchasers of household food, women between ages 35 and 54, support for such labeling is 86 percent.
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Furthermore, over the years, I have met with dozens of women between the ages of 18 to 40-years old—the primary food buyer for the family we often refer to as the ''soccer mom.'' It is not a big shock that these women continue to demand that all meat, including blended products such as hamburger, be labeled by its country-of-origin. In fact, I receive regular correspondence from women all over the country stating that they would be willing to pay several dollars more per year to know the origin of their meat products.
Clearly, Mr. Chairman, knowing the origin of the products you consume is as American as apple pie, and it should be as American as a cheeseburger.
On a related note, I am very pleased that representatives of the American producers, ranchers, packers, processors, and retailers have recently taken the initiative to submit a voluntary meat labeling program proposal to the U.S. Department of Agriculture. I commend the representatives for remaining focused and committed to an issue so important to the American consumer and producer. However, Mr. Chairman, I must say should the voluntary program prove insufficient, I hope that H.R. 1144 can serve as a blue-print for an eventual mandatory country-of-origin labeling plan.
Again, I thank everyone for being here today. I look forward to hearing from the panels of witnesses, and to explore ways to improve the quality and safety of the meat we consume. There is also a great deal of information of which I look forward to bringing to the attention of the committee.
Thank you, Mr. Chairman.
Mr. POMBO. Well, I thank you very much. As you said we have talked about this issue on numerous occasions, and there is no doubt in my mind that you are very passionate about it.
Are there any further opening statements? Mr. Stenholm.
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OPENING STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. STENHOLM. Thank you, Mr. Chairman. Just briefly I want to thank you for holding this hearing this morning, and as anyone who has followed the issue knows that the rules on country-of-origin labeling are changing around us daily. Over the summer our producers worked with retailers to craft a workable voluntary labeling program for meat.
Meanwhile, Japan was implementing new requirements that all retail stores showed the country-of-origin on a variety of perishable food items. The European Union has begun implementing compulsory beef labeling rules, including country-of-origin, which will be fully implemented by January 2002.
One of the arguments made against mandatory country-of-origin labeling in the United States has been the potential negative affect on exports of U.S. agricultural products. I would note that as other countries change their rules, however, some of the arguments made against the mandatory system disappeared.
Political reality, though, is that where a mandatory program faces strong opposition, a voluntary program could be achieved. I congratulate the Cattlemen and others who were able to come together on recommendations for a voluntary program, and I encourage USDA to quickly implement a voluntary labeling program for meat and to restrict USDA grading of imported beef, lamb, veal, and calf products as AMS proposed in July.
Chairman Pombo, I look forward to working with you and Mr. Peterson to monitor this issue and to make sure that our food labeling laws stay current and keep our farmers and ranchers competitive.
Mr. POMBO. Mr. Thune.
OPENING STATEMENT OF HON. JOHN R. THUNE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA
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Mr. THUNE. Let me if I might, too, just briefly say thank you for holding this hearing, and to Representative Helen Chenoweth-Hage for all of your great efforts on this.
This is an issue which is very important in South Dakota. I grew up in western South Dakota. There are a lot of livestock producers in that part of our State. I think Mr. Pomeroy from North Dakota would also say in the western part of his State that this is an important issue. People out there are tough, they are independent, they don't really like government regulation but all they ask for is fairness. And I think that our producers understand that if given a level playing field on which to compete, that they will out-produce the world market.
We have a very, very competitive livestock sector in our country, and I am very proud of the hard work that our producers in South Dakota do to give us a very high quality product.
What I would like to just briefly say, in support of this legislation is that—and my colleague, Senator Johnson, is here today, who I think will also testify to the importance of this issue in South Dakota, that I think consumers and producers alike and consumers obviously demand quality and consistency in meat products, and our producers can meet those demands better than any other livestock producers in the world.
And I think it is very important that we move forward with this legislation. I appreciate the efforts that have been made on behalf of the industry in trying to come to sort of a voluntary agreement on this, and I credit them for those efforts. However, I still believe that Mrs. Chenoweth's legislation is a strong meat-labeling law, which is in my view a much better solution in terms of where we need to go with this issue. It is pro-consumer. It is pro-producer. I think consumers in this country have a right to know where their products, where their meat is coming from so they can make a better decision on what product they want to feed their family. And I think it is also important for our producers that we be able to distinguish their product from their competitors' product, thus allowing them to benefit from the quality that we produce in this country.
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It is very important in my judgment that this legislation move forward.
I appreciate the opportunity to be heard on it today and for allowing me to sit in on this subcommittee meeting. The Dakota Caucus is represented here today, even though we don't serve officially on this subcommittee but look forward to the testimony. We have some people from our neck of the woods who are going to be testifying and anxiously await what they have to say. But I do hope that we can use this as an opportunity, as a foundation to make some progress towards addressing what I believe is a very important issue, not only to my part of the country but to the entire country and to our competitiveness in the world marketplace.
So I thank the chairman, and I yield back.
[The prepared statement of Mr. Thune follows:]
PREPARED STATEMENT OF HON. JOHN R. THUNE
Thank you, Mr. Chairman. I also want to thank Representative Helen Chenoweth-Hage, for all of her hard work on this legislation, H.R. 1144, the Country of Origin Meat Labeling Act of 1999.
Mr. Chairman, I appreciate being given the opportunity to speak here today on an issue that is very important to livestock producers in my home State of South Dakota. Country-of-Origin labeling has been a priority of mine for several years now and I am proud to be an original cosponsor of this legislation.
Country-of-origin labeling will become even more important to the U.S. livestock industry as international trade continues to increase. For example, in 1998, beef imports equaled 8 percent of total U.S. beef production. Such beef is often blended into ground beef or other processed beef products and is then sold without any identification informing consumers where it came from.
U.S. consumers demand quality and consistency in meat products, and U.S. livestock producers meet those demands better than any other livestock producers in the world. Unfortunately, under the current labeling system, it is often difficult for producers to identify which specific products meet consumer demands and which products do not. A country-of-origin label will give consumers a tool to make informed decisions when they purchase meat products. Furthermore, such a label will allow competition and market forces to determine the relative value of meat from different countries. Mr. Chairman, that is exactly the way it should be—competition should be the key. I'm confident that American producers, when given a level playing field, will out-compete any other producers in the world.
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Mr. Chairman, I applaud the recent voluntary efforts by some processors, retailers and other groups—specifically the Food Marketing Institute, American Farm Bureau, the American Meat Institute, the National Cattlemen's Beef Association, and the National Meat Association—to begin a voluntary country of origin labeling program, and I thank those groups for their diligence and hard work. My concern is that this proposal only applies to beef, and that it further would allow cattle born and raised in foreign countries to qualify for a ''Beef: Made in the USA'' label—so long as they were fed in the United States for 100 days and processed without leaving the country. While this effort is definitely a step in the right direction, I still believe that H.R. 1144 more completely addresses the concerns of U.S. livestock producers. I encourage these groups to include livestock producers in further discussions and revisit their proposal, so that all the stakeholders are involved and so that a mutually agreeable country of origin labeling system can be established. Short of that, I believe we must move forward with legislation such as H.R. 1144.
H.R. 1144 is a very strong meat labeling law that would require all imported meat to be clearly labeled. Mr. Chairman, this legislation gives consumers clear and concise information about the origin of their food.
H.R. 1144 clearly defines the difference between imported and domestic meat. Under this legislation, domestic meat is defined as a carcass, part of a carcass, meat, or meat food product derived entirely from domestic livestock. In order to meet the definition of ''domestic livestock,'' three main requirements must be met:
(1) The animal was born in the United States.
(2) The animal was raised throughout its entire life in the United States; and
(3) The animal was slaughtered and otherwise process in the United States.
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H.R. 1144 defines ''imported'' meat and livestock as a carcass, part of a carcass, meat, meat food product or livestock that does not satisfy the definition of ''domestic'' meat or livestock. Futhermore, H.R. 1144 applies to not only cattle, but also other types of meat such as sheep and swine.
Mr. Speaker, this legislation is pro-consumer and pro-producer. The consumer finally can see where their meat is coming from and can make a decision on what product they want to feed their family. At the same time, U.S. livestock producers will be able to distinguish their product from their competitors' products, thus allowing them to benefit from the quality they produce.
It is important to both producers and consumers that we develop a meat labeling system that accurately and completely reflects the country of origin of agriculture products. Producers deserve the assurance that their reputation for producing quality meat is not harmed by inferior products and consumers deserve the assurance that the meat they buy is of the highest quality—I believe this bill does just that.
Thank you, Mr. Chairman.
Mr. POMBO. Thank you very much. Mr. Pomeroy.
OPENING STATEMENT OF HON. EARL POMEROY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA
Mr. POMEROY. Well, the other half of the Dakota Caucus and more importantly as original co-sponsor of this legislation, I want to just briefly state I think that by Helen's persistence a lot has been done. It is the second hearing that you have held, Mr. Chairman, on this issue. I think that the legislation has undoubtedly prompted the effort to reach an agreement across the diverse dimensions of the livestock market, and I am pleased for all who have participated in that effort.
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I think their work product, unfortunately, does fall a bit short of where we need to go and that this legislation is it is as urgently needed now as ever. And in light of what is occurring in our foreign markets probably more urgently needed than ever before. One of the issues that really is at the heart of whether or not the voluntary proposal brought forward by the assembled group will be adequate or not is whether 100 days in this country makes this a U.S. beef product. And I think that information that our witnesses today might bring us on that point would be helpful in evaluating the proposal made by the collective group to the U.S. Department of Agriculture. I, representing a State that has significant amount of industry in cow/calf operation, I don't think the last 100 days makes it American. Or for that matter makes it U.S. beef product. So I don't think that the agreement quite hits the mark in that important respect.
And I will look forward to some evidence on the record that we might get today. Thank you again for holding this hearing.
[The prepared statement of Ms. Stabenow follows:]
PREPARED STATEMENT OF HON. DEBBIE STABENOW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Chairman Pombo, Ranking Member Peterson, thank you for convening today's hearing on H.R. 1144, the Country-of-Origin Meat Labeling Act of 1999, authored by our colleague, Representative Helen Chenoweth-Hage. I appreciate the opportunity to review this legislation.
The issue of food country-of-origin labeling for all food products, not just meat as this legislation would mandate, is garnering increased attention. I have been in contact with numerous consumer groups as well as producers and ranchers in Michigan who believe that such labeling provides needed information to consumers so that they may make informed decisions about the food they purchase.
I look forward to hearing the testimony from today's witnesses and learning more about this important issue.
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Mr. POMBO. Thank you. I would like welcome Senator Tim Johnson to this hearing, a former colleague, I know he has expressed a great deal of interest in this, and Senator Johnson, we are pleased to have you here today and look forward to your testimony.
STATEMENT OF HON. TIM JOHNSON, A SENATOR FROM THE STATE OF SOUTH DAKOTA
Mr. JOHNSON. Well, thank you, Chairman Pombo, and members of the committee. I appreciate the interest in this issue and from my representative, Congressman Thune, his interest in the issue as well.
I would like to acknowledge that with us today are Herman Schumacher, an R-CALF board member and owner of the Herreid Livestock Auction, Herreid, SD, as well as Danni Beer, who operates a ranch with her family near Celgron, SD. They both attended an R-CALF meeting that I participated in recently in Eagle Butte, SD, and we have a lot of interest in this issue from my State and from all across the Great Plains.
Mr. Chairman, we have all heard constituents ask why can't I know where the meat I feed my family comes from when I can identify the origin of nearly every other product in my home? To address this concern on the Senate side I have authored S. 242, which calls for mandatory country-of-origin labeling for beef, pork, and lamb, muscle cuts and ground meat products. This legislation has bipartisan support, has been endorsed by the National Farmers Union, the Farm Bureau, the National Cattlemen's Beef Association, R-CALF, the American Sheep Industry, and the National Consumers League.
I want to recognize and thank Representative Chenoweth for her two bills in the House that addressed comprehensive, mandatory country-of-origin labeling of meat.
Two years ago to the month I was able to attach a mandatory meat-labeling amendment to the fiscal 1999 agriculture appropriations bill in the Senate. Unfortunately, in the Conference Committee that language was deleted. Instead, the Conference Committee ordered USDA to measure the benefits and costs of country-of-origin labeling on muscle cuts of beef and lamb. In January of this year USDA released their report whereby they stated that there are legitimate policy reasons for action on mandatory meat-labeling legislation despite assertions by opponents of meat labeling that it may result in trade complications or increased costs.
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The USDA report did shed light on a process for designating beef and lamb with quality grades like USDA Choice, which indicated more than one way existed to accomplish the goals of meat labeling. The Agricultural Marketing Act of 1946 grants the Department of Agriculture the authority to administer a voluntary certification program for quality grades on beef and lamb but unfortunately, American consumers today mistakenly all too often believe the meat they buy with the USDA Choice label is domestically produced. This is simply not always the case.
Foreign nations do nothing to promote the value of USDA graded beef or lamb and yet they fight to insure the meat they export to the United States displays the USDA quality grades in our stores.
And that is why I introduced S. 241, the Truth in Grading Act of 1999. That legislation prohibits the use of USDA quality grades on imported beef and lamb.
In a February 24 meeting with President Clinton, Senator Daschle, and R-CALF president, Leo McDonnell, we discussed how foreign nations benefit by camouflaging their meat with USDA grades. The President assured us he would look into the matter, and I am pleased with his decision now to act. As a result on July 21 of this year USDA announced that they would issue a proposed rule that would restrict USDA quality grades on imported beef, lamb, and veal.
This is a significant victory for domestic livestock producers. It was also during this course of time that stakeholders in the meat-labeling debate led by the Food Marketing Institute indicated their intention to work on voluntary U.S. meat labeling. And I support their voluntary labeling talks because in past experience these groups parted ways over mandatory COL legislation. And yet I have made it clear that I preferred bipartisan legislation which requires country-of-origin labeling on muscle cuts and ground beef, lamb, and pork products.
Voluntary labeling is a step in the right direction, and I applaud the work that has gone into that. However, many of us recall the mixed experiences we had with voluntary price reporting and how, in fact, that in the end was not as helpful as it needed to be. Some of the organizations recently asked USDA to create a voluntary U.S. beef certification program pursuant to the Agricultural Marketing Act of 1946, launching a voluntary system to promote ''Beef: Made in the USA''.
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Mr. Chairman, I indicated to Secretary Glickman that USDA should take into consideration the opinions of other farm groups interested in meat labeling prior to acting on the petition. My preference is legislation mandating country-of-origin labeling like this legislation introduced here in the House.
I don't oppose those who want to pursue voluntary labeling but I do believe the consumers and livestock producers who support country-of-origin labeling would view scattered and voluntary programs as being at risk of being a fig leaf that doesn't cover the ground that comprehensive labeling would involve.
The petition letter to USDA recommends that to qualify as ''Beef: Made in the USA'' under the voluntary system beef products must originate from cattle raised and fed a minimum of 100 days in the US. Their proposed definition of U.S. beef under this voluntary proposal doesn't satisfy cow-calf ranchers in my State, nor does it satisfy consumers. In fact, it is a weaker definition than some in the group were considering earlier this summer.
It is disappointing to me as I am sure it will be to America's cow-calf ranchers that the best effort to compromise on this voluntary U.S. beef definition resulted in calling for cattle to be raised and fed in the United States a minimum of only 100 days. Domestic cow-calf ranchers who raise, feed, and sell their cattle for slaughter here in the United States find this definition to dilute the true meaning of ''Made in the USA.''
Around 36 million cattle were slaughtered in the United States last year, about 1.9 million head of these cattle were imported from Mexico and Canada, about 5 percent of the slaughter last year. This means 95 percent of the cattle slaughtered in the United States in 1999 were born, raised, and fed domestically. Given this it doesn't make sense to provide a loophole for cattle born and raised in other countries to fall under a U.S. beef definition.
If this committee or USDA wants a definition compromise, I suggest that cattle be required to remain on feed in the United States for considerably more than 100 days. I realize compromise sometimes is necessary. In fact, my legislation includes a compromise definition of U.S. meat, although it is a mandatory bill, and I would argue much more comprehensive than the voluntary proposal.
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At this stage I will introduce country-of-origin labeling in 2001 that defines U.S. meat as that deriving from animals born, raised, and slaughtered in the United States.
Mr. Chairman, in summary, consumer support of country-of-origin labeling for meat. A survey in November 1998 found that 78 percent of consumers support country-of-origin labeling and given a choice 90 percent would purchase an American meat product according to that survey. Other countries have country-of-origin labeling. This year Japan implemented labeling for food which will eventually include all meats, fruits, and vegetables. Japanese government believes labeling will improve consumer information, and the EC launched a compulsory beef-labeling regime on September 1, 2000. Country-of-origin labeling is consistent and permitted by both the WTO and NAFTA.
I have never tried to oversell country-of-origin labeling. It has never been my suggestion that it will solve by itself our price problems but it is one piece, important piece of a puzzle. It is outrageous that consumers have the right to know the origin of virtually every product they purchase but are not permitted to know the country-of-origin of the meat products they feed their families. We can promote fair competition, provide consumers with information, and truthfully market meat in a way that is consistent with our trade policies and not overburden some industry with a mandatory country-of-origin legislation.
I thank the committee for its attention and for your very constructive work on this issue.
[The prepared statement of Mr. Johnson follows:]
PREPARED STATEMENT OF HON. TIM JOHNSON, A SENATOR FROM THE STATE OF SOUTH DAKOTA
Chairman Pombo, Ranking Member Peterson, thank you for conducting today's hearing and for permitting me to testify before many of my former colleagues on the critical significance of country-of-origin meat labeling legislation. Country-of-origin labeling of meat is simply one of the most important issues to livestock producers in South Dakota and the entire country.
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We've all heard a concerned constituent ask the question: ''Why can't I know where the meat I feed my family comes from when I can identify the origin of nearly every other product in my home—from clothes to appliances?'' Frankly, the only defensible answer Congress should offer is: ''You're right, this is wrong, and we should enact legislation to allow you to know where the meat you eat comes from.''
To address this concern I have authored S. 242 in the Senate which calls for mandatory country-of-origin labels for beef, pork, and lamb muscle cuts and ground meat products sold at retail levels in the United States. My bill has bipartisan support and it has been endorsed by the National Farmers Union, the American Farm Bureau, the National Cattlemen's Beef Association, the Ranchers-Cattlemen Action Legal Fund, the American Sheep Industry, and the National Consumers League.
I wish to recognize and thank Rep. Chenoweth-Hage for her two bipartisan bills in the House of Representatives that address meat labeling. One, H.R. 222, closely mirrors my Senate legislation. The other, H.R. 1144, is a more prescriptive bill calling for comprehensive, mandatory, country-of-origin labeling of meat and meat food products.
Yet, given the strong bipartisan support for our bills, Congress still seems unwilling to act on this issue. Eventually, Congress needs to recognize the desire for mandatory country-of-origin meat labeling legislation on the part of the consuming public and domestic livestock producers.
Two years ago to the month, I successfully attached a mandatory meat labeling amendment to the fiscal year 1999 agriculture appropriations bill in the Senate. Unfortunately, when the conference committee met that year, my meat labeling provision was stripped out of the bill by House Republican members of the committee.
Instead, the conference committee ordered USDA to measure the benefits and costs of country-of-origin labeling on muscle cuts of beef and lamb and report its findings to Congress. While some opponents of labeling hoped USDA would denounce mandatory labeling as a costly and counterproductive trade step, proponents like myself were expecting a recognition by USDA that labeling could benefit American consumers and livestock producers. In January of this year, USDA released their report whereby they fell short of endorsing labeling legislation, and instead, stated there are legitimate policy reasons for Congressional action on mandatory meat labeling legislation—despite assertions by opponents of meat labeling that it may result in trade complications and increased costs.
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The USDA report did shed light on a certification process for designating beef and lamb carcasses with quality grades—like USDA Choice—which indicated more than one way existed to accomplish the goals of meat labeling. Here's how it works. The Agricultural Marketing Act of 1946 grants USDA the authority to administer a voluntary certification program specifying certain quality grades for beef and lamb meat carcasses. Unfortunately, American consumers today are misled to believe that the meat they buy with a ''USDA Choice'' stamp is domestically produced meat. This is not always the case.
Countries like Canada and New Zealand do nothing to promote the value of USDA graded beef or lamb, yet those same countries fight to ensure the meat they export to the United States enjoy USDA quality grades when placed on our store shelves. That's why I introduced S. 241—the ''Truth in Grading Act of 1999''. My legislation prohibits the use of USDA quality grades on imported beef and lamb. Earlier this year I petitioned the Congressional Research Service to identify whether my legislation was necessary, or, whether USDA could administratively restrict quality grades on imported beef and lamb. CRS indicated to me in February that the Secretary of Agriculture has broad authority to permit or restrict USDA quality grades without a Congressional directive.
Shortly thereafter, in a meeting with President Clinton, Senator Daschle, and R-CALF president Leo McDonnell—who is testifying before the committee today—we discussed how important this issue is to domestic livestock producers. For far too long, foreign nations have benefitted by camouflaging their meat with USDA grades. We argued the Agricultural Marketing Act of 1946 and USDA quality grades are not intended for foreign meat products. The President assured us he'd look into the matter and I am pleased with his decision to act.
As a result of our meeting, on July 21, 2000 USDA announced they would issue a proposed rule that will restrict USDA quality grades on imported beef, lamb, and veal. USDA and the administration deserve extraordinary recognition for this decision to retain the use of the USDA quality grade shield for U.S. beef and lamb carcasses only. Livestock producers in the United States believe this is a positive step.
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It was also during this course of time that stakeholders in the meat labeling debate—led by the Food Marketing Institute and including the American Farm Bureau, the American Meat Institute, the National Cattlemen's Beef Association, the National Meat Association the National Farmers Union and the American Sheep Industry—indicated to me their intention to cooperate on a voluntary U.S. meat labeling system. I supported their voluntary labeling negotiations primarily because, in past experience, these groups parted ways over mandatory country-of-origin meat labeling legislation. Their division—specifically the opposition to country-of-origin labeling legislation by meatpackers and food marketers—resulted in the defeat of my meat labeling bill in a conference committee in 1998. Therefore, I supported the voluntary negotiations in hopes that the groups would make progress. Yet, I made it clear to those involved that I preferred my bipartisan legislation which requires country-of-origin meat labels on muscle cuts and ground beef, lamb, and pork products.
Some of these organizations recently asked USDA to create a voluntary U.S. beef certification program—pursuant to the Agricultural Marketing Act of 1946—enabling cattle producers, beef processors, and retail grocers to participate in a system to promote ''Beef: Made in the USA.''
Mr. Chairman, as I have already indicated to Secretary Glickman and USDA, I cannot support the group in their request for a voluntary U.S. beef labeling and certification system. Two weeks ago, I urged USDA to resist acting on the petition without taking into consideration the opinions of other farm groups and individuals interested in meat labeling as well.
Instead, my preference is legislation mandating country-of-origin labeling, like my legislation or bills introduced here in the House. I don't oppose those who voluntarily want to pursue labeling, but I believe consumers and livestock producers who support country-of-origin labeling would view a scattered, voluntary program as a fig leaf that does not achieve comprehensive labeling. It should also be noted the National Farmers Union and American Sheep Industry are not signatories to the group's petition, and, all the major farm groups still support my mandatory bill.
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The petition letter to USDA recommends that to qualify as ''Beef: Made in the USA'' under the voluntary system, beef products must originate from cattle raised and fed a minimum of 100 days in the United States. Their proposed definition of U.S. beef under this voluntary proposal does not satisfy cow/calf ranchers nor American consumers. In fact, it is a weaker definition than some in the group were considering earlier this summer.
Earlier this year the group informed me that around half of the participating organizations, including the meatpackers, hoped to define U.S. beef as beef from cattle born, raised, fed, and slaughtered in the United States. Others in the group felt beef from cattle raised and fed a minimum of 90 days in the United States was satisfactory. It is disappointing to me—as I'm sure it will be to America's cow-calf ranchers—that the best effort to compromise on this voluntary U.S. beef definition merely resulted in calling for cattle to be raised and fed in the United States a minimum of 100 days. It seems to me this definition is tailored to meet the wishes of those feeding imports of Mexican and Canadian feeder calves and live cattle. Feeding operations along our southern and northern borders can acquire imported feeder calves from Mexico and Canada, place them on feed for 80 to 100 days, and then sell them to packers for slaughter and processing in the United States so to benefit from marketing their product as ''Beef: Made in the USA'' under this definition. Domestic cow-calf ranchers who raise calves from birth on U.S. soil, feed these cattle on U.S. soil, and sell their cattle for slaughter here in the United States find this definition to dilute the true meaning of ''Made in the USA.''
According to the American Meat Institute, around 36 million head of cattle were slaughtered in the United States last year. Approximately 1.9 million head of these cattle were imported from Mexico and Canada—representing 5 percent of total slaughter in 1999. This means 95 percent of the cattle slaughtered in the United States in 1999 were born, raised, and fed domestically. Why then would the group petitioning USDA push for a voluntary program and definition of U.S. beef, with a loophole permitting cattle born and raised in other countries to fall under a ''Made in the USA'' definition?
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If this committee or USDA believes a definition compromise is essential, I suggest that cattle be required to remain on feed in the United States for considerably more than 100 days. Now I realize compromise sometimes is necessary. In fact my legislation includes a compromised definition of U.S. meat—although it is a mandatory bill and I would argue much more comprehensive than this voluntary proposal. If a ''Beef: Made in the USA'' label is desired, the threshold for cattle to be on feed in the United States should be raised to around 180 days, according to some livestock producers who have contacted me. Nonetheless, others argue for integrity sake the definition of U.S. meat should only include meat from animals born, raised, and slaughtered in the United States.
At this stage, I plan to introduce country-of-origin meat labeling legislation in the Senate next year that defines U.S. meat as meat derived from animals born, raised, fed, and slaughtered in the United States.
Mr. Chairman, here are the facts when it comes to country-of-origin meat labeling legislation.
Consumers Desire to Know the Origin of the Meat they Buy. A survey commissioned by the National Cattlemens Beef Association in November of 1998 and conducted by Wirthlin Worldwide shows an overwhelming percentage of Americans want to know more about the origin of the meat they purchase. Wirthlin Worldwide researchers found that 78 percent of consumers support country-of-origin labeling for meat. And given that choice, 90 percent would purchase an American meat product according to the survey.
A similar, follow-up poll was completed this March where consumers were asked which product (United States or imported) they would choose if they saw packages of ground beef and steaks in the retail meat case, all priced similarly, with various country-of-origin labels. Ninety-one percent said they would choose the United States meat product.
Country-of-Origin Meat Labeling is not a Trade Barrier. Opponents of meat labeling always overlook the fact that other nations around the globe either already impose country-of-origin meat labeling mandates or plan to in the very near future. On July 1, 2000, Japan implemented a law mandating that all retail stores show the country-of-origin on many perishable food items. The Japanese plan will eventually include all meats, fresh fruits, vegetables, and seafood. The Japanese Government is reported to state the new labeling will improve information provided to consumers at the point of sale. The EU is imposing retail country-of-origin labeling this year as well. The European Commission launched a compulsory beef labeling regime for EU partners beginning September 1, 2000. Their mandatory labeling system will be implemented in two stages, resulting in retail labeling stating the country-of-origin—including birth and traceback of cattle used for beef production—of all beef products sold at retail levels. Thirty nations on the globe require some form of country-of-origin labels for processed meat and meat cuts while 22 require fresh meat carcasses and cuts to have country-of-origin labels.
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Country-of-origin labeling is consistent with and permitted by the World Trade Organization and North American Free Trade Agreement.
Mandatory Meat Labeling is not Too Costly. Opponents will also contend that country-of-origin labeling is simply too costly to industry and government. I have never said meat labeling comes without a cost, but I am concerned by the exaggerated cost estimates touted by labeling critics. Even more disturbing is that opponents dismiss labeling will produce any benefits whatsoever.
Some have suggested labeling would cost over $1 billion annually. However, meat labeling opponents rushed to judgement in many of their cost estimates. First, an animal identification program for traceback (estimated cost around $268 million a year) is unnecessary because many producers are able to verify domestic versus foreign origin to packing plants already. Imported animals for slaughter are delivered in sealed trucks as identified by the Animal and Plant Health Inspection Service and are already verified as to origin. Meat products used in domestic and foreign food aid programs are already verified to originate from domestic livestock herds as well.
Opponents claimed labeling would result in retaliation from Canada to the tune of $350 million. However, this assumed labeling would completely shut off Canadian exports of beef, lamb, and pork to the United States. The critics have essentially admitted they grossly miscalculated this claim however, because their newly revised cost estimates subtracted the entire $350 million from the total. Yet, in an effort to keep their estimated cost above $1 billion, they added more retail grocery segregation costs, going from $72 million in the first estimate to over $375 million in the new total.
Mandatory country-of-origin meat labeling is not a magic bullet to raise prices for livestock producers. I have never tried to oversell meat labeling, it has never been my suggestion that it will solve our price problems, it is just one piece of the puzzle. Like mandatory price reporting, it is one reform intended to ensure fair and free competition in the marketplace.
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It is outrageous to me that American consumers have the right to know the origin of virtually every consumer product they purchase, but are not permitted to know the country of origin of the meat products they feed their families. Unfortunately, too many consumers are misled to believe the unmarked meat products they purchase in grocery stores are from the United States. Country-of-origin labeling legislation will identify the true origin of meat.
America's livestock producers are proud of their record for producing quality meat and meat food products from American raised livestock. They invest tremendous resources into raising livestock that result in some of the most satisfying, nutritious, and safest meat in the world. Moreover, American taxpayers have invested heavily in our food safety system—and it is undoubtedly the safest in the world. It just makes good sense for these same taxpayers and consumers to know the origin of the meat they buy for their families.
I am willing to work towards a system whereby livestock producers and consumers alike can benefit from country-of-origin meat labeling. We can promote fair competition, aid consumer food information, and truthfully market meat products in a way that is consistent with our trade policies and not overburdensome or costly to industry and the government.
Thank you Chairman Pombo for the opportunity to offer this statement.
Mr. POMBO. Thank you for your testimony. I have no questions of the Senator. Does anybody have any questions at this time? Thank you very much for your testimony.
I would like to call up our second panel. Ms. Caren A. Wilcox, Deputy Under Secretary for Food Safety, U.S. Department of Agriculture.
Thank you very much for being here today, and when you are ready, you may begin.
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STATEMENT OF CAREN A. WILCOX, DEPUTY UNDER SECRETARY, FOOD SAFETY, U.S. DEPARTMENT OF AGRICULTURE
Ms. WILCOX. Mr. Chairman, thank you very much for inviting us. Members of the subcommittee, good morning. I am Caren Wilcox, Deputy Under Secretary for Food Safety at USDA, and I am pleased to appear before you today to discuss H.R. 1144, the Country-of-Origin Meat Labeling Act of 1999.
As I believe you will remember I discussed the subject of country-of-origin labeling with you in April 1999. I must stress at the outset that FSIS feels that the broad issue of country-of-origin labeling primarily is a marketing issue, not a food safety issue. The Agricultural Marketing Service is responsible for programs that facilitate the marketing of FSIS regulated products and Ken Clayton, the Associate Administrator from AMS is here with me as well.
You are probably aware that the Conference Report accompanying the fiscal year 2000 Agricultural Appropriations Act directed the Secretary, in consultation with the affected industries, to define, ''which cattle and fresh beef products are, products of the USA.''
I am pleased to report to you that an advanced notice of proposed rulemaking is undergoing clearance within the Food Safety and Inspection Service now and should be published in the Federal Register shortly. FSIS ensures that imported meat is every bit as safe as domestically-produced meat. FSIS requires imported meat to be inspected under a system that FSIS has determined through a rigorous and comprehensive process to be equivalent to the U.S. system. Then upon arrival at a U.S. port of entry FSIS subjects these meat shipments to another review.
Almost all imported products, about 85 percent, then proceed to federally-inspected U.S. plants for further processing into value-added products. FSIS does require country-of-origin labeling on all meat carcasses, parts of carcasses, and retail packages entering the United States. These products must bear in English the country-of-origin and the foreign establishment number. Such products as canned ham labeled from Denmark or lamb from New Zealand are seen in our retail stores.
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In July the Department announced that a proposed rule will be issued later this year to restrict the USDA grading of imported beef, lamb, veal, and calf products.
H.R. 1144 would require that all meat and meat food products, whether domestic or imported, bear a country-of-origin label. I want to stress the words all meat and meat food products. Fresh imported product constitutes about 2 1/2 billion pounds of beef, pork, and lamb but this bill would require all beef, pork, and lamb to be labeled, including the over 43 billion pounds of domestically-produced product.
It is important to point out that the study prepared by the Department in 2000 did not cover all meat food products but was only requested to study fresh muscle cuts of beef and lamb.
I would like to discuss briefly the implications of mandatory labeling as examined by the USDA report that was transmitted to Congress in January. The major cost associated with country-of-origin labeling requirements are related to the costs of segregating and preserving product identity, the direct cost of labels, enforcement costs, and any market disruption costs.
Some of those steps processors, wholesalers, and retailers might have to take include segregating product and storage, placing tags on carcasses, labels on boxes, and the creation of records. It appears by implication that H.R. 1144 would precipitate requirements from processors to ranchers and farmers that they certified birth and livestock raising circumstances.
Our January, 2000 report estimated an annual direct cost to the industry of up to $8 million just to label imported and domestic muscle cuts for sale at grocery stores. Of course, since the study did not cover them, this estimate does not include the costs of labeling ground products such as hamburger or sausage. The labeling of these ground products could be extremely complex because H.R. 1144 would require labels to bear in descending order a list of all the countries-of-origin of the livestock from which the blended product was derived.
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Cost for verification at the retail level would vary depending on how many visits our FSIS compliance officers would make regarding country-of-origin labeling and whether they would need to increase the number of their compliance visits. In fiscal year 1998 FSIS made approximately 15,000 visits to retail stores to conduct reviews and collect ground beef samples for laboratory analysis.
However, FSIS would incur additional costs if visits for country-of-origin labeling verification were required even if they were annual at all 130,000 retail stores where meat products are sold. Of course, FSIS would cooperate with Congress to make as efficient a program as possible.
The Secretary has testified that he would not like to see such compliance cause diminish the food safety compliance tasks of FSIS. Should a requirement for mandatory country-of-origin labeling for all meat to the retail level be enacted, all segments of the meat distribution chain would need to develop and implement systems of monitoring and control to maintain the integrity of country-of-origin labeling.
While we continue to encourage and support voluntary country-of-origin labeling, there has not been extensive use of this by domestic industry. Our country-of-origin study did cover the economics of other possible benefits to labeling fresh muscle cuts of beef and lamb.
We at USDA continue to believe that this issue is a marketing issue and not a food safety issue. USDA will continue to report to you on efforts to define products of the USA and to issue rules relative to grading of imported carcasses. We will continue to work with the Congress as it examines this important issue.
Thank you very much for the opportunity to appear before you. Mr. Clayton and I will be happy to answer questions from you or other members of the committee.
[The prepared statement of Ms. Wilcox appears at the conclusion of the hearing.]
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Mr. POMBO. Thank you very much for your testimony, Ms. Wilcox. Just to start off with, one of the concerns that I have or one of the concerns that has been raised over the past couple of years has to deal with on trade issue in terms of TWO or NAFTA provisions and the requirement of a country-of-origin label. And I would like you to get into a little detail about that and what the Administration or what the Department's position is as of right now.
Ms. WILCOX. Well, I believe that you have received some testimony from USTR this morning from Greg Fraiser. It is my understanding, without being a trade lawyer, that there are obviously ways that one could make a WTO label that would be appropriate and legal. Some of the factors you would have to look at, though, would be that that not be overly complex so as to raise an inordinate burden on another country's products. Certainly the use only of the term imported has raised certain issues, and the country would have to be looked at and included. You can't just say imported, and some bills have done that. There are some other factors related which I covered in my testimony but it is possible to make a country-of-origin regime. The problem that emerges is then you have to be able to verify that in your own country and verify what the appropriate segregation and tracking of that product from birth to table.
Mr. POMBO. Now, you said that it would be different if it said imported. And I understand you are not a trade lawyer but maybe you could explain to me your understanding of what the difference is.
Ms. WILCOX. It is my understanding that the label needs to be very factual and that the view of it only being labeled imported can be viewed as a label that somehow casts some question on the product without saying where it is from so that they want to have the country, actual country-of-origin. Of course, the products that Representative Chenoweth-Hage held up were all said the country as well as the fact that it had come from there.
Mr. POMBO. Has the USDA explored the cost of implementing H.R. 1144?
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Ms. WILCOX. No, we have not, Mr. Chairman.
Mr. POMBO. You have not looked at it at all then?
Ms. WILCOX. Well, we did the study that was required. I think you were given another copy this morning but as you will recall covered mandatory country-of-origin labeling of imported fresh muscle cuts of beef and lamb. And that was a very extensive study, and we have not tried yet to cover all of the processed meat products and the issues that would be inherent in that.
Mr. POMBO. Thank you. Mr. Peterson.
Mr. PETERSON. Just real briefly. You don't have a ballpark estimate on that?
Ms. WILCOX. Well, the study here talked about the labeling of fresh muscle cuts of beef and lamb and estimated anywhere for labeling costs anywhere from $500,000 to $8 million.
Mr. PETERSON. And under that regime you have enough money in your budget to implement that?
Ms. WILCOX. Those would be costs to the industry. The cost for inspection and verification are also fairly difficult to give you. We know in FSIS that a visit for the purposes that I described in my testimony go to pick up laboratory samples and otherwise look at a retail store are about $100 per visit. And so it would depend upon the inspection regime that we would have to determine what the cost would be. Obviously, we visit stores for many purposes, and we would not gratuitously add on just this. We would be doing multiple tasks.
Mr. PETERSON. So in other words you don't know at this point whether you could do this or not. Is that what you are saying?
Ms. WILCOX. No. It would depend on the regime that the Congress wanted us to implement for verification.
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Mr. PETERSON. Would one of the potential solutions be to raise the issue of user fees again?
Ms. WILCOX. Well, that is always an issue, sir.
Mr. PETERSON. In terms of this voluntary agreement that they apparently forwarded to you, you said the rulemaking is where, in OMB or something or wherever it is. Could you explain what you intend to do in terms of implementing that? What is the process?
Ms. WILCOX. Well, there are really three issues under consideration. First of all, FSIS was asked to make some definitions about what constitutes product USA, and that is underway, and we will put out an ANPR very soon about that.
Then AMS has discussed the fact that they will be looking into grading, and I would like Mr. Clayton to talk about that.
And then finally we did receive petitions from the industry, and also I should add I guess some opposition to that petition, which would have this voluntary system. Now, that is under review in the Department.
Mr. PETERSON. So it is just under review at this point? There is no process for moving ahead with that?
Ms. WILCOX. Why don't we let Mr. Clayton comment on where we are on that.
Mr. CLAYTON. OK. Mr. Peterson, we, as Ms. Wilcox just indicated and as you are probably aware, the most recent industry proposal came to the Department dated September 8 so we have only had it for a couple of weeks. Subsequent to that we did also receive a letter from National Farmers Union expressing a different position on whether that proposal had merit. So consequently we have not really had a chance to sit down and thoroughly digest the incoming proposal.
I would say in thinking about that proposal or any other proposal of this sort it is probably helpful to look at it maybe in two veins. One clearly is the sort of the technical aspects, the anticipated scope of the certification program, of the technical feasibility of doing the necessary verifications that would go along with that. That seems to me as one set of issues.
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Another set of issue is basically the label itself that would go with that certification program, and there probably is a different calculus that one goes through there in terms of how that label plays. Is it truthful on its face, is it in any way misleading on its face? There is I think a separate consideration that goes on there.
So we are in the process of looking at it.
Mr. PETERSON. Yes. I understand that but how long if you decide to move ahead or how long is it going to take you?
Mr. CLAYTON. Well, difficult to put timeframes on it. The normal process, though, and I would refer really back to a somewhat similar effort that we engaged on back in 1998 for a USA label where basically the first step in the process was to convene an industry meeting, bringing all interested and affected parties together, to have a chance to thoroughly review what was being proposed. I am sure you have seen the proposal that was provided to the Department. It is certainly somewhat specific but probably begs many more details to be discussed before one can conclude whether you can really tie it all together.
And again, that is kind of from a technical point of view. The other issue of whether the claim itself makes sense, runs counter to any other considerations also would have to be considered. I think in part through some public process where all parties could consider that also clearly would require some policy consideration on the part of Department officials, which may take some time to get through and weigh out the pros and cons.
Mr. PETERSON. So you don't know how long it will take? The long and the short of it?
Ms. WILCOX. Wait. We don't know how long it would take Mr. Peterson, and also it would be an inner-agency process because FSIS has to look at the label. So it is a complicated process.
Mr. PETERSON. I would like to ask you to get the information to me in writing and other members of the committee, it was touched on before but I would like to know specifically in the Uruguay Round and the NAFTA what our obligations are on country-of-origin labeling, if you could talk to the other folks and find out specifically what that is and what the provisions actually state. And second, I would like to know for the record are there major country markets for U.S. raised meat and poultry, which of these countries require country-of-origin labeling at the retail level, if you could make a list for us of those countries or maybe you have one.
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Ms. WILCOX. Yes, there is an outline in here of the requirements in the report that was sent in January 2000, which I think we brought extra copies today. There is a list in here of other countries that require country-of-origin labeling of some kind, and there is also an outline that has been reviewed by USTR and others about the basic requirement for Uruguay. But we will be glad to go over those with your staff, and if there is any other additional information we should provide, we will get that.
Mr. PETERSON. So those provisions state exactly how this would work?
Ms. WILCOX. Yes.
Mr. PETERSON. And both for the Uruguay Round and for NAFTA as well?
Ms. WILCOX. Well, of course, under any of these provisions there are broad statements about requirements and then you always weave your way through them but we do know what has been accomplished by other countries and without challenge. That is fairly clear.
Mr. PETERSON. OK. Thank you.
Mr. POMBO. Mrs. Chenoweth-Hage.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman.
I really appreciate your last comment, Ms. Wilcox, because my question would be that with the implications of a serious trade threat then if there really is such a serious threat to our trade relations with foreign countries, then why hasn't the Federal Government taken formal action against these countries who insist on country-of-origin labeling in their countries under the WTO? Why haven't we taken those actions under the WTO if there is a serious trade threat?
Ms. WILCOX. Primarily country-of-origin labeling is a marketing program in other countries as well, and it turns out that because of the high quality of our products there are many instances in which it is an advantage to the United States to have country-of-origin labeling in those countries. I just consulted with a colleague from FAS, and we do not know of any instance in which we have challenged country-of-origin labeling in another country. There are some issues under some proposals that are under way in Europe, and we are actively discussing those with the Europeans but there have been no complaints.
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Mrs. CHENOWETH-HAGE. Ms. Wilcox, isn't it true that under the TBT Agreement or the agreement on Technical Barriers to Trade that actually in order to make sure that we meet all the legitimate objectives of the TBT that we really should be labeling our meats because it would do away with the security requirements or the prevention of deceptive trade practices, which is a requirement under TBT. And it could be argued in my opinion, I wonder if you agree with me, that there are deceptive trade practices being employed now under TBT by not labeling and that actually by labeling not only American products but the foreign products, that we would actually come more in under compliance with the TBT agreement?
Ms. WILCOX. Well, I would be happy to get you a technical answer to that. That is far beyond my capabilities in terms of food safety to comment to you about the interpretations of the TBT. I have never heard that interpretation but it doesn't mean that it is not valid, and we would be glad to try and get an answer to that.
I think I should point out that the United States is one of the countries that requires country-of-origin labeling because we do require final retail product that is brought into this country and carcasses to be labeled with country-of-origin. It is true that if the product is further processed, that the label does not accompany the product through further processing. So we do have country-of-origin labeling.
Mrs. CHENOWETH-HAGE. So what you are testifying to is that USDA requires that it be labeled when it comes into the country but that label is lost at the retail counter.
Ms. WILCOX. If it is reprocessed or further processed it is lost. It is not lost if it comes into the country, for instance, like a New Zealand lamb does, wrapped in cryovac and is marketed directly at the supermarket.
Mrs. CHENOWETH-HAGE. But you can testify to the fact that almost all meats, fresh meat, fresh cuts, hamburger at the retail level, there is no requirement for label, that labeling is lost.
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Ms. WILCOX. Yes. That is correct.
Mrs. CHENOWETH-HAGE. I also wanted to talk to you about costs. Mr. Chairman, it is important to point out that opponents to the country-of-origin meat labeling originally estimated the cost at $60 million, then at $100 million, and then at $1 billion, and if we calibrate down what the cost would be to consumers even under the $1 billion estimate, that would turn out to be 33 cents per month per consumer, which I think most Americans would be willing to pay so that they would know the country that their meat came from. Do you agree, Ms. Wilcox?
Ms. WILCOX. Well, our study was mixed on what the consumer would accept. The view of most economists have been that the industry would probably offer country-of-origin labeling if they thought there was an advantage to it, and of course, right now it is offered rarely. But it is possible that a further study of consumers would show some other benefits.
Mrs. CHENOWETH-HAGE. Isn't it true that under the FIS labeling policy that there has been a voluntary program in place that would require that meat products be labeled as to where the livestock was born, raised, and slaughtered? Isn't that already a voluntary program?
Ms. WILCOX. Yes, it is, Mrs. Chenoweth.
Mrs. CHENOWETH-HAGE. Well, then why do we need another voluntary program if this one hasn't worked?
Ms. WILCOX. Well, I can't speak for the industry. I think you are going to have a panel that will describe to you some of the benefits that they see from their proposal, and obviously we are having to evaluate that proposal so I don't think it would be appropriate for me to
Mrs. CHENOWETH-HAGE. Well, I do want to join the chairman and others who have spoken here thanking the industry for moving forward on the voluntary program. It is one step forward but that question remains with me, is this just a temporary Band-Aid to get me to back down and some of the other Members who are so concerned about this issue, or is there a plan in place to make the voluntary program something the American consumer can rely on. Thank you very much, Mr. Chairman.
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Mr. POMBO. Thank you. Mr. Pomeroy.
Mr. POMEROY. Ms. Wilcox, I have to tell you this is my fourth term on the Agriculture Committee, and I have never heard more lame testimony from the U.S. Department of Agriculture than is reflected in your statement. It reflects 6 pages of a group that doesn't want to do a dog-gone thing, and you are here kicking and screaming because of the pressure brought by Congress reflecting the pressure brought by our producers. I just am highly agitated and angered by the inactivity, the ineptitude, and the resistance to taking the action that our producers and our consumers deserve as reflected in this testimony.
Let us begin on page 3, second paragraph. You talk about plans at last afoot to not put the USDA stamp of approval of the USDA's stamp on imported product as has long been the case. July of this year the Department announced a proposed rule. All I can say is it is about time. My goodness sakes. This is not rocket science, and the fact that basically the United States Department of Agriculture has left indistinguishable imported product from domestic product by a USDA grade stamp is to me highly surprising.
I then want to move onto to talk about your assessment of the cost of mandatory labeling. I do think a much more reasonable assessment of cost wouldn't be to put out figures like the $8 million at the bottom of the page and the other figures put out without linking it in terms of the actual costs that might be translated onto the consumer. I mean, in light of the volume of revenues reflected in the meat industry, these costs I believe at the high end would be nominal at best and most likely something the consumer really wouldn't even see in the pricing of the product.
A final observation I would make and it absolutely gets at the heart of why the performance out of the Department has been so dismal is on the bottom of page 4, ''If consumers do distinguish goods depending on their country-of-origin, strong incentives exist for industries to act without Government intervention on a voluntary basis.''
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The industry is not monolithic. There are many points of view. There is the producer, there is the feedlot, there is the processor. And I think that we are at a point where we have very much a concentrated industry from a processor's standpoint that has found it to its interest from its perspective to bring imported product in and blend it and sell it and don't tell the consumer. Now, that is starkly at odds with the domestic producer, the rancher, the family farmer, people that we are trying to help with this legislation in addition to the consumers. So I think a statement like that simply reflects that you are just really missing the point.
Finally, I want to read to you something that the European Union put out and indicate that this is a government structure that is advocating for its producers. It is comments from the European Commission welcoming the Compulsory Beef Labeling Rules. It could not be in starker contrast to what we see from the United States Department of Agriculture. I quote, ''The Commission welcomed the decision of the counsel, paving the way for the EUI Compulsory Beef Labeling Rules.''
These rules, by the way, are very, very, very specific. Our Franz Fishler, commissioner of Agriculture, Rural Development and Fisheries, declared, ''This decision marks an important step in enabling full traceability of cattle in the EU from the stable to the table. The Commission will insure that the application of the beef labeling system is consistent with the principles of single market,'' and goes on to talk about the incredible detail that they extract on their labeling provision.
You indicate on the final page of your testimony you are worried about other countries taking similar action against our product that if we might basically have U.S. labeling. Clearly it is happening already, and your further statement that at no point have you raised in an official way objection to labeling requirements across in other markets, I think shows what is really at issue there. You are not engaged in this as a trade issue relative to our competitors. It is just more of you don't want to do this, and you are offering every reason why not to do it.
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Now, I have vented here for several minutes, and it is only fair that you have a chance to respond.
Ms. WILCOX. Thank you, Representative Pomeroy. I am sorry that you are disappointed in the testimony, and I am disappointed that you are.
I do want to make a couple of responses to that. First of all on the trade issue, I believe Mrs. Chenoweth asked whether we had filed a formal complaint. We have certainly been having discussions, especially with the EU about the implications of overall country-of-origin labeling, not just applied to meat but applied to other products. And it is a very important issue that could have a lot of implications for U.S. agricultural exports to the EU. I am not an expert in that area but I do know something about what is going on there. I just returned from Brussels last week.
The other thing that I think we should point out to you is that in the report that we did study, while it is not a comprehensive report, it does not cover processed meat of any kind, we did interview many, in fact, all of the groups that you mentioned as having concerns, ranchers, farmers, consumer groups, and their comments are reflected in the back of the report. And all of their comments were taken into consideration and were reviewed not only by FSIS but by our Chief Economist's Office and others.
So I think we have tried to take into account at least the information that we could gather in response to the study we were asked to make. Ken, do you have anything to add?
Mr. POMBO. Is he done?
Mr. CLAYTON. I am done.
Mr. POMBO. OK. I just wanted to make sure. Mr. Thune.
Mr. THUNE. Thank you, Mr. Chairman. I would like to come back to one point that Mr. Pomeroy made, too, and that has to do with the cost. And even if you took the high end, which as he noted is probably not that substantial, I don't know how you could have such a huge range. It costs somewhere between $500,000 and $8 million. I mean, surely, and this is cost to industry, and then the follow-up question was, OK, how about cost to the Department, and that was, well, that is tough to ascertain, too. It seems to me that if you can define currently what your costs of operation are in terms of inspections and everything else, that adding this requirement wouldn't be all that difficult to determine cost. It seems to me that is sort of a cop-out. We know it is going to cost. We just don't know how much, or if it costs, it is going to cost in this enormous range. And it is just not, I mean, there has got to be a better way I would think to quantify this.
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Ms. WILCOX. Well, we were only looking here at muscle cut segregation and not at further processing. I would have to say that, I mean, if we were to have looked at further processing, If you have, I am sure, been through processing plants in your State and other places, it can be a very complicated process to do that, to segregate the product when you are bringing it in. It is not impossible. I mean, we have that done now. Our non-hormone-treated cattle program that we are, AMS and FSIS are overseeing right now, looks at the animal from its birth and traces that product all the way through. Costs for that program, however, for export are very, very high. Those producers expect to get a real premium, and they will get a real premium when they provide that kind of record keeping. So record keeping and then compliance checks of all of that record, there is no test we can do. We can't tell whether a product, an animal, was raised in Canada or Mexico or Australia for that matter or in the United States. There are certain species tests that we can do. So you really will have to do it through records and through a very complex set of tracking that would have to go on from the birth of the animal all the way through.
Now, it is not impossible to do. Mr. Pomeroy talked about what is happening in Europe. They show in the retail store the picture of the farmer who produced the meat, and it says Mr. Johnson made this meat for you and gives his phone number in some cases. Now, it is a great marketing tool. In our system that would be very complicated and potentially quite expensive. I can't give you numbers about it.
Mr. THUNE. We don't have information today about how much say, for example, cattle coming in on the hoof from other countries? We don't have that information?
Ms. WILCOX. Oh, sure, we have the information about them. Yes. What I am telling you is that to track them through you would have to have a record keeping system that would track the use of that meat. First of all, you would have to track where they were born, where they had been fed out, I mean, under the bill. You would have to keep track of all of that and then provide all of that record keeping to the slaughterer, and the slaughterer would, of course, take that and then with the carcass as it would be cut up, you would then maintain that record. Now, it could be the plants would either segregate or decide that they were only going to process imported meat in one place and not in another plant. I don't know how the industry would organize itself to comply with that but they would have to do that. And when you get to the kind of processing that we are talking about here where you are going to be looking at as you said the hamburger, sausage, many of those products contain a variety of meat sources. You will have to ask the industry how many but——
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Mr. THUNE. Well, it is really hard for a lot of us and maybe we see this in too simple of terms but if you look at it from the producer's standpoint, I mean, it is a very simple equation.
Ms. WILCOX. Right.
Mr. THUNE. Other countries are doing it. We are not.
Ms. WILCOX. Yes, they are.
Mr. THUNE. We do it for other things that come into this country. It can't be that complicated to do it for beef products, and it seems to me there is a lot of effort to make this as complicated and as confusing and as convoluted as you can, people who oppose this. And it is hard to explain that. I mean, it is hard to explain that that something should be that simple and straightforward, and it seems to me at least that the cost assessments and everything else are, again, used as sort of a smokescreen to prevent any action on this issue.
Ms. WILCOX. Well, there are ingredient tracking systems. I have observed them in plants but they are computerized, and they are potentially—for a plant that doesn't have one would be complex. So I think that you will have to talk to the industry about the costs that would be entailed in that kind of segregation.
Mr. THUNE. I see my time has expired, Mr. Chairman, so thank you.
Mr. POMBO. Mr. Gutknecht.
Mr. GUTKNECHT. Mr. Chairman, thank you. I really hadn't intended to ask any questions but I want to just clarify something just for the benefit. We don't raise that many feeder cattle in my district but we do raise an awful lot of hogs, and I remember a few years ago when hogs hit bottom there was a lot of concern that there were, I mean, rumors were that there were anywhere from 25 to 100,000 hogs coming across the border every month for slaughter in our facilities. And our facilities didn't have the shackle space for the hogs that we were producing. I am not really clear what are, what does the USDA or FDA do about, and I am particularly concerned about FDA and I am going to get to a point here in a minute, in terms of live hogs or even potentially hanging carcasses, what are the restrictions in hogs coming across the border?
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And maybe if you could follow up, as long as you are whispering there
Ms. WILCOX. I am trying to get some advice from FAS that is very aware of whether—I asked them for instance whether there is a quota on hogs. There is not. I mean, animals that would be brought over the border alive would then be slaughtered in a slaughter plant, and under our law they are then a U.S. product right now.
Mr. GUTKNECHT. But the answer to that then is there is virtually no restrictions. There are no inspections at the border.
Ms. WILCOX. Oh, no. There are inspections.
Mr. GUTKNECHT. Well, tell me what they do.
Ms. WILCOX. Yes. If a product came in that had already been slaughtered——
Mr. GUTKNECHT. No, no, no, no, no.
Ms. WILCOX. OK. You want it live.
Mr. GUTKNECHT. I just want to know about live hogs.
Ms. WILCOX. OK. If it is live, and it is a hog, it is brought it, and it would have an anti-mortem inspection by a veterinarian when it was presented for slaughter. So it would be treated like any other hog that would be presented.
Mr. GUTKNECHT. So it is no different than a hog raised in Fillmore County?
Ms. WILCOX. That is correct. And it would be inspected like that. It would be inspected for disease or for a condition and then it would be inspected throughout the process.
Mr. GUTKNECHT. And if it is a hanging carcass?
Ms. WILCOX. A hanging carcass it would have to come in with a country-of-origin label, and it would have had to be slaughtered in a plant that was considered by FSIS to maintain the equivalent system for HACCP and anti-mortem and post-mortem inspection.
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Mr. GUTKNECHT. But there would be no special inspection of that?
Ms. WILCOX. There is a re-inspection when the carcass comes over the border. Yes.
Mr. GUTKNECHT. OK. By a USDA inspector.
Ms. WILCOX. Yes.
Mr. GUTKNECHT. OK. Well, the reason I raise the issue, and Mr. Berry and I have been working on this for a long time in terms of drugs, and it just strikes me that in terms of if a consumer wants to buy prescription drugs from Canada, we put the bar about a mile high for them to be able to do that. On the other hand if someone wants to bring live hogs across the border, those hogs can hop across whatever restrictions we have. And I am not sure what the right answer is but it does strike me that we have one standard to protect the pharmaceutical industry, and we have another standard to protect consumers and producers as it relates to agriculture. And one of the things we are trying to do is at least level the playing field as it relates to prescription drugs. Thank you.
Mr. POMBO. Mrs. Chenoweth.
Mrs. CHENOWETH-HAGE. Mr. Chairman, I just have one more question that was prompted by Mr. Thune's questions and comments.
One of the concerns of the northern-tiered States, Ms. Wilcox, is that there is a lot of cattle coming in in sealed trucks across the Canadian border to our border States, Idaho being one, the Dakotas, Montana, Washington, and then of course, it filters down and distorts the American market. The only thing that this bill does it that it just requires country-of-origin labeling, and that shouldn't be too complex. We are not asking for anything else, and it wouldn't be too difficult to require a tattoo on every cow, live cow that comes across the border. And in addition to that for safety reasons and many other reasons every one of those trucks should be opened and inspected to make sure that the cattle that boarded or recorded boarding bore the tattoo and if they could be inspected when they are downloaded at the packing plants. And that tattoo would be carried through. It isn't a difficult thing to do. Mr. John Hayes from Oregon works and is developing meat packing plants for Northwestern Beef, and I look forward to hearing him address this issue but I know that the northern-tier States are most concerned about cattle coming over in sealed trucks. Nobody knows where they come from. They could be downloaded from God knows which country into Canada and then brought in in sealed trucks in America.
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So we are not asking that USDA track the use of the meat which you referred to several times in your testimony or your answers. We are only asking for the meat to be labeled as to the country-of-origin.
I thank you, Mr. Chairman, for your indulgence. I yield back the balance of my time.
Mr. POMBO. Thank you. If there are no additional questions for this panel, I am going to dismiss you but as I do that I would just say that this is an issue that I want to come to some conclusion on. I really would like to see us move forward on this issue. I feel I do owe it to the people who for many months sat down and tried to negotiate out a voluntary agreement that we see if that agreement is workable. But if it appears that we are not going to move forward or it becomes trapped in the bureaucracy, we may be put in the position of holding a markup, moving forward with legislation. So I just want the administration to know that.
Mr. PETERSON. Mr. Chairman, I would like to just add to that. When I asked you folks about this, you basically said you didn't know, and you told me you were going to go through all this process. Well, there has been a lot of process put into what has been done up to this point, and with all due respect I don't think the votes are here for the mandatory bill that Representative Chenoweth has. And if we don't move ahead with something, we are going to end up doing nothing, which I think is the worst of all the alternatives. It seems to me you have the authority, the Secretary has the authority to do this. I would just encourage you as well to move ahead on this. I don't think it takes away from the efforts of the people that are trying to put stronger provisions in the law, that at least we get something done. Kind of like Medicare. Stuff gets so politicized, and you got the two sides so polarized nothing happens. It is not a good situation.
Ms. WILCOX. Well, there has been action, Mr. Peterson, since we met the last time in terms of the grading regulation and in terms of definitions, and we have just received this petition within the last two weeks. So it is a little premature to be able to comment on how fast we will be able to handle that. But we understand the committee's desire for a prompt action of the Department. Thank you.
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Mr. PETERSON. Thank you.
Mr. POMBO. I would call up our next panel.
Mr. George Hall, Mr. John Rigolizzo, Mr. Wes Sims, Mr. John Hayes, Mr. Leo McDonnell, Ms. Caren Cowan, and Ms. Loneta Rice.
I welcome you all to the hearing. I will start with Mr. Hall, who is the president of the National Cattlemen's Beef Association. Mr. Hall.
STATEMENT OF GEORGE A. HALL, PRESIDENT NATIONAL CATTLEMEN'S BEEF ASSOCIATION
Mr. HALL. Thank you, Chairman Pombo, and Congressman Peterson, and members of the committee for holding this hearing on country-of-origin labeling, review of H.R. 1144, the Country-of-Origin Meat Labeling Act.
I am George Hall, president of both the National Cattlemen's Association, director and former president and manager of National Stockyards Company in Oklahoma City and St. Louis, IL.
NCBA's strong support of country-of-origin labeling is reflected in the policy established by our members which states in part that NCBA favors legislation requiring all imported meat and meat derived from live cattle destined for immediate slaughter be plainly labeled for the consumer as to its country-of-origin. Since NCBA adopted this policy, which was worded and worked through our process at great efforts by the Montana Stock Growers Association, we have worked with several Representatives and Senators including Representative Chenoweth-Hage, Representative Pomeroy on legislation to achieve these goals. We appreciate the hard work to broaden the political support for country-of-origin labeling.
These members' dedication to this issue was helpful in the development of a recently-submitted proposal to establish a Volunteer U.S. Beef Labeling Program. Also commend you, Mr. Chairman, and Ranking Member Peterson for their directive to all segments of the beef industry to work cooperatively towards developing a Voluntary Labeling Program. Your message was not taken lightly and was a key factor in keeping our negotiations moving forward.
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Another key factor in NCBA's decision to engage in the Voluntary Labeling Negotiation was driven by political reality. Our efforts in previous years made it clear that there simply was not enough votes in the U.S. House to approve legislation calling for mandatory country-of-origin labeling.
Throughout this year NCBA has worked with Farm Bureau, Sheep Industry, National Farmer's Union, Food Marketing Institute, National Meat Association, and American Meat Institute to develop a voluntary process-verified certification beef labeling program that would be monitored by USDA, AMS. This program will provide U.S. producers, packers, and retailers with a marketing tool to provide consumers with information on the origin of the beef they eat.
In early September five of the original seven groups reached consensus on a proposal that we submitted to USDA. The Sheep Industry excused themselves to pursue a lamb-specific approach. The National Farmer's Union declined because of their concerns regarding the definition of U.S. cattle. NCBA does appreciate National Farmer's Union position as our association has also struggled with this issue. But our disagreement over this particular aspect of the voluntary proposal does not diminish in any way National Farmer's Union positive contribution to these negotiations.
Our proposal utilizes AMS's Live Animal and Carcass Specification Programs to establish a process-verified program to allow the marketing of beef products with a ''Beef: Made in the USA'' label using the following criteria.
Beef products must originate from cattle that are raised and fed a minimum of 100 days and processed without leaving the United States. Beef producers, processors, and retailers who want to use the label must develop a written certification program that clearly outlines a system that identifies, tracks, and maintains record on the cattle in the program. To insure consumers are informed, a clarifying statement would be added to the ''Beef: Made in the USA'' label that reads, ''This beef is processed from cattle raised and fed for at least 100 days in the United States.''
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Beyond USDA's approval the critical ingredient for success of this voluntary labeling program will be its use by the industry. If the program is not utilized, the pressure for a mandated approach to COL will intensify. NCBA believes this voluntary program represents real progress towards our policy goals.
NCBA is pursuing other avenues in this arena. In 1999 we petitioned USDA to stop allowing imported beef carcasses to carry USDA quality grade designations. USDA Prime, USDA Choice, USDA Select not only denote value, they are perceived as a defacto indicator that the beef carrying these brands is U.S. beef.
Reportedly USDA is close to making a final decision on proposed changes in the regulations governing the use of quality grades on foreign carcasses. We are hopeful these changes will prohibit the use of USDA quality grades on imported beef carcasses.
Regarding H.R. 1144, we have worked with Representatives and Senators, including the sponsors of H.R. 1144 to introduce legislation consistent with NCBA policy calling for mandatory COL. Currently there are two House bills, H.R. 222 and H.R. 1144, and three Senate bills, 19, 242, and 251, that contain COL-authorizing language. In general NCBA supports these proposals but this support is qualified with regard to H.R. 1144 and Senate bill 19.
Specifically on H.R. 1144, introduced by Representative Chenoweth-Hage and Pomeroy, our primary concern is that the bill's proposed definition of domestic livestock is not consistent with the policy set by our producer members. When H.R. 1144 was introduced by immediate two predecessors, Clark Willingham of Texas and George Swan of Idaho, met with Representative Chenoweth-Hage to discuss our concerns. NCBA's position was developed with the recognition that many southern and northern ranchers and feeders have long utilized imported Mexican and Canadian stocker and feeder cattle to maximize the economic viability of their operations. All these imported stock or feeder cattle are born in another country. U.S. producers invest substantial management and resources towards finishing these cattle. Simply put American producers have the opportunity to add substantial value to these cattle, which clearly is not the case with cattle imported for immediate slaughter.
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Representative Chenoweth-Hage did indicate that she understood our concerns and promised to work NCBA should her legislation be brought up for active consideration. NCBA's review of the bill's other provision suggests that H.R. 1144 is generally consistent with our position on COL.
Country-of-origin labeling is a priority issue for cattle producers. We want the ability to assure consumers they are getting the beef they want. And CBA appreciates the committee's leadership and support in helping us to establish a viable U.S. beef labeling program. We look forward to working with you and our industry sector partners to get this program approved and put to use.
And I also want to again thank Representative Chenoweth-Hage, Representative Pomeroy, and other COL cosponsors for their consistent efforts on COL. Their dedication to this issue certainly contributed to our negotiations on the pending voluntary labeling proposal, help that we all kept in our seats around the negotiating table, and serves as a reminder that Congress is closely monitoring our progress.
Finally, thank you, Chairman Pombo, Congressman Peterson, for your leadership on behalf of the livestock sector. While I suspect this may not be your favor issue, you, your staff, and the committee are to be commended for consistently providing cattlemen and women the opportunity to discuss our policy goals in a balanced and open forum.
Thank you for the opportunity to present our views.
[The prepared statement of Mr. Hall appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
STATEMENT OF JOHN RIGOLIZZO, PRESIDENT, NEW JERSEY FARM BUREAU
Mr. RIGOLIZZO. Yes. I am John Rigolizzo. I am the president of the New Jersey Farm Bureau, and I am also a farmer first, raise fruits and vegetables, flowers, a little bit of livestock. We do a lot of wholesale as well as retail business.
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The American Farm Bureau Federation is the largest general farm organization in the United States with more than 4.8 million member families in all 50 States and Puerto Rico. We appreciate the opportunity to come before your committee today to offer our views on country-of-origin meat labeling.
We strongly support country-of-origin meat labeling for all products at the retail counter. As trade increases and agricultural products, both fresh and processed, flow across international borders, U.S. consumers deserve to know where their food products originate. Farm Bureau policy states, imported products should be labeled at the distribution point and retail level as to the country-of-origin. Labels on imported products should stay on the main display panel of the package that the product is imported in letters not less than one half the size of the produce name. Our policy goes on to state, we support the establishment of a grown in the USA labeling program, and that U.S. origin products should proudly display the American flag in a prominent position on the label.
We also state in our policy that all livestock entering the United States for any purpose should be permanently identified as to country-of-origin. We strongly support the labeling of products all the way to the retail outlet as to its country-of-origin. We feel the consumers have the right to know where the food they are buying is produced in order to be able to distinguish American products from those produced in other countries. Consumers have confidence in America's farmers and ranchers. This allows them to buy products produced by their fellow Americans and be assured that the products were produced in America.
Consumer surveys indicate that the majority of consumers want to know the origination of their meat products. We feel that it is important to change the current practice of allowing cattle to be imported into the United States and then be immediately processed and then carry the USDA inspection label. We feel that this practice misleads the American consumer into thinking they are buying a US-produced product, when in fact it was imported into this country.
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For example, imports of beef to the United States have more than doubled in the last 10 years. Nearly 3 billion pounds of beef are imported into the United States annually. Several retail accounts tell us they now sell both domestic and foreign products in their meat case without any differentiation.
In addition a great deal of foreign beef today is graded by USDA and sold at retail to the consumer simply as USDA beef. Foreign beef is frequently advertised as USDA inspected without mention of whether it is domestic or imported product. Fruit and vegetable imports have seen this same type of import growth with little opportunity for consumers to identify domestically-produced fruits and vegetables.
Legislation H.R. 1144 has been introduced in the House which would amend the Federal Meat Inspection Act to require that imported meat and meat products be labeled so that U.S. consumers would be able to identify the country-of-origin at retail sales points.
Farm Bureau has supported legislation calling for mandatory country-of-origin labeling for meat products. Unfortunately, legislative efforts have not been successful. As a result Farm Bureau has been participating in a working group this year to come up with a voluntary certification program that just recently sent a letter to Secretary Glickman formally requesting that USDA promulgate regulations to create USDA process-verified, ''Beef: Made in the USA''. The recommended beef products must originate from cattle that are raised and fed a minimum of 100 days and processed without leaving the United States.
Beef producers and processors who want to make process-verification marketing claims under the ''Beef: Made in the USA'' program must develop a written certification system that requires cattle feeders, beef packers, and retailers to maintain adequate systems and records to qualify for this voluntary program. Consumers would also be informed of the required specifications for marketing ''Beef: Made in the USA.''
Farm Bureau believes that a process-verified program certified by USDA would be beneficial to our livestock producers. This program will provide a marketing opportunity for U.S. cattle producers to contribute to the value of retail beef products. We look forward to working with USDA during the rulemaking process to create USDA process-verified ''Beef: Made in the USA.''
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We realize that there are some concerns and unanswered questions related to labeling. We know that there will be costs involved, although we believe them to be somewhat minor. WE also realize that there will be challenges for U.S. producers in maintain a high quality and safe product. But at the same time we look at it as an opportunity to highlight our products both domestically and abroad. The bottom line is that we know there are challenges and possible pitfalls with labeling meat and perishable products as to their origins but with challenges come opportunities we do not presently have available to us.
Country-of-origin labeling is simply a matter of informing the American consumer and helping assure consumer confidence in the products they choose to purchase. Enhancing the market opportunities for domestic meat, meat products, and all agriculture commodities by requiring labeling of imports is critical to the agriculture industry. We feel the voluntary certification program through the Agricultural Marketing Service will not only have a positive impact upon American producers but also American consumers.
Thank you, sir, Chairman, for allowing me time.
[The prepared statement of Mr. Rigolizzo appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. Sims.
STATEMENT OF WES SIMS, PRESIDENT, TEXAS FARMERS UNION
Mr. SIMS. Thank you, Mr. Chairman, for holding this opportunity on country-of-origin labeling.
I am Wes Sims, and I farm near Sweetwater, TX, where I raise wheat, hay, and cattle. I also serve as president of the Texas Farmers Union and am on the Board of Directors of National Farmers Union. Today I am testifying on behalf of the 300,000 farm, ranch families that are members of National Farmers Union.
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Mr. Chairman, at this time I have two requests to make of you. I ask that letters addressed to you from the National Consumers League and the Consumers Federation of America in support of mandatory labeling be made part of the hearing record. I have given these letters to the clerk and have copies of the letter available for committee members.
Mr. POMBO. Without objection they will be included as part of the record.
Mr. SIMS. And the second request I have a letter from National Farmers Union to Secretary Glickman signed by every State president of National Farmers Union. I would like it to be a part of this record also.
Mr. POMBO. Without objection it will be included in the record.
Mr. SIMS. Thank you. Our organization is a strong proponent of mandatory country-of-origin labeling as provided for in H.R. 1144, introduced by Representative Chenoweth-Hage and Representative Pomeroy. We are particularly pleased that the legislation covers beef, pork, and lamb. We also support the provision that requires U.S. labeled meat to be from animals that are born and raised in the United States. We also like the fact the bill requires all meat to be labeled rather than just labeling U.S. meat.
As a cow-calf producer I am proud to have products from my farm labeled product of the United States. Labels are used on many other consumer items including frozen food, and labeling fresh meat seems long overdue.
In the absence of country-of-origin labeling the current system is misleading to the consumer. Due to grade stamping each meat product receives a label that reads, ''USDA inspected.'' This gives the appearance that all the meat is produced in the United States. National Farmers Union is pleased that USDA is reviewing this practice. We believe that only U.S. meat should receive the USDA grade stamp. However, action to remove the grade stamp from foreign meat is not enough to tell consumers where the meat was produced. Only the country-of-origin label will do that.
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Some have suggested that the United States should try voluntary labeling. I would point out that we already have the authority to do that, and it has not resulted in meat being labeled.
During the past 8 months National Farmers Union met with retailers, processors, and some other producer groups to further discuss use of the voluntary label. However, the effort produced a suggestion for a label that would allow beef from imported cattle to be labeled product of the United States. Specifically, the label would have required the cattle to be in the United States for only 100 days prior to slaughter. That time period is a small fraction of the animal's life and would result in a false label, one that would certainly not meet the standards for other products labels product of the United States.
The past 3 years have been very difficult on Texas cattle producers. In my area we have had 3 years of minimal rainfall, with 1998 we only had 25 percent of the normal level, and 1999 and 2000 we have had less than 2000 percent of the normal rainfall. As a result like many other farmers in my area my cattle numbers are well below normal, and I am forced to use supplemental feeding. I raise all my own calves normally. In years with better weather I occasionally buy stocker cattle from other States, which include Tennessee, Mississippi, or Florida. I have never knowingly purchased imported cattle.
I am aware of some large operations that import thousands of cattle from other countries and then lease wheat pasture in the wintertime to feed these cattle. I am also aware of large operators who buy foreign cattle and ship them directly to the feedlot where they are finished for 100 days or more and then slaughtered. These operations directly compete with U.S. cow-calf operators, and there is no reason that beef from these cattle should be falsely labeled U.S. beef. In fact, in addition to misleading the consumer, we risk a loss of consumer confidence in labeling, and the false label would actually encourage more cattle imports.
Livestock producers today are forced to sell into a market with very little competition. Four firms control 81 percent of beef slaughter, 73 percent of sheep slaughter, and 57 percent of pork slaughter. In some cases processors source the animals from other countries, decrease competition, and the practice of sourcing animals from foreign countries have resulted in little or no profits being returned to U.S. livestock producers. Adopting the false label would reward processors for import sourcing.
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While the effort on voluntary labeling was a good try, it falls short on the 100 days and on the fact that it only covers beef.
Two years ago Members of Congress came very close to adopting mandatory country-of-origin labeling. The effort was killed by some in the processing industry. Since that time producers have continued to suffer from low prices, too low to cover their cost of production. In addition, consumers have an increased awareness of food safety concerns, which has led to greater interest in where their food originates. At a time when U.S. producers and processors are under rigorous production requirements and consumers are expressing an increased interest in the origin of their food, it is more important than ever that Congress adopts country-of-origin labeling.
The provision of H.R. 1144 are good produce policy. It is good consumer policy, and it is good trade policy. Many other countries already require country-of-origin labeling for U.S. produced meat. This bill treats all countries the same, and it avoids creating a loophole for ground meat. It informs the end consumer and has strong support from farmers and ranchers across the country. As a beef producer and president of the Texas Farmers Union there is no legislation I know of that would provide a bigger boost to U.S. livestock producers.
On behalf of our members I commend Representative Chenoweth-Hage and the 58 cosponsors for introducing this legislation, and I offer the full support of the National Farmers Union. Mr. Chairman, I urge you and the committee to support this bill and bring it to a vote before the full Congress. Once again, thank you for holding this hearing and offering me the opportunity to testify in support of this key legislation.
[The prepared statement of Mr. Sims appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. Hayes.
STATEMENT OF JOHN V. HAYS, PRESIDENT, OREGON CATTLEMEN'S ASSOCIATION, ROUSE BROTHERS RANCH
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Mr. HAYES. Thank you, Chairman Pombo. I would also like to make available to you our ''Steadying Up for the 21st Century'' our quality assurance program in Oregon produced by Oregon State University, Dr. Zollinger and Dr. Hanson, which recently was adopted by the beef specialists in Tennessee as their guidebook and our beef health record, form number one, which is developed by OSU. I would like to submit these also.
Mr. POMBO. Without objection.
Mr. HAYES. Members of the committee, as president of the Oregon Cattlemen's Association I support H.R. 1144. The American ranchers are proud of their product, our cow-calf operators are subject to the most scrutinizing regulations and inspection in the world, and in turn they know their product is the top of the line. Would you knowingly defeat the ranchers' dedication and hard work? Would you want to diminish the value found in their product? By denying the country-of-origin beef labeling requirements of H.R. 1144 you are doing precisely that.
Currently American beef is mixed with imported foreign lands. We know not what those cattle are exposed to, nor what they are bringing to the land of the free. Even if our inspections could single out each and every differences between our product and theirs, how is the consumer to capitalize on that information if he or she is denied the ability to distinguish between the products?
The current system does not reward American producers for their hard work and for their adherence to the U.S. laws on food safety, environmental and label requirements. In fact, they are punished. Our present system allows for the importation of inferior product that is produced under much less stringent standards, mixes it with that from the U.S., and then sells it for the same price. The American consumers believe they are buying my product, U.S. beef, but they are not, and there is no way to determine the difference. This is a counterproductive on two levels. By placing domestic beef among imports, it both devalues the American product and lends credibility to the imported one.
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Further, one can legitimately argue the importance of country-of-origin meat labeling to maintaining a national health standard. With Americans importing more beef they are exporting, the USDA inspecting less than 2 percent of imports, it is imperative that each and every item be labeled. We ask ourselves, would you buy a car if you didn't know its brand? Shirts, shoes, and pants all are labeled but each of these is external matter. Without labeling you are asking the American meat customer to buy a product for consumption for themselves and their families without knowing where it came from or the standard or production or type of humane or inhumane treatment the animal has had. This Nation has recognized the importance of labeling in so many respects. Why should beef by any different?
There may well be some here today that will tell you that country-of-origin meat labeling would be far too expensive. This is not true. The GAO reports estimated that the meat labeling costs could be three quarters of a cent per pound. Consumers have indicated that they would be willing to pay far more than this to know where they are buying their meat that is produced in the United States by United States producers under United States safety and environmental standards. Those who use cost as a reason to oppose H.R. 1144 reap huge profits from unlabeled imported meat. They also told an official of my National Cattlemen's Beef Association that they are willing to spend $30 million in an effort to lobby to stop country-of-origin meat labeling. So far it seems to have worked.
Chairman Pombo and members of this committee, I am an honest man. I know the meat industry. I know what consumers want and deserve. I am a rancher, and I know what ranchers want and deserve. My word is good, and it is this. The only reason there is opposition to H.R. 1144 is big money, big profits. The opposition does not come from the ranchers or the consumers. We want it.
The USDA states that the cost associated with meat labeling would likely be passed backwards to the producers in the form of reduced prices. As a member, as a producer and a representative of 2,500 other ranching families in Oregon I will guarantee you that we are willing to accept the risk of lower prices to pay the cost of meat labeling because we are confident that the American consumer will be willing to pay more for our high quality, safe product than the foreign uncertain products. My State Cattlemen's Association supports country-of-origin meat labeling. In fact, the National Cattlemen's Beef Association, NCBA itself, of which I am a dues paying member, also has policies supporting country-of-origin meat labeling, which I quote. ''NCBA favors legislation requiring all imported meats and meat derived from live cattle destined for immediate slaughter be plainly labeled for the consumer as to the country-of-origin.''
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This definition of U.S. beef that provides total truth to the consumer and fairness to the rancher is this. U.S. Beef must come from cattle that have spent their entire lives in the United States.
The time has come for American producers and consumers to be afforded the opportunities promised in a free market. Why would the producer provide high quality without the ability to name his product, and how can the consumer purchase without the ability to distinguish. H.R. 1144 provides the solution. Members of the committee, I respectfully request that you support H.R. 1144, and thank you, Mrs. Chenoweth-Hage, for all your efforts for this and also we think that it very much is needed. Thank you.
[The prepared statement of Mr. Hayes appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. McDonnell.
STATEMENT OF LEO R. MCDONNELL, JR., CATTLE RANCHER AND PRESIDENT, RANCHERS-CATTLEMEN ACTION LEGAL FUND
Mr. MCDONNELL. Good morning, Mr. Chairman, and members of the subcommittee. My name is Leo McDonnell. I am a cattle rancher from Montana and North Dakota, and along with my wife, Sam, we own and operate a ranch in Montana and North Dakota.
Besides working as a full-time rancher I am president of the Ranchers-Cattlemen Action Legal Fund, R-CALF. I appreciate this opportunity to testify before this subcommittee today on an issue that is of great importance to cattle producers in this country.
R-CALF was formed in 1998 as a non-profit organization whose mission statement is focused on the market interests and restoring conditions of fair trade and fair prices to U.S. market for live cattle and working to insure cattle producers' concerns are effectively addressed in trade negotiations. Today R-CALF has approximately 9,000 members in 36 States, and I am proud to say that we are the fastest growing cattle producer association in the United States.
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The cattle that are raised today in the United States are raised according to some of the strictest and highest quality standards of any country in the world. Once our States get to the meat counter, however, you can't tell whether they are made in the United States, Canada, Australia, Argentina, or New Zealand. This enables the importers, which includes the major packers, to use imports to leverage down prices for domestic cattle. In fact, that is exactly what the former chairman of the International Trade Commission, Lynn Bragg, said last November, and I quote. And first I would like to point out that the ITC looks at hundreds of industries over the last several years. What the chairman of the ITC said was, ''The concentration of packers provides packers the ability to use imports to reduce domestic live cattle prices or prevent price increases.'' And I think it is fair to say that that could also be included with imported beef.
It is interesting in our industry today that we see beef demand being reported at 5.2 percent higher than a year ago, that we see export values reported at 31 percent more than a year ago, that we recently, yesterday visited with the USDA and NAS, and we see reports that total red meat production is about the same year to date from a year ago. So wouldn't you think with that much demand, with that much increase in value, in export value that we would have a stronger fed cattle price today instead of selling fed cattle at 10 percent under where we were a year ago and selling fed cattle at a loss again today. There is something wrong.
Country-of-origin labeling is an important means to help level the playing field for ranchers and feedlot owners. I think everyone on this panel would agree that U.S. cattle producers produce the best quality and most wholesome beef in the world but without country-of-origin labeling we are not able to get the full value for our product, no matter how much better it is than the competing imported beef. I think it is also important to point out that we are in the midst of some various trade negotiations in which this administration's negotiation position is to further liberalize trade. As more countries gain access to our beef market country-of-origin labeling will become increasingly more important if U.S. ranchers are to have any chance at getting full value for their product.
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As we go into this global market how can we expect U.S. producers to compete in an environment where they can't differentiate their product? That is a key element of competition. That is like asking us to go to the polls in November and giving us a blank ballot to mark. Who do we know who we are voting for?
Opponents of country-of-origin labeling make a number of arguments, and I would be glad to address those arguments in the question and answer. They are in my written testimony.
One argument in particular that I would like to address, however, is that country-of-origin labeling is often called protectionist. As I discussed earlier importers, processors, and packers enjoy a significant competitive advantage over the rancher and feedlot owner because of the lack of differentiation. I don't believe that a law which enables ranchers and feedlot owners to differentiate and thereby improve their ability to market their products to American consumers can be regarded as protectionist. We can't really sell our product direct to the consumer. We have little alternative but to go through packers as an industry. Country-of-origin labeling would greatly help to improve the return we get for our product.
I also find it curious that a bill such as H.R. 1144 would be called protectionist. Isn't one of the great promises of global trade is to give consumers more choices? Isn't that what we hear time after time? Where is the choice in our industry on our product with country-of-origin labeling?
In closing, Mr. Chairman, R-CALF strongly supports H.R. 1144. We believe that this legislation would significantly improve the ability of American ranchers to get full value for the product they raise as well as give American consumers the same information that consumers in numerous other countries already have available to them today.
Thank you, and thank you, Helen.
[The prepared statement of Mr. McDonnell appears at the conclusion of the hearing.]
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Mr. POMBO. Thank you. Ms. Cowan.
STATEMENT OF CAREN COWAN, EXECUTIVE SECRETARY, NEW MEXICO CATTLE GROWERS' ASSOCIATION
Ms. COWAN. Mr. Pombo, members of the committee, thank you for allowing me to be here this afternoon. My name is Caren Cowan. I am the executive secretary of the New Mexico Cattle Growers' Association. I was raised on a commercial beef operation in southern Arizona and basically I am an economic refugee to New Mexico because a family ranch couldn't support me anymore.
I appreciate the opportunity to be here but I hope that you are all watching television and reading the newspaper because I think this issue is a whole lot broader than economics or food safety even. I think we are perhaps even looking at a national security issue. Twenty-five years ago I never realized that our oil supplies were being exported off country and that we were moving to the mercy of foreign countries, many of our adversaries, for our oil supply. So I fear the day that we pick up the newspaper or we turn to CNN and find that we are having to delve into our strategic food supplies because we can't get the food that we need from our own country and other countries aren't producing enough or they are charging too much for it. So I hope that you look at that.
Trade agreements like NAFTA and GATT are providing for more imports into our country at cheaper prices than our own producers can even afford. In the fall of 1998 we got word that there was a group of 5,000 head of Australian cattle that were going to come across the border from Mexico into New Mexico and then on into feedlots in Texas. While we appreciate the voluntary efforts that our national organizations have taken and USDA, I just don't feel that that is enough when we had this crisis looming. These folks could bring cattle from Australia on boats to Texas cheaper than my members could sell cattle to them 150 miles down the road. There is something wrong with the economics there.
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And as far as the voluntary part of it, I talked to one of our feeders who is a member of our organization, and he informed me in no uncertain terms that he would fill his feedlot with the cheapest cattle he could find. He didn't really care where they came from. It was only through our New Mexico State Regulations, and quite frankly, the testicular circumference of our livestock board and its employees, that kept those cattle from crossing the border. We are told that they were consumed in Morez but then there were additional cattle that came in with them. They ended up we are told in restaurants and grocery stores in California.
Didn't those folks who bought that meat have the right to know that those cattle had been on boats from Saudi Arabia for weeks? We don't know what they were exposed to. We averted the animal health problems that might have come to our State but what did we do about the human health problems that are there.
Today we are told that there are some 30,000 head of Uruguay cattle in Mexico waiting to be naturalized with the hopes of coming to the United States. We have learned that hoof and mouth disease has broken out in four South American countries so that is a little foggy at this point whether they will actually make a run but given that the cattle are there waiting and you have that disease problem sitting there, it tells us there is something wrong with the system. And we certainly have a right to know where those cattle are.
Right now livestock could be naturalized in 60 days in Mexico. I am assuming the same thing happens in Canada. In 60 days you are not going to surface the animal disease, let alone the potential human health hazards that you have got there.
Earlier I mentioned that it was our own State regulations that stopped the Australian cattle from coming into Mexico. Right now this body has before it a bill that would take away our State laws and our State ability to do that and turn everything over to the Federal Government, and quite honestly, we didn't see that the Federal Government was a huge help when we dealt with this problem. So we have fears about this whole thing as we go along.
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New Mexico opposed the free trade agreements as they came along. We oppose most everything quite honestly. You have to take it as it comes but we certainly have to figure out a way to have fair trade with free trade, and that is not what we are seeing right now. Country-of-origin labeling would put us simply on the same playing field but we have to look at our own laws and regulations as we go along. We have a chili producer in southern New Mexico that was raising chili in New Mexico. There were so much regulation that came down from USDA on him that he simply moved his chili operation to Mexico, the other side of the border, where he could have the products that he needed to produce a healthy crop. He is now growing his chili in Mexico and shipping it back across the border.
Something is wrong with the system, and we need to look at it because we are exporting our ability to produce our own food. New Mexicans have been notorious against increased regulation, and some of our own congressional delegation has said you guys gripe about regulation all the time but here you are asking for somebody else to be regulated. If that is what it takes to level the playing field, that is what we are willing to do.
I love the statement in the USDA's report that said there is no evidence to suggest that a large or long-term price premium would be engendered by mandatory country-of-origin labeling. They didn't ask anybody in New Mexico. About a year ago our New Mexico Beef Council surveyed over 800 New Mexico households and had 12 focus groups across the State. The research was done by the Wirthlin Worldwide Company who told us that the most significant opportunity that stands out in New Mexico's beef production is the positive impact of the U.S. label beef. Overall, New Mexican consumers almost unanimously expressed preference for such a label. 90 percent agreed, 75 percent strongly agreed.
Another 77 percent said that they would not purchase beef that was labeled imported or from a foreign country, and 66 percent of those strongly agreed. That survey didn't cover blended products but as a beef producer when I think about blended products, a member of this body told me one time that if we had to label hamburger with all the countries that it came from, that the label would be bigger than the package. I am a beef producer, and that makes me think twice when I walk into the grocery store and look at a package of hamburger.
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Yesterday on the plane it took me about 10 hours to get here with different problems with flights. I decided I would play a little game, and everybody that I sat next to on the plane that I could talk to. I told them what I was doing and what I was coming for. And across the board, from the airline stewardess that was on her way to watch the Monday night football game with a guy she met in Baltimore last week to the hunters from North Dakota that had been in New Mexico, they all looked at me and said, our beef isn't labeled? Consumers don't know that they are not getting a product from America right now.
So we talk about political realities. The political reality is that people aren't aware of what they are getting, and it is our responsibility and your responsibility and the USDA's responsibility to give them that kind of information. We know where our clothes come from as people have pointed out. We know where our cars come from. We know the treats we feed our dogs. Shouldn't we know where the food that we feed our children comes from?
Thank you.
[The prepared statement of Ms. Cowan appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mrs. Chenoweth-Hage wanted the opportunity to introduce her constituent.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman. This is a great privilege of mine. I first want to thank all the members of the panel who have all come so far at your own expense to testify. I am especially privileged today to introduce Mrs. Loneta Rice. She is a special lady. She is the mother of 15 children. She is married to one of the finest constitutional lawyers I have ever met, and I am very picky about that so you can understand he is an outstanding constitutional lawyer, very bright. And I remember one time he told me the reason his wife attracted his attention was because he felt she was the most brilliant woman he had ever met.
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So it is my privilege today to introduce that brilliant woman, the mother of 15 children, Mrs. Loneta Rice.
STATEMENT OF LONETA RICE
Mrs. RICE. Thank you, Helen. I am glad my husband feels that way about me. Thank you for allowing me to come and testify. I appreciate this opportunity.
I don't come as an expert. I come as a consumer and a shopper. You can imagine with 15 children I spend a lot more time in grocery stores than most people do. We have had experience raising our own meat, and so I know something about that process but now we live in town and depend on, I was really naive. I thought that the stamp USDA meant that that was American beef, and I really appreciate coming to these hearing because I really received an education. I wish I had time to ask a lot of questions. But you all introduced your organizations you represent. I represent the Rice family with my husband and my 15 children, and my 28 grandchildren, and the spouses of my children. There are 50 of us so that is not very many compared to you guys but we eat, and I go to the grocery store, and I do read labels. If I don't read labels, there are times when I come home and read the label and have to throw something out. It is much cheaper to read the label when you get there.
And like I said, I had been naive. I thought that I was getting American meat but as the problems are coming out more and more often with contamination in meat, with problems especially for children, the one thing that concerns me is that ground meat, hamburger, hotdogs, lunch meat, pizza meats, those are the meats children most often eat. To do research on muscle meat is to eliminate the entire group of children of the United States because most children will not eat a steak. They don't like it. They like these processed meats. Those meats I want to know where they come from. I want to know what if meat is raised in a country that does not have the same kind of sanitation standards that this country has, I want to know. I would be suspicious but if there is a country that raises meat and wants me to know that their meat is good, they need to let me know that have the same standards that American meat has. Those are things that are important to me because I do read the labels, and it matters whether or not these things are something I can feed my children and feel confident of.
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It is becoming more and more a risk when you take your kids out for hamburgers, and believe me they don't order anything else. They order hamburgers. Hamburger meat and contamination frequently comes from your fast food chains. It would be nice if when you entered the fast food chain building if there was a label that said meat comes from these areas. I really thought that it came from America but I have learned about it as I have gone into these issues.
When I make decisions when I buy food, I have to take into account cost because we have always been limited in the money that we have but to me I have always eliminated buying something if I thought there was a risk involved with it. And with meat that is possible because we have many times lived without meat because it was too expensive. But if I am going to buy meat, I want to know that what I am getting is going to be the standard that the USDA label says it is. Because I appreciate that the meat we get from you American producers is the best in the world. It was interesting for me to find out that if you lived in another country, you would flock to the U.S. meat because you would say, hey, this stuff is good stuff. I don't see why we can't have that kind of assurance when we go to the grocery store that this meat is United States meat.
I would like it from the time that it was born, if it came from somewhere else, I would like to know. And if that country had standards which assured me that I could get the same level as the United States, then I would be willing to buy that meat that came from another country.
Thank you very much.
[The prepared statement of Mrs. Rice appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. I thank the entire panel for your testimony, and Ms. Rice, representing 50 people in your organization is probably more than a lot of the folks who testified before this committee at times so I appreciate you being here and your testimony.
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One of the issues that is of great concern to this panel and to a lot of the folks that I represent at home is the whole issue of born, fed, and slaughtered in the United States, what it means to be U.S. beef. There has been a lot of back and forth. I know that the National Cattlemen's Beef Association has fought with us, with each other, and with everyone else in trying to figure out a definition and what that really means and how to represent the membership of that particular organization. And Mr. Hayes, I am a fifth generation cattleman, and I am not one of these guys whose family has a cattle ranch. I have spent as much time on the ranch as anybody sitting out here, and if it is money, my number one interest is the cattlemen because that is what I have to go home to every weekend. And so I don't know exactly where you going with your comments but if it is directed at me, I can tell you that if it is a matter of money, my money is not around this place. It is at home, and that is where my family, my brothers, my dad, and my cousins, everybody else, that is where we make it.
But when it comes to the issue of what it means to be U.S. beef, and Mr. Sims made a comment that he had not knowingly bought foreign beef. I have a cow-calf operation, and I have a feedlot. I feed a lot of Hawaiian cattle. Under the definition that is included in H.R. 1144 most of those Hawaiian cattle that I feed would not be U.S. beef because they are shipped in, they come through Canada, they spend a couple of weeks in Canada, and then they end up in feedlots in the United States. And under this definition those would not qualify. Those would be foreign beef under this definition.
So I have concerns about what the definition is to what U.S. beef, what qualifies as U.S. beef, and I can't tell you exactly what the definition should be. And that is one of the reasons why we tried to work this out and tried to figure out what a definition would be that everyone could agree on. When it comes to an issue like this, it is personal for me, and it is something that I care about. I know there are a lot of Hawaiian cattle that end up in Mr. Sims' part of the country and because I have seen where they go. I have been to the feedlots down there, and I have seen the cattle that have come in from Hawaii. According to the definition that is in this bill those would not be considered U.S. beef because of another stupid law but, I mean, it is something else we did at some point in time, and as a result of that those cattle are not shipped directly into the United States.
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And if I could I would like Mr. Hall to comment on that part of the law because that has been, within the family of cattlemen that has been one of the most contentious issues and one of the things that I have heard a lot from my producers at home is to what that final definition would be. Mr. Hall.
Mr. HALL. Mr. Pombo, I think that the reason for that I guess is what, the Jones Maritime Act or something of that nature. I am not real familiar with it.
Mr. POMBO. The Hawaiian cattlemen are.
Mr. HALL. I am sure they are, very much so, and by the way I look forward to being there in a little over a month to visit with the Hawaiian Cattlemen's Association. Certainly cattle produced in Hawaii, that is one of our States, it is part of this Union. To me it does not make sense just because of another law that says you got to go through another country to get here makes them any less desirable than one produced in southern Oklahoma. But compliance with the law, whatever law it may be, and certainly there has been some indications that cattle from these other countries do not meet the same standards that are set up here, and I know in trying to import cattle, breeding cattle especially, they have to meet some pretty strict standards to get them into this country. At the same it just seems like there are barriers to the trade that we attempt to make our living at, whether it is buying cattle out of Mexico and fattening them on wheat pasture, adding value, adding size to them, and then putting them in feedlots for another 120 to 150 days, those cattle are completely changed from the time that they were brought in through a market or into Oklahoma or wherever it may be. And that is one of the reasons we looked at a compromise of this voluntary proposal.
I like several others, though, question whether a voluntary program will have the affect of Congresswoman Chenoweth-Hage's bill. And yet it is a step in the right direction.
Mr. POMBO. Thank you. I do have additional questions but my time has expired. Mr. Peterson.
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Mr. PETERSON. How many, if I can get a show of hands, how many of you folks or your organizations supported the GAD agreement and the NAFTA? The rest of you didn't support it. How about the Rice organization?
Mrs. RICE. We did not support it.
Mr. PETERSON. Well, good for you. It just seems like how do you square the fact that your organization is supporting supposedly free trade and well, I don't think there is such a thing but the concept of it and then want to come back and support legislation that kind of goes contrary to what the free traders talk about. Is that ever discussed within your organization?
Mr. HALL. Yes, sir, it is discussed pretty heatedly and pretty thoroughly, and certainly our organization is a Democratic kind of organization where policy is brought through, and it is debated in open debate, and the majority rules.
Mr. PETERSON. Do you support country-of-origin labeling for wheat, soybeans, and corn, because that ends up in bread, and nobody has any idea of whether the wheat that is in bread came from other countries.
Mr. HALL. I am mainly concerned with the cattle industry, sir. I never have really thought that much about that. I know that even products that are labeled made in the USA, I know personally whether it is clothing or whatever it may be, that is just a label sewn in and the cutting and the sewing is done in maybe sweat rooms.
Mr. PETERSON. I shouldn't put you on the spot because I bought a Buick so I could make sure I got an American car and it turned out it was made in Canada so——
Mr. HALL. Yes. I have one of those vehicles also.
Mr. PETERSON. How about the Farm Bureau? Do you guys
Mr. RIGOLIZZO. Yes, sir. Like Mr. Hall, we believe our organization is grassroots and a very democratic process as well, and probably the most vociferous representatives in this issue come from the border States, whether it be along Canada or Mexico. But certainly they have an impact but again, at our annual meeting it is all hashed out, and those 460 some delegates come to an agreement, and that is what we have.
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We also recognize that sometimes our greatest wishes reflect what we would like to see and sometimes we have to deal with reality, and we believe that this situation we still reflect our policy. But we are trying to look out for the bets interest of all our members, and this is certainly a step in the right direction.
If I can add a personal slant, and maybe I will get chastised for it but I have always believed that any time you can do something voluntarily rather than mandatorily, it is a step in the right direction. And you can learn from it. if it turns out wrong, well, then you can always go change it or make it stricter but I thin kit is worth a try.
Mr. PETERSON. Well, if we had $200 a head subsidy like they have in Europe, legislation probably wouldn't be quite as hot an issue.
This voluntary program, I heard you say, Mr. Hall, that you were in favor of the bill but you would just as soon get something accomplished and move somewhere down the road towards your goals, and I happen to agree with that. What do you need from this committee to help insure the success of this program, and are your ranchers ready for the identification part of this program? What is going to be needed there?
Mr. HALL. Many of them already have identification mechanisms in place. That is another issue of mandatory animal IV has been banded around, discussed, and debated for many, many years now as we have moved towards trying to take ownership and pride and improvement in the livestock industry. There has been a lot of debate over how can you improve unless you know what you have, and how do you select individuals without identification on them and that identification remaining with them until slaughter or until harvest. I am sorry. And that is one of the things that is being debated and is being used particularly in the seed stock or purebred industry and may at some time become one of those things that we might be brought back here to debate on that also at some time in the future.
So the mechanism to some degree is there. Now, whenever it gets on into the other segments of the industry that will be required all the way to the retailer, there is some paperwork involved that someone will have to keep up with. Lie in this very room many years ago mandatory vaccination for the brucellosis program someone had to keep records. It wound up being for the most part the stockyard, live stock markets having to do that. And there will be some segment of the industry have to maintain those records and make them available for review or compliance.
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Mr. POMBO. Mrs. Chenoweth.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman. Mr. Hall, I want to begin by directing my questions to you. Thank you very much for your testimony. And doing so, Mr. Chairman, I do want to say that both the NCBA and the Farm Bureau supported NAFTA and GATT but that was before the report after the fact that WTO issued and that stated that the meat producers in America would be hit hardest by WTO policies. And then just above that we are farmers in America. And I kicked into gear, and many people did because we thought it utterly unfair that WTO could just simply say the American meat producer and the American farmer are going to be hit hardest by WTO practices. And so the reason that I put together the country-of-origin meat labeling, Mr. Peterson, was not to provide a barrier at the border at all. I think you know I am a free trader, too, but simply to give the consumer the right to know and give that person the ability to choose at the retail level.
I am adamantly opposed to building impermeable walls at the border but I think I have got to be fair to these organizations because I don't believe that given the knowledge that they have now that they would have been so willing to support NAFTA, GATT, and the WTO. I will yield to the gentleman.
Mr. PETERSON. Well, I am perfectly willing to put barriers at the borders so I just want to clear that up.
Mrs. CHENOWETH-HAGE. That is good.
Mr. PETERSON. I also tried to tell people before we passed NAFTA and GATT that this is exactly what was going to happen and not really many people listened.
Mrs. CHENOWETH-HAGE. Well, the fact is that now we know, and I think Mr. Pombo's question to Mr. Hall was very interesting. I think it is the Jones Act that requires that, the complications that you addressed, and I do think that we need to amend the Jones Act to recognize that Hawaii is an American State. I have cattle producers in Idaho who raise Hawaiian cattle, too, so I am very sympathetic to this and will continue after my term in Congress is up to work on the outside on this particular issue lobbying Congress to make the right and proper corrections to the Jones Act.
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I also want to state, Mr. Hall, that there have been many ranching families who have existed for more than a century who have brought feeder cattle in from Mexico in Texas and Oklahoma, New Mexico, and Arizona. They brought feeder cattle in and raised them. These are families that have existed forever, and I do not believe that by fiat of government that we should do anything to harm existing businesses that have served America well. I do want you to know, though, I still have ultimate faith in the American consumer, and while I had petitioned the chairman to hold the hearings on H.R. 222 that would address that particular issue, he and I both agreed that H.R. 1144 was a place to start in this whole debate. And since USDA's voluntary program requires born, raised, and slaughtered in America, that was a good benchmark to start from.
I also want to address the issue that Mr. Peterson addressed with regards to grains that are coming into America. The application of sanitary and phyto-sanitary measures in the SPS Agreement requires that we evaluate anything coming in, whether it be meat or grains based on measures established by risk assessment. And it is amazing to me that Carol Browner would apply labeling requirements so strict to our American grain producers that it makes it difficult for them to raise grain here but yet streaming over the border is grain whose product has had chemicals used on it that is disallowed here because of the government's risk assessment programs.
So I am just asking the Government in food labeling, and I have addressed this in another bill but also in meat labeling to be utterly consistent.
Mr. Chairman, I see my time is up but as you can well imagine I do have other questions. Can we have a second round?
Mr. POMBO. I would go ahead and encourage the lady to take an additional 5 minutes at this point and ask your remaining questions.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman. I want to address an issue, Mr. Hall, that has been brought up, and that is the issue of if we require country-of-origin meat labeling here in America, then the EU is going to require that we label with regards to hormone shots. It is my understanding that the hormone that used to be used on steer, cattle in the feedlots was known as DES, and that it is a protein anabolic that allows for quicker growth of muscle. But hasn't that been changed? They are no longer using DES and in fact, they are using a product now that has absolutely no residue of active ingredients in the carcass, in the meat. Isn't that true?
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Mr. HALL. Yes, ma'am.
Mrs. CHENOWETH-HAGE. So we have met all the concerns of any health issues with regards to hormone injections.
Mr. HALL. There is no scientific basis for the barrier that has been raised by the EU concerning hormones. Certainly, growth promotants contribute to the efficiency of the feeding, livestock feeding industry, poultry, swine, and beef cattle. We may have become too efficient in our efforts to produce with fewer and fewer people engaged in the production of the food and fiber that we are proud of.
I think that the one thing that we continue to and we must recognize that less than 4 percent of the population of this world is contained in the continental United States. We have a tremendous opportunity for marketing of our farm products outside of this country. The recent passage of trade relations with China is a step in the right direction. Certainly that is—but along with those abilities to perhaps export our product into those countries which have tremendous possibilities for increasing our hopefully the income from our products, I guess we have to have the opportunity to trade. And with those trades there is always negotiation, whether it is a cattle trade, grain trade, labor trade, whatever it may be. And many times those negotiations and those terms don't always go exactly the way that we want them. And consequently we may have to give up something in order to do that kind of business but we as an industry are producing enough to not only feed this Nation but also do a pretty good job of exporting to other countries.
Mrs. CHENOWETH-HAGE. Well, Mr. Hall, in making those tradeoffs my concern is that—and this room is filled with representatives from various food producing organizations but I do believe that together if we focus on the American market first, it is going to do a lot to stabilize our production of farm products, especially meat. 98 million pounds per month that is now being consumed by consumers of foreign meat, I think if the consumers knew that it was foreign meat, that 98 million pounds per month would go to the American meat producer, and I think we have to be concerned as industry reps first about the American market and the American consumer. And I think it will do a lot to stabilize cattle prices.
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And I want to ask you about the proposed cattle identification voluntary system, Mr. Hall. I am pleased we moved ahead. I am still going to push for legislation. You knew I wouldn't give up but the identification system that is proposed in this voluntary program may include but is not limited to ear tags. Now my concern is how in the world are we going to make sure that with an animal having an ear tag when we cut off the head.
And also it indicates the producers will consult with participating packers to streamline the flow of information. I am very worried about that one, and I have many more questions but Mr. Hall.
Mr. HALL. OK. Ear tags are just one method. It may be tattooing as you suggested or that someone did today that that might be a possible means of identification. In the brucellosis program, and I go back to that because I have had so much experience with it, that was an ear tag, and it became the responsibility of USDA's inspectors or the plant personnel to transfer that tag out of the ear onto the carcass and to follow it through. And certainly any form of identification can be manipulated if it is desirable. Certainly whenever that animal goes to breaking, a breaking room, if that tattoo is not on every primal cut, there is no way of keeping track of it. So it is how sophisticated that we want to become on tracing it. I heard testimony this morning or questions were asked maybe it is just a pretty simple thing. It seems there are very few things in this industry that are simple. When people are involved, when a perishable product is involved, it is a lot different from a piece of cloth or an automobile of keeping track of it.
Mrs. CHENOWETH-HAGE. I don't think it would be a very complex thing to require tattooing or branding, and that is what I was referring to, Mr. Hall, but I want to thank you so much for your testimony. And I didn't mean to pick on you. In fact, I meant to pick on everybody on this panel.
Mr. HALL. Thank you.
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Mrs. CHENOWETH-HAGE. I know that you have purchased the Armour Plant, and you are in partnership with ConAgra in a packing plant in Idaho, although you are president of the Oregon Cattle Association. Can you guarantee to me that you are not going to be accepting hundreds of, or even one sealed truck of Canadian live beef into your plant without letting the consumer know?
Mr. HAYES. Yes. We are contracting ConAgra to do our packaging because we couldn't get the house in Oregon. Yes. We are going through with the system. Our system is electronic ID, which we have got through the Cenex people, and it takes the animal from birth all the way through. It is recorded, and it is out now, and everybody is trying to do it but it goes right to the rail, goes all the way through to the box, and it is on the cord and everything like that. And our program the way it is set up, Mrs. Chenoweth, is that we have a branded beef program. You have to qualify. Your cattle has to be qualified on the system and also your feedlots have to be qualified. Also the packing house has to be qualified, the feeding and everything. It goes all the way through. We find it is very—and it is not, and it is about $5 a day that goes all the way through it, and the tags are reusable. And we can put all the data there is.
There is every data you want on that thing. There is about 25 to 30 different datas that this will produce, the cost to gain of the animal, the breeding, the genetics, all the way through to it, and it is another deal for food safety. We will not accept any cattle that come in that do not meet our program for Oregon Trail Beef.
We have a feeder also, which as Representative Pomeroy said from Hawaii, and I am just like you, if Hawaii comes up to our program and stuff like that, and they are all data-backed, we will go through with it. And there is also a vac track that we are using now that is getting into process, and it goes from the deal of the 18 inches that makes you keep them from punching in the rear or places that spoil meat, and that is what this whole program here was dedicated to that for food safety and health and everything.
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And, no, we will not accept cattle that come in that are unsealed because that is what we are trying to get ahold of. And we find out with the labeling process and the branded beef process we have created a market that we could put many times the cattle out, and we are finding out that it is another way that our people can get into the retail end of the product from ranch to table and that can make some money.
But definitely if Hawaii is a State, they should be able to bring their cattle in and everything.
Mrs. CHENOWETH-HAGE. Mr. Chairman, I just want to thank you and this panel. I have a lot of questions for Mr. McDonnell, Caren Cowan, Mrs. Rice, Mr. Sims, and our Farm Bureau representative whose name I won't attempt to pronounce but may I submit them in writing?
Mr. POMBO. Yes. There will be, and I will announce this at the end of hearing. There will be additional questions that will be forwarded to you in writing from members of the committee who were unable to be here and people like Mrs. Chenoweth that had additional questions that they did not have the opportunity to ask.
I am going to dismiss this panel and temporarily recess the hearing. We have a series of votes over on the House floor. We will return as quickly as we possibly can, and the committee will stand in recess.
[Recess.]
Mr. POMBO. The subcommittee will be in order and I welcome our fourth panel. Mr. Tim Hammonds, Ms. Leslie Sarasin, and Ms. Sara Lilygren. Mr. Hammonds, you may begin.
STATEMENT OF TIM HAMMONDS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, FOOD MARKETING INSTITUTE
Mr. HAMMONDS. I thank the committee for inviting Food Marketing Institute here today. The last time I appeared before your subcommittee was on April 28, 1999, talking about this very issue, and today I am delighted to tell you that 17 months of thoughtful and sincere negotiations really can make a difference.
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In April 1999 I testified against the idea of mandating the retail labeling of meat by its country-of-origin. FMI and its members firmly believed that labeling would trigger conflicts with and retaliation from our trading partners who would view a labeling mandate as a non-tariff trade barrier, whether or not that was the intent.
At the time I proposed developing a voluntary labeling program that would promote U.S. meat products as an alternative to legislation. Many on the committee under your leadership encouraged us to give that approach a try.
FMI took the lead in bringing together the interested parties to hold frank discussions of the concerns and objectives. We all agreed that we wanted to increase the sale of U.S. beef. We explored ways to achieve that important goal, and we did reach a solution. The result of our dialog is a proposed U.S. Beef Voluntary Certified Labeling Program. Our agreement recommends that domestic beef carry a label that reads: Beef: Made in the USA. This beef is processed from cattle raised and fed for at least 100 days in the United States.
It was a long but fruitful process that produced a huge step forward for the entire meat industry, from the rancher and packer to the grocer and food service distributor, and we are pleased with FMI's roll in it.
On September 8 in a petition to the Secretary of Agriculture we asked that USDA create a process to certify which beef products can be labeled ''Made in the USA.'' The groups that signed the petition include the National Cattlemen's Beef Association, the American Farm Bureau Federation, National Meat Association, The American Meat Institute, and Food Marketing Institute. I am submitting a copy of the letter to Secretary Glickman for the record.
Beef producers and processors who want to sell their products with this marketing claim would develop a written certification program. It would require cattle feeders and beef packers to maintain adequate systems and records to make claims and use labels through this voluntary program.
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We expect to see the program implemented nationwide. Packers and cattle producers would reimburse the USDA for the cost of the certification program.
This cooperative labeling and certification program is clearly a far better approach that mandating country-of-origin labels on imports, an approach that would be costly, raise false safety and quality concerns, and undermine U.S. trade policy.
Mr. Chairman, in conclusion, let me say that FMI very much appreciates the leadership of you and your subcommittee in encouraging those involved in the industry to develop a voluntary solution to this important issue. We hope it will be a model for settlement of other issues throughout the industry.
I thank you for the opportunity to appear here today. FMI members look forward to working with you and consumers on constructive efforts to increase sales of U.S. meat and produce both at home and with our trading partners abroad.
[The prepared statement of Mr. Hammonds appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Ms. Sarasin.
STATEMENT OF LESLIE G. SARASIN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN FROZEN FOOD INSTITUTE
Ms. SARASIN. Thank you, Mr. Chairman. I am Leslie Sarasin, president and chief executive officer of the American Frozen Food Institute in McLean, VA. AFFI is the national trade association that represents 550 companies responsible for approximately 90 percent of the frozen food processed annually in the United States valued at roughly $60 billion. We appreciate the opportunity to appear today before the subcommittee.
An AFFI representative appeared previously before this subcommittee to present our views on country-of-origin labeling as envisioned in H.R. 1144. Since that time our position has not changed.
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The Smoot-Hawley Tariff Act of 1930 requires imported products to bear country-of-origin marking. Since AFFI members' products are subject to this requirement, AFFI is opposed to any new country-of-origin labeling schemes which would place the frozen food industry under duplicative, conflicting, and more burdensome requirements. AFFI believes current U.S. country-of-origin marking laws are sufficient. Any additional marking requirements for frozen foods would force AFFI members to segregate ingredients and maintain an impractical variety of label stock, confuse consumers with redundant data, violate International Trade Laws, and potentially limit the ability of its member companies to compete in export markets.
For 70 years U.S. law has required that an article of foreign origin be marked to inform the ultimate purchaser of the origin of the article. AFFI does not object to this requirement and has never done so but the country-of-origin marking requirement must be administered fairly and reasonably and must not be misused as a disguised barrier to trade.
U.S. law has never required labeling to disclose the country-of-origin of the foreign ingredients present in the good. To do so would depart from well-established precedent under which a good is not required to be labeled for country-of-origin if it is transformed in the United States into a new and different article. In other words our tariff laws for good reason have always applied the country-of-origin labeling rule to the good itself, not its components.
As provided under current trade agreements the United States recognizes as the country-of-origin the country in which the last substantial transformation is carried out. For example, an imported cow is substantially transformed into a new and different article of commerce when it is slaughtered and packed in the US. Further, a frozen food processor that includes imported meat in a product such as frozen lasagna has transformed the meat and the other ingredients into a new different article of commerce.
H.R. 1144 departs from the principle of marking to inform the ultimate purchaser of the country-of-origin of the product itself. Instead it would require labeling to disclose the country or countries-of-origin of ingredients in the products, resulting in marking requirements that are inconsistent with our countries obligations under its trade agreements.
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In previous testimony AFFI demonstrated with frozen lasagna labels the difficulty processors of products containing imported meat would have in complying with this law. At the time Congresswoman Chenoweth-Hage stated that an ingredient labeling requirement was not intended in the bill. However, the legislative language clearly includes all meat and food products that do not satisfy the definition of domestic meat. Therefore, our conclusions regarding the impact of H.R. 1144 remain the same.
In order to maintain consistent supply quality and taste for its products processors must have multiple sources for each ingredient. In some cases particular ingredients may come from other countries. Suppliers may vary throughout the year depending on variations in growing season, weather phenomena, as well as cost and consistent availability. If the United States adopts an ingredient marking requirement for meat, companies would be forced to segregate ingredients as well as finished products to insure compliance.
In addition, an unsound precedent would be created here and in other countries to do the same for any and all food ingredients.
So even if a frozen lasagna manufacturer has the physical and technical capabilities to comply, a shopper who examines a food label will be confronted with an overload of data that will detract from other more relevant consumer information.
H.R. 1144 correctly would be viewed as establishing objectionable barriers to international commerce. The legislation would force the United States to disregard its obligations under its trade agreements, reverse progress made in eliminated origin-rule-based technical barriers to trade, and place its own exports in jeopardy.
The global food marketplace represents the largest growth market for the domestic frozen food industry. As the use of freezers and microwaves continues to increase throughout the developing world, exports represent a virtually untapped market for U.S. frozen food products. Their manufacturers are legitimately concerned that any new country-of-origin marking requirements on imported foods or food ingredients will be detrimental to U.S. exports. Because the United States in the past has exercised global leadership in removing and preventing product labeling standards that function as disguise barriers to trade, this country has nothing to gain and much to lose from resorting to new country-of-origin labeling mandates.
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We urge this committee to recognize that H.R. 1144 and similar measures must not be enacted. Thank you for this opportunity to present the views of the American Frozen Food Institute.
[The prepared statement of Ms. Sarasin appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Ms. Lilygren.
STATEMENT OF SARA LILYGREN, SENIOR VICE-PRESIDENT, LEGISLATIVE AND PUBLIC AFFAIRS, AMERICAN MEAT INSTITUTE
Ms. LILYGREN. Thank you, Chairman Pombo, for inviting the American Meat Institute again to testify on this important issue.
I am Sara Lilygren, senior vice-president of legislative and public affairs at AMI. We represent packers and processors of about 70 percent of the beef, pork, lamb, veal, and turkey produced in the United States.
The issue of country-of-origin labeling is complex. For some it means to limit competing imports. For others country-of-origin labeling is a way to promote U.S. products to consumers. AMI shares the goal of those who seek to promote U.S. products but we oppose the goal of those who seek to discriminate against imported products. In our view H.R. 1144's mandatory approach would create untenable barriers to imported meats, damage our ability to export U.S. meats, and mandate significant new costs throughout the industry.
When we testified last year AMI shared our calculated estimate of the annual costs of the mandatory country-of-origin labeling requirement for meat. Our cost estimate was a staggering $1 billion a year. Given the tremendous costs of such a mandate and the counterproductive trade barrier it would erect, AMI continues to oppose H.R. 1144 and all other mandatory country-of-origin labeling proposals for meat.
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There is, however, another approach that we think is responsive to the desire to provide country-of-origin labeled meat in the marketplace without creating an expensive and burdensome and protectionist mandate, and that approach as Mr. Hammonds has mentioned is a voluntary U.S. Beef Certification Program. As you know, Mr. Chairman and members of the subcommittee, AMI joined the National Meat Association, Food Marketing Institute, American Farm Bureau Federation, and National Cattlemen's Beef Association recently in petitioning USDA for this new Voluntary U.S. Beef Certification Program. The program would be administered by the Agricultural Marketing Service and would be available to anyone in the beef packing business for a fee to provide certified U.S. beef. Importantly, the livestock used for this voluntary program would be subject to an animal identification program to insure that they, too, meet the standards to be certified U.S. beef under the terms of the program.
Although to date our member companies have not been asked by their retail or food service customers to provide certified U.S. beef, this plan will give credible parameters to a new type of product and if it is used, it will facilitate the marketing of that product. If there is a market for this product, our beef packers will now be able to fulfill consumer demand. If there is little or no demand for this product, then we will not have saddled the entire cattle, beef, retail, and food service industries with costly mandates that have little or no relevance to consumers.
In summary, AMI's members support a voluntary approach to country-of-origin labeling, and we look forward to working with our retail customers and the Agricultural Marketing Service to develop a credible, certified U.S. beef program for consumers. Thank you.
[The prepared statement of Ms. Lilygren appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Ms. Sarasin, does your organization support the voluntary USA brand that has been talked about by the other two people?
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Ms. SARASIN. Mr. Chairman, as we understand that program it relates to U.S. beef, and AFFI represents the processors of frozen food products primarily in the context of meat value added products. So as we understand the program it would not affect our members at all, and as a result we haven't take a position.
Mr. POMBO. OK. Mr. Hammonds, if a voluntary program were adopted such as the one that is on the table right now, what kind of things would your membership do to help promote a USA branded item through their stores?
Mr. HAMMONDS. Well, I think we have some experience with that because we have seen our members develop similar programs for other kinds of products in their market. Many of our members, for example, will promote local produce in the summer where the produce farmers have their product coming to market. We have members in Iowa, for example, that run regular promotions on buy Iowa beef so what we believe will happen is that working with the suppliers and the processors our industry will develop periodic promotions that encourage consumers to buy local or U.S. made product in their advertising and with signs in the store. And we hope in a way that can be coordinated with other advertising programs that the rest of the industry would develop. So what we believe we will see is a very positive message to consumers as opposed to a negative message of being careful about certain kinds of products, a positive message saying buy American beef, buy local products that would part and parcel of our advertising on a regular basis throughout the year, particularly when supply was good or when barbecue season was approached as an example.
Mr. POMBO. And if you answered this already, excuse me, but are any of the major retailers at this point marketing a USA branded product?
Mr. HAMMONDS. Well, we do see a good deal of branded product that might be in the way of certified Angus beef as an example or locally-grown produce. We don't know of any made in USA beef programs currently but that remains to be enabled under this voluntary program once we see what kind of regulations the USDA comes out with. So we see enough programs for similar kinds of products to believe this would be quite popular with retailers and in turn with consumers.
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Mr. POMBO. Ms. Lilygren, and to you I would like to ask the same question. What is your membership looking at doing to promote a program such as this to make it successful if we were not to do a mandatory system, and the only way I see us from not doing that is if a voluntary system can be successful. What kind of things are your membership looking at to make this kind of thing a success?
Ms. LILYGREN. Well, obviously the first thing they are looking for is demand from their customers, and we have had several conference calls with the marketing folks from our member companies to ask them this very question. And obviously in order to participate in this new voluntary program the packer would have to pay a fee to the Agricultural Marketing Service. So there is a cost involved to the packer to participate or to get the government to come in and certify this program, as much as they pay a grading fee now. So that plus the fact that in order to participate there will have to be some product segregation.
There is some costs involved, and a manufacturer, a packer isn't going to engage in that unless there is customer demand. We believe from talking to the Food Marketing Institute that at least at the retail level there will be some customer demand, and so what our members would look for is first the demand from their customer and then they would sign up for the program and get involved in the documentation. There are a lot of logistical issues as you can hear from my answer that would have to be worked out. In terms of promotion there are all kinds of different promotional programs that beef packers and also promotion boards like the Beef Promotion Program through the National Cattlemen's Beef Association work on with retailers to promote various types of beef. So I would imagine on a company-by-company basis they will probably try to differentiate their product under this Certified U.S. Beef Program and work with retailers to do in-store promotions and advertising, much as they do with other products. But step one is demand.
Mr. POMBO. Thank you. Mrs. Chenoweth.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman. I just have a couple of questions. One is for Leslie Sarasin. Meat lasagna, and I find it interesting in that already on your label you break down what the ingredients are. One of the ingredients is beef. Just one of them. But on your attachment number two here, frozen meat lasagna ingredient label with country-of-origin specified, all my bill does is ask that the meat be labeled as to the country-of-origin, and you have labeled every single ingredient in here including citric acid and modified corn starch and dehydrated soy sauce and dehydrated garlic, all of it. And so don't you think that is overreaching? I mean, all my bill does is ask for country-of-origin meat labeling.
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Ms. SARASIN. Yes, ma'am. We certainly do think it is overreaching but I think from our members' perspective it would be difficult to justify in a multi-component ingredient that there is something unique about the beef component that would make it worthy of a mandate that it be labeled for country-of-origin. We believe that over time there would be no justification for not making similar demands regarding other components. And our concern is that in our international agreements and the history of country-of-origin marking since 1930 when the Tariff Act was imposed we have never in this country and as far as we know internationally we have never required that there be ingredient labeling. So we are concerned about a slippery slope frankly, that if we start having to in a multi-component product label specifically the beef component for its country-of-origin, we are concerned about what else would prevent future mandates for country-of-origin marking of other ingredients in these multi-component products.
Mrs. CHENOWETH-HAGE. I really think that the consumer is less concerned about where their vegetable oil or beef flavor comes from than actual meat. Whereas your people in an effort to defeat my legislation would feel that you have to label everything. That is an internal decision and certainly not something that my legislation does require.
Ms. SARASIN. I certainly understand that is not your intent, and you have made that clear the last time. We participated in the hearing. I was not the witness at that time but I recall clearly that you said that was not the intent of your bill. Unfortunately, we think a literal reading of your bill does include these products, and we think the ultimate result is the potential for further ingredient mandated country-of-origin labeling.
I think it is also important to note, and I go into this in a lot more detail in the written testimony but our products have been subject to these country-of-origin marking requirements since the Tariff Act was passed in 1930. So this is not a new thing for us. Our frozen products regularly are marked for country-of-origin if they do not qualify under the Tariff Act as a domestic product. So we don't object to country-of-origin marking. We have been complying ever since 1930 but in this case we are concerned about the long-term ramifications.
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Mrs. CHENOWETH-HAGE. I do want to say that I understand my bill very well. I wrote it, I have read it, I have studied it, I have revised it, and then I submitted it, and nowhere in my bill does it require anything beyond country-of-origin meat labeling. And I don't know how the attorneys may want to interpret it but they are certainly overreaching with all due respect.
Ms. Lilygren, I have received word from the chairman of your participation and your positive work in the committee that put together the voluntary proposal as well as all of you who are sitting here in this panel but I do want to say that we heard much testimony earlier on about the cost as well as from this panel we are hearing about the cost. And one of my concerns and the concern of many cattlemen is that the CEO of IBP, Mr. Robert Peterson, received a bonus of $6,316,914 in 1999 because IBP's 1999 income jumped 65 percent. Now, while I agree that in a free country if a company wants to issue bonuses like this, more power to them. It is just that I want you to understand that all we are asking for is an even playing field, a level playing field for the producer as well.
In 1998 IBP's net income totaled $190 million and then it jumped to $313.3 million, which is commendable but that in large part is part of the cost of operation for the packers and for each company. And it is a little hard for the farmer and rancher to take when they are just struggling to keep ends meeting.
And I think, Ms. Lilygren, you can see my concern about if the voluntary agreement has to have a final sign-off by the packers whose natural concern is profit. I can't fault them for that. It is just that unless we all play by the same rules and that is the consumer has a right to know where their product comes from, this does present a distortion.
Ms. LILYGREN. Could I just address that comment?
Mrs. CHENOWETH-HAGE. Yes.
Ms. LILYGREN. I have never seen a bonus anything like that in my entire life. It is amazing. IBP isn't a member of AMI but they are a significant player in the field. What our companies tell us is if the consumer wants this product, we will produce it. What this voluntary approach gives us is some parameters that were worked at by all of the stakeholders really in the business of selling, producing and selling certified U.S. meat, which is different than the U.S. certified beef proposal or program that the Agricultural Marketing Service introduced a couple of years ago. We didn't all sit around the table and work it out. So this one really reflects a lot of blood, sweat, and tears from the interested parties. And our folks will produce a product that the marketplace wants if it is hormone-free product, if it is a light product, if it is a certified Angus product, or if it is a certified U.S. product. And you are absolutely right to recall the motivating force in U.S. commerce when you make your comments about these products. So I think if there is a market for it, you will see a lot of this product in the marketplace, and our members will be full-fledged partners with the cattlemen and the retailers and others to get this product out there.
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Mrs. CHENOWETH-HAGE. Thank you very much. Thank you, Mr. Chairman.
Mr. POMBO. Well, thank you. I would like to thank the panel for their testimony. I want to apologize to you for the delay in the hearing but I appreciate you sticking around and testifying before us.
At the end of the testimony from the Department I told them that my concern was that the voluntary agreement would bog down in the bureaucracy somewhere and not be implemented. I would also issue this panel the warning that if there is not an effort on the part of you and the members that you represent to try to make this work, I will feel compelled to move forward with legislation.
I think there is a market for it. I think you realize or believe that there is a market for U.S. branded product. I would rather see this done on a voluntary basis. I would rather see it be a cooperative agreement between the producers and the packers and the retailers to put a good-faith effort forward and market a product because I think that would be best for the producers that I represent.
But I do expect to see your membership make a solid effort to make this work and put together a program in cooperation with the producers to make this work. I think it can, and I expect you to do it but I will look forward to being able to walk into my local grocery store and see the product on the shelf.
Again, I want to thank you for your testimony, for answering the questions. If there are additional questions in writing, those will be provided to you, and if you could answer those in a timely manner for the committee, I would appreciate that.
So thank you very much for being here, and the hearing is adjourned.
[Whereupon, at 3:00 p.m., the subcommittee was adjourned, subject to the call of the Chair.]
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[Material submitted for inclusion in the record follows:]
Statement of Caren A. Wilcox
Mr. Chairman and members of the subcommittee, I am pleased to appear before you today to discuss the issue of country of origin labeling and, more specifically, H.R. 1144, the Country-of-Origin Meat Labeling Act of 1999, introduced by Congresswoman Chenoweth-Hage, a member of this subcommittee. As you probably remember, I testified before this same subcommittee on country of origin labeling in April 1999. At that time, we discussed the study by the Department on the potential effects of mandatory country of origin labeling of imported fresh muscle cuts of beef and lamb. That study was requested by the conference report accompanying the fiscal year 1999 Agriculture Appropriations Act and was transmitted by the Secretary to Congress in January of this year. I have brought additional copies with me for your review.
You are probably also aware that the conference report accompanying the fiscal year 2000 Agriculture Appropriations Act directed the Secretary, in consultation with the affected industries, to define which cattle and fresh beef products are Products of the U.S.A. The Secretary was also directed to determine what labeling terminology would best reflect that the beef products were derived from cattle born, raised, slaughtered, and processed in the United States. I am pleased to report to you that an Advance Notice of Proposed Rulemaking is undergoing clearance within the Food Safety and Inspection Service (FSIS) now and should be published in the Federal Register shortly.
I would like to begin with a brief background of current import requirements for meat. I must stress at the outset that FSIS, as you know, is responsible for making sure that the meat, poultry, and egg products moving in interstate commerce or exported to other countries are safe, wholesome, and accurately labeled. We feel that the broad issue of country of origin labeling primarily is a marketing issue, not a food safety issue. The Agricultural Marketing Service (AMS) is responsible for programs that facilitate the marketing of these products and Ken Clayton, the Associate Administrator from AMS, is here with me as well.
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CURRENT REQUIREMENTS FOR MEAT IMPORTS
FSIS ensures that imported meat is every bit as safe as domestically produced meat. FSIS requires imported meat to be inspected under a system that FSIS has determined—through a rigorous and comprehensive process—to be equivalent to the U.S. system. Then, upon arrival at a U.S. port of entry, FSIS reinspects all meat shipments. Almost all imported products, about 85 percent, then proceed to a U.S. plant for further processing into value-added products—all under FSIS inspection. So, approximately 85 percent of imported product undergoes inspection three times.
FSIS has certified only 37 countries as meeting U.S. inspection standards. This is out of the 190 countries recognized by the United States. In general, inspection under an equivalent system means meeting U.S. standards for microbiological pathogens and chemical residues; it also means meeting all sanitation standards and ante-mortem and post-mortem inspection requirements applicable to U.S. meat processing plants. Perhaps most importantly, all plants exporting meat to the United States must meet the requirements of the Hazard Analysis and Critical Control Points (HACCP) inspection system, implemented in all U.S. plants over the past 4 years.
For the report we delivered in January, Congress requested that we look at fresh muscle cuts only. Based on data from USDA's Economic Research Service (ERS), we reported that imported fresh muscle cuts of beef consumed in the United States amounted to only about one percent of domestic beef consumption. However, about 24 percent of fresh lamb is imported into the United States. In any event, not one pound of imported product is permitted entry into the United States unless it has undergone inspection under a system certified by FSIS as equivalent to the FSIS inspection system. And, as I stated earlier, once imported product enters the United States, it undergoes reinspection.
FSIS does require country of origin labeling on all meat carcasses, parts of carcasses, and retail packages entering the United States. They must also be labeled with the foreign establishment number, either as part of the country's mark of inspection or on the product's packaging at the time of import. The container must bear, in English, in a prominent and legible manner: the country of origin, the foreign establishment number, and the name or descriptive designation of the meat product. How this information is displayed depends on whether it is on carcasses or on individual retail packages.
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Imported meat products such as individual retail packages or consumer size packages must be labeled, in English, with the country of origin, foreign establishment number, and name or descriptive designation of the meat products so consumers know the origin of the product. Some of these products include: canned ham from Denmark, packaged leg of lamb from New Zealand, and meat pot pies from Canada. Fresh meat products derived from imported carcasses and all meat products from imported animals slaughtered in the United States are not required to have country of origin labels at the retail level.
In addition to labeling requirements, official meat inspection health certificates must accompany all consignments of meat and meat products imported into the United States (except those for personal consumption). These certificates, signed by an official of the national meat inspection program of the exporting country, certify that the exported products meet three criteria: they were derived from livestock that received ante-mortem and post-mortem inspections at the time of slaughter in plants certified for importation of their products into the United States; they are not adulterated or misbranded as defined by U.S. meat inspection regulations; and they have been handled in a sanitary manner and are otherwise in compliance with requirements equivalent to those in the Federal Meat Inspection Act (FMIA) and U.S. meat inspection regulations. Similar certificates certifying compliance with requirements equivalent to those in the Poultry Products Inspection Act (PPIA) and U.S. poultry inspection regulations must accompany imported poultry products.
Imported carcasses or carcasses from animals imported into the United States are currently eligible to receive a USDA grade provided they meet all other inspection requirements. However, in July of this year, the Department announced that a proposed rule will be issued later this year to restrict the USDA grading of imported beef, lamb, veal, and calf products. Under the proposed rule, the USDA grade shield would only appear on meat products from livestock slaughtered and processed in the United States.
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H.R. 1144—THE COUNTRY-OF-ORIGIN MEAT LABELING ACT OF 1999
Congresswoman Chenoweth-Hage's bill, H.R. 1144, would require that all meat and meat food products, whether domestic or imported, bear a label notifying the ultimate purchaser of these products of the country of origin of the livestock used for these products. I want to stress the words all meat and meat food products. Fresh imported product only constitutes about one percent of beef, four percent of pork, and twenty-four percent of lamb consumption in the United States—a total of about 2.5 billion pounds. This bill would also require the labeling of the over 43 billion pounds of domestically produced beef, lamb, and pork.
Currently only 10 countries export fresh beef to the United States: Australia, Canada, Costa Rica, Guatemala, Honduras, Japan, Mexico, New Zealand, Nicaragua, and Uruguay. Australia, Canada, and New Zealand account for the vast majority; imports from other countries are negligible. For lamb and mutton, only six countries export to the United States: Australia, Canada, Costa Rica, Iceland, Mexico and New Zealand. By far, the vast majority of imported lamb and mutton comes from Australia and New Zealand, and much of that is already subject to country of origin labeling laws in that it enters the United States in consumer-sized packages.
So what would be required of foreign countries, the United States government, consumers, producers, and industry if this bill were to become law? I'd like to discuss briefly the implications of mandatory labeling as examined by the USDA report.
COSTS OF MANDATORY LABELING
The major costs associated with country of origin labeling requirements are related to the cost of (1) segregating and preserving product identity; (2) the direct cost of labels; (3) enforcement costs; and (4) market disruption costs.
The cost of segregating and preserving the identity of imported and domestic meat and meat products is unknown, but could be significant. As our January 2000 Report to Congress found there are no quantitative estimates of segregation costs available. Some of the costly steps processors, wholesalers, and retailers might have to take include separation in storage, placing tags on carcasses, labels on boxes, and the creation of records. When retail packages are prepared, labels would have to be applied.
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The direct costs to the industry of labeling are also difficult to ascertain. Our January 2000 report estimated an annual cost of up to $8 million just to label imported and domestic muscle cuts for sale at grocery stores. This estimate does not include the cost of labeling ground products such as hamburger and sausage. Such ground products often contain ingredients from more than one country. The labeling of these ground products could be extremely costly because H.R. 1144 would require labels to bear, in descending order, a list of all the countries of origin of the livestock from which the blended product was derived. On top of these annual costs, industry would incur one-time costs in designing and gaining approval for labels.
Although FSIS has personnel present at slaughter and processing facilities under Federal inspection who could verify that segregation of domestic and imported meat occurs and that records and labels are maintained and made available to wholesalers, distributors, and retailers, this would be new work not now being performed. The same would be true at USDA-approved cold storage establishments and warehouses.
Costs for verification at the retail level could vary depending on whether FSIS compliance officers include country of origin labeling verification as part of their routine compliance visits. In fiscal year 1998, FSIS made approximately 15,000 visits to retail stores to conduct reviews and collect ground beef samples for laboratory analysis. FSIS would incur additional costs if visits for country of origin labeling verification were required even annually at all 130,000 retail stores where meat products are sold. If violations were found, enforcement action would also lead to additional costs.
Alternative methods to minimize additional Federal costs for labeling verification include: (1) a set number of visits could be scheduled based on decisions as to how available personnel resources should best be deployed with sites selected either randomly or on a targeted basis; (2) visits could be statistically driven to determine the state of compliance nationwide within a certain level of confidence; or (3) visits could be limited to those generated by complaints from competitors and whistleblowers.
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In addition to these alternatives, State and local governments, that do have a presence at the retail level, may have a role to play in a system of verification and enforcement with regard to country of origin labeling. However, it seems likely that if State and local governments were to carry out inspections required by a Federal country of origin labeling law, such a law would have to specify the States' enforcement role and consider resources available for such activities.
A requirement for mandatory country of origin labeling for all meat to the retail level would be disruptive. All segments of the meat distribution chain would need to develop and implement systems of monitoring and control to maintain the integrity of country of origin labeling, and costs to carry out these systems would be incurred.
Benefits. Our January 2000 report noted that while some circumstantial evidence suggests the possibility that consumers in the United States distinguish domestic meat from imported meat, there is no direct or empirical evidence to suggest that a price premium engendered by country of origin labeling will be large or persist over the long term. Indeed, if consumers do distinguish goods depending on their country of origin, strong incentives exist for industries to act without government intervention on a voluntary basis.
FSIS has established guidance on voluntary labeling for any and all beef products as ''Product of the United States.'' While we continue to encourage and support the use of this type of label, there has not been extensive use of this approach by domestic industry.
And as I mentioned earlier, an FSIS Advance Notice of Proposed Rulemaking on promulgating ''regulations defining which cattle and fresh beef products are 'Products of the U.S.A.' '' is in the final Agency clearance process.
The infrequent use of voluntary labeling by our domestic establishments may reflect the unwillingness of consumers to pay a price premium for domestically labeled products, or it could be that the benefits may be less than the costs the domestic industry would incur in changing to a country of origin labeling system. In either case, both producers and consumers could be worse off. As mentioned earlier, FSIS considers country of origin labeling to be a marketing issue—not a food safety issue. Therefore, H.R. 1144 would have no food safety benefits to consumers.
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There is no evidence that the market for providing such information has failed. There is, therefore, no economic efficiency argument for mandatory country of origin labeling for products to the point of retail sale. However, some have argued that there is a ''benefit'' to consumers' right to know but, at this time, that benefit is not quantifiable.
TRADE IMPLICATIONS
In order for mandatory country of origin labeling at the retail level to be consistent with U.S. commitments under various trade agreements, various criteria must be met.
Article IX of the GATT addresses Marks of Origin by setting out guidelines for rules and their application on imports into a country at the time of import. Regulations on marks of origin are allowed, but difficulties and inconveniences to commerce or industry should be minimized, while protecting consumers against fraudulent or misleading indications. Marks of origin at the time of import are to be permitted provided they do not seriously damage products, materially reduce the product's value, or unreasonably increase costs.
Article III of the GATT requires that imported goods be treated like domestic product (national treatment) with respect to laws and regulations affecting their internal sale, offering for sale, purchase, transportation, distribution, or use. If labeling is required for purposes other than country of origin, post importation, then national treatment requirements could apply.
The disciplines of the World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT Agreement) apply to a broad range of industrial and agricultural products. The Agreement establishes fundamental rules and procedures regarding the development, adoption, and application of voluntary standards, mandatory standards (technical regulations), and the procedures (conformity assessment procedures) used to determine whether a particular product meets such standards. These requirements are intended to ensure that standards, technical regulations, and conformity assessment procedures do not create unnecessary obstacles to trade. Key obligations under the TBT Agreement include non-discrimination and national treatment; transparency; and a prohibition against unnecessary barriers to trade.
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The North American Free Trade Agreement (NAFTA) also has various provisions, which would guide the application of country of origin labeling requirements.
Because the United States is a major importer and exporter, it is quite possible that our trading partners would challenge a U.S. requirement. In addition, the United States has objected to other countries' country of origin labeling, when they are objectionable, because of costs or lack of consistency with international agreements. Establishing a mandatory country of origin labeling requirement in the United States could undercut our ability to object to such requirements in the future.
It is important to consider that U.S. exporters can and do label products as a marketing tool when it will expand their market. In some markets, however, the presence of a mandatory country of origin label could be used to the detriment of U.S. products by protectionist interests.
Supporters of country of origin labeling have emphasized that consumers have a right to know if the meat and meat food products they purchase contain imported meat and that such labeling would help consumers make better informed choices. We, at FSIS, continue to believe that this issue is a marketing issue, and not a food safety issue.
Depending on the regulatory regime adopted, compliance with and enforcement of an extended country of origin labeling requirement could result in additional costs to the government, domestic industry, and consumers.
Thank you again for the opportunity to appear before you today. I will be happy to answer any questions you or other Members of the subcommittee may have.
Testimony of John V. Hays
Chairman Pombo, and members of the committee, I would like to begin by thanking you for holding this hearing. H.R. 1144 represents legislation of such great importance for cattle ranchers that it demands I fly from coast to coast, some 6000 miles round-trip, to speak in its favor. As the President of the Oregon Cattlemen's Association, I quite honestly have a hard time believing H.R. 1144 is not a slam-dunk for the American consumer, and in turn I question why it would be an issue of such controversy to this committee. After all, the consumer is, indeed, the most important client in the beef business.
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One can find the rationale, and in fact a pressing need, for H.R. 1144 in a few short arguments.
To start with, the American ranchers are proud of their product. They help their cows give birth in the driving snow of North American winters and then place their offspring on the greenest pastures. The cattle are then moved into qualified, safe feedlots. And finally they're processed with care and cleanliness. If nothing else, our cow/calf operators are subject to the most scrutinizing regulations and inspections in the world, and in turn they know their product is the top of the line. Would you knowingly defeat the ranchers' dedication and hard work? Would you want to diminish the value found in their product? I'm here to testify and guarantee to you that by denying ''country of origin/meat labeling'' requirements of H.R. 1144, you are doing precisely that.
Currently, American beef is mixed with that imported from foreign lands. Is the United States so arrogant as to believe that we can control foreign nations hell-bent on national sovereignty? We know not what those cattle are exposed to, nor what they bring to the land of the free. Even if our inspections could single out each and every differentiation between our product and theirs, how is the consumer to capitalize on that information if he or she is denied the ability to distinguish between products?
The current system does not reward Americans producers for their hard work and adherence to U.S. laws on food safety, environmental and labor requirements. In fact, they are punished. Presently, our system allows for the importation of an inferior product that is produced under much less stringent standards, mixes it with that from the U.S. and then sells it for the same price. The American consumers believe they are buying my product—U.S. Beef, but they are not and there is not a way to determine the difference. This is counterproductive, on two levels. By placing domestic beef among imports, it both devalues the American product, and lends credibility to the imported one.
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Further, one can legitimately argue the importance of country of origin/meat labeling to maintaining national health standards. With Americans importing more beef than they are exporting, and the USDA inspecting less than 2 percent of imports, it is imperative that each and every item be labeled. We must ask ourselves, would we buy a car if we didn't know its brand? Shirts, shoes, and pants are all labeled, but each of these is an external matter. Without labeling you are asking the American meat customer to buy a product for consumption for themselves and their families without knowing where it came from or the standards of production or type of humane or inhumane treatment of the animals. This Nation has recognized the importance of labeling in so many respects. Why should beef be any different?
Now, just as every good football team has to spend some time on defense, I would like to take the opportunity to clear up an important misconception. There may well be some here today that will tell you that country of origin/meat labeling would be far too expensive. This is far from the truth! The GAO report estimates the meat labeling cost would be of a cent per pound. Consumers have indicated they would be willing to pay far more than this to know they were buying meat produced in the United States by United States producers under United States safety and environmental standards. Those who use ''cost'' as a reason to oppose H.R. 1144, are from the same segment of the meat industry that reaps huge profit from ''un-labeled'' imported meat. It is the same segment of the beef industry that told an official of my National Cattlemen's Beef Association that they were willing to spend $30 million in a lobbying effort to stop country of origin/meat labeling.
So far it seems to have worked. Chairman Pombo and members of this committee, I am an honest man. I know the meat industry. I know what consumers want and deserve. I am a rancher and I know what ranchers want and deserve. My word is good and it is this! The only reason there is opposition to H.R. 1144 is big money—big profits! The opposition does not come from the ranchers or the consumers. We want it!
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In the USDA report on country of origin/meat labeling it states that the cost associated with meat labeling would ''likely be passed backwards to producers in the form of reduced prices.'' As a producer and a representative of 2500 other ranching families in Oregon, I will guarantee you we are willing to accept the risk of lower prices to pay the cost of meat labeling, because we are confident that the American consumer will be willing to pay more for our high quality, safe product than foreign uncertain products. The Oregon Cattlemen's Association, that I represent, has a policy that supports country of origin/meat labeling. The National Cattlemen's Beef Association (NCBA), of which I am a dues paying member, also has policy supporting country of origin/meat labeling, which I quote: ''NCBA seeks rules requiring that U.S. beef be labeled as 'U.S. Beef' to the consumer in the United States and in the country of destination.'' And further NCBA policy reads, ''NCBA favors legislation requiring all imported meat and meat derived from live cattle destined for immediate slaughter be plainly labeled for the consumer as to its country of origin.''
I have given much thought into the definition of ''US Beef'' that would be placed on the label. I keep coming back to only one simple way that provides total truth to the consumer and fairness to the ranchers, and that is this—''US Beef'' must come from cattle that have spent their entire life in the United States.
The time has come for America's producer and consumer to be afforded the opportunities promised in a free market. Why would the producer provide high quality without the ability to name his product, and how can the consumer purchase without the ability to distinguish. H.R. 1144 provides the solutions. Members of the committee, I respectfully request that you support H.R. 1144. Thank you.
Statement of Caren Cowan
Good morning. My name is Caren Cowan and I am here today representing the New Mexico Cattle Growers Association (NMCGA). Let me begin by thanking you, Chairman Pombo, and members of the committee for holding a hearing on this most important issue as well as for the opportunity to speak to you today. However, watching the television news last week can probably better illustrate to you the need for mandatory country of origin labeling for our beef and all of our food supply than I can.
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I don't believe any American ever had any clue that our country was exporting the oil production so vital for our families, our homes and our businesses. We find ourselves held hostage by oil producing countries—some of them adversaries—while our own oil fields lay untapped and our own oil field workers have had to move their families in search of work. While much of the rest of the country has been enjoying a booming economy, the east side of New Mexico has been in a depression because oil prices were so low. Now that prices are higher, we have no capacity to produce our own oil. But economics are the least of the issues.
Do we want to read headlines in a few years that some president is having to delve into strategic food reserves because we cannot produce the food supply necessary to feed our own people and/or foreign countries are charging more than our citizens can afford for food? I don't think so. Mr. Pombo, I cheered my television during your first term in Congress when you made a passionate speech on the House Floor on an issue, summing it up by saying that you didn't know how you were going to explain Congress' actions to the farmers in your district. Explaining how our Nation's food supply has been exported will be another one of those times when your conversation with your foot on the bumper of a pickup truck in a field will be difficult.
We say it so often that it has become almost trite, but it is true. American agriculture provides the safest, most wholesome and cheapest food supply in the world. Less than two percent of our population feeds the rest of our people and much of the rest of the world. But that is changing.
According to the U.S. Department of Agriculture Food Safety & Inspection Service report on mandatory labeling published in January of this year, the U.S. imported 2.754 billion pounds of beef/veal and lamb/mutton and their products in 1998. There is no doubt that the number is increasing. Admittedly we are exporting our beef and lamb products and exports are increasing and will continue to do so probably at increasing rates. But not at the same rate as products coming into our country. Trade agreements like NAFTA and GATT are providing for more imports into the U.S. at cheaper prices than those products can be produced in the U.S. Foreign countries that are exporting to the U.S. do not have the cost of regulation, inputs and labor that our beef producers do.
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In the late summer and fall of 1998, we received word that there were some 5,000 head of Australia cattle coming to Mexico border to cross into New Mexico and on to Texas feedyards. The price of those cattle was cheaper, coming across the water from Australia, than my members could sell feeder cattle in New Mexico.
It was a step forward last spring for members of this committee to endorse a voluntary country of origin labeling plan, but unfortunately our society is well past voluntarily doing much of anything for the good of any one segment. While the controversy over those cattle was ongoing, I had a conversation with a feedyard owner who is a member of our organization. He told me in very plain terms that he didn't care where the cattle came from, he would fill his yard with the cheapest cattle available.
It was only because of New Mexico's animal health laws and regulations coupled with the testicular circumference of our New Mexico Livestock Board and its employees that those cattle did not come across the border. While we believe that we stopped those animals and they were consumed in Mexico, we are told that other Australian cattle were mixed with Mexican cattle in other States and were ultimately sent to the U.S. as boxed beef.
We averted the animal health issues with the live animals in our area, but what about human health and safety? Didn't the buyers and eaters of that beef, who purchased it in American grocery stores and restaurants, have a right to know that it spent quite a bit of time on a boat from Saudi Arabia before it got to Mexico and came into the U.S.? Where had those boats been before they got to Australia? What diseases had the cattle been exposed to?
Today we are told that there are some 30,000 head of cattle from Uruguay in Mexico waiting for their 60-day naturalization and a probable attempt to bring them into the U.S. as Mexican cattle. Hoof and mouth disease has surfaced in four South American countries—Brazil, Columbia, Argentina and Paraguay—is it not possible that the same disease could be found some time soon in Uruguay? How many human and animal diseases will not surface in 60 days?
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Earlier I mentioned that it was only New Mexico's own regulations and sheer will that kept the Australia cattle out of our State and country as live animals. Congress has before it legislation that would virtually eliminate State laws and tie our hands in protecting our livestock herds and our people in the future.
I know that I am straying into trade and regulatory issues, but labeling is certainly linked to those issues. USDA cited the possibility of violating trade agreements as one reason not to impose mandatory country of origin labeling. Did our country enter in to those agreements to the detriment of our own citizens? Is it too late to fix that?
New Mexico opposed the free trade agreements when they were being considered by the Federal Government, but certainly understands that they are in place and we must learn to do business with them. However, we do not believe that free trade should be any different than fair trade.
New Mexicans are also notorious for their opposition to increased regulation or bureaucracy. But if regulation is what is necessary to level the playing field in the world trade arena then so be it.
Beef producers in the West and in New Mexico in particular are at the mercy of Federal acts that have little to do with our production or product, but are tremendously impacting our business like the Endangered Species Act and the Clean Water Act and the citizen lawsuit provisions those measure contain. Those two laws alone provide a huge unfair advantage to producers in other counties who do not have to contend with these issues and the increased costs of production they create.
It is clear even with other commodities that the playing field for production in the United States is not level with our trading partners. We have a chili producer who, when Federal regulations made it unprofitable to grow his crop in New Mexico, simply moved his operations south a few miles across the Mexican border where he can use the products necessary to produce healthy crops then ship them back across the border into the U.S.
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Doesn't the American consumer have a right to know that the food they eat comes from countries where production regulations and standards are not as high as those in the U.S.? If not, why do we have so many regulations—and they are growing EVERY day—for our producers?
The USDA FSIS report indicates that there is no evidence to suggest that a large or long term price premium would be engendered by mandatory country of origin labeling. They apparently didn't ask anybody in New Mexico. In the fall of 1999 the New Mexico Beef Council (NMBC) surveyed over 800 New Mexicans by telephone and hosted some 12 focus group on beef issues. According to the research company, Wirthlin Worldwide, ''the most significant opportunity that stands out (in New Mexico's beef industry) is the positive impact of U.S. labeled beef. Overall, New Mexico consumers almost unanimously express preference for such a label—90 percent agree, with 75 percent who strongly agree—and most would not purchase beef products labeled as produced outside of the United States—77 percent agree with 66 percent who strongly agree.''
The survey did not cover blended products, but I would venture to say that folks would have even stronger feelings about blended products. One member of Congress noted last year that if blended products had mandatory country of origin labeling, the label might be bigger than the package. That is truly frightening and make even me, a third generation beef producer think twice before I buy hamburger in the grocery store.
Congress is presently embroiled in debate over the recall of a specific kind of tires on specific vehicles that has apparently caused the death of many Americans. What kind of hearings are you going to hold when hundreds people become ill or die because of blended meat and you cannot trace back to its origin?
Individual States have seen the need to legislate labeling in an effort to protect their citizens. Louisiana for example passed enhanced legislation in 1999 that become effective in 2000 calling for a $500 per day penalty for any person, firm, company, corporation, partnership, association or other business entity which sells processed or unprocessed meat, whether fresh or frozen, that does not indicate in clear and conspicuous letters on the meat, the immediate wrapping or container, or a sign included with the display if the meat is displayed for sale or sold unwrapped, either the name of the country of origin preceded by the words ''product of'' or the country of origin of the meat using one of the following designation: ''Imported'', ''American'', or ''Blend'' of imported and American meats. Previous statutes called for jail time.
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We will attempt to pass similar legislation in New Mexico during our next legislative session.
Like oil, at the present time our meat—and our entire food supply—is generic. When we pump gas into our cars and trucks, we have no idea where it comes from. That lack of knowledge is coming back to haunt us. Shame on us as citizens and consumers for not paying more attention.
We know where our clothes come from, we know where are cars come from, we even know where our doggie treats come from. Isn't it only fair to have the same information about the food we put the mouths of our children?
Testimony of Wes Sims
Thank you Mr. Chairman for holding this hearing on country of origin labeling. I am Wes Sims, and I farm in Sweetwater, Texas, where I raise wheat, cotton, hay, and cattle. I also serve as president of the Texas Farmers Union and board director for the National Farmers Union. Today I am testifying on behalf of the 300,000 farm and ranch families that are members of the National Farmers Union.
Our organization is a strong proponent of mandatory country of origin labeling, as provided for in H.R. 1144, introduced by Rep. Chenoweth-Hage and Rep. Pomeroy. We are particularly pleased that the legislation covers beef, pork, and lamb. We also support the provision that requires U.S.-labeled meat to be from animals that are born and raised in the United States. We also like the fact that the bill requires all meat to be labeled, rather than just labeling U.S. meat.
As a cow-calf producer, I am proud to have products from my farm labeled product of the United States. Labels are used on many other consumer items, including frozen food, and labeling fresh meat seems long overdue.
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In the absence of country of origin labeling, the current system is misleading to the consumer. Due to grade stamping, each meat product receives a label that reads ''USDA inspected.'' This gives the appearance that all the meat is produced in the United States. National Farmers Union is pleased that USDA is reviewing this practice. We believe that only U.S. meat should receive the USDA grade stamp. However, action to remove the grade stamp from foreign meat is not enough to tell consumers where the meat was produced—only the country of origin label will do that.
Some have suggested that the United States should try voluntary labeling. I would point out that we already have the authority to do that and it has not resulted in meat being labeled.
During the past 8 months, National Farmers Union met with retailers, processors, and some other producer groups to further discuss use of a voluntary label. However, the effort produced a suggestion for a label that would allow beef from imported cattle to be labeled product of the United States. Specifically, the label would have required the cattle to be in the United States for only 100 days prior to slaughter. That time period is a small fraction of the animal's life, and would result in a false label—one that would certainly not meet the standards for other products labeled product of the United States.
The past 3 years have been tough on Texas cattle producers. In my area, we have had 3 years of minimal rainfall, with 1998 at 25 percent of the normal level, and 1999 and 2000 at only 50 percent of the normal rainfall. As a result, like many other farms in my area, my cattle numbers are below normal, and I am forced to use supplemental feeding. I raise all my own calves. In years with better weather, I occasionally buy stocker cattle from other States, including Tennesee, Mississippi or Florida. I have never purchased imported cattle.
I am aware of some large operations that import thousands of cattle from other countries and then lease wheat pasture in the winter to feed those cattle. I am also aware of large operators who buy foreign cattle and ship them directly to the feedlot where they are finished for 100 days or more and then slaughtered. These operations directly compete with U.S. cow-calf operators and there is no reason that beef from these cattle should be falsely labeled U.S. beef. In fact, in addition to misleading the consumer, we risk a loss of consumer confidence in labeling, and the false label could actually encourage more cattle imports.
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Livestock producers today are forced to sell into a market with very little competition. Four firms control 81 percent of all beef slaughter, 73 percent of sheep slaughter, and 57 percent of pork slaughter. In some cases, processors ''source'' the animals from another country. Decreased competition and the practice of sourcing animals from foreign countries have resulted in little or no profit being returned to U.S. livestock producers. Adopting the false label would reward processors for import sourcing.
While the effort on voluntary labeling was a good try, it falls short on the 100 days and on the fact that it covers only beef.
Two years ago, Members of Congress came very close to adopting mandatory country of origin labeling. The effort was killed by some in the processing industry. Since that time, producers have continued to suffer from prices too low to cover their cost of production. In addition, consumers have an increased awareness of food safety concerns, which has led to greater interest in where the food originated. At a time when U.S. producers and processors are under rigorous production requirements and consumers are expressing an increased interest in the origin of their food, it is more important than ever that Congress adopts country of origin labeling.
The provisions of H.R. 1144 are good producer policy, good consumer policy and good trade policy. Many other countries already require country of origin labeling for U.S. produced meat. This bill treats all countries the same and it avoids creating a loophole for ground meat. It informs the end consumer, and has strong support from farmers and ranchers across the country. As a beef producer and president of the Texas Farmers Union, there is no legislation I know of that would provide a bigger boost to U.S. livestock producers.
On behalf of our members, I commend Representative Chenoweth-Hage and her 34 cosponsors for introducing this legislation and I offer the full support of the National Farmers Union. Mr. Chairman, I urge you and the committee to support this bill and bring it to a vote before the full Congress. Once again, thank you for holding this hearing and offering me the opportunity to testify in support of this key legislation.
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Testimony of Sara Lilygren
Good morning. I am Sara Lilygren, senior vice-president of legislative and public affairs at the American Meat Institute, the Nation's oldest and largest meat industry trade association. AMI represents packers and processors of about 70 percent of the beef, pork, lamb, veal and turkey produced in the U.S. About two-thirds of these companies are small businesses with fewer than 100 employees. The remaining third are mid-to-large firms, including some major international food processing companies.
The issue of country-of-origin labeling is complex in that its proponents see it as a means to a variety of ends. For some, it is a means to limit competing imports. Frustrated by growing Canadian or Mexican imports, some see such labeling as a way to discriminate against other North American agricultural products and thereby improve the position of U.S. products in the U.S. marketplace. For others, country-of-origin labeling is a way to promote U.S. products to consumers. If Americans only knew how to choose U.S. products, they reason, then they would prefer to purchase those products and help American agriculture in the process.
AMI shares the goal of those who seek to promote U.S. products, but we oppose the goal of those who seek to discriminate against imported products. In our view, H.R. 1144's mandatory approach would create untenable barriers to imported meats, damage our ability to export U.S. meats and mandate significant new costs throughout our industry.
NEGATIVE IMPACTS OF A MANDATORY APPROACH
Last year AMI calculated the estimated annual costs of a mandatory country-of-origin labeling for meat. Our cost estimate was a staggering $1 billion per year. We determined that, in order for mandatory country-of-origin labeling to work, an entirely new mandatory animal identification system must be designed. Such a system would likely use ear tags to separate domestic from imported livestock and would cost livestock producers at least $268 million to implement.
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Mandatory livestock and meat segregation at all slaughter plants would require new record-keeping procedures, separate accommodation in chilling, fabrication and storage, and a host of new labels at a total cost of $324 million per year to packers.
Product segregation at retail markets also would be required and would include separate storage, cutting and grinding requirements, as well as new labeling and signage, at an estimated cost of nearly $375 million per year to retailers.
According to both and internal Agriculture Department analysis and a General Accounting Office report, oversight of country-of-origin labeling requirements will cost USDA $60 million a year.
A January 2000 report from the General Accounting Office to Chairman Pombo stated that H.R. 1144 would ''necessitate changes in the meat industry's current practices (that would) create compliance costs across all sectors of the industry.'' GAO noted that some industry cost estimates did not factor in all of the relevant costs, suggesting that those estimates are actually low. GAO also noted that additional costs to producers, processors and retailers would certainly be passed along to consumers and, while some consumers would probably like to know the country of origin of their meat products, all consumers would bear the burden of higher meat prices in order to accommodate a labeling mandate.
Given the tremendous costs of such a mandate—and the counterproductive trade barrier it would erect, AMI continues to strongly opposes H.R. 1144 and all other mandatory country-of-origin labeling proposals for meat.
There is, however, another approach that we believe is responsive to the desire to provide country-of-origin labeled meat in the marketplace without creating an expensive, administratively burdensome, protectionist mandate. That approach is a voluntary U.S. beef certification program.
BENEFITS OF A VOLUNTARY APPROACH
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As you know, Mr. Chairman and members of the subcommittee, AMI joined the National Meat Association, Food Marketing Institute, American Farm Bureau Federation and National Cattlemen's Beef Association in petitioning USDA two weeks ago for a new, voluntary, U.S. beef certification program. This program would be administered by the Agricultural Marketing Service and would be available to anyone in the beef packing business, for a fee, to provide certified U.S. beef. Importantly, the livestock used for this voluntary program will be subject to an animal identification program to ensure that they, too, meet the standards to be certified U.S. beef under the terms of the program.
Although to date our member companies have not been asked by their retail or foodservice customers to provide certified U.S. beef, this plan will give credible parameters to this new type of product and, if used, facilitate its marketing. If there is a market for this product, our beef packers will now be able to fulfill consumer demand. If there is little or no demand for this product, then we will not have saddled the entire cattle, beef, retail and foodservice industries with costly mandates that have no relevance to consumers.
In summary, AMI's members supports a voluntary approach to country-of-origin labeling and look forward to working with their retail customers and AMS to develop a credible ''certified U.S. beef'' program for consumers. Thank you for your time this morning.
Testimony of Leslie G. Sarasin
Thank you, Chairman Pombo and members of the committee. I am Leslie Sarasin, president and chief executive officer of the American Frozen Food Institute of McLean, Virginia. AFFI is the national trade association that represents frozen food processors, marketers and suppliers to the industry. AFFI's membership of 550 companies is responsible for approximately 90 percent of the frozen food processed annually in the United States, valued at approximately $60 billion. We appreciate the opportunity to appear before the subcommittee today to discuss country of origin marking requirements for food products, specifically H.R. 1144, the Country-of-Origin Meat Labeling Act.
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Overview. AFFI is a technology-based organization, and its members manufacture, freeze and market products ranging from juice and branded and private label vegetables, to brand-name pizza, entrees, meals and gourmet desserts. The Smoot-Hawley Tariff Act of 1930 requires imported frozen foods of foreign origin to bear a country of origin marking. AFFI members' products have been subject to the Tariff Act's country of origin marking requirements since 1930, and as a result, AFFI is opposed to any new country of origin labeling schemes which would place the frozen food industry under duplicative, conflicting, and/or more burdensome requirements. AFFI believes any additional country of origin marking requirements for frozen foods would violate international trade laws, confuse consumers without providing them with useful, new information, subject its members to large and unjustified costs to segregate ingredients and to maintain an impractical variety of label stock, and potentially limit the ability of its member companies to compete in essential export markets.
Current U.S. Country of Origin Marking Rules Are Sufficient. For the last 70 years, U.S. law has addressed the matter of country of origin marking in Section 304 of the Tariff Act of 1930. Section 304, in brief summary, requires that an imported article of foreign origin be marked to inform the ultimate purchaser of the country of origin of the article. AFFI does not object to the country of origin marking requirement, and has never done so, but it is in the interest of all U.S. businesses, including AFFI's members, that the country of origin marking requirement be administered fairly and reasonably and not be misused as a disguised barrier to trade.
Section 304 does not require, and has never required, labeling to disclose the country of origin of the foreign ingredients or materials present in the good. Such a requirement would depart from well-established and long-standing precedent under which a good is not required to be labeled for country of origin if it is transformed in the United States into a new and different article, as determined under applicable origin rules. In other words, our tariff laws, for good reason, have always applied the country of origin labeling rule to the good itself, not its components.
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Regulatory authority for Section 304 of the Tariff Act has been delegated to the Secretary of the Treasury. The U.S. Customs Service, which has primary responsibility for implementation and enforcement of Section 304, works in cooperation with the U.S. Department of Agriculture (USDA) regarding country of origin marking requirements for meat and poultry products. It is important to note, however, that the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA), which are the two primary food safety statutes adhered to by both domestic and imported meat and poultry processors, are not the statutes under which country of origin requirements reside. Any amendment to the FMIA to establish country of origin marking requirements for meat and meat food products would conflict with section 304 of the Tariff Act and the administrative practice thereunder, which has developed over the course of 70 years. Such an amendment would subject AFFI's members to overlapping and conflicting regulatory requirements, making compliance difficult if not impossible. Addressing subject matter already addressed under another statute and administered by another executive branch department would be unnecessary and unsound from the standpoint of regulatory policy and practice. For all these reasons, AFFI believes countyy of origin marking of meat and meat food products should continue to be addressed in the Tariff Act and not in the FMIA.
AFFI believes the Tariff Act, with its nearly 70-year history of marking regulations and the voluminous body of law which has developed around the implementation of the statute, should be the Act that continues to govern country of origin labeling requirements for food products.
H.R. 1144 Would Violate our Country's International Trade Obligations. H.R. 1144 departs from the principle of marking to inform the ultimate purchaser of the country of origin of the product itself, and in effect, requires labeling to disclose the country or countries of origin of ingredients in the product. As such, it creates country of origin marking requirements that are inconsistent with our country's obligations in its international trade agreements, including those resulting from the Uruguay Round of the World Trade Organization and the North American Free Trade Agreement. H.R. 1144 would hinder current and future U.S. efforts to remove similar barriers to trade by other countries and subject U.S. food exports, including those of AFFI members, to retaliatory actions.
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In its January 2000 report, Beef and Lamb: Implications of Labeling by Country of Origin, the General Accounting Office presented the concerns of U.S. trade and diplomatic officials that, ''mandatory country of origin labeling for beef and lamb, as provided by H.R. 1144, could have negative implications for U.S. trade.'' The GAO report cited the specific concerns of U.S. trade and diplomatic officials that our country's trading partners would view such a measure as a trade barrier. These U.S. officials also expressed concern that the requirement would make it more difficult for the United States to oppose an impending European Union proposal for country of origin labeling that may adversely affect U.S. meat exports.
In its international trade agreements, the United States has pledged not to use country of origin marking requirements as disguised barriers to trade and has objected when other countries have adopted labeling and origin rules for protectionist purposes. Because H.R. 1144 correctly would be viewed as establishing objectionable barriers to international commerce, it is contrary to our country's trade obligations and its trade objectives. Enactment of the measure would have serious adverse consequences for U.S. producers and exporters of food products, including those in AFFI's membership.
In addition, it would interfere with the objectives of the Uruguay Round negotiations of GATT, which in the Agreement on Rules of Origin, imposed disciplines on member countries designed to prevent the use of country of origin marking rules as disguised barriers to trade.
In article 2 of the Uruguay Round Agreement on Rules of Origin, the U.S. pledged that its rules of origin, including those applied for marking purposes, would be administered in a consistent, uniform, impartial and reasonable manner. Article 2 further requires that nonpreferential origin rules not be used as instruments to pursue trade objectives and that they not create restrictive, distorting or disruptive effects on international trade. In addition, member countries, including the U.S., expressly have undertaken disciplines under article 9.1 of the Agreement on Rules of Origin to recognize as the country of origin the country in which the last substantial transformation is carried out.
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Defined most generally, the substantial transformation principle provides that a good will have the origin of the last country in which it underwent a change in name, character, or use, resulting in a new and different article of commerce. For example, an imported cow is ''substantially transformed'' into a new and different article of commerce when it is slaughtered and packed in the U.S. Further, a frozen food processor that includes imported meat in its frozen lasagna product has transformed the meat, as well as all the other ingredients, into another new and different article of commerce.
It should be noted that the Customs Service has issued, as Part 102 of the Customs Regulations, rules of origin applying to the marking of products under NAFTA. These special rules are not based on the substantial transformation principle, but instead create a hierarchy of rules incorporating, in part, a ''change in tariff classification'' methodology for determining country of origin. This ''tariff shift'' approach is also under consideration at the World Customs Organization, which is in the process of developing a harmonized methodology for determining non-preferential rules of origin for WTO member nations. Under any plausible and workable system of origin rules, a cow must be recognized as having undergone a change in origin when processing results in, for example, a hamburger or frozen lasagna.
Finally, article 2.2 of the Uruguay Round Agreement on Technical Barriers to Trade states that member countries may not adopt technical regulations, including marking and labeling regulations, that are more stringent than necessary to achieve a legitimate objective or that are applied with a view to or with the effect of creating unnecessary obstacles to international trade. H.R. 1144 would create obstacles to trade and pose myriad compliance difficulties for U.S. companies, including AFFI members, who use imported meat and meat products in the production of processed food products. Accordingly, it would not constitute an acceptable regulatory measure under article 2.2.
The United States would be acting contrary to its best interests were it to enact H.R. 1144 or a similar such measure. In doing so, the United States would be disregarding its obligations under its trade agreements, reversing progress made to date in eliminating origin-rule-based technical barriers to trade in world markets, and placing its own exports in jeopardy.
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Ingredient Labeling Will Confuse Consumers. Equally as important, a country of origin labeling regime for ingredients of multi-component products would serve only to confuse consumers, while burdening the frozen food industry, as well as other segments of the food industry, with unnecessary costs.
To demonstrate AFFI's concerns, let's look at a label for a typical, domestically produced frozen meat lasagna. (Attachment 1.) As you can see by looking at the ingredient statement that appears on this generic product that is representative of products being sold in the market today, this product includes 23 individual components. In the real world, in order to maintain consistent supply, quality and taste for its products, the processor must have multiple sources for each of these components. In some cases, suppliers of particular ingredients may be from other countries. So, for certain ingredients, suppliers may vary throughout the year depending on variations in growing season, weather phenomena, as well as cost and consistent availability, all of which must be factored into corporate procurement decisions.
Referring back to the lasagna package, Attachment 2 demonstrates an ingredient statement that includes the potential countries of origin from which each component could be sourced in today's market. As you can see, there are many countries listed here, including the U.S. and 16 others. If the United States adopts an ''ingredient marking'' requirement for meat ingredients, an unsound precedent would be created, here and in other countries, to do the same for any or all food ingredients. As a result, if a company were required to label each potential source of each of these components, a typical label might look like the one depicted in Attachment 2. If each package were required to show the specific country of origin of each ingredient in that particular item, as opposed to the potential options, a company would have to maintain hundreds of variations of labeling for this one product.
As these mock labels demonstrate clearly, country of origin marking at the ingredient level would complicate significantly the manufacture of a frozen meat lasagna or other frozen food product because companies would be required to segregate ingredients, as well segregate finished products, in order to ensure compliance with this type of labeling requirement. But who would benefit from all this complicated and costly manufacturing process and confusing label? No one.
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The frozen food manufacturer would still need to ensure there were multiple suppliers, from numerous countries, available for a wide variety of ingredients. To limit supply of a key ingredient to one U.S. supplier, for example, might mean that at any given time of the year, due to a drought, disease or other unexpected act of nature, this key component might become unexpectedly unavailable. Or, due to similar circumstances, a particular ingredient could increase dramatically in price, thereby forcing the manufacturer to increase the retail price of the finished product.
Maintaining hundreds of different labels for a single product in a frozen food plant that processes numerous products would require a large and complicated packaging inventory system. It is critical to bear in mind that most of these products are packaged in cardboard boxes, and that maintenance of on-hand inventory of this many packages would require a large storage capacity. Many facilities physically would not be able to handle this burden.
Even if the frozen lasagna manufacturer is able to comply with such a labeling requirement, the average consumer shopping for frozen meat lasagna will be given no additional useful information when examining an ingredient statement with ingredient country of origin labeling. A consumer who examines a complicated statement of origins for various ingredients on a food product label will be confronted with an overload of information that will not serve a useful purpose in a purchasing decision. A change in the statement necessitated by a sourcing change will not be noticed by a customer considering a repeat purchase of the same product, because the change will be lost in a sea of overly complicated country references. The actual country of origin of the good—disclosure of which is the whole purpose of Section 304 of the Tariff Act—will be reduced to an abstraction. The practical effects on the consumer will be negative, as the imposition of all this additional regulatory burden will reduce consumer choice and increase product prices.
In addition, we know from years of market research that the average consumer will buy a product because it offers consistent quality and taste, or because it carries a brand he or she trusts, or because it is being sold at a good price. When asked in a telephone poll conducted by Opinion Research Corporation on behalf of the American Frozen Food Institute, ''What are the main things that influence which frozen fruits or frozen vegetables you purchase,'' only one respondent out of the 656 cited the origin of a product as an important factor in his or her purchasing decision.
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New Country of Origin Labeling Could Curtain Exports of U.S. Products. The global food marketplace represents the largest growth market for the domestic frozen food industry. Global U.S. exports of frozen food have increased dramatically, from $600 million in 1990 to $1.3 billion in 1997. (See USDA chart, attachment 3) Exports in every frozen food category, including vegetables, juice, prepared meals, ice cream, bakery, and fruits, increased during the 1990 to 1997 period. As the cold chain infrastructure improves throughout the world, and the use of freezers and microwaves increases in developing nations, exports represent a virtually untapped market for U.S. frozen food manufacturers.
Despite the urging of some sectors, regulation of food products imported into the U.S. cannot be contemplated without taking into account the increasing dependence of the U.S. economy on global sourcing as well as export markets. U.S. frozen food manufacturers legitimately are concerned that any new country of origin marking requirements imposed on imported foods or food ingredients, particularly if these requirements are outside internationally agreed to rules of trade, will be detrimental to U.S. exports. Actions taken by the U.S. to restrict certain imports will result in restrictions to lucrative markets abroad. Because the United States in the past has exercised international leadership in removing and preventing product labeling standards that function as disguised barriers to international trade, this country has nothing to gain, and much to lose, from resorting to new country of origin labeling mandates.
Country of Origin Labeling Does Not Enhance Food Safety. Some proponents of new, more onerous country of origin marking requirements for food products attempt to justify the resulting costs and burdens by citing food safety issues. Their argument is misleading, and it is just plain wrong. Country of origin marking requirements do not serve a food safety objective and cannot do so, as our government has recognized on more than one occasion. USDA's Foreign Agriculture Service confirmed this fact in a September 1997, document stating, ''Country of origin labeling does not address the issue of food safety. If a product is not safe, it should be prohibited from entering the United States.''
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Country of origin labels will not help consumers determine if a product is safe. The General Accounting Office in its recently released report, The Consequences of Country of Origin Labeling for Fresh Produce, came to the same conclusion regarding the lack of connection between food safety and country of origin labeling.
The purpose of country of origin marking is to inform the consumer of the country of origin of an imported good of foreign origin, so that the consumer may use that information in exercising his or her choice. The FMIA serves a completely different purpose than does the country of origin marking law. The FMIA prohibits entry into the United States of adulterated and misbranded meat products, imposing the same level of control on imported products as it imposes on domestic products. This is not a matter of consumer choice; it is an essential matter of public health and safety. Nothing is to be gained by disregarding the essential purpose of the FMIA through an amendment that would attempt to serve the purpose already served by Section 304 of the Tariff Act.
New Country of Origin Labeling Requirements Constitute Unfunded Mandates. Implementation and enforcement of new country of origin labeling mandates will cost millions of dollars. USDA estimated in 1998 that costs of proposals pending at the time to place new country of origin markings on meat and meat-containing processed foods would cost the Food Safety and Inspection Service (FSIS) $60 million, or approximately 10 percent of the annual FSIS budget. GAO has estimated new country of origin labeling requirements for raw produce at retail would cost the Food and Drug Administration (FDA), the Federal agency which likely would be given enforcement responsibility for this new mandate, approximately $57 million. The GAO study also rightly points out that State and local inspectors generally carry out food inspection at the retail level. If Federal funds were not appropriated for these new requirements, the requirements would place a significant and unfunded burden on State and local inspectors.
Proponents of new country of origin labeling mandate government intervention in an attempt to limit or eliminate competition from imports. This type of government-mandated market intervention should be avoided. New requirements established ostensibly to assist certain producers in fact may cost these very producers in lost domestic production and export opportunities. In addition, undue costs will have to be borne by entities involved in every aspect of the food chain, from producers to processors and retailers. Consumers also will bear unnecessary expense as increased costs along the food chain lead to increased costs of food at retail. No corresponding benefit, however, will be gained.
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New country of origin marking schemes such as H.R. 1144 that attempt to create disguised barriers to trade are contrary to our country's international trade obligations and a hindrance to our country's efforts to maintain and expand export markets for U.S. food products. They place our current exports at risk and are contrary to the public interest. We urge this committee to recognize that H.R. 1144 and similar measures must not be enacted.
Thank you for this opportunity to present the views of the American Frozen Food Institute. I would be happy to answer any questions you may have.
Testimony of Leo R. McDonnell, Jr.
Good morning, Mr. Chairman, members of the subcommittee. My name is Leo R. McDonnell, Jr. I am a cattle rancher in Columbus, Montana, where, along with my wife, ''Sam'', I own and operate Midland Bull Test. Besides working as a full-time rancher, I am president of the Ranchers-Cattlemen Action Legal Fund (R-CALF). I appreciate this opportunity to testify before the this subcommittee on an issue that is of great importance to cattle producers in this country.
Let me tell you a little about R-CALF. Formed in 1998, R-CALF is a non-profit, 501(c)(6) organization whose mission statement is focused on the market interests, and restoring and ensuring the profitability, of U.S. cattle producers by addressing harm to the U.S. live cattle industry caused by imports and unfair trade practices, restoring conditions of fair trade and fair prices to the U.S. market for live cattle, and working to ensure cattle producer concerns are effectively addressed in trade negotiations. Today, R-CALF has approximately 9,000 members in 36 States. I'm proud to say that we're the fastest-growing cattle producers' organization in the country today.
The issue of country of origin labeling frequently is described as a consumer information issue, and I certainly agree with that. American consumers have as much right to know where the food they are buying for their families comes from as have consumers in Japan, France, and a host of other countries that currently require country of origin labeling for beef. As a rancher and as the president of an organization whose main focus is to ensure that the interests of cattle producers are represented in the international trading arena, however, I'd like to talk to you today about the importance of this legislation to America's cattle producers.
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I don't need to tell the members of this subcommittee that between drought and wildfires on the one hand and ever-increasing concentration in the packing industry on the other, cattle producers today are feeling pretty embattled. Our industry is in the fifth straight year of herd liquidation and USDA reported in August that liquidation is now likely to continue through 2001. See USDA/ERS, Livestock, Dairy and Poultry, Situation and Outlook, (Aug. 29, 2000), at 2 (*Cattle inventories have been declining since 1996 and are likely to continue declining at least through 2001. Heifer retention has to begin before numbers can begin to stabilize. Although beef cow slaughter is down, the number of beef replacement heifers being saved and the number of heifers calving and entering the cowherd continues to decline.*).
USDA also reported in August that fat cattle are once again selling at a loss, Id. at 16.
even though demand for beef at the retail level is strong and growing. ''The strong demand for higher quality beef has largely continued unabated since late summer 1999.'' Id. at 3.
Why is this occurring? One reason is that today cattle producers cannot differentiate their product from imported cattle and beef in the retail market. The cattle that are raised today in the United States are raised according to the some of the strictest and highest quality standards of any country in the world. Once our steaks get to the meat counter, however, you can't tell whether they are made in the USA, or Canada, or Australia, or Argentina. This enables the importers, which includes the major packers, to use imports to leverage down prices for domestic cattle. In fact, that's exactly what the former chairman of the International Trade Commission, Lynn Bragg, said last November in her findings in the antidumping case on live cattle from Canada—''the concentration of packers . . . provides packers the ability to use imports to reduce domestic live cattle prices and/or prevent price increases.'' Live Cattle from Canada, Inv. No. 731-TA-812 (Final), USITC Pub. 3255 (Nov. 1999) at 50.
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And the same is true with respect to imported beef.
Country of origin labeling is an important means to help level the playing field for the rancher and the feedlot owner by reducing the ability of the packer and processor to use imported cattle and beef to leverage down prices. I think everyone on this panel would agree that U.S. cattle producers produce the best quality and most wholesome beef in the world. But without country of origin labeling, we're not able to get the full value for our product no matter how much better it is than competing imported beef. And that's why R-CALF endorses a policy of requiring all imported beef, including beef produced from cattle that were imported as feeders or calves, to be labeled with the country of origin. Although H.R 1144 doesn't go as far as we would like, it's a very big step in the right direction.
It's also important to point out that we're in the midst of various trade negotiations in which the Administration's negotiating position is to further liberalize all markets for agricultural products. As more countries gain increased access to our beef market, country of origin labeling will become increasingly important if U.S. ranchers are to have any chance of getting the full value for their product.
Opponents of country of origin labeling make a number of arguments that I would like to briefly address. First, they contend that it would be very costly to implement. USDA's January 2000 report on mandatory country of origin labeling states that the costs of the labels themselves could be as high as $8 million, and that record-keeping, verification and enforcement could cost millions of additional dollars. Those costs, however, are a fraction of the more than $30 billion in revenues that the cattle and beef industry generates every year. Of course, no regulation is cost-free. We require country of origin labeling for a host of other consumer products, and those industries pay the associated costs. The real question is, what is it about the beef industry that requires it to be treated differently? I would submit that, apart from the desire of packers, processors and retailers to avoid the same kinds of costs that their counterparts in other industries pay every day, there really is no difference.
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Another reason that the cost argument sounds like such a red herring is that there are proposals to institute a National Identification program that would make it possible to track your steak from the plate all the way back to the pasture where the calf was first raised. In fact, it's called ''Pasture to Plate'' tracking. If the technology is available to make that feasible, then it seems that similar technology could be used to facilitate the tracking of imported beef once it enters the country. As an aside, if ranchers are going to be asked to shoulder a portion of the cost of such a tracking system, then it's only fair that all beef products be held to the same standard, whatever its country of origin.
Second, opponents castigate country of origin labeling as ''protectionist'' and as contrary to our trade agreement obligations. Let's be clear about the first point. As I discussed earlier, importers, processors and packers enjoy a significant competitive advantage vis-a-vis the rancher and feedlot owner from the lack of differentiation between imported and domestic beef. I don't believe that a law which enables ranchers and feedlot owners to differentiate and thereby improve their ability to market their products to American consumers can fairly be regarded as ''protectionist.'' We can't really sell our product direct to the consumer. We have little alternative but to sell through the packers. Country of origin labeling would greatly help improve the return we get for our product.
I also find it curious that a bill such as H.R. 1144 would be called protectionist when you consider that one of the arguments that proponents of free trade make is that free trade increases the choices for consumers. H.R. 1144 helps make that an informed choice by letting the consumer know where the product comes from. If anything, H.R. 1144 is in fact fully consistent with the principals of free trade.
As for our trade agreement obligations, let's not forget that the Federal Meat Inspection Act already requires country of origin labeling on imported beef when it enters the country. See 21 U.S.C. 620(a) (requiring imported meat to be *marked and labeled as required by . . . regulations for imported articles.*).
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No one has suggested that this requirement is contrary to our trade agreements. It can't be the case, then, that making the same information that is already available to the importer also available to the consumer is somehow a violation of our trade agreements. Moreover, a large number of our trading partners also require country of origin labeling, yet I haven't seen any cases being brought before the WTO challenging the legitimacy of those laws. So long as the requirement is applied in a non-discriminatory manner, it is not inconsistent with our trade agreement obligations.
In fact, within the WTO, there have been ongoing negotiations and meetings concerning rules of origin for various products including beef and cattle. The June 1999 report of the Technical Committee on Rules of Origin to the Committee on Rules of Origin indicated a variety of approaches to defining the origin of meat produced from bovine animals, including ''the country in which the animal was born.'' See G/RO/37/Add.1, Report of the Technical Committee on Rules of Origin to the Committee on Rules of Origin on Progress Made at its Seventeenth Session (25 June 1999) at 35. This approach is supported by Argentina and Senegal.
It's also important to note that the current U.S. position supports a rule of origin based on a change in chapter, that is, the country of origin is where the imported product last underwent a change in the chapter of the Harmonized Tariff Schedule. Under that approach, the country of origin for beef from an imported slaughter cow would be the United States rather than the country in which the animal was born because the beef is classified under a different HTS chapter than is the slaughter cow. That approach obviously doesn't help to differentiate our beef that is produced from the cattle we raise from the beef from cattle raised in another country and shipped to a slaughter house in this country. It would important for our negotiators to work toward a definition that ensures this bill's consistency with WTO agreements. That is an issue that we would urge the Congress to raise with the Administration before the definitions are finalized.
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Finally, the opponents of this legislation argue that American consumers don't care where their beef comes from as long as it's inspected by USDA. But I haven't seen any citations to any studies or surveys that support that contention. Even the USDA's report from January 2000 concedes that ''No study of United States consumer preferences over domestic and imported meat products has been reported.'' USDA/FSIS, *Mandatory Country of Origin Labeling of Imported Fresh Muscle Cuts of Beef and Lamb* (January 2000) at 14 (internet copy).
The report also acknowledges that in certain countries such as Japan and France, studies show consumers are willing to pay a premium for domestic beef versus imported beef. Id. at 18.
But there is in fact documented evidence that American consumers do care about whether the products they buy are domestic or imported. The Federal Trade Commission published in December 1997 a notice in the Federal Register recounting its ''comprehensive review of 'Made in USA' and other U.S. origin claims in product advertising and labeling.'' *Made in USA* and Other U.S. Origin Claims, 62 Fed. Reg. 63,756 (1997).
The FTC had earlier issued Proposed Guidelines that would have relaxed the stringent standards for using the ''Made in USA'' label. They received 1,057 comments representing 1,165 commenters, including 963 individual commenters, 24 members of Congress, and two consumer organizations. See id. at 63,757.
The FTC summarized the comments as follows:
The consumer commenters overwhelmingly opposed the proposed Guides and generally supported an ''all or virtually all'' standard or advocated a specific percentage, usually 90 percent or, more often, 100 percent. Many commenters stated that '' 'Made in USA' means what it says'' or expressed similar sentiments. Several commenters asserted that changing the current standard would confuse consumers wishing to buy American products, leaving them unable to determine whether a product was truly made in the United States. Individual consumers also stated that they buy American products to support fellow Americans and expressed concern that lowering the standard would lead to a loss in American jobs. Id. at 63,758.
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The FTC also noted: An overwhelming number of consumers told the Commission . . . that they prefer buying U.S.-made goods; they want to be able to rely on a simple and clear standard; and, they feel very strongly that the current standard should be retained. The comments also underscore the fact . . . that consumer awareness of the globalization of the economy has not necessarily changed consumers' beliefs about those products actually labeled ''Made in USA.'' Id. at 63764-65.
The FTC's experience certainly suggests that American consumers do in fact care about the origin of the products they buy. In fact, the FTC's guidelines for qualifying claims of U.S. origin where there is more than negligible imported content could be used for imported beef as well. See Enforcement Policy Statement on U.S. Origin Claims, Federal Trade Commission, December 1997, available on the internet at www.ftc.gov/os/1997/9712/epsmadeuse.htm.
For beef produced from cattle that are born and raised in the United States, ''made in USA'' would be appropriate. For beef that comes from foreign cattle imported from, say, Canada, and slaughtered in the U.S., the label ''beef from Canadian cattle slaughtered in the U.S.'' would be appropriate. For beef that comes from foreign cattle that are finished and slaughtered in the U.S., ''beef from Canadian cattle finished and slaughtered in the U.S.'' would make sense.
In closing, Mr. Chairman, R-CALF strongly supports H.R. 1144. We believe this legislation would significantly improve the ability of American ranchers to get full value for the product they raise, as well as give American consumers the same information that consumers in numerous countries already have available. Thank you and I would be pleased to answer any questions.
Statement of John Rigolizzo
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The American Farm Bureau Federation is the largest general farm organization in the United States with more than 4.9 million member families in all 50 States and Puerto Rico. We appreciate the opportunity to come before your committee today to offer our views on country-of-origin meat labeling. We strongly support country-of-origin labeling for all products at the retail counter.
As trade increases and agricultural products both fresh and processed flow across international borders, U.S. consumers deserve to know where their food products originate.
Farm Bureau policy states:
''Imported products should be labeled at the distribution point and retail level as to the country of origin. Labels on imported products should state on the main display panel of the package that the product is imported in letters not less than one-half the size of the product name.'' Our policy states: ''We support the establishment of a grown in the U.S.A. labeling program,'' and that U.S. origin products should proudly display the American flag in a prominent position on the label.''
We also state in our policy that ''All livestock entering the United States for any purpose should be permanently identified as to country of origin.''
We strongly support the labeling of products, all the way to the retail outlet, as to its country of origin. We feel that consumers have the right to know where the food they are buying is produced in order to be able to distinguish American products from those produced in other countries. Consumers have confidence in America's farmers and ranchers. This allows them to buy products produced by their fellow Americans and be assured that the products were produced in America. Consumer surveys indicate that the majority of consumers want to know the origin of their meat products.
Farm Bureau believes it is important to change the current practice of allowing imported cattle to be immediately processed and then carry the USDA inspection label. We feel that this practice misleads the American consumer into thinking they are buying a U.S.-produced product when in fact it was imported into this country.
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For example, imports of beef to the United States have more than doubled in the last 10 years. Nearly 3,015 million pounds of beef are now imported into the United States annually. Several retail companies have indicated they now sell both domestic and foreign products in the meat case without any differentiation. Today, a great deal of foreign beef is graded by USDA and sold at retail to the consumer simply as USDA-graded beef. Foreign beef is frequently advertised as USDA-inspected meat without mention of whether it is a domestic or imported product. Fruit and vegetable imports have seen this same type of import growth with little opportunity for consumers to identify domestically-produced fruits and vegetables.
Legislation, H.R. 1144, has been introduced in the House which would amend the Federal Meat Inspection Act to require that imported meat and meat products be labeled so that U.S. consumers would be able to identify the country of origin at retail sales points. Farm Bureau has supported legislation calling for mandatory country-of-origin labeling for meat products. Unfortunately, legislative efforts have not been successful.
As a result, Farm Bureau has been participating in a working group to come up with a voluntary certification program. Recently we sent a letter to Secretary Glickman formally requesting that USDA promulgate regulations to create USDA process-verified ''Beef: Made in the USA.'' In order to receive this designation, we recommend that beef products must originate from cattle that are raised and fed a minimum of 100 days and processed without leaving the U.S.
Beef producers and processors who want to make process verification marketing claims under the ''Beef: Made in the USA'' program must develop a written certification system that requires cattle feeders, beef packers and retailers to maintain adequate systems and records to qualify for this voluntary program. Consumers would also be informed of the required specifications for marketing ''Beef: Made in the USA.''
Farm Bureau believes that a process-verified program certified by USDA would be beneficial to our livestock producers. This program will provide a marketing opportunity for U.S. cattle producers to contribute to the value of retail beef products. We look forward to working with USDA during the rulemaking process to create USDA process-verified ''Beef: Made in the USA.''
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We realize that there are some concerns and unanswered questions related to labeling. We know that there will be costs involved although we believe them to be somewhat minor. We also realize that there will be challenges for U.S. producers in maintaining a high quality and safe product. But at the same time we look at it as an opportunity to highlight our products, both domestically and abroad. The bottom line is that we know there are challenges and possible pitfalls with labeling meat and perishable products as to their origins. But with the challenges come opportunities—opportunities we do not presently have available to us.
Labeling is simply a matter of informing the American consumer and helping assure consumer confidence in the products they choose to purchase. Enhancing the market opportunities for domestic meat, meat products and all agricultural commodities by requiring labeling of imports is critical to the agriculture industry.We feel a voluntary certification program through the Agricultural Marketing Service will not only will have a positive impact upon American producers, but also upon American consumers.
Thank you for the opportunity to testify today on country-of-origin meat labeling.
Statement of Loneta Rice
I have come to testify in support of H.R. 1144, a bill to amend the Federal Meat Inspection Act to require that all meat and meat food products, whether domestic or imported, bear a label notifying the ultimate purchaser of meat and meat food products of the country of origin of the livestock that is the source of the meat and meat food products. I have come to testify as a consumer who does a lot of shopping for food. My husband, Ben, and I have 15 children and 28 grandchildren. Over the years that has meant a lot of shopping, as well as raising and preserving a lot of food ourselves. Today I only have to shop for six, but it is still a responsibility I take seriously. Because my family takes this issue seriously, they have combined forces to make this trip possible for me.
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The health of my children and grandchildren concerns me greatly. No amount of medical care, after the fact, can make up for lack of safe and proper nutrition. I am appreciative of the years of effort by many people to insure a safe food supply in our country. Regulations and inspections have done a great deal to help with this, but it is the informed public that is most effective in bringing about compliance with safe practices. I want all the information that is pertinent when I make a decision on buying food. When there is a problem with any contaminated food, knowing its source is important. It would influence my purchases. If a country was serious about wanting me as a customer for its meat, it would make sure that meat was produced and processed under conditions similar to those used in this country.
I spend more time in grocery stores than I would like. I do read labels. They influence the decisions I make on what to buy. Knowing where certain fruits and vegetables come from at a particular time of year lets me make an informed guess about the quality I can expect. I would very much appreciate a label letting me know the country of origin of meat or meat food products that I buy. I could then make a better decision on possible quality and safety.
I am aware that no other country requires the high standards for meat that we do. Countries where sanitation standards for the general population are far lower than ours would worry me if they were involved in producing a meat food product that ends up in my local grocery store. Ground meats and blended meats are particularly worrisome. We have all heard the horror stories about hot dogs. E-coli infections aren't just in the news, but happening to people we know now. When I buy hot dogs, pizza, ground meat, or lunch meats, I would like to know which country, or countries, contributed meat for making them. Those are little kids favorite meats. Children are at a great risk if those meats aren't safe. I want to do the best job of protecting them that I can.
I am not testifying as an expert on any of this. I am testifying as a consumer who feels that I have a right to know where the meat I buy comes from so that I can do as good a job of protecting my family as possible when I shop for them.
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Statement of George A. Hall
Thank you Chairman Pombo, Congressman Peterson and Members of the committee for holding this hearing to discuss country of origin labeling. Today's hearing to review H.R. 1144, the ''Country of Origin Meat Labeling Act,'' is the committee's second hearing this Congress on country of origin labeling (COL), and I appreciate the opportunity to present the views of the cattlemen and women NCBA represents on this issue. I am George Hall, President of the National Cattlemen's Beef Association. I am Director of the National Stockyards Company in Oklahoma City and reside in Mustang, Oklahoma.
As the committee is aware, NCBA's strong support of COL is reflected in the policy established by our members, which states that ''NCBA seeks rules requiring that U.S. beef be labeled as 'U.S. Beef' to the consumer in the United States and in the country of destination [and that] NCBA favors legislation requiring all imported meat and meat derived from live cattle destined for immediate slaughter be plainly labeled for the consumer as to its country of origin.''
NCBA adopted this policy in 1997 and a task force was appointed to address challenges and concerns raised by various segments of the beef industry and to facilitate implementation of labeling. The NCBA Country-of-Origin Task Force recommended that:
The definition of ''U.S. Beef'' include all beef produced from cattle slaughtered in the U.S., except those cattle brought into the U.S. in ''sealed'' trucks for slaughter. In addition, this definition will not include imported beef trimmings, imported boxed beef, or beef produced from imported carcasses.
All fresh muscle cuts offered for sale at the retail meat case be labeled as to their country of origin, regardless as to whether the product is graded with the USDA Quality Grade, and that this identity be maintained to the retail meat case.
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The ''U.S. Beef'' label should be available for use on ground/processed beef products if individuals or firms wish to meet the criteria established for the domestic label beef and market the products accordingly.
Due to the unique complexity of labeling ground beef, a pilot study of significant scope and magnitude should be conducted to test consumer response to, and costs of, labeling ground beef as ''imported,'' ''U.S. Beef,'' or percentage of ''imported and U.S. Beef.'' If found that this labeling would not impose a significant cost on U.S. producers and was found to have acceptance among consumers, this labeling should become mandatory industry-wide. NCBA would direct additional research funds toward developing information about potential improvements in source verification and accountability.
Over the past few years, NCBA has worked with several representatives and senators, including Rep. Chenoweth-Hage and Rep. Pomeroy and other members of this committee on legislation to achieve these goals. We certainly appreciate their hard work and leadership to increase awareness of our concerns and broaden the political support for COL.
Also, these Members constant and consistent attention to this issue was helpful in our efforts this year to develop a consensus proposal on a voluntary U.S. beef labeling program, which was recently submitted to the Department of Agriculture's Agricultural Marketing Service for review.
I would be remiss if I did not also thank and commend Chairman Pombo and Ranking Member Peterson for their leadership in directing the proponents and opponents of mandatory COL to sit down and discuss the possibility of developing a voluntary approach to origin labeling. Your message to our industry was not taken lightly and was a key factor in keeping our negotiations moving forward.
I also want to point out that another key factor in NCBA's decision to engage in negotiations to develop a voluntary U.S. beef labeling program was driven by political reality. Simply put, our efforts in 1997 through 1999 made it clear that there simply are not enough votes in the U.S. House at this time to approve legislation calling for mandatory COL.
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That is why we are appreciative of the opportunity provided by this hearing. It reassures cattle producers that this issue will continue to be monitored and reviewed in the appropriate legislative forum, with all sides participating in the process of discussing our respective positions as we make progress toward a viable resolution of this issue. We are confident that USDA's review of our voluntary labeling proposal to establish and process-verified certification program will result in providing U.S. producers, packers and retailers with a marketing tool that will help us verify our belief that our ultimate customers, namely consumers, will respond positively to knowing the origin of the beef they purchase.
BEEF INDUSTRY VOLUNTARY LABELING
Throughout this year, NCBA has worked with the American Farm Bureau Federation (AFBF), the American Sheep Industry Association (ASI), the National Farmer's Union (NFU), the Food Marketing Institute (FMI), the National Meat Association (NMA) and the American Meat Institute (AMI) to develop a consensus on the criteria for a voluntary program. There was general agreement by all participants on a number of details, specifically our collective decision to work through the USDA-AMS ''process verified'' certification program.
In early September, five of the original seven groups reached consensus and we submitted our proposal to USDA. I should point out that ASI pulled out of the negotiations in order to pursue a lamb-specific approach to this issue and the NFU declined to sign the final letter because of their concerns regarding the definition of U.S. cattle. I do want the record to reflect, however, that NCBA appreciates NFU's position regarding the days-in-country requirement as our association has also struggled with this issue—our disagreement over this particular aspect of the voluntary proposal does not diminish their overall positive contribution to these negotiations.
The Agricultural Marketing Act of 1946 provides the United States Department of Agriculture (USDA) with the authority to establish standards for the grading and classification of U.S. agricultural products, which are the mark of U.S. excellence and quality around the world. Under this authority, the AMS Live Animal and Carcasses Specifications allow breed associations, distributors and other industry organizations to use Live Animal and Carcass Specifications to group carcasses into specific and uniform breed and quality ranges. The certification process is a voluntary program and may include quality attributes of the carcass, such as maturity and marbling. Live animals may also be certified for origin, hair coat color and other characteristics.
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Our collective research indicated that certain national retail food chains and food service companies are willing or have the desire to market and promote beef products that are certified as having been produced in the United States. A process verified program provided by USDA to certify ''Beef: Made in the USA'' would provide a voluntary certification program for producers, packers, retailers and food service operators who want to promote and market ''U.S. Beef.''
In our formal petition to Secretary Glickman, we requested that USDA immediately promulgate regulations to create a USDA process verified ''Beef: Made in the USA'' program. We recommended that to qualify for the ''Beef: Made in the USA'' program:
Beef products must originate from cattle that are raised and fed a minimum of 100 days and processed without leaving the U.S.
Beef producers, processors and retailers who want to make process verification marketing claims under the ''Beef: Made in the USA'' program must develop a written certification system that requires maintenance of adequate systems and records to identify cattle and track cattle that qualify for the program.
Consumers would also be informed of the required specifications for marketing ''Beef: Made in the USA'' through a specific label statement suggested to read: ''Beef: Made in the USA—This beef is processed from cattle raised and fed for at least 100 days in the United States.''
Beyond USDA approval of our petition, the critical ingredient for successful application of this voluntary labeling program will be its use by the industry. If the program is approved, but is not utilized through cooperative efforts by producers, packers and retailers, the pressure for a mandated approach to COL that applies to all beef will intensify. NCBA's volunteer leaders and members believe this program is a solid first step and we are hopeful that it will prove a viable solution that helps us meet our policy goals while addressing the concerns of our industry segment partners.
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Rescinding Use of Quality Grades on Imported Carcasses. NCBA believes that through a viable labeling program, we can improve our ability to market U.S. beef, and ensure that we are getting the full value for the resources we are spending to promote our product. Labeling is not a new concept. Many countries around the world require such labeling on foreign product. In some of our largest markets, Japan for example, we have taken advantage of labeling to better identify our product for Japanese consumers. The growth in that market since the barriers were eased has resulted in a market that consumes $1.75 billion and growing worth of clearly marked and identified U.S. beef.
NCBA also believes there is an inherent value to beef producers, including those from other countries, in being able to market their product as ''U.S. Beef.'' While I cannot provide quantifiable data to support our belief, logic suggests this is the case given the extreme reaction by Canadian producers and officials when this issue was considered in Congress last year.
This is why NCBA, in 1999, petitioned USDA to stop allowing imported beef carcasses to carry USDA Quality Grade designations. Around the world, ''USDA Prime,'' ''USDA Choice'' and ''USDA Select'' imparts extra value to the beef cuts and products labeled as such. More to the point, these labels are perceived as a de facto indicator that the beef carrying these ''brands'' is, in fact, U.S. beef.
In our petion, we pointed out that the law requires that to be eligible for use of USDA Quality Grades, beef carcasses must be inspected and graded at the plant in which the carcass was initially chilled. Because the cattle from which these imported carcasses originate were processed, and the resulting carcass chilled, in a foreign plant, we believe use of the grade stamps in such cases violates the law.
It is our understanding that USDA is close to making a final decision on proposing changes to the regulations governing the use of Quality Grades on foreign carcasses. It is our hope these proposed changes will, in fact, prohibit the use of USDA Quality Grades on imported beef carcasses.
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H.R. 1144
As stated earlier in my testimony, NCBA policy supports mandatory country of origin labeling. We have worked with representatives and senators, including the sponsors of H.R. 1144, in this and in previous Congresses to ensure introduction of legislation consistent with our policy objectives. Currently, there are two House bills (H.R. 222 and H.R. 1144) and three Senate bills (S. 19, S. 242 and S. 251) that contain COL authorizing language. In general, NCBA has gone on record in support of these proposals—however, this support is qualified with regard to H.R. 1144 and S. 19.
Specifically on H.R. 1144, introduced by Reps. Chenoweth-Hage and Pomeroy and cosponsored by more than 50 other representatives, NCBA's primary concern involves this bill's proposed definition of ''domestic livestock'' because it is inconsistent with the policy set by our members. In contrast, I should point out that Rep. Chenoweth-Hage and Rep. Pomeroy are also the lead sponsors on H.R. 222, which is consistent with NCBA policy regarding the definition of domestic livestock.
When H.R. 1144 was introduced, my predecessors, Clark Willingham of Texas and George Swan of Idaho, met with Rep. Chenoweth-Hage to discuss our concerns regarding the bill's definition of domestic livestock. They pointed out that NCBA policy regarding U.S produced beef cattle includes stocker and feeder cattle that are imported from Mexico and Canada.
This policy was developed by our members in recognition that in many of our Nation's southern and northern tier States, beef cattle producers—both feeders and ranchers—have utilized these imported stocker and feeder cattle to maximize the economic viability of their operations for many decades. Our policy also recognizes that while these cattle may have been born in another country, the fact remains that U.S. producers do provide substantial management and resources toward finishing these cattle. In other words, U.S. producers play a key role in adding value to these cattle, which clearly is not the case with cattle that are imported in sealed trucks destined for immediate slaughter.
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I do want to note that at the conclusion of the meeting between Rep. Chenoweth-Hage and my predecessors, she did indicate she understood our concern and promised to work with NCBA should her legislation be brought up for active consideration. I also would note that NCBA's review of the bill's other provisions suggest that H.R. 1144 is generally consistent with our policy regarding COL.
Country of Origin labeling is an ongoing issue and a priority for American cattle producers. U.S. cattle producers want to assure consumers they are getting the beef they want, not to mention the U.S. beef that producers' marketing dollars promote.
NCBA appreciates the committee's leadership in helping us make progress toward establishing a viable ''U.S. Beef'' labeling program, which is included in my testimony. We look forward to working with our industry sector partners to get this program approved and put to use.
And I also want to again thank Rep. Chenoweth-Hage and Rep. Pomeroy for their consistent efforts on COL. Their constant presence on this issue certainly contributed to the progress of our negotiations on the pending voluntary labeling proposal, not to mention helping ensure that all interested parties kept in our respective seats around the negotiating table.
The National Cattlemen's Beef Association is prepared to participate in the process of evaluating critical marketing and trade issues within the beef industry. NCBA looks forward to providing additional input as other issues arise. Thank you for the opportunity to present this information.
September 8, 2000
THE HONORABLE DAN GLICKMAN
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Secretary, U.S. Department of Agriculture
Washington, DC 20250
Dear Secretary Glickman:
The Agricultural Marketing Act of 1946 provides the United States Department of Agriculture (USDA) with the authority to establish standards for the grading and classification of U.S. agricultural products. These standards have become recognized around the world as the mark of U.S. excellence and quality and provide a distinct marketing advantage for our products.
The USDA Agricultural Marketing Service (AMS) Live Animal and Carcasses Specifications allow breed associations, distributors and other industry organizations to use Live Animal and Carcass Specifications to group carcasses into specific and uniform breed and quality ranges. The certification process is a voluntary program and may include quality attributes of the carcass, such as maturity and marbling. Live animals may also be certified for origin, hair coat color and other characteristics.
Certain national retail food chains and food service companies have indicated willingness to market and promote beef products that are certified as having been produced in the United States. To date, this has not been possible. A process verified program provided by USDA to certify ''Beef: Made in the USA'' would provide voluntary certification program for retailers and food service operators who want to promote and market U.S. Beef.
Mr. Secretary, the following organizations hereby formally petition USDA under the authority granted by the Agricultural Marketing Act of 1946, and within the regulatory rulemaking process to create a voluntary certification program that will enable U.S. cattle producers to contribute to the value of retail beef products. Specifically, we formally request that USDA immediately promulgate regulations to create USDA process verified ''Beef: Made in the USA.''
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We recommend that to qualify for the ''Beef: Made in the USA'' program beef products must originate from cattle that are raised and fed a minimum of 100 days and processed without leaving the U.S. Beef producers and processors who want to make process verification marketing claims under the ''Beef: Made in the USA'' program must develop a written certification system that requires cattle feeders, beef packers and retailers to maintain adequate systems and records to qualify for this voluntary program. Consumers would also be informed of the required specifications for marketing ''Beef: Made in the USA.''
For example, the label could read:
''Beef: Made in the USA. This beef is processed from cattle raised and fed for at least 100 days in the United States.''
The program being proposed will not impede the marketing or sale of foreign beef; rather, it will establish a voluntary process verification system for U.S. beef producers, retailers and food service operators to market U.S. Beef.
Mr. Secretary, we strongly urge you to immediately issue a proposed rule to allow the marketing of ''Beef: Made in the USA.''
Sincerely,
American Farm Bureau FederationNational Cattlemen's Beef Association, American Meat InstituteNational Meat Association, Food Marketing Institute
Proposed Outline for Cattle Identification System
PRESUMPTIONS:
Program is voluntary. Participants (producers, packers, retailers, and food service) will have flexibility in meeting AMS livestock identification audit requirements.
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Eligible beef cattle will have been in the United States for at least 100 days and will not leave the country prior to harvest in the United States.
Program may be utilized by participants in conjunction with other certification/branded programs (i.e., Certified Angus Beef, Texas Pride, Nebraska Corn Fed, Harris Ranch, et cetera).
Livestock Identification requirements:
Eligible cattle must be raised following Beef Quality Assurance (or similar) guidelines.
Eligible cattle must have been in the United States at least 100 days prior to harvest. In the case of imported stocker/feeder cattle, producers may utilize APHIS importation documents to establish date of entry. For cattle born in the United States, producers may utilize ranch production records to verify days-in-country requirement.
All eligible cattle enrolled in the program must be identified through AMS approved system 100 days prior to harvest (with allowance for timely processing). Such identification system may include (but is not limited to) eartags, tattoos and/or branding unique to participation in the program. Producers will consult with participating packer(s) to streamline the flow of information, reduce duplication and/or ensure consistency with other marketing programs.
Producers shall record issuance of identification to enrolled cattle, including number of head, type of cattle, lot (pen) number and location, when issued. Producers are to avoid mixing eligible and non-eligible cattle in lots.
Preliminary enrollment records will be forwarded to participating packer. Producers will be responsible for maintaining records through delivery to packer with the packer responsible through delivery to retailer. Both parties will be responsible for maintaining records for time period required for AMS auditing procedures.
Retailers and food service will be responsible for process control on beef marketed under the program to preserve identity. Retailers will also maintain records on beef and beef products that are subject to further in-store processing prior to retail sale. In arrangements where case-ready product is provided to retailer, retailer will be responsible for noting location of and point of contact for records maintained by participating suppliers.
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Producers will be responsible for updating records through ''raised'' period. This will include recording death losses, the exportation to another country prior to harvest or other situations that may eliminate, remove or otherwise make ineligible an animal enrolled in the program.
Packers shall be responsible for updating records, including circumstances where beef from harvested enrolled animal is removed from the program. Packers shall also pass this information on to program partners to ensure consistent maintenance of records.
Beef from cattle enrolled in the program will be sold using the established ''Beef: Made in the USA'' label, including accompanying explanatory remarks to ensure uniformity and compliance with program outlines.
Statement of Tim Hammonds
Mr. Chairman and distinguished members of the committee, am Tim Hammonds, president and CEO of the Food Marketing Institute (FMI), the leading business association for the supermarket industry. The Food Marketing Institute (FMI) is a nonprofit association conducting programs in research, education, industry relations and public affairs on behalf of its 1,500 members including their subsidiaries * food retailers and wholesalers and their customers in the United States and around the world. FMI*s domestic member companies operate approximately 21,000 retail food stores with a combined annual sales volume of $300 billion * three-quarters of all grocery store sales in the United States. FMI*s retail membership is composed of large multi-store chains, small regional firms and independent supermarkets. Its international membership includes 200 members from 60 countries.
The last time I appeared before your subcommittee was April 28, 1999. Today, I am delighted to tell you that 17 months of thoughtful and sincere negotiations can make a difference.
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In April 1999, I testified against the Congress mandating the retail labeling of meat by its country of origin. FMI and its members firmly believed that labeling would impose costs on our business, which would be passed on to the American consumer. We also felt that it could trigger conflicts with and retaliation from our trading partners that viewed a labeling mandate as a non-tariff trade barrier.
At that time, I proposed developing a voluntary labeling program that would promote U.S. meat products as an alternative to legislation. Many on the committee encouraged us to give that approach a try.
FMI took the lead in bringing together the interested parties to hold a frank discussion of concerns and objectives. We all agreed that we wanted to increase the sale of U.S. beef. We explored ways to achieve that important goal and we reached a compromise. The result of our dialog is a proposed U.S. Beef Voluntary Certified Labeling Program. Our agreement recommends that domestic beef carry a label that reads:
Beef: Made in the USA. This beef is processed from cattle raised and fed for at least 100 days in the United States
It was a long but fruitful process that produced a huge step forward for the entire food industry—from the rancher and packer to the grocer and foodservice distributor. And we are pleased with FMI's role in it.
On September 8 in a petition to the Secretary of Agriculture, we asked that USDA create a process to certify which beef products can be labeled ''Made in the USA.'' The groups that signed the petition include the National Cattlemen's Beef Association, American Farm Bureau Federation, National Meat Association, American Meat Institute and Food Marketing Institute. I am submitting a copy of the letter to Secretary Glickman for the record.
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Beef producers and processors who want to sell their products with this marketing claim must develop a written certification program. It would require cattle feeders and beef packers to maintain adequate systems and records to make claims and use labels through this voluntary program.
We expect to see the program implemented nationwide. Packers and cattle producers will be required to reimburse USDA for the cost of the certification program.
This cooperative labeling and certification program is clearly a far better approach than mandating country-of-origin labels on imports—an approach that would be costly, raises false safety and quality concerns, and undermines U.S. trade policy.
Mr. Chairman, before concluding, let me say that FMI very much appreciates the leadership of you and your subcommittee in encouraging those involved in the country-of-origin debate to negotiate a voluntary solution to this problem. Hopefully, it will be a model for the settlement of other issues.
I thank you for the opportunity to appear before you today. FMI members look forward to working with you and consumers on constructive efforts to increase sales of U.S. meat and produce both at home and abroad.
Statement of John R. Cady
The National Food Processors Association (NFPA) is pleased to provide testimony to the House Subcommittee on Livestock and Horticulture on the Country of Origin Meat Labeling Act, H.R. 1144, which would require that all meat and meat food products, whether domestic or imported, bear a label notifying the ultimate purchaser of the country of origin of the livestock that is the source of the meat or meat food product.
NFPA is the Nation's largest food trade association representing a $460 billion industry that includes an estimated 20,000 manufacturing facilities and employees over 1.5 million Americans. With three laboratory centers, NFPA is the leading authority on scientific and public policy issues involving food science and safety for the food industry.
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NFPA enjoys many partnerships with Federal and State food safety regulatory authorities, and we are committed to ensuring that these same authorities are well equipped to protect public health and instill confidence among consumers about the safety of the food products they consume.
The food products processed and distributed by NFPA members are largely derived from ingredients produced in the United States, although a number of members import ingredients from other countries for incorporation into products that are formulated and processed in the United States. In addition, many NFPA members distribute products processed in the United States worldwide. They have a substantial interest in cooperating with U.S. and international efforts to harmonize origin marking requirements so as not to interfere with the free flow of food products or diminish consumer confidence in food safety. The members of NFPA support efforts to enable marketers of food products to establish voluntary promotion programs aimed at informing consumers of the benefits of their particular food products. Food processors and distributors should be free to make truthful, non-misleading voluntary statements on food product labels that advise consumers about the nature, benefits, origin, or improvements of such products.
NFPA appreciates the concerns of the authors of H.R. 1144 for the safety of meat product, but opposes rigid mandatory country of origin labeling requirements of H.R. 1144. Such requirements convey no health or safety information to consumers and would do nothing to enhance the safety of the U.S. food supply.
Further, country of origin labeling requirements such as those in H.R. 1144 would be too costly to domestic interests, would almost certainly be viewed internationally as a barrier to trade, and may result in retaliatory measures by countries that trade with the United States. The following is a more detailed explanation of our concerns with H.R. 1144.
Country of origin labeling provides no unique food safety information to consumers. Evidence does not exist that imported products pose a greater public health risk than domestic foods. Expanded country of origin labeling requirements such as those in
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H.R. 1144 would fail to convey any unique health or safety information and would serve only to confuse the consumer about the quality or safety of food products. Existing Federal law already subjects imported meat and poultry products to inspections at U.S. ports of entry. Countries exporting meat to the U.S. have been determined by the USDA to have regulatory systems that provide a level of food safety equivalent to the U.S. system. In addition, processed food products containing meat products from either foreign or domestic sources must conform to U.S. regulatory requirements for ensuring the food is safe.
The new labeling requirements in H.R. 1144 will do nothing to increase consumer confidence or improve the safety of the U.S. food supply. The U.S. food supply is one of the safest in the world. Consumers look to food companies to produce safe and high quality products whether derived from domestic or imported ingredients. In the U.S., there are a variety of regulations and guidelines that foods and food manufacturers must meet. These requirements, coupled with a food industry that is committed to providing foods that are safe to consume, help ensure that the U.S. maintains a food supply in which we can continue to have confidence without rigid country of origin labeling requirements.
Consumers would bear the cost of new labeling requirements. The cost associated with segregating products containing domestic and foreign ingredients must be considered. According to a January 2000 report by the United States Department of Agriculture (USDA), mandating country-of-origin labels on meat products ''could have a potentially damaging effect on United States exports of beef.'' Such labels could be ''significant'' and the report estimates ''there would be efficiency losses and lost business costs associated with segregating product by country of origin,'' according to the report. Processors would be forced under H.R. 1144 to maintain an inventory of labels reflecting all possible combinations of countries from which imported products have originated, or use expensive alternative marking systems such as ink-jet labeling for country of origin declarations—both of which would entail high costs that would eventually be passed on to the consumer. While country of origin labeling is intended to ''protect'' many domestic producers from foreign competition, increased retail costs will simply reduce consumer demand.
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Producers would be subjected to ''traceback'' to verify compliance. Failure to accurately identify imported ingredients in processed food products or raw meat retail sales will render the products misbranded, and trigger criminal prosecution under the Federal Meat Inspection Act. In order for retailers and processors to verify the origin of products, a costly certification or verification ''paper trail'' system would have to be established through the production chain to enable ''traceback'' to the source. Such a traceback system would trigger changes in documentation each time the combination of meat sources changed.
Mandatory labeling requirements that promote specific geographical locations are inconsistent with U.S. obligations under the World Trade Organization (WTO). As a member of the WTO, the U.S. has committed to the Agreement on Technical Barriers to Trade (TBT). Under the TBT Agreement, ''members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.'' They must not be more restrictive than necessary to fulfill legitimate objectives which are defined as: ''national security, the prevention of deceptive practices or protection of human health and safety.'' Expanded country of origin labeling requirements in H.R. 1144 would fail to convey any unique health or safety information and would only serve to confuse the consumer about the quality or safety of food products. NFPA has opposed similar requirements from other nations, identifying them as disruptive and technical barriers to trade.
The proposed requirements are inconsistent with efforts to harmonize international rules of origin. The World Customs Organization (WCO) is currently engaged in an effort to harmonize international rules of origin. The outcome is expected to apply the ''substantial transformation'' test to confer origin. H.R. 1144 would inappropriately mandate retaining markings of original nationality even when the product has undergone substantial processing or substantial transformation in the U.S. Food processing generally transforms a food ingredient substantially by changing it from a perishable commodity to a finished, shelf-stable, consumer product. For example, soup, which combines several different foods -some or all of which may be imported—becomes a U.S. product when processed, with a new name and a new identity. These requirements supersede international rules by requiring country of origin markings that would override the common and prevailing concept of substantial transformation and fail to recognize the value added through processing technology.
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Country of origin labeling requirements for the purpose of promoting domestic product would violate WTO ''national treatment'' rules. The WTO Agreement requires equitable national treatment. Rules ''should not be applied to imported or domestic products so as to afford protection to domestic production.'' These mandatory-marking requirements, strongly supported by some U.S. producer groups, could be viewed as intended to protect a specific U.S. industry segment from foreign competition.
New country of origin labeling requirements will be viewed as protectionist and invite retaliation. These requirements are clearly a non-tariff trade barrier. They invite retaliation from our trading partners who are likely to demand reciprocal labeling on foods imported from the U.S. or call for WTO dispute settlement action. The U.S. has been a leader in seeking to eliminate trade barriers and should not, now, be perceived as reverting to protectionist policies.
Voluntary labeling initiatives are preferable to new and unnecessary mandates. The Food Marketing Institute, American Farm Bureau Federation, National Cattlemen's Beef Association, American Meat Institute, and National Meat Association recently filed a petition with the USDA to allow beef products to be labeled ''Beef: Made in the USA.'' The petition, filed on September 8, 2000, requests the approval of a voluntary certification program to identify products from cattle that was raised and fed a minimum of 100 days and processed without leaving the United States. Instead of creating more government bureaucracy, the program requires producers and processors to develop written verification program that requires cattle feeders, beef packers, and retailers to maintain adequate systems and records to qualify for the certification. Unlike a mandatory program, this industry-led program could not be viewed as a government orchestrated non-tariff trade barrier to impede the marketing or sale of foreign meat or meat products. With a voluntary structure, the program avoids the negative implications of a mandatory program that would violate our obligations under the WTO, inhibit trade and invite retaliation from U.S. trade partners. NFPA applauds these groups for taking the initiative and leadership to advocate for this voluntary promotion program aimed at informing consumers of the origin of their particular food products.
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NFPA will continue to urge Congress to reject mandatory country of origin labeling proposals such as those in H.R. 1144, and to instead focus on appropriate oversight of activities by the Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA), to ensure that those agencies are fully utilizing their existing authority to regulate food imports and enhance the safety of the U.S. food supply. NFPA appreciates the opportunity to submit testimony on this important issue. We are very interested in the deliberations and the conclusions of the subcommittee and we offer our assistance to you anytime during the process.
"The Official Committee record contains additional material here."