The United States' Country-of-Origin Labeling policy isn't what dampened demand for higher-priced meat products and therefore live cattle imports from Canada and Mexico, a new study finds. An economic downturn, however, is.
"COOL did not cause the declines in livestock exports to the United States, which largely coincided with a substantial global economic downturn that sapped demand for more expensive meat products," notes the study, authored by C. Robert Taylor, Ph.D., an Auburn University Professor.
The study, released by the U.S. Cattlemen's Association, builds on an ongoing dispute between the U.S. and Canada and Mexico regarding COOL. The two countries say it violates World Trade Organization regulations.
The countries first challenged COOL in 2008 on grounds that it was a technical barrier to trade which hurt their export opportunities.
The cost of implementing COOL, they argued, discouraged U.S. meatpacking and processing companies from purchasing livestock of non-U.S. origin and, as a result, reduced the prices of these livestock exports.
The new study finds instead that U.S. Country-of-Origin Labeling has not led to a significant effect on prices paid for imported slaughter cattle, nor has it negatively impacted slaughter cattle imports. It used publicly reported data to complete the analysis.
"The price basis is lower in the six years since implementation of COOL than it was the preceding four years," the study comments in respect to prices paid for imported cattle versus domestic slaughter cattle.
In addition, the study claims COOL didn't have a negative effect on imports of slaughter cattle or on feeder cattle.
"Qualitative and econometric analysis of Mandatory Price Reporting and monthly trade and price data cast considerable doubt on assertions that COOL negatively affected imports of slaughter cattle," the study says.
Failure to recognize the effects of imported and domestic captive supplies of slaughter cattle and beef demand uncertainty, along with other factors, played a larger role in reduced import demand than acknowledged in previous studies, USCA said.
USCA said Taylor's study is different from Canadian studies because it is "more detailed and exhaustive" and is based on Mandatory Price Reporting data provided to the USDA by U.S. beef packers.
According to the study, the MPR price and basis trends reflect actual operational slaughter costs and offer a distinct perspective from which to assess beef packers' statements about the costs of Country-of-Origin Labeling.
The study concludes that cattle exports to the U.S. are subject to a number of variables that are independent of the implementation of Country-of-Origin Labeling.
USCA said the study's outcome is a reason to reconsider opposing the policy. "COOL is popular with consumers because they want to know where their food comes from, and it's popular with farmers and ranchers because they're proud to put the American label on their products," National Farmers Union President Roger Johnson said. "Congress needs to stay the course on COOL," he said.
Aside from complaints that the COOL rule is costly to packers, opponents of the policy suggest that it hurts relationships with trading partners and provides little public benefit.