COOL thawed and will take effect Sept. 30

by Jay Sjerven
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WASHINGTON — After six years in regulatory limbo, country of origin labeling (COOL) will be required on specified meat and agricultural products effective Sept. 30. As of that date, retailers must notify their customers of the nation of origin of products covered by the regulation. Meat products covered include muscle cuts of beef, lamb, chicken, goat and pork; ground meat products, and wild and farm-raised fish and shellfish. Agricultural commodities subject to COOL include fresh and frozen fruits and vegetables, macadamia nuts, pecans, ginseng and peanuts.

The publication by the U.S. Department of Agriculture of an "interim final rule" for COOL in the Aug. 1 Federal Register sparked a flurry of webinars and meetings conducted by meat and produce industry organizations advising their members on what is required to be in compliance. An Aug. 6 webinar sponsored jointly by the Produce Marketing Association and Western Growers Association drew more than 800 participants.

U.S.D.A. officials emphasized a final rule will be issued in the future and there may be some changes from the interim rule based on industry comments that must be submitted before Sept. 30.

COOL was mandated by Congress in the 2002 farm bill, but implementation for all covered commodities except wild and farm-raised fish and shellfish was delayed until Sept. 30, 2008. The Food, Conservation and Energy Act of 2008, the new farm bill, required there be no further delay in implementation of COOL for the rest of the covered products.

Food service operations and even salad bars and delis in supermarkets are exempt from the provisions of COOL.

Food retailers have flexibility with regard to how they notify customers of a product’s country of origin and may use labels, signs and even twist ties, as long as the labels are easily legible.

Processed food products are exempt from COOL, and the U.S.D.A. provided a broad definition for what constitutes a processed food under the program. The U.S.D.A. indicated a processed food is "a retail item derived from a covered commodity that has undergone specific processing resulting in a change in the character of the covered commodity." Specific processing may include cooking, curing, smoking and restructuring, the latter process applying primarily to fish products. Also considered a processed food is a covered commodity combined with at least one other covered commodity or other food, such as chocolate, breading or tomato sauce.

The U.S.D.A. provided the following examples of exempted meat products under its definition of processed food: meatloaf, meatballs, fabricated steak, breaded veal cutlets, corned beef, sausage, breaded chicken tenders and teriyaki-flavored pork loins. On the produce side, exempted as processed foods would be a salad mix that contains lettuce and a dressing packet, a salad mix that contains lettuce and carrots, roasted peanuts and a fruit cup containing melons, bananas and strawberries.

Interestingly, a mix of different types of lettuce would not be considered a processed product because it is composed of different varieties of the same covered commodity, and this mix would be subject to COOL.

To receive a U.S.-origin designation under COOL, covered fruits, vegetables and nuts must be grown in the United States. In the case of meat products, the meat must be derived exclusively from animals born, raised and slaughtered in the United States or from animals that were in the United States on or before July 15, 2008, and once present in the United States remained continuously in the United States.

Meat from an animal imported to the United States but not for immediate slaughter would be labeled, for example, as a "Product of the U.S. and Mexico." If the animal was imported for immediate slaughter, the labeling would be reversed and state, again, as an example, a "Product of Mexico and the U.S."

Imported commodities for which origin already was established and for which no production steps occurred in the United States will retain their origin as declared to the U.S. Customs and Border Protection at the time the product entered the United States.

Labeling in the case of ground meat that might have several origins must include all of the possible countries of origin.

In the event a fruit, vegetable or other covered agricultural commodity is imported and then commingled with the same commodity but from U.S. or other origins, the label must indicate all possible countries of origin.

The U.S.D.A. specified how those affected by the regulation should keep records to comply with COOL. In general, retailers must maintain records that permit verification of origin claims made at retail. The records may be kept in any location and must be maintained for a year from the date of the transaction. The U.S.D.A. explained in the interim final rule what types of documentation would qualify for establishing a product’s origin.

The U.S.D.A. acknowledged all in the supply chain will bear a cost in complying with COOL. The U.S.D.A. estimated the recordkeeping burden alone during the first year at $126 million for development and startup and $499 million for maintenance and operations. Subsequent recordkeeping costs were estimated at $499 million per year.

Overall implementation costs during the first year for directly affected companies were estimated at $2,517 million. Costs per company were estimated at $376 for producers, $53,948 for intermediaries and $235,551 for retailers.

"The expected benefits from implementation of this rule remain difficult to quantify," the U.S.D.A. said. "Available studies on the potential benefits of mandatory COOL suggest benefits will likely be small."

The U.S.D.A. estimated the cost to the U.S. economy in higher food prices and reduced food production in the tenth year after implementation of the rule at $211.9 million.

This article can also be found in the digital edition of Food Business News, August 19, 2008, starting on Page 1. Click here to search that archive.

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