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WHERE'S THE BEEF FROM?
BEEF INDUSTRY WEIGHS EFFECTS OF COUNTRY-OF-ORIGIN LABELING
Bruce Springsteen isn't the only American proud of his heritage and happy to capitalize on it. Domestic beef producers, as well as processors, retailers and restaurants, are increasingly interested in offering consumers a product that is born in the U.S.A.

Several factors have converged to create exciting market opportunities for domestic beef. International outbreaks of BSE and foot-and-mouth disease have raised safety issues. The terrorist attacks of September 11 fueled international tensions and patriotism at home. Surges in international trade under global agreements and increasingly discriminating consumers worldwide have also contributed to the growing emphasis on source verification and labeling.

Due to a trend to more product branding, retail beef is carrying more tags with more product information than ever before in both domestic and international markets.

"A brand is something that is catching on in this country because it does supply that assurance of consistency," observes Lynn Heinze, vice president of information for the U.S. Meat Export Federation, Denver, Colo. "Also something important in many international markets is a company or individual who stands behind the product. There are a lot of brands really establishing themselves in the U.S. market, and the same thing applies abroad. It helps the industry because as our own brands become established it increases demand for a product with a U.S. origin."

Aside from name brands, country-of-origin labeling is also an important way to distinguish a product. The label verifies the specific country from which a product originated. Due to widely publicized disease outbreaks, food safety concerns have erupted, in some cases creating new opportunities for the U.S. in other countries.

"In Japan right now with the BSE situation, we and the Australians find it an advantage to tell Japanese consumers that this product is imported from a country that does not have BSE," Heinze points out.

'BORN AND RAISED'

Efforts are underway to achieve domestic beef-origin labeling through two different approaches: market promotion and legislative mandate.

California rancher Carolyn Carey has launched a private labeling campaign to source verify and label domestically produced beef.

The Alturas, Calif., rancher, who also serves as CEO of Western Ranchers Beef Cooperative, organized the beef certification and labeling program about

six months ago. It involves licensing an attractive marketing logo and setting up a certification system, which she compares to a car tag system. About 100 ranchers producing several thousand head, along with a handful of auctions, feed yards and retail beef programs are already signed on to the effort, which has the support of the National Cattlemen's Beef Association, Greenwood Village, Colo.

"The reason we haven't been able to label a U.S. product until now is because nobody was tracking one. Now, all of these retained ownership programs know instantly where the cattle came from, and they can buy rights to a label, and track the product back for verification purposes," she says.

"We don't need legislation or permission to label our own product," she continues. "Supporting voluntary labeling with the 'born and raised' definition is such an excellent position. It doesn't require any change in the law."

She is actively recruiting more participation in the program. "The way to get this started is to overlap it with existing programs for which store shelfspace is already being designated, such as Laura's Lean Beef," Carey says. "I want to get the label on a branded beef program already in stores."

More information on Carey's campaign is available on the Web at www.bornandraisedintheusa.com.

WORLD MARKETS

While the demands of the worldwide marketplace is driving the trend toward source identification, the domestic cattle industry is also involved in efforts to impose some type of mandatory country-of-origin labeling at the federal level. All imported live cattle and boxed beef is already source identified when it enters the country, but it seldom carries that identification by the time it reaches the consumer. Mandatory country-of-origin labeling law contained in farm bill legislation, which has yet to gain congressional approval, would mandate that consumers have more information about the product they buy.

"International trade law allows a product that is 'significantly transformed' to be labeled as a domestic product," explains Chuck Lambert, chief economist for the National Cattlemen's Beef Association. "Thus, cattle that become carcasses are likely to be considered U.S. product under international law. However, further processing those carcasses into boxed beef, or cutting bigger pieces into smaller pieces, is not a significant transformation, we would argue. Therefore, Canadian boxed beef, or boxed beef from any other country, should be identified as coming from that country when sold as retail cuts."

Many U.S. foreign customers and competitors already require country-of-origin labels on U.S. beef, he continues. "Some, like Korea, have in the past even required it to be marketed in separate retail cases, although the U.S. has won a World Trade Organization case to force Koreans to market imported products side-by-side with domestic products," he says.

In NCBA's opinion, mandatory origin labeling is not a food safety issue since imports are only accepted from countries that meet or exceed U.S. safety standards. "However, it is a marketing issue," Lambert says. "Our research shows that 75 percent or more of consumers would prefer a U.S. product if identified and offered separate from imported product. Of course, what consumers say and what they do is often not the same, but NCBA policy states that we are willing to find out."

INDUSTRY CONCERNS

Any mandatory labeling effort, however, will involve complexity and detail. To allow the industry more flexibility, NCBA supports mandatory labeling of whole muscle cuts at retail and voluntary labeling for ground beef and all beef used by the institutional food trade.

"Imported lean adds value to U.S. fat trimmings," Lambert says. "We blend 50 percent U.S. fat with 90 percent imported lean to make 80 percent lean patties for food service. If consumers view imported products as a negative, they will pay less for the blended product, meaning less money for U.S. producers because half of the blended product is domestic."

The institutional food service trade would be exempted from the labeling requirements due to the prohibitive costs of maintaining separate inventories of product, strong political pressures and the potential for a negative image that could hurt beef demand, Lambert says. Labels could end up reading "this product contains trimmings from U.S., Australia, New Zealand and Canada," or something similar.

Even some industry members who support efforts to create more market transparency have concerns about how additional regulation would affect the industry.

Ken Winter, who owns a feedlot and livestock auction in Dodge City, Kan., cautiously supports country-of-origin labeling.

"My concerns are how it's going to be implemented," he says. Will packers refuse to buy cattle unless buyers provide all of the necessary paperwork to prove U.S. origin? "I don't think it's our responsibility as the sellers to do that," he says. "We need to make sure this is not an obligation placed on the producer."

In addition, cowherds are still relatively small in many parts of the country, leading to extensive co-mingling before cattle go through a sale barn or into a feed yard. Auctions are basically collection points for cattle, and the paperwork could be burdensome unless live imports can be marked with a prominent brand, implanted with a computer chip or some other form of easy, fast and permanent identification, he says.

On the positive side, the requirements for source verifying beef might at least force foreign imports to be sold at a higher price that more accurately reflects their cost. That could give U.S.-produced beef an additional advantage in the marketplace, he concludes. AM

Candace Krebs is a freelance writer based in Enid, Okla.


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