With the latest version of the country-of-origin-labeling law still being debated as part of the 2007 Farm Bill, government and industry associations are still unsure exactly what to tell retailers. But, there are a few things retailers can do to prepare for COOL, which will likely become mandatory for fresh produce and meat products as of Sept. 30, 2008.
The date may not be set in stone. Congress has delayed implementation of the law for meat and produce twice already, and there has been talk of a presidential veto for the entire Farm Bill. However, if mandatory COOL is an inevitability, many industry leaders are hopeful that the new and revised version of COOL in the current Senate version of the Farm Bill will pass, lessening the burdens on retailers as well as containing the costs for the program.
“We're certainly doing everything we can to ensure that the Farm Bill gets passed so the COOL that the industry would be dealing with is the COOL that we've worked very hard on to develop,” said Lorna Christie, senior vice president of industry products and services, Produce Marketing Association.
In this new version of COOL, groups including PMA, United Fresh Produce Association, Food Marketing Institute and a number of companies in the produce and meat industries have negotiated improvements to reduce the regulatory burden and cost of COOL compliance that retailers were so concerned about in earlier versions of the program.
In the new version, there would be no new record-keeping measures required, and retailers would not be liable for misinformation provided by their suppliers. Also, the new version of the law would allow branding and labeling by U.S. state, regional or local programs, such as “Pride of New York,” “Georgia Grown” and “From the Heart of Washington,” to be automatically deemed compliant with COOL.
Robert Guenther, senior vice president of public policy at United Fresh, said that part of the problem with the old proposed regulation was that it would not allow state labeling. Guenther added that he believes that as long as the U.S. Department of Agriculture does not write a rule that makes the industry fundamentally change the way it is labeling now, and can allow that continued robust labeling and does not add any burdens through the supplier or the retailer, costs can be minimized within the produce side of this mandate.
“[The old proposed regulation] was going to create an unnecessary regulatory burden on the whole distribution chain, all the way from the growers to the retailers,” Guenther said.
“Hopefully they're not going to do that this time. We anticipate that the rules will be more acceptable, based on what current labeling practices are going on within produce.”
Unfortunately, it is still uncertain whether this version of the bill will pass.
“I think the biggest question that everybody has now is, what are they going to do on Sept. 30, 2008?” said Deborah White, senior vice president and chief legal officer of FMI.
“The biggest issue right now is timing and implementation, and the challenge is that we don't have a final rule out of the USDA on any of the covered commodities. The interim final rule for seafood is close, and we don't expect there to be many changes in that respect, but in terms of meat, produce, peanuts, if there are any other commodities that are added to the Farm Bill process, there's no way for us to advise retailers on how to get ready.”
FMI has been emphasizing to the USDA that it will be critical to give retailers adequate time to come into compliance once the final rules are issued as well, according to White.
Despite the fact that the industry is awaiting USDA's final rules, there are some things retailers can be doing now to better prepare themselves, should this new version pass.
It is hoped the new COOL would eliminate the need for retailers to audit their suppliers to ensure compliance with the law; however, retailers are advised to still work closely with their suppliers to know what's coming ahead.
“We don't know yet what exactly is going to be required, but everybody is going to need to work together, and retailers are inherently going to need information from their suppliers about the country of origin of the products,” White said.
Guenther agreed. “I think as long as we continue to work together, and retailers work with their suppliers to make sure that there is not any undue needed business practices that change related to labeling, I think we can all take advantage of this,” he said.
MAKING THE BEST OF IT
PCC Natural Markets, Seattle, has been 100% COOL-compliant since around November 2007. The company also provides additional information on its website about source farms and how the products are raised.
“I just think that if retailers are prepared and work with their distributors ahead of time, I think everyone can provide that information to their customers, and even the conventional customers will find an appreciation for country-of-origin labeling,” Paul Schmidt, director of merchandising at PCC, told SN. “I think they will all see a benefit for that.”
In PCC's meat departments, many items are labeled according to the specific farm that they came from, but all of the labels state that the meats are products of the U.S. and/or the product of a certain state. For seafood, PCC has set up individual retail codes for each different country that various species could potentially be sourced from.
“For meat and seafood, there was some initial time invested in setting up additional codes, but we've been very fortunate to work with very good suppliers who provide us information when the product is delivered, so the information is on the invoice. So, it's not as much [work] for the stores, they're just able to maintain that,” Schmidt said.
Since seafood departments have been working with COOL regulations for a couple of years already, White said retailers should look closely at what systems their seafood buyers and department managers have developed, because that's FMI's best approximation of what the final COOL law for produce and meat will look like.
“The statute could change, USDA could change its mind about the regulations, but in terms of tea leaves, that's the closest thing we've got — to look at the seafood interim final rule, think about how you implemented it for seafood, and perhaps try to develop strategies about how you would implement a country-of-origin-labeling [requirement] for the other covered commodities,” White said.
Undersecretary Knight agreed, describing this assessment as accurate.
“Certainly, their experience with seafood should be very transferable,” Knight told SN. “I will be doing the best that I can to make sure that we meet the letter of the legislation, the intent of the law, while minimizing any of the regulatory burdens — keeping in mind that we need to be responding to a consumer's informational needs.”
Other steps retailers can take include reviewing the information on USDA's website about the original bill that passed in 2002, Christie suggested.
She also pointed out that a majority of produce is already labeled in some way, which should help smooth the transition.
“We've done research, and 80% of the produce offered for sale already carries a labeling mechanism, and so you can easily convert that to origin labeling,” Christie said.
Guenther agreed. “I think that if you look at labeling at this point in time, a majority of products in the produce aisle are already being labeled with country-of-origin information or state origin, so I think we're in good shape to be prepared to address this,” he said, adding that United Fresh is telling its members to start ordering packaging and labeling that represents country of origin so they'll be prepared for 2008 implementation.
Many critics of COOL have long been of the opinion that it is an expensive marketing program whose benefits to retailers, suppliers and consumers are far outweighed by its costs. And, while the import scandals and contamination scares of 2007 have certainly raised consumer awareness and demand for a program like this, most industry leaders still argue that the program will not necessarily make food safer.
“It's purely a marketing program,” said Guenther. “It has nothing to do with food safety whatsoever. This is purely a consumer right-to-know marketing program, and it isn't an effective food safety deterrent.”
But if it's a marketing program, what is the best way for retailers to take advantage of it?
Consumers have always wanted information as to where their products come from, and shoppers at PCC say they've been pleased that the co-op has been such a leader in providing that for them, Schmidt said.
“I think people deserve to know where their product is coming from, and we as retailers should be able to provide that information to them so they can make informed choices,” Schmidt said.
“Everyone chooses their products based on different criteria, and for some, it is where that product is grown or raised. It's just as important for them to know where their product comes from as it is whether it's organic or has salt in it. Everybody deserves to know what they're buying.”
Chris Waldrop, director of the Food Policy Institute, Consumer Federation of America, agreed, adding that many recent events in the past regarding food safety have demonstrated that this could be a way for consumers, when they have food safety concerns, to gather more information about a particular food, a particular country or a particular area and then make their decisions accordingly.
“It's not exactly a food safety measure, but it does have those implications,” Waldrop told SN.
“It's an information program as far as consumers are concerned. I know that U.S. producers see it as a marketing program, because they are marketing products grown and raised in the U.S., but from a consumer standpoint, it really is a program that provides them with information.”
Studies done after the passage of the 2002 Farm Bill looked at the cost issue and found that the cost was negligible to consumers, and that they were willing to pay a few extra cents to have that information, according to Waldrop.
Seventy-five percent of consumers said that labeling the country or place of origin of products and/or ingredients should be mandatory, compared with only 8% who are not in favor of mandatory COOL regulation, according to the Hartman Group's 2007 Pulse report, “Label Reading From a Consumer Perspective.”
“Consumers have a heightened interest in knowing where their food products and ingredients come from,” said David Wright, spokesman for the Hartman Group.
Undersecretary Knight acknowledged that while COOL has been fairly controversial, with a fair number of people very adamant about wanting it and a fair number of people saying it would be expensive and would not provide meaningful value, he sees policymakers moving toward COOL.
“The concerns starting last summer on melamine in pet food and the issues on toothpaste really changed the political climate on COOL, and I've seen on Capitol Hill a coalescing of opinions to simply move forward on country-of-origin labeling.”