(Oct. 27) The elements of the produce industry that like the idea of mandatory country of origin labeling found reason to praise the proposed rule on mandatory origin labeling released Oct. 27, but the Food Marketing Institute promptly repeated its call for repeal of the law based on the cost of compliance.

After conducting months of listening sessions and reviewing thousands of submitted comments, the U.S. Department of Agriculture on Oct. 27 issued the proposed rule for the mandatory country-of-origin labeling program as required by the 2002 Farm Bill.

Mike Stuart, president of the Orlando-based Florida Fruit & Vegetable Association, said he was generally pleased with the proposed rule, though he said the association was still reviewing the 200-page document.

“We have the most issue with the cost and benefit analysis … but we and other organizations got a large part of what we asked for,” he said, praising USDA officials for addressing the issues of record keeping and downstream liability issues.

Tom Stenzel, president of the United Fresh Fruit & Vegetable Association, Washington, D.C., said the association would examine the rule and see whether the USDA responded to industry concerns. As of Oct. 27, United indicated it had no comment yet.

FMI GIVES THUMBS DOWN

In a news release, Tim Hammonds, president and chief executive officer of the Food Marketing Institute, Washington D.C., said that the $3.9 billion price tag to implement the country-of-origin law is unacceptable to the industry.

“The only reasonable recourse is to repeal the law,” he said.

Under the proposed rule, beef, lamb, pork, fish, fresh and frozen fruits and vegetables and peanuts must be labeled at retail to indicate their country of origin by Sept. 30 of next year. Foodservice establishments are exempt.

On Oct. 27, the USDA also issued a revised cost estimate for record keeping for mandatory country-of-origin labeling and released a cost/benefit analysis which found no quantifiable economic benefit from country-of-origin labeling.

ACCOMMODATIONS FOR MIXED PRODUCE

During a teleconference for media on Oct. 27, USDA Agricultural Marketing Service Administrator A.J. Yates revealed that several changes relating to fruits and vegetables were made in the proposed mandatory regulations, as compared with the voluntary guidelines released last October.

Importantly, he said that a salad mix or fruit cup containing several commodities would be exempt from any origin labeling regulation.

However, a bag of lettuce or any commodity that is packaged singly would have to be labeled.

If more than one country source is represented in a bag of iceberg lettuce, for example, the USDA said that listing the countries of origin by alphabetical order would be acceptable.

That will be a relief to some in the fresh cut industry. Processors said the voluntary guidelines, which required listing of origin by weight, was completely unworkable.

Yates also indicated that salad bars and deli service at retail establishments would be exempt from labeling for country of origin — a point that was not crystal clear in the voluntary guidelines.

Yates said retailers can display fruit from two countries in the same display, but the fruit must be stickered so the consumer can determine origin, Yates said.

Record-keeping requirements at store level were reduced to 7 days from two years, while records must be kept at corporate headquarters for two years.

Consumers purchasing fruit and vegetables on the Internet from retailers don’t have to be informed about the country of origin at time of purchase, the USDA said in its rule. Yates said it will be sufficient if the consumer can find the origin of the covered commodity when it is delivered.

Yates said retailers will not be held liable for the accuracy of origin information given to them by their suppliers but will have to use common sense in evaluating origin claims. For example, Yates said, if grapes are said to be from the U.S. in February, the retailer should know that the grapes are imported.

The 200 pages that make up the proposed mandatory regulation can be found at www.ams.usda.gov/cool/ls03-04prdoc.pdf.

REVISED COST, ZERO BENEFIT

Kenneth Clayton, AMS associate administrator, told the media Oct. 27 that initial record-keeping costs estimated last fall were $1.9 billion for covered commodities.

Taking the input from various affected stakeholders since then, the USDA has revised that number to $582 million for the first year of operation of the country-of-origin law, then declining in subsequent years to $458 million annually.

Additional costs will be required to make capital modifications on affected industries; that sum could total $3.9 billion, Clayton said.

As for benefits, Clayton said the USDA struggled to quantify benefits to the marketplace from mandatory country-of-origin labeling. “It was really not possible to identify in any quantitative sense a benefit that might accrue from the statute and implementation through regulation,” he said.

The cost to the U.S. economy from the mandatory regulation is projected to fall in a range from $158 million to $596 million annually after a period of adjustment.

Production levels of covered commodities are projected to go down slightly, and prices are expected to rise modestly, Clayton said, and the overall revenues to the producers of covered commodities are predicted to decline slightly.

Consumption increases of 1% to 5% would be needed for the costs of the program to be recouped by producers, Clayton said.

Comments on the proposed rule, which has a 60-day comment period, will be accepted by the USDA through Dec. 29.