the national animal identification system and country of origin labeling how are they related l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
The National Animal Identification System and Country-of-Origin Labeling: How are They Related? PowerPoint Presentation
Download Presentation
The National Animal Identification System and Country-of-Origin Labeling: How are They Related?

Loading in 2 Seconds...

play fullscreen
1 / 41

The National Animal Identification System and Country-of-Origin Labeling: How are They Related? - PowerPoint PPT Presentation


  • 167 Views
  • Uploaded on

The National Animal Identification System and Country-of-Origin Labeling: How are They Related?. Prepared by: Wendy J.Umberger Assistant Professor and Extension Economist Department of Agricultural and Resource Economics Colorado State University Email: wendy.umberger@colostate.edu.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The National Animal Identification System and Country-of-Origin Labeling: How are They Related?' - aure


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the national animal identification system and country of origin labeling how are they related

The National Animal Identification System and Country-of-Origin Labeling:How are They Related?

Prepared by:

Wendy J.UmbergerAssistant Professor and Extension EconomistDepartment of Agricultural and Resource Economics

Colorado State University

Email: wendy.umberger@colostate.edu

Western Extension

Marketing Committee

Western Center for Risk Management Education

presentation overview
Presentation Overview
  • Background of country-of-origin labeling provision
    • What is COOL
    • What are the controversies related to COOL?
    • Estimates of Costs and Benefits
  • Issues related to verification of COOL
  • COOL versus the National Animal ID System (NAIS)
what is mandatory cool
What is Mandatory COOL?
  • Title of the 2002 Farm Bill
  • Retailer shall inform consumers at the final point of sale of the country of origin of covered commodities.
  • Only animals born, raised and slaughtered/processed qualify for “Product of U.S.A” label
  • Exemption for food service
  • Secretary of Agriculture can not mandate a national identification system to verify country-of-origin
proponents reasoning behind cool
Proponents’ Reasoning Behind COOL
  • Consumers’ “right to know”
  • Food safety - U.S. food supply is “safer”
  • Protection of the U.S. market
  • Increase demand for U.S. products
  • Voluntary labeling will not work
    • Mandatory labeling program is the only way to get all segments of the food chain coordinated
      • Ex. Nutritional labeling
  • Necessary after BSE incidents in North America
the controversy cool law exemptions
The Controversy: COOL Law Exemptions?
  • Ingredients In Processed Food Products
  • Poultry and Dairy
    • No Chicken, Turkey, Eggs, Milk
  • Food Service Establishments
    • Restaurants, Cafeterias
  • Retailers With Less Than $230,000/Year In Fruit & Vegetable Sales
    • Butcher Shops, Fish Markets, Small Grocers

Why are some meat products exempt if “consumers have the right to know”???

the controversy labeling of country of origin
The Controversy: Labeling of Country-of-Origin?
  • U.S. Origin…

Meat Must Be Exclusively From Animals

    • Born, Raised, and Slaughtered (Processed) In U.S.

Also includes beef from animals born and raised in Alaska or Hawaii (transported for no more than 60 days through Canada to the U.S. for slaughter)

What about feeder animals from Canada or Mexico that are finished in U.S.?

mixed origin and blended origin meat labeling
“Mixed Origin” and “Blended Origin” Meat Labeling
  • Mixed Origin = Products with an origin that includes production steps (e.g. born, raised, slaughtered) that occurred in more than one country, including the U.S.
    • Ex. “Product of Canada, Raised and Slaughtered in United States”
  • Blended = different products of different origins that are combined for retail sales with no material change
    • Ex. Ground beef – “Product of Australia; Product of Mexico, Raised and Slaughtered in U.S.A.; Product of U.S.A.;”
the controversy necessary records and verification
The Controversy: Necessary Records and Verification
  • USDA didn’t create an “unknown origin” label
  • Self-Certification is not sufficient
  • Retailers must label covered commodities
    • Must keep Point of Sale records for 7 days
    • Must keep records of origin for 2 years
  • Suppliers must provide information about country of origin
    • Producers, handlers, processors, packers, importers
  • Verifiable (auditable records)
    • Suppliers must maintain records
    • Affidavits may be used to certify origin and existence of records
what are the costs
What Are the Costs?
  • Cost of Preserving

the Identity of Animal

(Covered Commodity)

  • Cost of Labeling the Products
  • Compliance Costs
  • Unexpected Industry Costs
    • Structural changes
    • Domestic or export demand changes
slide11

Cost Estimates: USDA-AMS

  • First Year Cost Estimates (Millions of Dollars)
slide12

Cost Estimates: Sparks / CBW

Segment Cost

Segment Cost

Calculation

Calculation

$/Head

$/Head

(Million $)

(Million $)

Process

Process

38 Mil

38 Mil

Hd

Hd

calf crop

calf crop

Cow

Cow

-

-

calf Producers &

calf Producers &

$4.88

$4.88

$198

$198

Backgrounders

Backgrounders

2.5 Mil

2.5 Mil

Hd

Hd

Imports

Imports

Feedlots

Feedlots

$3.75

$3.75

-

-

5.75

5.75

$109

$109

-

-

167

167

29 Mil. Head Sold

29 Mil. Head Sold

29 Mil

29 Mil

Hd

Hd

Steer/Heifers

Steer/Heifers

Packer / Processor

Packer / Processor

$15

$15

-

-

18

18

$435

$435

-

-

522

522

6 Mil

6 Mil

Hd

Hd

Cows/Bulls

Cows/Bulls

8 Billion lbs. Sold @

8 Billion lbs. Sold @

Retail Dist. & Store

Retail Dist. & Store

$23

$23

$805

$805

10cents/lb from 35 mil

10cents/lb from 35 mil

cattle

cattle

Total

Total

$47

$47

-

-

$52

$52

$1,571

$1,571

-

-

1,716

1,716

Source: Andersen. R.S. and S. Kay. “COOL Cost Assessment.” Published by the Sparks/CBW COOL Consortium. April 2003. http://www.ams.usda.gov/cool/comments/cool1041.pdf.

cost estimates across livestock industry sectors
Cost Estimates Across Livestock Industry Sectors
  • Beef
    • $47-52/head
    • ~$0.10/pound
  • Pork
    • $3.25-$10.25/head
    • ~$0.075/pound
  • Fish and Seafood
    • $0.05 to $0.075/pound

Source: Andersen. R.S. and S. Kay. “COOL Cost Assessment.” Published by the Sparks/CBW COOL Consortium. April 2003. http://www.ams.usda.gov/cool/comments/cool1041.pdf.

potential benefits of cool
Potential Benefits of COOL?
  • Mandatory COOL may be an Appropriate Policy Tool if (Golan et al, 2000):
    • Asymmetric information exists
    • Disclosure of possible negative quality attributes does not exceed the benefits
    • COOL increases demand for product
  • Increased Demand?
    • Market Share
    • Higher Price
      • Will Consumers Pay For Country Of Origin Information?
consumer studies examining possible market impact of cool
Consumer Studies Examining Possible Market Impact of COOL:
  • 2002 Colorado Supermarket Study:
    • Loureiro and Umberger. “Estimating Consumer Willingness to Pay for Country-of-Origin Labeling.” Journal of Agricultural and Resource Economics. 28(2)(August 2003):287-301.
  • 2002 Chicago, IL & Denver, CO Consumer Auction Study:
    • Umberger et al. “Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions.” Journal of Food Distribution Research. 34(3)(November 2003b): 103-116.
  • 2003 Continental U.S. Consumer Study:
    • Loureiro and Umberger. “Assessing Preferences for Country-of-Origin Labeled Products.” Journal of Agricultural and Applied Economics. Forthcoming April 2005.
slide16

2002 Colorado Supermarket Study:Loureiro and Umberger.“Estimating Consumer Willingness to Pay for Country-of-Origin Labeling.” Journal of Agricultural and Resource Economics. 28(2)(August 2003):287-301.

  • 243 Consumers surveyed in supermarkets along the Front Range of Colorado
  • Consumers Very Receptive to COOL
  • “Mandatory COOL Program”
    • $183.77/year
    • $3.53/week
  • “U.S. Certified Steak” = 38% Premium for label
  • “U.S. Certified Hamburger”= 58% Premium for label
slide17
273 Consumers in Denver and Chicago

Surveyed on WTP for COOL Hamburger and Steak

Experimental Process- paid $50 to participate

Bid on “USA Guaranteed: Born and Raised in the U.S.” Labeled & Unlabeled Steak

2002 Chicago, IL & Denver, Colorado Consumer Study:Umberger et al. “Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions.” Journal of Food Distribution Research. 34(3)(November 2003b): 103-116.

consumer research on cool important food characteristics
Colorado Front Range Study:

Extremely to Very Desirable

Fresh

Food Safety Inspection

High Quality

Lean

Visual Presentation

Very to Somewhat Desirable

Source Assurance

Beef Raised in your region of the country

Consumer Research on COOL: Important Food Characteristics

Chicago, IL & Denver, CO Study:

Extremely to Very Desirable

  • Fresh
  • Food Safety Inspection
  • Color
  • Price
  • Leanness

Very to Somewhat Desirable

9. COOL

  • Source Assurance
  • Beef Raised in your region of the country
consumers rationale for preferring cool 75 preferred labeled 22 indifferent
Consumers’ Rationale for Preferring COOL:(75 % Preferred Labeled, 22% Indifferent)
  • Safety and Health of Meat, 45%
    • U.S. better regulations and standards
    • Mad Cow Disease
  • More Information (Awareness of conditions, Identify meat if Outbreak Occurs), 32%
  • Support Producers 21%
  • Location (Prefer from certain countries, Learn about importing countries), 12.5%
  • Quality of Meat Higher in U.S., 11%
  • Freshness of Meat Closer to Home, 4.5%

Source: Umberger et al. “Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions.” Journal of Food Distribution Research. 34(3)(November 2003b): 103-116.

slide20

2002 Chicago, IL & Denver, CO Study:Umberger et al. “Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions.” Journal of Food Distribution Research. 34(3)(November 2003b): 103-116.

  • “COOL Steak”
    • 73% Consumers were Willing to Pay Premium
    • 11% Premium for label
  • “COOL Hamburger”
    • 72% Consumers were Willing to Pay Premium
    • 24% Premium for label
  • “U.S. Guaranteed Steak” versus Unlabeled Steak
    • 69% Consumers were Willing to Pay Premium
    • 19% Premium for labeled steak
slide21

$6.00

$5.20

$5.20

Domestic Bid

$5.00

Canadian Bid

Difference

$4.00

$3.59

$3.17

Average Bid ($/lb)

$3.00

$2.07

$2.07

$2.03

$2.00

$1.61

$1.00

$0.00

$0.00

Domestic Preferring

Canadian Preferring

Indifferent

Are Consumers Willing

-

to

-

Pay for their

Taste Preference?: Canadian vs. US

N = 106

45%

N = 78

N = 49

34%

21%

Umberger, W.J., D.M.

Feuz

, C.R. Calkins, B.M.

Sitz

.

Consumers

Preferences and Willingness

-

to

-

Pay for

Beef Originating from the U.S., Canada, and Australia.

Paper Presented at the

2003 WAEA Annual Meetings

.

slide22

$6.00

$5.04

$4.82

Domestic Bid

$5.00

Australian Bid

Difference

$4.00

Average Bid ($/lb)

$2.74

$3.00

$2.59

$2.45

$2.08

$2.00

$1.18

$1.18

$1.00

$0.00

$0.00

Domestic Preferring

Australian Preferring

Indifferent

Are Consumers Willing

-

to

-

Pay for their

Taste Preference?: Australian vs. US

N = 139

60%

N = 40

17%

N = 54

23%

Umberger, W.J., D.M.

Feuz

, C.R. Calkins, B.M.

Sitz

.

Consumers

Preferences and Willingness

-

to

-

Pay for

Beef Originating from the U.S., Canada, and Australia.

Paper Presented at the

2003 WAEA Annual Meetings

.

slide23

2003 Continental U.S. Consumer Study:Loureiro and Umberger. “Assessing Preferences for Country-of-Origin Labeled Products.” Journal of Agricultural and Applied Economics. Forthcoming April 2005.

  • Mail survey sent during Spring & early Summer 2003
  • Representative sample of 5000 households in the continental U.S., 673 respondents
  • Perceptions of safety of meat, agency for certifying origin, and fairest mechanism to pay for costs of COOL
  • Would you be WTP for “Certified U.S.” beef, pork, and poultry?
  • Compare value of COOL, source-verified, tenderness, food safety inspected
  • Socio-demographics representative of U.S. population
slide24

5.00

4.23

4.50

3.72

4.00

3.17

3.10

3.50

3.03

2.62

3.00

2.13

2.50

Average Ranking (1-5)

2.00

1.50

1.00

0.50

0.00

United

Canada

Australia

New

Denmark

Argentina

Mexico

States

Zealand

Country of Origin

Perceived Safety of Meat Products from

Exporting Countries

Source: Loureiro and Umberger. “Assessing Preferences for Country-of-Origin Labeled Products.” Journal of Agricultural and Applied Economics. Forthcoming April 2005.

slide25

Other

Local

Agencies

Producers

2%

13%

Government

USDA

Third-Party

Inspection

Independent

Service

Certifiers

63%

22%

Who Should Certify COOL?

Source: Loureiro and Umberger. “Assessing Preferences for Country-of-Origin Labeled Products.” Journal of Agricultural and Applied Economics. Forthcoming April 2005.

slide26

Other (Import

Higher

tariffs)

Income Tax

6%

2%

Fees Applied

to Producers

12%

Use of

Existing

Government

Higher Meat

Budget

Prices

40%

40%

Fairest Mechanism to Pay for COOL?

Source: Loureiro and Umberger. “Assessing Preferences for Country-of-Origin Labeled Products.” Journal of Agricultural and Applied Economics. Forthcoming April 2005.

other issues related to verification of country of origin
Other Issues Related to Verification of Country of Origin
  • Concerns regarding how COOL can be implemented in an auditable system since a mandatory animal ID system can not be created to maintain an animals origin information
  • Without individual ID, source verification becomes difficult and potentially requires more costly segregation
  • Market may discount animals sold by producers who aren’t able to provide specific source documentation information
other issues and remaining questions related to cool
Other Issues and Remaining Questions Related to COOL
  • Will COOL increase beef demand?
    • Unlikely due to supply vs. demand issue
  • Costs versus Premium estimates?
    • Chicken and pork highest, but likely the least costly to label with country-of-origin
  • Appears consumers have some misconceptions when asked directly if they are WTP for COOL
    • COOL is NOT TRACEABILITY
    • Relative value of origin-label versus other meat attributes
  • Competitiveness of U.S. versus major importers?
  • Animal ID makes COOL easier, but they are 2 separate issues
why individual animal id
Why Individual Animal ID?
  • Live animal traceability
  • Disease surveillance
  • Document origin
  • Homeland security
    • Bio-security
  • Food safety assurance
  • Reduce the financial and social impacts of animal health incidents
  • Market Access
  • Value-added
  • Opportunities for Genetic and Product improvement
why nais to maintain market access
Why NAIS: To Maintain Market Access!

Within the U.S.

and for Export

Markets

Countries with national ID

    • Europe, Australia, Canada, Japan
  • Countries implementing ID
    • Brazil, Argentina, Uruguay, Mexico
us beef export market
US Beef Export Market
  • About 10% of production
  • Japan 32%Mexico 26%S Korea 24%Canada 10%30 other 8%
  • High quality beef
  • Variety meats and hides (70% of tongues are exported)
  • Drop of 9% in demand would cause price to drop by 15%

82%

slide32

John Hayes, Senior Director of U.S. supply for McDonalds(CNNMoney 2 July 2004)

  • "We do have a captive supply of poultry. The animal ID program for us currently is most focused on cattle," he said.
  • "We'll continue over the next few years to increase the amount of traceable animal ID products that we can buy, and at some point in the not-too-distant future we'll draw a line in the sand and say that after a certain date, all of our animal products will be from animals that are under an animal ID program," Hayes said.
slide33

What Can Animal ID Do For Producers?

  • Help you maintain improved records on purchased cattle by source i.e. order, buyer, market, producer
  • Manage cattle while on your operation

– health, performance

  • Added value at marketing
    • Sort off poor performers
    • BQA certified
    • Process-verified
    • Fit various alliance/premium programs
cost estimates of id will vary depending on the method and size of operation
Cost Estimates of ID Will Vary Depending on the Method and Size of Operation

Information available at: http://www.beefstockerusa.org/rfid/

slide35

Estimated Costs of an RFID System

(Example is based on 250 Head at 8% Interest Cost)

Kevin Dhuyvetter and Dale Blasi: Web-based spreadsheet to calculate RFID costs. www.beefstockerusa.org

id costs decline with herd size
ID Costs Decline with Herd Size

Kevin Dhuyvetter and Dale Blasi: Web-based spreadsheet to calculate RFID costs. www.beefstockerusa.org

uncertainties associated with mandatory animal id
Uncertainties Associated with Mandatory Animal ID
  • Costs of system?
    • $100 million annually to maintain
  • Ability to maintain tags throughout production?
  • What happens once the hide is gone?
  • Sharing of the costs vs. benefits in the food supply chain?
  • Liability issues?
    • Producers no longer invisible participants in the marketing channel
  • Change in market structure?
public vs private needs and uses

USDA National Database

  • USDA Required
  • Animal ID number
  • Previous premises number
  • Current premises number
  • Dates and times of transfer
  • Potential
  • Industry Use
  • Examples:
  • Birth Records
  • Health Records
  • Genetic Information
  • Carcass Data

Third Party Database

Public vs. Private Needs and Uses
summary
Summary
  • The Mandatory COOL Program provides Neither traceability nor individual animal ID
  • THUS, Neither COOL nor the NAIS is a food safety program
  • However, the NAIS substantially increase the U.S. government’s ability to respond to animal health and disease outbreaks
    • Ensuring the safety of animal and meat product that could enter the food supply chain
  • Consumers value both COOL and Traceability, but based on consumer research what they appear to really want is traceability
summary continued
Summary Continued
  • A U.S. Animal ID system is inevitable, but the future of mandatory COOL is less certain
  • In 2004, Public Law 109-199 was signed into law, postponing implementation of the mandatory COOL program for all commodities except wild and farm-raised fish and shellfish until 9/30/2006
  • COOL will probably continue to be an issue
  • A NAIS will likely be implemented in a “technology neutral” manner
  • Some level of animal ID will be especially important to maintain and re-establish access to export markets
conclusions
Conclusions

Consumers’ needs and wants should play a dominant role in food production.

However, the needs of each member of the food system must also be met for the system to exist and to function efficiently.