Wednesday, February 23, 2005

Who wins from country-of-origin labeling?

The new issue of the online magazine Choices focuses on country-of-origin labeling (COOL) for beef, which was passed in the 2002 farm bill, and which is to be implemented in 2006. The new labeling would allow consumers to distinguish American beef from imported beef. Because labeling imposes some costs for the industry, the net benefits for producers hinge largely on whether consumer demand will increase -- for example, whether consumers will be willing to start paying a premium for American beef. Given the current administration's less than vigorous food safety policies, and continuing concerns about mad cow disease, you may find that prospect amusing. Indeed, the eminent agricultural economists writing in Choices are generally skeptical that there will be any demand increase for beef attributable to COOL.

So here's the conclusion:

The poultry industry is the only unequivocal winner of the implementation of COOL. We assumed that the poultry industry's cost structure was unaffected by COOL because poultry is currently excluded from COOL legislation. Consequently, increased COOL marketing costs in the beef and pork sectors that increase retail beef and pork prices encourage consumers to substitute towards poultry products. This demand increase causes subsequent increases in poultry prices, quantities, and producer and consumer surplus in the poultry industry.

For authors from Montana State University (Gary Brester, John Marsh, and Joseph Atwood) and magazine editors from Texas A&M university, the conclusion that "the poultry industry benefits at the beef industry's expense" counts as very faint praise for COOL.

1 comment:

Anonymous said...

ON BEEF PRODUCTS, SPECIFICALLY CHOPPED BEEF, LABELS HAVE 3 COUNTRIES OF ORIGIN LISTED ON THE LABEL. i.e. US CAN MEX - really? all three contries are involved in mixing beef in one package?