Friday, August 24, 2007

COOL complications

The Boston Globe reports on some of the complications of country-of-origin-labeling (COOL):
After years of delays, labels for a wider variety of foods -- including beef, lamb, pork, perishable agricultural products, and peanuts -- are set to become mandatory by September 2008. A bill passed by the US House of Representatives in early August is expected to be taken up by the Senate and signed by President Bush with few revisions. But despite the long-awaited regulations, plenty of food still will not carry country labels.

Consider poultry. Because opponents of the legislation were so strongly against requiring country labels and so little imported poultry is sold in the United States, legislators exempted it to avoid jeopardizing the bill, said a staffer at the US House Agriculture Committee.

Then there are the labeling law's quirks. For example, jalapeno peppers sold fresh will have to be labeled. But if they're sold frozen as "poppers" -- wrapped in a jacket of breading with cream cheese filling -- they will be exempt.

And a laundry list of countries are likely to grace various hamburger labels, owing to the multitude of countries that send beef here for processing. But if that same beef is used as an ingredient in a Marie Callender's frozen dinner, for instance, the dinner's maker -- ConAgra Foods -- will not be required to note the country of origin.

Opponents have seized upon what they call the arbitrary nature of the legislation. Why pigs and not poultry? Why green peanuts but not peanut butter?
Unfortunately, mandatory COOL is an example of a task that is difficult for government agencies, and which might be better addressed with market tools. Economists tend to think that, if consumers really want to know about country of origin, an entrepreneur whose product comes from a preferred country (U.S., for example, or New Zealand) will probably find a profit-making opportunity to provide that information voluntarily. Once some sellers provide this information, consumers will catch on that meat without labels probably comes from a less-preferred country.

At present, the economist's view in its purest form would be naive. There is strong survey evidence of consumer desire for country information, and yet insufficient voluntary labeling. Perhaps the best role for the government would be to break down some of the existing institutional barriers to better flow of country-of-origin information. Some of these barriers may be generated by meat industry trade associations. Perhaps some public funding for tools and systems to provide food brands with information about the country of origins used by their suppliers would be a better option than putting government agencies in the position of making difficult decisions about exactly which products should or should not be subject to mandatory COOL.

I point out the possible shortcomings of mandatory COOL with some hesitation. It is tempting to bite my toungue on grounds that anything the American Meat Institute hates must have some merit. The main impact of mandatory COOL, even if it were bad policy, would be to raise the costs of meat slightly and increase consumer awareness that some of their meat comes from unsafe sources. The consequences of doubtful policy on this issue might be better nutrition. But that's faint praise for mandatory COOL.


Marc said...

With just four companies controlling about 80% of the market in each of the poultry, beef and pork sectors (according to a CRS report that I can't find right now), couldn't one make the argument that the market is fundamentally broken, and therefore shoppers' preferences for COOL'd meat aren't properly accounted for in the market mechanism? Many cities probably have just one or two providers in each of the sectors, providers that don't really care what consumers think.

Anonymous said...

What it's likely to do is diminish the proclaimed interest people have in where their food comes from. By far the majority of people by based on price, convenience, and quality. When they start seeing that the food they love has ingredients from all over the world, they'll probably care less when they find out something that they were hesitant about before comes from a foreign country. Meanwhile, their California grown spinach will be giving someone e coli.