Agreement with Mexico about tomato imports

Agriculture Secretary Tom Vilsack on Feb. 2 announced a new agreement with Mexico, under which Mexico's tomato exports must satisfy a minimum price.

In adopting a moderately protectionist policy by mutual agreement, the two countries avoid a trade conflict that could have harmed their commerce more seriously.

"I applaud the good work of Undersecretary Sánchez and the Commerce Department to forge this important agreement to allow our domestic tomato industry to compete on a level playing field. The draft agreement meets the requirements of U.S. antidumping law and provides an effective remedy for our domestic tomato producers, further bolstering agriculture as a bright spot in our nation's economy. Ultimately, the Obama Administration forged an agreement that will restore stability and confidence to the U.S. tomato market and ensure fair trade in fresh tomatoes through increased reference prices, coverage and strengthened enforcement. The United States is one of the world's leading producers of tasty, high-quality tomatoes. Our U.S. fresh and processed tomatoes account for more than $2 billion in cash receipts and support thousands of American jobs in our food industry, shipping, processing and more."

Undersecretary Francisco J. Sánchez

The U.S. Food Policy blog recently discussed how agricultural labor markets in Mexico and the United States are interconnected.  If it is true that agricultural wages in Mexico are rising, it becomes easier for Mexico to agree to a price floor for Mexican tomato exports, addressing multiple problems simultaneously.  In a 2010 article for the Journal of Agricultural and Resource Economics (may be gated), Friedman School graduate student Wendy Johnecheck, Julie Caswell, and I studied the possible impact of hypothetical country-of-origin labeling (COOL) regulations on the U.S.-Mexican trade in tomatoes.

In my class on U.S. food policy, we explore (a) some occasions when import-competing businesses (such as U.S. tomato growers) have convinced the government to put up protective barriers and (b) other occasions when such barriers have been resisted by advocacy coalitions led by import buyers (such as major retail chains) and other U.S. agricultural industries that rely on exports (such as wheat producers).  These U.S. advocacy coalitions are politically important, because, of course, Mexican producer groups have no direct representation in the U.S. Congress.

A former student from this class today pointed out yesterday's New York Times coverage of the new tomato deal, which echoes these points.  In the article, Stephanie Strom explains the advocacy coalitions that make the new policy politically feasible:

The Mexicans enlisted roughly 370 American businesses, including Wal-Mart Stores and meat and vegetable producers, to argue their cause. Those businesses feared a bitter trade war like the one the Mexicans waged over trucking, which imposed stiff tariffs on American goods headed south. 

Oh, how COOL

Many of you may have noticed yet another “thing” on your food labels. While Country Of Origin Labeling (or COOL) was already printed on wild and farm-raised fish and shellfish, the 2008 Farm Bill has expanded the list to cover some muscle cuts of meats, ground meats, perishable agriculture commodities, ginseng and nuts. The implementation is the responsibility of the USDA’s Agricultural Marketing Service and so far, as expected, their job has been far from cool.

The legislation has roots in the 2002 farm bill. On January 27, 2004, Public Law 108-199 delayed implementation of mandatory COOL for all covered commodities except wild and farm-raised fish and shellfish until September 30, 2006. On November 10, 2005, Public Law 109-97 delayed implementation of mandatory COOL for all covered commodities except wild and farm-raised fish and shellfish until September 30, 2008.

The bill has been framed as effort to provide consumers with information to make informed decision regarding where their food comes from, partially due to the recent attention to local food movements. What they tried to avoid was the ‘elephant in the room’ to all of us, food safety. The reason to avoid food safety? Maybe it is admitting that there is a problem with food safety in this country? Or maybe we don’t want to offend the countries we trade with? Whatever the reason, you are now going to know if you cow was a Canadian or if your tomatoes have been on further vacations then you.

Like most pieces of legislation there are a few exemptions to rule:

1. Non-PACA licensed stores. The Perishable Agricultural Commodities Act (PACA) is a federal law that regulates the produce industry (this could be butcher shops, convenience stores, etc.).

2. Food Service Establishments.

3. Certain processing methods:
- any covered commodity that has undergone processing that results in a change (cooking, curing, smoking, restructuring);
- any covered commodity that has been combined with another food product that is not water salt or sugar (does this mean a rise in peas and carrots? Oh dear!).

And it is these “exemptions” that seem to be causing a lot of ruckus. Say for instance: mixed salad versus bagged spinach? Mixed salad wouldn’t be covered, but the spinach would require labeling. How about a fruit cup that contains melons and strawberries? Nope, does not require a COOL label.

Dried fruit is not subject to COOL labeling requirements since the drying process changes the character of the fruit. Mushrooms, if fresh, are covered. Dried mushrooms are not covered. Packages of different colored sweet peppers (green, yellow, and/or red), combined in a package, will require country of origin notification because there is one U.S. Grade Standard for sweet peppers, regardless of the color.

And if you think the produce industry is confused on how to implement, the coolness continues for the meat industry responsible for muscle cuts beef, veal, pork, lamb and chicken and the ground counterparts.
a) Product of the U.S.—meat from animals born, raised, and slaughtered in the United States or from animals present in the United States on or prior to July 15, 2008.
b) Product of the U.S., Country X—meat from animals born in Country X and raised and slaughtered in the United States.
c)Meat from these animals were not exclusively born, raised, and slaughtered in the United States or imported for immediate slaughter -- meat from animals imported into the United States for immediate slaughter.
d) Product of Country X—foreign meat imported into the United States

Attempt at implementation has been revealing how meat is carried through the supply chain. From birth, to stockyard, to feedlot, to slaughter, animals can have quite a stamped passport and these complexities of the livestock industry may have some product labels listing multiple countries. That's especially true of ground beef, because some meat processors combine cuts from a number of countries to make ground meat and hamburger patties.

Meat packers and large agribusinesses initially opposed the rule because they want continued access to imported (often cheaper) meat, without facing a penalty in the marketplace from consumers who may think American meat is safer. They also argued that the label is unnecessary, too expensive and would be a record keeping nightmare (in this case, "they" was Tyson vice president testifying against COOL at USDA education session).

Proponents for the bill consider COOL a feather in their cap. They believe the greatest advantage is knowing exactly where your food comes from. They argue that COOL gives consumers the ability: to support more local economies, to choose fresher food, and could ultimately prevent food safety problems associated with imported foods.

Some caveats, because what would policy be without them?

1. There is a loophole: Food further processed in foreign countries, may still receive US determination i.e. baby carrots

2. Commingled commodities: goods from mixed countries require all countries to be identified i.e. a mixed bin of tomatoes

Whether you are for or against Country Of Origin Labeling, what this bill teaches us is that these laws are never cut and dry. Once the rule making and regulation begins, what sounded like a great idea can sometime turn into something that is not-so-COOL.

Note: cross-posted from Epicurean Ideal.

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.

The internet and food policy advocacy

In yesterday's Seattle Post-Intelligencer, Bob Condor offered U.S. Food Policy's coverage of Country of Origin Labeling (COOL) as an example of using the internet to organize communities in support of public interest food policy positions. Condor's jumping off point was a description of the Chicago-based public interest marketing organization Sustain, which supports family and organic farming in the Midwest:

There are many perspectives about whether the Internet is dividing us or uniting people and communities.

Food activists tend to fall on the side of communitybuilding.

"It used to take days or even weeks to get the word out about an issue or rally," one organic food activist told me several years ago. "Our new weapon is e-mail. We can mobilize people in hours now. It's powerful -- and, believe me, we need it."

That activist, Chicagobased Jim Slama, and his green public relations and marketing firm, Sustain (sustainusa.org), were central figures in convincing U.S. consumers to send more than 275,000 e-mails and postings to the Department of Agriculture in 2000 to take exception to the proposed National Organic Standards.

Before then, organic certification was more in the hands of food activists who wanted to discourage the use of pesticides and other chemicals in plants. The private National Organic Standards Board was adamant that the proposed rules would allow irradiated and/or genetically engineered foods to qualify as organic, plus sewage sludge would be acceptable for watering any "organic"-label food.

Yuck.

But those 275,000 comments worked, thanks in large part to Slama and other activists spreading the word about an extended public comment period. The USDA couldn't neglect the number of comments (and prospective voters) no matter how many lobbyists might be knocking on their doors. By 2001, the final organic rule was passed after reinstating prohibitions on irradiation, genetically modified seed and that nasty sewage sludge.

Sustain's project on family farming, FamilyFarmed.org, was recently chosen at the NetSquared conference as one of 21 public interest projects for future funding and mentoring from leading social networking experts in Silicon Valley.

USDA reopens public comment period on country-of-origin labeling (COOL) amidst beef industry infighting

The U.S. beef industry is in an uproar this month over a policy adopted by the U.S. Congress in 2002, but never yet implemented, which would require a label to inform consumers about the country of origin for meat products.

The American Meat Institute (AMI), which represents packers and processors, has lobbied heavily against country-of-origin labeling (COOL) and published a fierce print ad (.pdf) accusing COOL supporters of being protectionists (see image below).

This accusation outraged the Ranchers Cattlemen's Legal Action Fund (R-Calf), one of several disparate trade associations that seek to represent the interests of ranchers. R-Calf is a prominent supporter of COOL (see fact sheet [.pdf]). After several rounds of angry letters back and forth, R-Calf worried in a June 18 letter (.pdf) about the level of AMI influence with the Secretary of Agriculture on this issue:

If AMI professes to know what requirements the Secretary intends to impose on industry participants to implement the COOL law, then AMI must have been involved in unlawful, ex parte communications with the Secretary in order to obtain such knowledge. If this is the case, then the Secretary’s action of June 15, 2007, to reopen the public comment period for 60 days for the proposed rule for COOL for beef, lamb, pork, and other commodities is a shell game, inasmuch as the outcome of the rulemaking process is already known by AMI before the agency even considers public comments.

If you don't believe the fix is already in, express your own view about whether producers should be required to inform you about the country of origin for your meat. Submit your own public comment to USDA before August 20 (see here for current links and here for instructions on submission).

[Update next day: Here is an improvement on the instructions for sending comments to USDA: "Comments are due August 20 and should be submitted online at www.regulations.gov. Additional means of comment submission are via e-mail to cool@usda.gov; by mail to Country of Origin Labeling Program, Room 2607-S, Agricultural Marketing Service, 1400 Independence Avenue SW, Stop 0254, Washington, DC 2025-0254; or by fax to (202) 720 – 1112.. Additional information on this and the COOL program can be found at http://www.ams.usda.gov/cool."]