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COUNTRY-OF-ORIGIN LABELING
WEDNESDAY, APRIL 28, 1999
House of Representatives,
Subcommittee on Livestock and Horticulture,
Committee on Agriculture,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:20 a.m., in room 1300, Longworth House Office Building, Hon. Richard W. Pombo (chairman of the subcommittee) presiding.
Present: Representatives Boehner, Everett, Lucas of Kentucky, Chenoweth, Schaffer, Calvert, Gutknecht, Combest [ex officio], Peterson, Holden, Condit, Dooley, Stabenow, Etheridge, Boswell, Lucas, and Stenholm [ex officio].
Also present: Representatives Moran, Walden, Barrett, Thune, Ros-Lehtinen, and Minge.
Staff present: William E. O'Conner, Jr., staff director; Tom Sell, Pete Thomson, John Goldberg, Christopher D'Arcy, Brent Gattis, Callista Bisek, Wanda Worsham, clerk; Andy Baker, Howard Conley, and Andy Johnson.
OPENING STATEMENT OF HON. RICHARD W. POMBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. POMBO. Good morning. This meeting of the Subcommittee on Livestock and Horticulture to receive testimony on the issue of country-of-origin labeling for meat and produce will come to order.
Today's hearing will allow this subcommittee to examine the issue of country-of-origin labeling for meat and produce. Although the committee has been gathering information on this subject for some time, this will be the first hearing on the matter in quite a while. I hope to provide the members here today with a broad overview of this complicated, many-sided, and often time emotional issue. Without being limited to any one specific piece of legislation, we can explore this matter more fully attempting to understand the philosophies, the costs, the benefits, and the alternatives to mandated country-of-origin labeling.
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It was my hope to open this hearing with testimony surrounding two studies mandated by Congress in Public Law 105–277 and due on April 21 of this year. One, by the General Accounting Office on country-of-origin labeling for produce was completed on time, and GAO officials made themselves to brief congressional staff on two separate occasions. I want to thank the GAO for their being responsive to the needs of this subcommittee.
I am, however, very disturbed by the lack of such responsiveness by the Department of Agriculture with regard to their report, due the same day, on country-of-origin labeling. Although most of USDA's reports are late, this committee signaled to the Department for months its intentions to hold hearings soon after the release of the two reports. The committee was not informed until Monday of this week that their testimony would be late and that the report would not be completed at all, in violation of the law—a week after it was due. Such an attitude by the Department makes the oversight responsibilities of this subcommittee more difficult. I am requesting, today, a letter from the Secretary outlining why this report is late and the steps that will be taken to ensure that future reports receive the priority and attention required. From habitually late testimony, to unfinished reports mandated by law, to rules and regulations that are promised that sit on someone's desk while the seasons change—added together, these examples raise serious concerns about the nonchalant, if not negligent, attitude adopted toward this committee's work on behalf of American agriculture by some at the Department.
Turning to the issue at hand, I am looking forward to the testimony to explore this labeling issues so that members can better understand and appreciate all of its aspects and make sense of the rhetoric. In the final analysis, I am most interested in whether or not country-of-origin labeling, mandatory or voluntary, is a tool for producers to earn more in the marketplace. If it is, then I want to know about the methods and costs of compliance in enforcement as well as any potential trade impact. Only when we understand these points can we determine the value of any country-of-origin labeling proposal.
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I would now like to welcome all of our guests and witnesses here today and to yield to the ranking member of the subcommittee, Mr. Peterson, for any statement he may have.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
Mr. PETERSON. Thank you, Mr. Chairman, for taking the time to thoroughly state today's important topic. I believe the question of whether or not to require additional labeling of fresh food products is still largely unanswered, and so I welcome this discussion. I understand and respect the driving forces behind some of the current proposals—low commodity prices and consumer awareness both deserve serious attention. Minnesota farmers and ranchers are not immune to the economic downturn that we are going through, far from it. However, I believe it is in everyone's best interest to ensure that our limited Federal resources are used in the most effective and prudent manner.
As we begin to study country-of-origin labeling more closely, there are questions I hope we will address. Number one, what are the costs and benefits of additional labeling? It is a rare day when additional bureaucracy can benefit either farmer or consumer, and so we need to move cautiously in this arena. How exactly would the proposal benefit farmers with higher prices and consumers with safer food? Let us make sure we are addressing the actual needs with any new legislation.
Number 2, what signals are sent to our trading partners with labeling proposals? As we continue to struggle to get the world community to use sound, scientific evidence in their labeling, whether it is hormones or genetically altered products, is the scientific evidence for additional labeling available.
I would also like to say that some of these problems, I think, would not be here had it not been for the passage of GATT and NAFTA, and I just want to take this opportunity to make another pitch for a proposal that I put up last year which would give the Agriculture Committee equal standing in the fast track arena with the Ways and Means Committee, and I intend to reintroduce that bill as a free-standing bill and would encourage all of my colleagues on this committee and all the members of the agriculture community to take a close look at that, because I think if we would have had that framework last time, we may not have been facing some of these problems.
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Mr. Chairman, today, I look forward to receiving today's testimony and engaging in a healthy debate, and I especially welcome my colleagues to the subcommittee and look forward to hearing their testimony. I am also glad to have the GAO and USDA here to provide us with the results of their studies on the effects of country-of-origin labeling. I would just comment to the USDA that although it is not a problem unique to this Department or this administration, it is also a deep disappointment when the reports are late, so I hope that is corrected shortly, and I want to say to the USDA that your analysis is essential to this debate, and I look forward to your comments as well as the soon to be released report.
So, again, thank you, Mr. Chairman, for calling this hearing, and I look forward to hearing the testimony.
Mr. POMBO. Thank you, Mr. Peterson.
I would like to recognize the chairman of the full committee, Mr. Combest, for an opening statement.
OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
The CHAIRMAN. Thank you, Mr. Chairman. I would like to thank you, Mr. Chairman, for having today's hearing on the subject of country-of-origin labeling on agriculture commodities. The purpose of this hearing is to examine the subject of country-of-origin labeling and to review the two statutorily mandated reports on the topic. GAO provided a report on product labeling on April 21, the due date, and has briefed staff on their findings. In contrast, the U.S. Department of Agriculture, in apparent violation of the law, has failed to comply and to complete the meat labeling report on time. USDA was even unwilling to brief the committee on the work completed so far. It is particularly puzzling since this is a topic of major concern to so many people, and according to his public statements, Secretary Glickman, himself.
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I had the occasion to meet with Under Secretary for Food Safety, Kathy Woteki, on March 15 about a number of items the Department was working on at that time. One of these items was this report on country-of-origin labeling. At that time, she told me that enforcement costs for the Food Safety Inspection Service, alone, would amount to $60 million a year. Since this represents about 10 percent of the agency's operating budget, she said it raises concerns about undermining the agency's responsibility to provide inspection service in meat and poultry slaughter and processing facilities.
Under Secretary Woteki also indicated that the Department was having a very difficult time identifying any significant benefits for livestock producers. Since my primary interest in country-of-origin labeling is to determine whether or not it has potential to help producers earn more from the marketplace, I found this conclusion to be quite disappointing.
In any event, I encouraged the subcommittee chairman to schedule a hearing right after the April 21 date so that colleagues could have an opportunity to hear and evaluate both of the mandated studies. It is very unfortunate that USDA appears to have been unable to comply with the congressional mandate. The Department's failure makes it that much more difficult to reach a thoughtful conclusion on the issue.
Since we will be unable to review the administration's report on country-of-origin labeling for meat, let me offer a few of my thoughts on the subject. I believe all of today's witnesses would agree that the label of any product serves producers best when it provides information which encourages consumers to purchase it. This is the intent of all of the country-of-origin labeling proposals—selling more farmers' and ranchers' products. By associating these products with the positive feeling consumers have with their country, State or region, we hope consumers choose on behalf of our constituents.
My colleagues will find at their seat an example of what I am talking about. On April 8, the Texas Department of Agriculture rolled out a campaign to encourage Texans to choose Texas products first. ''Go Texan'' is a campaign which employs a distinctive brand in promoting Texas food, natural fibers, leather, wine, horticulture, and all products grown or produced in my home State. Texas has enlisted actor Tommy Lee Jones and baseball Hall-of-Famer Nolan Ryan as a part of this effort. I would like to show you a short commercial that kicked off in this pro-Texas campaign.
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[Commercial shown.]
I am sure my colleagues have constituents that feel as strongly about their home State's products as Nolan Ryan does about Texas. Everyone has heard of Idaho potatoes, Washington State apples, Vermont maple syrup, and Omaha beef. These products tap into consumers' loyalties in a positive way when they are making their buying decisions. Many of the witnesses today understand this idea because they represent producers that participate in check-off promotional programs based on the commodities themselves.
As Texas and other examples have shown, there is no reason why we can't come up with creative ways to promote products based on their State, region, or country of origin. What I like best about efforts such as these is that they allow producers, processors, and retailers to control the message in a way that targets consumers better than any federally mandated labeling requirement ever could. I am confident that producers will be more prudent about the costs associated in this type of labeling than Government bureaucrats.
As this committee continues to study the notion of country-of-origin labeling, I hope my colleagues will spend some time to consider not just the merits of the idea but the best way to accomplish it. Thank you, Mr. Chairman.
Mr. POMBO. Thank you.
Mr. Stenholm.
OPENING STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. STENHOLM. Thank you, Mr. Chairman, and thank you for holding this hearing today. It is evidence of the seriousness of this matter and of the importance to the sheep and cattle industry. I have the privilege of having a V.I.P. on the second panel this morning, a voter in the 17th district of Texas, Mr. A.H. ''Chico'' Denis. Chico, I welcome you at this time to Washington and thank you for testifying today.
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We have been discussing this issue, now, for over 2 years without benefit of hearing. Given the recent release of the GAO report on labeling for produce, I think this hearing today is very timely. I am hopeful we will continue this discussion when the USDA report on labeling is released.
I was very disappointed to learn yesterday that the Secretary had decided not to include in the USDA report a study addressing the fact that imported meat products are being graded and labeled as USDA Choice. Needless to say, this is causing confusion in the marketplace. I believe Chico will address this issue in his remarks, and I look forward to hearing his testimony.
Ms. Wilcox, using your criteria outlined in last year's appropriation bill for the country-of-origin labeling report, I urge the Secretary to finish the job by beginning to work immediately on a comprehensive study of the potential effects of prohibiting quality grading of imported beef and lamb. I am not asking the Secretary to add this to the country-of-origin labeling study that is currently in the approval process. I do not want the Secretary to delay that study in any way in order to complete the study I am requesting on grading. These are both important issues and should be studied and considered as soon as possible.
Regarding the country-of-origin labeling issue, I have noted the legitimate concerns raised by retailers and processors over costs of enforcement and trade implications of country-of-origin labeling. These costs usually are passed down to the producer, and I hope that we consider that. I ask opponents of this effort to reexamine the goals of the legislation that is before us, to see if there are ways to address the very serious concerns reflected in a country-of-origin labeling program, including the consumers' desire to know more about the products they are eating. If retailers and processors work with consumers and producers, I am confident we can design a country-of-origin labeling program that is consistent with our international obligations and that efficiently provides the information that consumers will value.
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Again, Mr. Chairman, I thank you for this hearing. It is very timely, and I believe this will ultimately address a problem that has been around for quite awhile.
Mr. POMBO. Thank you, Mr. Stenholm.
I would like to unanimous consent that all other opening statements will be included in the record at this time.
[The prepared statements of Members follow:]
PREPARED STATEMENT OF HON. BILL BARRETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA
Thank you, Mr. Chairman for holding this hearing and allowing me to participate in it today. I'm not a member of the subcommittee, but I've always been personally interested in livestock issues, especially as we've seen U.S. producers suffer for several years from low prices, rising costs, and increased regulation.
The country of origin labeling proposals currently before Congress pose a difficult dilemma for House Agriculture Committee members. This is a highly complex issue. Unfortunately, both sides on this debate have attempted to reduce the issue to 30-second sound bites. ''Consumers have the right to know where their beef comes from. '' ''We can't do it because it will cost too much.'' ''It will be a deterrent to free trade.'' These are the comments I hear.
Well, each of these statements contain some truth. However, I contend there are real issues to address. U.S. livestock producers are hurting, and packers, processors, and retailers are right to be concerned about the consequences of knee-jerk policy decisions. But the tone of this debate has become so heated I think the goal of creating good policy has been forgotten.
I continue to have an open mind on country of origin labeling. My primary concern is to ensure that Congress doesn't end up doing something that hurts cattle producers more than it helps. We need exports not unjustified, non-tariff barriers. We need to focus on expanding trade to raise everyone's standard of living not protectionist policies that may ''help'' in the short run but really end up hurting very badly in the long run.
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From my extensive studies on the subject, I must say the hard facts seem to stack up against labeling. I'm eager to hear from the panelists today and to finally have a full and open debate on country of origin labeling. And even if this hearing only provides a forum, I would hope the proponents and opponents could get beyond the sound bites and really discuss the problems all of agriculture faces today and seek options, such as access to the USDA grade shield for imported cattle, to move the debate forward.
PREPARED STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON
Mr. Chairman, thank you for the opportunity to comment today on an issue of great importance to the cattle producers in the Second Congressional District of Oregon—country of origin meat labeling. During the first 4 months of my service to the second district, I have visited 17 of the 20 counties that I represent. During my travels I have had the opportunity to meet and talk with the ranchers of my rural district and one message above all from them has been clear: Congress must pass country of origin meat labeling legislation with specific provisions. Family ranchers are the backbone of rural America's way of life and economy, and most ranches have been in the family for generations. Ranchers in my vast, agricultural district are no exception. They keep things together, they persevere . But family operators in my district are at risk, and because of the lingering beef market predicament and other regulatory factors, many of my producers believe permanent disaster is just around the comer if Congress does not act to stabilize the industry.
If we had unlimited time today, I could read pages of notes from numerous meetings and conversations I've had and letters I've received from family ranchers in my district. The No. 1 priority to them right now is required country of origin meat labeling. It's a matter of extreme importance to my ranchers. Producers have told me that Congress needs to act now to legislate country of origin meat labeling or their livelihoods will be in jeopardy. They tell me that legislation must include three main provisions: That all meat and meat products be labeled indicating exactly what is in the package and the country of its origin; that ''U.S. Meat'' should mean meat or meat products that came from animals that spent their entire life in the United States; and that imported meat shall be labeled at the U.S. border and remain labeled until it reaches the ultimate purchaser.
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The cattlemen in my district are proud, hard-working people and they produce top-quality livestock. They strongly desire to be able to compete on a level playing field with those that export beef into the U.S. Oregon's cattlemen do not want foreign beef to be passed
off as a U.S. product and feel strongly that consumers need to know what they are eating and feeding their families.
I applaud Chairman Pombo and Ranking Member Peterson for having this hearing today to review this very important issue, and letting me share the concerns of Oregon's ranchers. I am very disappointed that USDA was not able to provide the report on this matter as directed by Congress in the fiscal year 1999 appropriations legislation last year. Such information is critical as we seek to understand this vital issue
Thank you again Mr. Chairman, and Ranking Member Peterson, for allowing me to be here with you today as we discuss this issue of great importance.
PREPARED STATEMENT OF HON. DEBBIE STABENOW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
I appreciate the opportunity to participate in today's hearing on the issue of country of origin labeling. Our Nation's current law requires that many imported food items bear a label that informs the purchaser of the product's country of origin. Several bills have been introduced in this Congress to expand these labeling requirements. Today's hearing should move the debate on this issue forward. I am pleased that all sectors of the industry from producers to processors are represented at today's hearing. Their testimony will provide valuable insight as this subcommittee continues its consideration of country of origin labeling.
Food safety is an issue that is on everyone's minds today. In fact, back in Michigan, folks are still very concerned about the recent Listeria outbreak in the Bil Mar processing facility. Michigan also experienced another food safety tragedy, when students in the school lunch program consumed tainted strawberries. Consumer advocates have approached me and offered country of origin labeling as one solution for reducing the numbers of deaths and illness associated with food safety in this nation. I have not been convinced by the evidence shared with me to date that country of origin labeling is a viable solution. I encourage today's panels to share their data with me on the impact of country of origin labeling on food safety concerns.
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I have heard my State, Michigan, referred to as the ''salad bowl'' of the Nation. I think that is an accurate description. We grow everything from lettuce, asparagus, and beets to blueberries, cherries, and apples. In fact, Michigan is second only to California in our diversity of crops. We also have a significant dairy, pork, lamb, and beef producers. I am always looking for a way to help Michigan's agricultural community add value to their products here in the domestic market as well as on the foreign market. Our Nation has an international reputation for growing and producing the best food in the world. Proponents of country of origin labeling suggest that country of origin labeling will increase the demand for our products.
There are concerns that the labeling requirements be will be overly expensive. Even worse, some argue that the labeling requirements will be viewed as a non-tariff trade barrier by countries seeking to import their products into the U.S. The recent Government Accounting Office report on country of origin labeling confirmed that the labeling might have trade implications. The report also concluded that it is difficult to determine the precise magnitude, but that production costs would rise with new labeling requirements in place. Furthermore, the GAO determined that while the labeling might provide some food safety benefits, the cost of enforcement could detract from other food safety activities within the Food and Drug Administration.
I agree that consumers have a right to know about the products they purchase. But, they also have right to food that is affordable and safe. Furthermore, in light of the severe condition of our agricultural economy, this committee must do everything it can to help farm country. Today's hearing must balance all these interests in the consideration of country of origin labeling.
Mr. POMBO. I will now turn to our first panel and recognize our colleagues, all of which have worked very diligently on this effort over the past several years.
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To start with, I would like to recognize Mrs. Chenoweth for her statement.
STATEMENT OF HON. HELEN CHENOWETH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
Mrs. CHENOWETH. Thank you, Mr. Chairman and Chairman Combest. Without objection, I would like to just speak extemporaneously, but have the entire text of my testimony entered into the record.
Mr. POMBO. Without objection, all written testimony will be included in the record.
Mrs. CHENOWETH. Thank you. This morning, I got up thinking about this hearing, because I am so grateful that you are finally holding the hearing. This is an issue that the Worthlin Worldwide Polling Company has shown in studies that 86 percent of the women favor country-of-origin labeling on their meat products. The aggregate of men and women together, studies showed that 78 percent of the aggregate, men and women, preferred to know where their meat comes from, and they favor country-of-origin labeling meat labeling. There is an 8 percent difference that exceeds the men's numbers with women, because this really is a concern that women have, and I am sitting here testifying as a mom, as a congresswoman, as a grandmom to a lot of grey suits up there, and this is an issue that needs to reach out beyond the Beltway in Washington, DC, because it is an issue that has life, and it is of great concern to the consumers.
The reason is that Americans have learned to be label readers. For instance, I have here, Mr. Chairman, the sales information on a Jeep Cherokee, and right here, clearly indicating, it says ''Country of Origin: Japan.'' We buy toys that are labeled as to the country of origin. These Hot Wheels—my grandsons love them—these Hot Wheels, on the back it says ''Made in Taiwan or Malaysia as marked.'' You turn it over and look at the bottom, and it is marked ''Made in Malaysia.'' Clothes that we wear—this is a hat from the Owhyee cattleman in Idaho, by the way, and it is marked, the country of origin, ''Made in Thailand.'' Dog bones—we all love our dogs, and we want to make sure that our dogs are healthy. This is a dog bone that has been imported from Brazil. This has been made in Brazil; it is clearly marked. This is a dog bone that is clearly marked ''Made in the U.S.A.,'' and they brag about the fact that it is made from the best American rawhide available.
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But, we look at the meat, and look at all of the information on these labels. Why, we have nutrition information, which we, as homemakers, really appreciate, and there is a lot of information here on these nutrition labels. There is a funny little stamp up here that says, ''Guaranteed meats,'' whatever that means. But, also, there is very detailed cooking instructions on here, and it also is labeled with regard to 80 percent lean ground beef and 20 percent fat; all kinds of information.
But, Mr. Chairman, members of the committee, what is missing? What is missing is that it doesn't tell us where the meat came from, and, today, we are importing meat from as far away as Croatia and Korea, New Zealand. Twenty-two percent of our beef that we are eating unknowingly—picking up one out of ever five pieces of meat that we eat unknowingly has come from a foreign country, and we have believed in the American USDA stamp of approval, but the fact is that USDA has inspected less than 1 percent of the foreign meat. They inspect the facilities overseas, but the meat coming into this country, less than 1 percent of it is inspected. Today, 40 percent of the lamb that we are eating comes from foreign countries, and I think about 2 percent of the pork that is coming in.
It is interesting, we are concerned, especially this year, about costs, but we just can't nail that cost down. First, we hear $60 million, then we hear $100 million, then, low and behold, it suddenly has ratcheted up to $1 billion, but studies that I have been involved in—because I have been working hard on this for 3 years—studies show that the American consumer is willing to pay more to know that the meat that they are purchasing is the kind of meat that they trust. Americans know that the American meat producer produces their meat to the highest food safety and environmental quality of anyone else in the entire world.
And America is sort of behind the 8-ball when it comes to country-of-origin meat labeling, because there are exactly 32 other countries that already require country-of-origin meat labeling, including Argentina, Brazil, Bosnia, Chile, Costa Rica, El Salvador, Guatemala, Hungary, Indonesia, Israel, Korea, Malaysia, Mexico, Philippines, the Arab countries, Venezuela, and I could go on and on, Mr. Chairman, but this is an issue that—how can you put the cost on the value of a child's life when it comes to being able to trace back and make sure that we know the origin of any disease, and if there is a disease problem in another country, the American consumer wants to be able to go to the meat counter and know for sure that she has purchased American meat. Thank you very much.
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[The prepared statement of Mrs. Chenoweth appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
Mr. Pomeroy.
STATEMENT OF HON. EARL POMEROY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA
Mr. POMEROY. Mr. Chairman, thank you for holding this hearing. This is exactly the place where we need to hash these issues out, the Agriculture Committee of the U.S. House; I appreciate this hearing.
It has been my pleasure to work with Helen Chenoweth, such a compelling advocate on this important issue. I think it is an issue as clear as night and day. In every sector of our economy we label the products by their country of origin, from T-shirts, to telephones, computer, stereos, microwaves, automobiles; just look at their label. But, remarkably, when it comes to the consumer going to the grocery store to purchase food for their family, they have no idea the point of origination.
I represent thousands of family farmers and ranchers, and they believe that we our doing our Nation's consumers an injustice by failing to provide them with country of origin information. America's cattle and sheep producers invest billions every year to produce the safest, leanest, most nutritious products in the world, but without country-of-origin labeling, American consumers have no idea where the product originates. Cattle ranchers throughout North Dakota support country-of-origin labeling, because they have extreme confidence in the product they produce. They believe that American consumers deserve to know whether the meat selections they consider at the grocery store were grown in the United States, Brazil, Mexico, Denmark, wherever.
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We have put in place in this country, as you all well know, comprehensive consumer quality protections designed to assure that U.S. agriculture products, including meat, pass every exacting standard for food safety and quality. The American consumer has confidence in these products, U.S. agriculture products. It, therefore, makes no sense in the world to fail to provide the U.S. consumer with the information to know whether the food item they are considering was grown here or half way around the world.
This is more than a matter, as Helen as so well mentioned, far beyond the wishes of U.S. cattle producers. The survey, the Worthlin Worldwide survey of 1,000 consumers, 78 percent support labeling; 86 percent of women in that critical 35 to 54 range so often the primary grocery shoppers for their families. A national survey in 1995 found 3 out of 4 consumers favor country-of-origin labeling and would buy U.S. products even if they cost more.
Now, we will hear, this morning, about scare tactics from the opponents of this legislation. They want to say it costs more, bureaucracy, $1 billion in costs. Let us recognize this for what it is: scare tactics by large processors intent on sliding in foreign product with U.S. beef. The U.S. Department of Agriculture's preliminary estimates may cost as much as $60 million. You factor this out, it is just 20 cents per year per consumer. During last year's 1999 agriculture appropriations debate, CBO scored a similar amendment offered at that time and came up with no cost to taxpayers for this labeling requirement.
An argument some will use is that labeling is somehow outdated, protectionist policy. I find this pretty unpersuasive, especially in light of the fact that is specifically allowed under the General Agreement on Trade and Tariffs, and 25 or maybe even more, as someone has mentioned, 32 of our trading partners label their meat products by their country-of-origin labeling. How is country-of-origin labeling by the U.S. protectionist when out trading partners are doing it in their domestic markets?
Last Congress, my office called every single meat retailer in Bismarck, ND. We think of ourselves as the heart of cattle country. Grocery stores, butcher shops, even restaurants, we tried to find one who sold identified local beef products. Not a single one could verify their beef products by the country of origin, because their supplier, IBP, blends in foreign product and does not give them that information. In light of the fact that 22 percent of the meat sold in this country—almost one-fourth of the meat sold in this country—is shipped in from outside of the United States, we sure know there is an awful lot blending going on. It is small wonder even in North Dakota they couldn't verify the origin of the products sold.
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Country of origin is common sense; benefits American ranch and farm families; provides consumers with the right to know, and it is affordable for consumers and taxpayers; it is trade friendly, and it increases competition. I, therefore, look forward very much to continuing working with colleagues from across the aisle as well as agriculture interests right across the spectrum to pass this legislation. A constituent recently told me we label our T-shirts, by golly, it is time we also label our T-bones. Thank you.
[The prepared statement of Mr. Pomeroy appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
Mr. Hill.
STATEMENT OF HON. RICK HILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA
Mr. HILL. Thank you, Mr. Chairman, and I want to thank the ranking member for having this hearing, and if I could, Mr. Chairman, I would like to submit formal remarks for the record.
Mr. Chairman, this last weekend I played in a fundraising golf tournament, and maybe some of you did likewise, and all over this golf course there were coolers that were filled with refreshments, and this can came from one of those coolers, and it is a can, I think, probably everybody in this room recognizes, and if you are like me, I usually drink the same brand of refreshment. But, in all the coolers on the golf course that I looked in, I saw Diet Coke, Diet Pepsi, Classic Coke, Gatorade, Bud Light, Miller Lite, even the bottled water carried the Evian brand, but there were no, I repeat, there were no, none, no generic colas in those coolers. There were no bottles, there were no cans that were simply labeled beer. Now, I am sure it would have been cheaper for the sponsors of the golf tournament to fill those coolers with generic-labeled colas, beers, and beverages, but they chose not to. And that, Mr. Chairman, is what this hearing is all about—labels and brands. We live in the era of brands.
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Producers with readily recognized brands sell for more; they have higher stock values; they have broader margins, and they have better profits. They are more successful; they hire more employees; they invest in modern plants and machinery, and they are growing markets. They are the most successful enterprises in the world. What is this all about? There is a great economist by the name of Demming who explained some simple economic concepts to the world—some of you may be aware of his achievements. But, one of those was the transformation of the Japanese, because he taught the Japanese how to manufacture and market, at that time, the best cars, the best TVs, the best cameras, the best electronics in the world. They captured huge chunks of market share by following Mr. Demming's simple lead, and that lead was a simple economic concept, Mr. Chairman, that producers can determine the quality of their product, but it is the consumer who assigns value to that quality. Even if the producer has the highest quality, the producer will only be paid more if the consumer perceives that value.
Now, what does that have to do with nation-of-origin labeling? Well, Mr. Chairman, we have a problem, and the problem is that the farm producers' share of the consumer dollar is declining, and if we continue at this pace, the producers are simply going to go broke. No matter how hard they work at quality, until that quality is identified by the consumer, the producer can do nothing to increase his share of that value.
Nation-of-origin labeling is often opposed by those who say it is nothing more than protectionism. Nothing could be further from the truth. It is not about closing markets; it is about opening markets. I believe that we produce the highest quality beef and lamb in the world. I know that the USDA stamp is recognized worldwide. Now, we don't ask Coke to lend its brand name to a competitor. The supermarkets who are here today to testify against labeling beef work hard to protect their brand, because they have invested heavily in promoting the quality they produce, and I say good for them. But, U.S. beef and lamb producers have invested heavily too by accepting lower prices to support food inspection and safety, and making the USDA label a world-class brand has come at their expense.
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In markets all over the world, meat products are labeled to origin, because consumers see value in knowing the origin. Polls indicate, as the earlier testimony has indicated, that 3 in 4 Americans want to know the origin of their meat, because they want consistency; they want quality, and they want safety.
Today, Canadians who oppose national origin labeling in the United States voluntarily label their meat sold in Japan. Why? Because it increases its value. In Europe, in Japan, and all around the world labeling is supported by consumers, and it results in rewards to producers, and it will here in America too. Today, a calf born in Canada; raised in Canada; fed and fattened in Canada, and slaughtered in Canada will carry a USDA grade and inspection stamp, and the consumer who purchases that beef at the counter believes it is buying a domestic product, and all the while U.S. producers pay a check-off to promote their beef and lamb consumption. It is not right, and it is not fair.
Safeway wouldn't pay a fee to promote IGA. We wouldn't ask Coke to pay a fee to promote Pepsi. Ford wouldn't want to pay a fee to promote Toyotas. Anybody who proposed doing that would be labeled as crazy. So, when U.S. meat producers simply ask for the right to label their product so that they can pay to promote it, it simply makes common sense to allow them to do it.
Mr. Chairman, my goal is to increase the income and the share the producers have of the consumers' dollar. I know of no other way to open that door for them so that they receive the value they deserve than to allow them to label their product. It is not as though, Mr. Chairman, that meat products carry no labels. Supermarkets put their label on meat for little cost. Why would they object to producers putting their label as well? Packers put their label on the boxed beef for very little cost. The only way that we are going to allow a producers' share of the consumer dollar to increase is for us to allow producers to be able to share in the reward for the increase in quality.
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Mr. Chairman, I thank you for the opportunity to testify. I hope this hearing leads to legislation.
[The prepared statement of Mr. Hill appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
Mrs. Bono.
STATEMENT OF HON. MARY BONO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. BONO. Thank you, Mr. Chairman, Ranking Minority Member Peterson, and the other distinguished members of the subcommittee, for giving me this opportunity to express my views on an issue that greatly concerns American consumers. Of course, I am referring to the country-of-origin labeling, specifically, the labeling of fresh produce.
Most of us are familiar with the labels placed on the products we buy that identify the country in which the product was produced. Fresh produce labeling is simple, inexpensive, and common sense practice to provide consumers with the same information already available in accordance with Federal law on virtually every other product we buy except fresh fruits and vegetables and meat. As I am sure you already know, I am the sponsor of H.R. 1145, a bill requiring that this information be made available to the consumers at the final point of sale, usually your local grocers. I am very pleased that this bill enjoys bipartisan support in both the House and the Senate.
Today, I would like to briefly comment on the recent GAO study on this subject. Like all parents, I care about the food that my family consumes. Of course, health and nutrition are of paramount importance. In making my purchasing decisions, as I am certain it is for all of you and many millions of other families, it is important to know what you are getting.
Although the GAO report confirms that according to recent polls approximately 75 percent of American consumers support country-of-origin labeling for fresh produce, I am concerned about the overall tone of the report and the inference a reader would draw from this study. The bulk of the study is devoted to exploring why fresh produce labeling is either too expensive or too time-consuming for both the Government and the retailer. Unfortunately, too little attention is paid to the successful example of Florida, the only State to pass a comparable State law.
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Before addressing some of my other specific concerns, I want to add at this time that I fully support free and fair trade. My bill, H.R. 1145, specifically avoids any language that would undermine our trade policies, and as a non-lawyer, I am amazed that when I ask how exactly does this practice allegedly violate any of our trade agreements nobody can give me a straight answer. Even this report acknowledges that many of our trading partners—Japan, France, England, Mexico, and many more, 28 in all— have similar laws. All we are seeking is harmonization in trading practices and fairness for our consumers and farmers.
Consumers want country-of-origin labeling for a number of reasons, including concerns about possible contamination and growing practices in other countries. The report is misleading when it discounts the effect produce labeling could have in preventing future health impacts to consumers when outbreaks of food-borne illness occur. The implication seems to be that the information would be of little use to consumers. I find that a bit of stretch. We need only to look at the recent CDC advisory warning shoppers to avoid Guatemalan raspberries. Common sense tells us that a simply country-of-origin label at the produce bin would have assisted stores and consumers in avoiding a potential health hazard.
There are many other legitimate reasons to support produce labeling, and I am please that the GAO report identifies that there are benefits to the consumer, but I wonder why the report included comments implying that retailers would be compelled to offer a consumer fewer choices if this legislation is enacted. Any of us who have visited markets like Fresh Fields in the Washington area or Jensen's in Palm Springs know that these grocery stores whose country-of-origin labeling is a positive marketing tool. And, once again, concerns about compliance costs are overstated compared with the real world experiences in Florida. In fact, routine inspections require about 15 minutes per visit, and when violations are found it takes only 5 minutes to process paperwork for new violations and 30 minutes for repeat violations. Rather than rely on speculation, I would urge the committee to look at the actual data contained in the testimony provided by Florida's deputy agriculture commissioner confirming that this is neither a time-consuming nor overly expensive regulation to enforce.
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Another issue raised was the impact labeling would have on the restaurant industry. However, my legislation exempts restaurants and other food service providers from this requirement. It is misleading to include these businesses in the section on compliance and enforcement if they are specifically excluded from the law.
While there are many other issues that concern me about this report, my overriding sense is that the benefits of country-of-origin labeling are understated in the GAO study.
In summary, the single most important thing to remember is that consumers overwhelmingly support fresh produce labeling. Something is very wrong if we in Congress cannot empower our constituents to enjoy the same rights as the citizens of so many of our trading partners.
Finally, I want to thank the Members of the House and Senate who have joined me in support of this legislation, and I want to express my appreciation to the subcommittee and you, Mr. Chairman, for allowing us to explore this important issue that is so essential to the well being and lives of so many American families.
[The prepared statement of Mrs. Bono appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. I have no questions of my colleagues. Do any of you have questions of our colleagues? Mr. Everett.
STATEMENT OF HON. TERRY EVERETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA
Mr. EVERETT. Thank you, Chairman Pombo. I appreciate you calling this meeting. It is a subject I am very interested in. I am co-sponsor of both Mrs. Chenoweth's and Mrs. Bono's bills. I think the American public ought to have a right to know where the foods that they eat come from.
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I also would like to mention that I plan to reintroduce my own bill that would enforce current labeling laws specifically dealing with frozen produce. The Tariff Act of 1930 requires imported commercial products, including frozen produce packages, be labeled with foreign country-of-origin information in a conspicuous place. Why then is this information often missing, misinterpreted or ignored completely? Due to the vague language of this statute, the U.S. Customs Office claims it has not been able to enforce the law, allowing many importers to fool the American public into thinking they are eating high quality, American grown products.
Now, unfortunately, the American consumer and farmers lose while foreign producers gain. U.S. Customs Service has proposed to amend current legislation and regulations to ensure uniform labeling standards by requiring a country-of-origin label to be marked on the front panel of frozen produce packages. However, in 2 years Customs has failed to implement this regulation. The legislation I plan to introduce merely codifies Customs' proposal and clarifies the term ''conspicuous'' by requiring the label to be moved to the front panel. This way consumers have the necessary information they need when making purchasing decisions.
Further, the bill provides an 18-month grace period to provide frozen food packagers with ample time to move the required information to the front of the package without incurring significant costs. And, let me say, Mr. Chairman, when I introduced this last year, the folks that came to my office in opposition to it, one of the first things they said was this would cost millions of dollars in printing of labels. Well, that is absolutely untrue.
First of all, in the real world out there that I have spent for 30 years, I had, in addition to newspapers, I own three rotary printing concerns, and that is no problem whatsoever, and if they need help on how to make a plate change, I will show them. I will be glad to go and show them. There is no significant costs involved in that. As far as inspection, that seems to be pretty simply—if it is not labeled, it is not sold. So, I think that would take care of itself.
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The legislation is consistent with current law and NAFTA. Remarkably, as has been pointed out by our panelists here, many countries, including Canada—the Canadian and Mexican government, require strict labeling requirements to ensure consumers have the information they need about the food that they purchase. Surely, Americans deserve the same opportunity. Thank you, Mr. Chairman.
Mr. POMBO. Thank you.
Mr. Dooley.
Mr. DOOLEY. Yes, I would just be interested in how some of you respond—a lot of your foundation for advocating this legislation is the fact that in the range in the figure of 75 to 86 percent of consumers think that there would be some benefit and value to having country-of-origin labeling. By that same token, if consumers were also to that same degree were advocating the labeling of beef that was produced with feed using hormones, do you think that should be included on the label? If you had the same number of people out there in the general public that supported some of the work that Consumers' Union did just recently in developing a toxicity index based on the amount of pesticides that were used on a particular produce, would you also support that as being part of labeling regime, because you had 85 to 90 percent of the American people that wanted that on the label? Mrs. Chenoweth.
Mrs. CHENOWETH. Mr. Chairman, Mr. Dooley, when we break the costs down, even using the $1 billion figure, with 250 million consumers, only 3 percent of which, according to USDA, are vegetarians, that calibrates out to about $4 per year.
Mr. DOOLEY. My question was, would you support labeling if 75 to 85 percent of the consumers wanted to have labeling on meat products that were produced with feed that was hormone used or injected with hormones or produce where there could be the ability, as the Consumers Union identified in a toxicity index, that if 75 to 85 percent of the consumers wanted that on the label, just as they want country-of-origin labeling, would you support that?
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Mrs. CHENOWETH. Yes, I would.
Mr. DOOLEY. You would?
Mrs. CHENOWETH. I would, because in Japan, I guess they already require the hormonal labeling, and yet the information that we are getting back is that the Japanese consumer will go for the label that has the American flag on it first and buy that meat first, because even the Japanese consumer trusts the American meat producer more than anyone else in the world.
Mr. DOOLEY. Mr. Pomeroy.
Mr. POMEROY. I would observe, Congressman Dooley, if they want to get an organic-produced product, that ought to be labeled, ought to be clearly available. If there is a health dimension to toxicity or any of these other things you are talking about, they surely ought to have the information to make an informed choice. I also believe, though, as a general matter, it is a lot easier to know that production—for example, North Dakota—it is a lot easier to know what goes into the production of U.S. beef than beef produced around the world, and I believe that, therefore, country-of-origin labeling does bring right in and of itself, a dimension of information that consumers find helpful in the product, kind of along the lines of what you are talking about.
Mr. DOOLEY. So, when we are negotiating with the EU on the hormone case that we just won, when there is going to be in excess of 90 percent of their consumers that will want labeling of beef from the United States and labeling that it was produced with hormones, then you think the U.S. position should be to accept that labeling?
Mr. POMEROY. I think that is a different dimension. Although the early—I have noted with great interest the indication from the EU is that, first of all, they have just ignored the WTO ruling. Second, they are pretty adamant in saying, well, if they ever do comply under any circumstances, there is going to be very extensive labeling along with it going far beyond country-of-origin labeling. Country-of-origin labeling much has been applied to our products sold in foreign markets across the country. We are only looking to do the same.
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Mr. DOOLEY. Yes, Mr. Hill.
Mr. HILL. I think it is important to note that there is U.S. beef being sold in Europe today that is certified as not being hormone fed, and certainly it is appropriate under the provisions for natural grown production produce to carry that label. I think one thing you want to keep in mind, however, and that is that cattle coming from outside the United States can be fed by feeds that have been treated by pesticides that are illegal in the United States. As a matter of fact, we have grains coming to the United States from Canada that have pesticides and herbicides that are illegal in the United States yet we allow those grains to come into the United States. One of the ways that a consumer can be assured that what they are buying and what they are consuming meets at least the U.S. standards is to be able to identify it as U.S. production.
Mr. DOOLEY. Mr. Hill, I think that—and, perhaps I am mistaken—but we cannot allow the importation of any food product that has any residues of any chemical material that is not registered for use in the United States. So, if you are aware of grain products coming into this country that are treated with materials that are not registered in the United States, I would suggest that you make USDA and AFIS and FSI known of this, because we would then have a trade action that we could take against them.
Mr. HILL. If I might respond to that, Mr. Pomeroy and I co-sponsored legislation in the last Congress to address this very issue requiring REPA to harmonize the requirements, rules and regulations, and licensing provisions between the United States and Canada, because the circumstance that I have just described is in fact occurring. Now, that residue may not appear on each kernel of grain, but that grain is being raised using pesticides and herbicides that are not licensed and in many instances not legal in the United States.
Mr. DOOLEY. Mrs. Bono, you represent a lot of vegetable growing areas, and this whole issue—what is science based and what is not—and if we have country-of-origin labeling which is arguably not science based—you have again the Consumers Union that adopted this toxicity index where they could measure the amount of the pesticides that are used on the produce which seems to me to be somewhat analogous in terms of providing consumers with information, then if you support country-of-origin labeling, would you support labeling if 95 or 90 percent or 85 percent consumers wanted to produce labeled with a toxicity index?
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Mrs. BONO. Without jumping into an immediate yes or no without looking into that greater—one thing in my one year of Congress here, I do like to sit a little bit with issues before I commit—but at first glance, first of all, what we are saying now, I think I want to agree with what my colleagues here have said which is that I think that simply the label itself ''Made in the U.S.A.,'' gives the consumer certainly a certain amount of confidence in the product itself.
But, I think the thing that you are overlooking here—you are not just talking about pesticides, and it is not necessarily—the larger issue isn't food safety, but we are also talking about, if you look over the past 5 years, how many outbreaks we have had of different microorganisms that have been on, say, Guatemalan raspberries? So, I think it is other issues, too, here that come into play, not just the pesticides.
Mr. DOOLEY. Well, I thank all of you for your statements, and I also would point out of the 12 cases of food borne illnesses that have been identified by country of origin, 10 of those were in the United States.
Mrs. BONO. Well, thank you. If I could address that, it is nothing more than giving the consumer the right to know, and I can't possibly see what is wrong with that, and I personally do think it could help anybody, whether it is the Guatemalan farmer or the American farmer. If they are going to say that there is a cyclospora outbreak on a certain raspberry from somewhere, it just gives the consumer the ability to make the choice, and when we talk about numbers, of course, I don't care if you want to break it down to two cases that come from Guatemala, when it is your children, it doesn't matter whether it is two or 2 million.
Mr. POMBO. Any further questions for this panel?
[No response.]
I would like to thank the panel for your testimony and excuse this panel. You are welcome to join us on the dais if time permits.
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I would like to call up our second panel, Ms. Caren Wilcox from USDA and Mr. Robert Robertson from GAO. We welcome you to the subcommittee hearing. Ms. Wilcox, I would like to start with you if you are prepared. You may begin.
STATEMENT OF CAREN A. WILCOX, DEPUTY UNDER SECRETARY FOR FOOD SAFETY, U.S. DEPARTMENT OF AGRICULTURE
Ms. WILCOX. Thank you, Mr. Chairman, members of the subcommittee. I am pleased to appear before you today to discuss the issue of country-of-origin labeling. The conference report accompanying the Agriculture Appropriations Act of 1999 directed the Secretary to conduct a study on the potential effects of mandatory country-of-origin labeling of imported fresh muscle cuts of beef and lamb. This study is in clearance, and USDA will submit it to Congress once clearance is completed. I apologize for the delay and sincerely wish I were here with a copy to present to you today.
I would like to begin with a brief background of current import requirements for meat since these are important to the food safety aspects of this issue. However, I must stress at the outset that the broad issue of country-of-origin labeling primarily is one of marketing not food safety. The USDA's Food Safety and Inspection Service ensures that imported meat is every bit as safe as domestically produced meat. FSIS requires imported meat to be inspected using a complex and comprehensive process that is equivalent to the U.S. system and then upon arrival at a U.S. port of entry, FSIS reinspects all meat shipments contrary to some testimony given this morning when there is often confusion between what FSIS inspects for imports and what FDA inspects for imports. Also, all imported products—about 85 percent—then proceed to a U.S. plant for further processing into value-added products; again, all under FSIS inspection.
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FSIS has certified only 37 countries that meet U.S. inspection standards. In general, inspection under an equivalent system means meeting U.S. standards for microbiological pathogens and chemical residues. It also means meeting all sanitation standards applicable to U.S. meat processing plants. Perhaps, most importantly, all plants exporting meat to the United States must meet equivalent requirements of the Hazard Analysis and Critical Control Points inspection system, our HACCP system with which you are very familiar.
FSIS requires that imported meat carcasses and parts of carcasses must be labeled with the country of origin and foreign establishment number, either as part of the country's mark of inspection or on the product's packaging at the time of import. The container must bear in English, in a prominent and legible manner, the country of origin, the foreign establishment number, and the name or descriptive designation of the meat product. If meat products are imported in individual retail or consumer-size packages, they also must be labeled in English with the country of origin, foreign establishment number and name or descriptive designation of the meat product from the time it enters the country until purchased by the consumer. Some commonly purchased consumer items include canned ham from Denmark, packaged leg of lamb from New Zealand, and meat pot pies from Canada.
There has been some discussion this morning about the labeling of State products and U.S. products. FSIS has already established a voluntary program for labeling any and all beef products as ''Product of the United States'' establishing standards to ensure the label is meaningful and accurate. We continue to encourage and support the use of this label.
Country-of-origin labeling could result in a variety of costs and benefits to various sectors, including producers, the Government, industry, and consumers, and there are a variety of regulatory regimes for country-of-origin labeling that could be adopted. These options include enforcement by USDA at retail; limited enforcement at wholesale establishments which are already regulated by USDA; enforcement at retail by States or other Federal agencies involved in marketing; monitoring and referral through private, third party certifiers, or enforcement through a whistleblower or a competitor complaint system. Each of these is discussed at greater length in my written statement.
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Currently, only 11 countries export fresh beef to the United States, and Australia, Canada, and New Zealand account for the vast majority. For lamb and mutton, by far the vast majority comes from Australia and New Zealand, and much of that is already labeled as to country of origin.
FSIS estimates the cost of its current food safety compliance visits, including labor time, travel costs, recordkeeping, and other expenses at $100 per visit. Thus, we estimate the annual cost to taxpayers for country-of-origin compliance checks could be approximately $100 multiplied by the number of retail or other points of inspection multiplied by the number of visits. In addition to retail establishments, the USDA, of course, would have to monitor compliance with labeling requirements in slaughter and processing plants, wholesalers, and distributors.
We believe our study will show that country-of-origin labeling would present both costs and benefits to industry and consumers. Balancing those impacts would be challenging. Of course consumers often wish to have more complete information about products presented to them in the marketplace, and, at the same time, we all must assure that any implementation of such a regulatory regime will not interfere with trade. It also cannot be excessively costly or take resources away from food safety priorities.
Trade experts who have reviewed the issues tell me that mandatory country-of-origin labeling at the retail level may be consistent with U.S. commitments under our trade agreements provided various criteria are met. Since I am not an expert on the details of the GATT or NAFTA Agreements, I will let my written testimony speak to this issue.
Because the United States is a major importer and exporter, it is likely that a U.S. requirement for country-of-origin labeling would be challenged by our trading partners. In addition, the United States has objected to other countries' labeling proposals because of costs or lack of consistency with international agreements. Establishing a mandatory country-of-origin labeling requirement in the United States could undercut our ability to object to such requirements in the future.
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Mr. Chairman, I want to thank you again for the opportunity to appear before you today, and I will be happy to answer your questions and those of the other members of the subcommittee.
[The prepared statement of Ms. Wilcox appears at the conclusion of the hearing.]
Mr. POMBO. Thank you, Ms. Wilcox.
Mr. Robertson.
STATEMENT OF ROBERT E. ROBERTSON, ASSOCIATE DIRECTOR FOR FOOD AND AGRICULTURE ISSUES, U.S. GENERAL ACCOUNTING OFFICE
Mr. ROBERTSON. Thank you. Good morning, Mr. Chairman, members of the subcommittee. We are happy to be here this morning to talk about our recently issues report on country-of-origin labeling as it pertains to fresh produce. I am delighted to have with me this morning Erin Landsburgh. She is the individual that was responsible for leading the work that we are going to be talking about today.
As you are probably aware, this work was conducted in response to the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999. In essence, that act asked us to look at a number of cost-benefit issues related to the country-of-origin labeling of fresh produce at the retail level. I am going to go ahead and summarize my statement and ask that the statement in its entirety be placed in the record.
My summary consists of five basic points. The first concerns compliance costs for mandatory country-of-origin labeling. In short, the magnitude of these costs are uncertain and would depend on several factors, including, as you might expect, the extent to which current labeling practices would have to be changed. An association representing grocery retailers estimates that it would cost roughly two staff hours per week per store to ensure that the produce is properly labeled. However, there could be additional costs incurred if, for example, stores were required to maintain paperwork documenting country of origin or if stores lost sales as a result of the labeling laws. Whatever these costs turn out to be, it is unclear who ultimately will bear the burden of paying them, whether it is the retailers, their suppliers, or the consumers.
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My second point concerns possible substantial costs and difficulties associated with enforcing a country-of-origin labeling law. FDA estimated that the Federal monitoring of a labeling law might cost as much as $56 million each year. Furthermore, the law would be difficult to enforce. I say this because while inspectors could ensure that retailers have the signs and labels in place and check whatever documentation is available, there is no guarantee that they could determine from a visual inspection that the loose, unmarked produce in a particular bin was indeed from the country designated by the sign on that bin; it is an inherent problem associated with enforcement of this type of law.
Third, I would like to touch upon possible trade implications of a country-of-origin labeling law. In this regard, other countries could view a U.S. labeling law as a trade barrier if, for example, they are concerned that additional costs may be incurred by their exporters. If our trading partners do take this view, they might challenge the law's consistency with international trade obligations or take steps to increase their own country-of-origin labeling requirements. Moreover, according to USDA officials we spoke with, enacting a labeling law could make it more difficult for the United States to oppose any foreign country's labeling requirements that the United States finds objectionable. And as a slight aside here, about half of the U.S. trading partners have country-of-origin labeling laws, and so far the United States has not formally challenged any of these laws.
My fourth point concerns the limited usefulness of a labeling law in responding to outbreaks of illness caused by contaminated fresh produce. Considerable time and in some cases weeks or months generally passes between the outbreak of a produce-related food borne illness, the identification of the cause, and a warning to the public about risks of eating certain foods. By the time a warning is issued, country-of-origin labeling would benefit consumers only if they remembered the country-of-origin for produce that they had already consumed or still had the produce or if the produce was still in the store.
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My fifth and final point concerns consumers' views of country-of-origin labeling—something that has been talked about already this morning. Based on surveys of consumer views, most people, depending on the survey we are talking about here, roughly 75 to 85 percent, favor this type of labeling for produce. Further, one survey that we looked at found that about half of all consumers would be willing to pay a little bit more to get U.S. produce. However, interestingly enough, consumers rate information on produce freshness, nutrition, handling and storage, and preparation tips as more important than information on country of origin. The chart to my right summarizes how consumers rate different types of produce labeling information. I know that you may not be able to see this, if you move to page 9 of my prepared statement, the same chart is on the top of that page, called figure 2. Basically, what it is showing you, if you look at the top bar on that chart, is about 80 percent—actually, over 80 percent of consumers rate information on freshness and expiration dates as extremely or very important, and over 90 percent rate this type of information as at least somewhat important. If you move down that chart, you will see how consumers rate information on various things like nutrition, storage and handling, and preparation tips, and you will see that country-of-origin information ranks about fifth on that list.
Mr. Chairman, that concludes my summary, and I will be happy to answer any questions you may have.
[The prepared statement of Mr. Robertson appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
Mr. Peterson.
Mr. PETERSON. I don't know if either of you can answer this question, but Mr. Robertson indicated that a good number of countries have country-of-origin labeling?
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Mr. ROBERTSON. Right.
Mr. PETERSON. Do you know, or does anybody know, is this one of those cases where we agreed to this, and we allowed these countries to have this country-of-origin labeling, and then we agreed not to have it? I mean, we did this in other areas where we basically gave up a lot of our export enhancement-type funds, but we let other countries keep theirs, and then it was GATT-legal. Did you look into this issue whether we have signed off and said it is OK for you to have these labels in these other countries? Or are the trade agreements silent on this?
Mr. ROBERTSON. Well, somebody mentioned this earlier, and it is quite true, that there is no prohibition against country-of-origin labeling under WTO or NAFTA agreements. We have not, as I said, formally challenged any of those laws, but we were told that that doesn't necessarily mean that they won't be challenged later on.
Mr. PETERSON. Thank you. Ms. Wilcox, from the research that you have completed today, would you say that the country-of-origin labeling would enhance safety of imported meat?
Ms. WILCOX. As you know, Mr. Chairman, under FSIS inspection, we don't believe that country-of-origin labeling is an indicator of food safety; it is a marketing program.
Mr. PETERSON. So, you say that this is a marketing issue not an inspection issue; that is your point?
Ms. WILCOX. Well, we are fortunate that under our statute, meat and poultry that is imported to the United States is very comprehensively covered and inspected in other countries under an equivalent system and then it is reinspected when it comes here by a substantial number of inspectors working for FSIS, and, therefore, we have a very comprehensive system, and we actually have records of substantial or some amounts of fresh beef and other products that are rejected at the border.
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Mr. PETERSON. Is everything inspected?
Ms. WILCOX. Yes.
Mr. PETERSON. Every single thing that comes in?
Ms. WILCOX. Well, not every single thing is opened up and inspected, but there is a system for both direct inspection and random inspection, yes.
Mr. PETERSON. So, it is subjected to as detailed an inspection as a United States plant would be, for example?
Ms. WILCOX. Yes. In fact, the other countries, of course, have to operate an equivalent system to ours also.
Mr. PETERSON. One of the things that we have problems with being up on the Canadian border with all these issues that come up, and as I understand it—this isn't so much in my area but the meetings I have had with Canadians and people on both sides—apparently there is a lot of feeder cattle in Montana and Idaho and over there that they send these feeder cattle to Canada, and then they feed them out, and then they turn around, and I think they might slaughter them and then send the beef back into the United States—I think is what happens. If we had the country-of-origin labeling, what would they be labeled? They were born in the United States—they started off there—and then they were shipped to Canada. I don't know, maybe nobody can answer that question, but they actually originated in the United States.
Ms. WILCOX. I am told that that would have to be defined in any legislation, and it would depend upon the definitions put into the bill.
Mr. PETERSON. And, the other thing I think you mentioned is that 85 percent of the imported beef that comes in is further processed?
Ms. WILCOX. Yes.
Mr. PETERSON. Is that correct?
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Ms. WILCOX. Yes.
Mr. PETERSON. So, in that capacity then, it would be inspected in the regular USDA——
Ms. WILCOX. Yes, as you know, we have to provide inspection wherever meat is processed, and, therefore——
Mr. PETERSON. So, all we are talking about here is outside of that is 15 percent.
Ms. WILCOX. Correct.
Mr. PETERSON. And, you are saying all of that is inspected at some point or another as well.
Ms. WILCOX. Yes, according to our system, it is.
Mr. PETERSON. OK. I guess that is it.
Mr. LUCAS [presiding]. Thank you, Mr. Peterson. Mr. Stenholm, any questions?
Mr. STENHOLM. First a comment: I appreciate our four colleagues' forthrightness and honesty in answering Mr. Dooley's question in saying it would not make any difference. I think there area lot of folks in the producing business that would like to see that question maybe not advertised in a manner in which some folks would want to see it advertised. I happen to believe that we have the safest food supply in the world, but there are those, who don't believe it and have their own conclusions and would continue to influence public opinion. We should be making sure that our consumers in the United States do continue to have the most abundant food supply, the safest food supply at the lowest cost to our consumers. Increased costs will be passed back to producers, and consumers will pay their fair share. This is a legitimate discussion that needs to be held.
Now, I want to talk about whether the administration is consistent in its enforcement of the Tariff Act and the Meat and Poultry Inspection Act, especially with regard to substantial transformation. I understand that Customs requires that imports undergo more extensive changes than USDA requires in order to avoid the need for country labels. In other words, if you simply slice a meat carcass in half and ship it to market, USDA considered that enough to satisfy the substantial transformation requirement. Why doesn't such meat flunk the Customs test and violate the law here? Why or why not? And, if you can't answer today, I would appreciate an answer for the record.
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Ms. WILCOX. I think we will have to provide you an answer for the record, Mr. Chairman. It has been an issue for many years, as you well know, and we will try to give you an answer.
[The Department responded:]
FEDERAL REGULATION OF COUNTRY OF ORIGIN LABELING FOR IMPORTED FOODS
Agency: U.S. Customs Service, Department of the Treasury
Imported Foods Regulated: All
Statutes Administered: Section 304 of the Tariff Act of 1930 statute, requires, with limited exceptions, every article of foreign origin (or its container) to be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit in such manner so as to indicate the ultimate purchaser in the United States the name of the country of origin of the article. In determining whether a U.S. processor is the ''ultimate purchaser'' of an article, the Customs Service employs the same ''substantial transformation'' analysis that is applied for determining the origin of an imported good produced in two or more foreign countries.
Agency: Food Safety and Inspection Service, U.S. Department of Agriculture
Imported Foods Regulated: Meat, Poultry, and Egg Products
Statutes Administered: The Food Safety and Inspection Service regulates the labeling of meat, poultry, and egg products amenable to the Federal Meat Inspection Act (FMIA), the Poultry Products Inspection Act (PPIA), and the Egg Products Inspection Act (EPIA), respectively. Regulations promulgated under these acts require meat, poultry, and egg products imported into the United States to bear the name of the country of origin and the establishment number assigned by the foreign inspection system where the products were produced. Under FMIA, PPIA, and EPIA, upon entry into the United States, meat, poultry, and egg products are deemed and treated as domestic products.
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Agency: Agricultural Marketing Service, U.S. Department of Agriculture
Imported Foods Regulated: Fresh and Frozen Fruits and Vegetables
Statutes Administered: The Perishable Agricultural Commodities Act establishes a code of fair trading practices in the marketing of fresh and frozen vegetables in interstate and foreign commerce. One provision of the law prohibits misrepresentation or misbranding as to grade, size, weight, variety, origin, count, et cetera of fresh and frozen fruits and vegetables received, shipped, sold or offered for sale in interstate or foreign commerce. The law does not require that specific descriptive terms be placed on the container but does require that any markings that are used must not give a false or misleading representation of the packed contents.
Agency: Food and Drug Administration, Department of Health and Human Services
Imported Foods Regulated: All Food Products not regulated under FMIA, PPIA, and EPIA
Statutes Administered: Products must be labeled as to country of origin under the requirements of the Tariff Act of 1930 and its implementing regulations. FDA works cooperatively to assist the Customs Service in enforcing the labeling requirements. FDA's interest in the matter of origin labeling is whether the label or labeling of the food, and representations that express or imply a geographic origin of the food, or of any of its ingredients, is misleading. Conditions under which geographic origin representations are not misleading are specified in 21 CFR 101.18.
Mr. STENHOLM. I think this is going to be a subject that needs to be looked at, because enforcement of current law is always important particularly before you change the law.
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I am a little bit disturbed that the Secretary chose not to look at the grading question, and I would respectfully ask that be reconsidered in a separate study. One of the things that does bother me and others is the fact that imported meat gets a USDA label—USDA Choice, for example, or USDA Good. That infers it is USDA produced meat, The question is: why should we have to have it stamped ''USDA?'' Why can't it be ''New Zealand Choice lamb,'' Australian Choice lamb?'' In fact, I think both of those countries would welcome that stamp based on the conversations that I have had with them. I know that if our product goes to Japan, we want it labeled USDA Choice. I do think as we pursue the grading question that this is a very valid question that will be asked by other witnesses later today as to we treat imported products to make sure they are labeled accurately? Australian lamb carcasses are not accurately stamped if they say is ''USDA Choice,'' and I don't think this will raise a trade concern. I think most countries interested in market growth are going to welcome this, including us.
Have your groups, GAO or USDA or anyone you know, conducted a defensible cost-benefit analysis for country-of-origin labeling?
Mr. ROBERTSON. We did not by agreement with the appropriations staff. Given the time constraints, we mapped out some work that we could do within the few months that we had available, and that did not include doing a cost-benefit analysis. There were reasons for not embarking down that road from the standpoint of—as I said earlier in my statement—that it is really difficult to get your arms around, in any meaningful way, good figures on what it is going to cost to implement a country-of-origin labeling law, at least as it pertains to produce. It depends not only on the ultimate law and the requirements of the ultimate law that would be passed, but it also depends on figuring out some answers to difficult questions about how consumers and how retailers and how suppliers are going to react to that law. We are kind of going into unchartered ground in doing that type of thing.
Mr. STENHOLM. Would you or would you not recommend that this committee consider the answers to those questions in a more detailed manner than which you have done thus far or others or anyone else has done? Is there anything in your studies to suggest to you that cost is—on a scale of 1 to 10 with 10 being a major concern to producers and consumers and 1 being of very little concern, is there anything in your studies that would help you to put a number on that for me today between 1 and 10?
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Mr. ROBERTSON. Well, I think what we could say based on the people that we have spoken with thus far and the numbers we have seen thus far, is that there is going to be significant costs associated with compliance and enforcement.
Mr. STENHOLM. Significant costs but no quantification other than that?
Mr. ROBERTSON. I would be remiss, I think, in trying to give you a number.
Mr. STENHOLM. Ms. Wilcox, any quick response from you on that?
Ms. WILCOX. Well, I think that Mr. Robertson's response has been similar to what we would give you. There are many unknowns in this whole process of trying to determine what would be value for consumers, and also some of the costs are very difficult to quantify.
Mr. POMBO [presiding]. Thank you, Mr. Stenholm. I had several questions I wanted to ask. Ms. Wilcox, what is the number of retail establishments in the United States that sell fresh meat and meat products to consumers? And, since relatively little of your agency's personnel spend any time in these types of establishments, would you envision shifting personnel from in-plant inspections or developing an entirely different workforce to carry out the inspections for country-of-origin labeling?
Ms. WILCOX. I believe that FMI has estimated that there are around 127,000 retail establishments. That is a number that I understand is different and not used by the Department in the past, but that is the number that has now been, I understand, provided to the Department.
It is true that we do not have a vast inspection force that normally is at retail, and I think in my testimony I tried to outline various modes that might be used to enforce country-of-origin labeling if you were to decide to ask the Department to do that.
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Mr. POMBO. Can you share a couple of those with us?
Ms. WILCOX. Well, there are some things that you could do. There would be various things we could do at retail with the kind of pick up that we already do in terms of—we do inspect on occasion at retail; we could also ask you to make arrangements to help us to fund State and local inspection, because they are more often at the local level and certainly do the bulk of the in-distribution inspection at this time. There are also certain ways that we might be able to work out a certification program of some kind, and the Department is also looking at sort of a complaint system that could work, and it has worked in certain instances where competitors certainly do not like to have others using a product that they don't label. So, there are a wide variety of options.
Mr. PETERSON. Mr. Chairman, will you yield?
Mr. POMBO. Yes.
Mr. PETERSON. Ms. Wilcox, I am having a hard time understanding how this would work even if you set up this system. How would you know where this meat came from once it got into the retail store? It all looks alike.
Ms. WILCOX. That is correct.
Mr. PETERSON. Are you going to set up some big, huge bureaucracy like OSHA where you are going to have to keep 20,000 pages of stuff in your store to prove where this came from so you can trace it all the way back?
Ms. WILCOX. We believe there would probably have to be some kind of a paperwork trace-back system if you were to decide to go ahead with this.
Mr. PETERSON. But, how would you know whether that paperwork is real or not? I mean you are going to have to have people sign off every time——
Ms. WILCOX. Sure, you would have to have a certification system that would go through. It would be very complex.
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Mr. PETERSON. But, how would you know which one lied in the chain if there were four people that signed off and it was the wrong stuff? How would you know? I mean, how would you know who to go after?
Ms. WILCOX. Once the product would be divorced from its primary carcass and not carrying a label of some kind, if that product were mixed together, unless one were able to go back to records and look very carefully and also, of course, do random inspections in which there could be product already there that would be from another country, and one would have to watch the process. It would very complicated.
Mr. PETERSON. I don't know, it just seems to me—I would like to see a judge trying to figure out whether this beef was Australian or not. I mean, I don't know how, once it got in the store, how you would ever figure out who was responsible if you could even tell it wasn't from the United States, I don't know. Sounds like a big bureaucratic boondoggle potential. Do you agree with that?
Ms. WILCOX. Well, I would hope that we could avoid it being a bureaucratic boondoggle, and whatever you give us to enforce, we will try to do that.
Mr. POMBO. We have a vote ongoing on the floor, a very important vote, and I am going to recess the committee so members have as much as time as they can to get over to the floor, and we will reconvene very shortly. So, we are temporarily going to recess the committee.
[Recess.]
Mr. POMBO. I am going to call the hearing back to order.
I am going to recognize Mrs. Chenoweth for here round of questioning.
Mrs. CHENOWETH. Thank you, Mr. Chairman. I wanted to ask Mr. Wilcox—when we talk about inspection of meat, isn't it the case that actually you inspect the facilities and that less than 1 percent of the actual meat is physically inspected? I am not challenging you. What I want to do is understand this. Your testimony as well as information that I received off of the Website indicates that the inspection is in a system certified by FSIS as equivalent to the FSIS inspection system, and in your statement today, you did indicate that it is an equivalency inspection rather than all of the meat as it comes over the border.
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Ms. WILCOX. Well, Mrs. Chenoweth, we have really a three-part system for determining if meat and poultry in another country has reached the standard required by the United States for import. The first thing that FSIS international staff does is to review all of the law and regulations that are created by the other country, and they do an extensive review for comparable requirements between our country and theirs.
Then we have a group of international inspectors who go out to that country and who review that entire system on site. I can give you a for instance. I know that a very experienced inspector just went to do an audit of a country that has already been listed as appropriate to export to us, and he will be there for a month in that country while he goes through a random review of plants and inspects those plants and also all the processes that are underway there.
The third part of it is that then when the product is exported to the United States, we have a very extensive import inspection force, and they do look at products specifically, and they also randomly look at other products. So, I can't tell you that they open every package; they don't, but they do review all the paperwork related to that, and then they randomly inspect certain products and test certain products as it is coming in and look at it all.
I think the 1 percent number that you are using is a widely quoted number related to the inspection of fresh fruit and vegetable produce that is coming into the country, because, as you know, FDA does not have as extensive inspection force as FSIS does, and we have run into that discussion of how much we do and it is usually that people have had the 1 percent quoted to them as applied to FSIS when it is really an FDA number.
Mrs. CHENOWETH. All right. I think, basically, we are on the same page. I think the concern that most consumers have is we don't eat the plants over in the foreign countries, and the system is inspected, and I respect that. And, Mr. Chairman and Ms. Wilcox, my bill does not propose more inspection. All my bill does is propose that the consumer understand where the meat came from, and then they can make that ultimate decision.
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Ms. Wilcox, isn't it true that most carcasses and parts of carcasses, as you indicated in your testimony, must be labeled with the country-of-origin and foreign establishment number, according from your testimony, either as part of a country's mark of inspection or on the product's packaging at the time of export? So, I know that Mr. Peterson had some great concerns about all the paperwork, but actually the information is known when it goes to the processor.
Ms. WILCOX. That is correct.
Mrs. CHENOWETH. And, so what my bill would do, Mr. Chairman, is simply give that same information to the consumer as it would to any other purchaser who was purchasing cars or dog bones or any other things. So, thank you very much for waiting so long.
Ms. WILCOX. Thank you.
Mr. POMBO. Mr. Stenholm, did you have any additional questions?
Mr. STENHOLM. Yes, thank you, Mr. Chairman.
One additional question going back to the grading question. Ms. Wilcox, you, Mr. Robertson, or anyone else, would you have any observation for me today regarding the previous statement that I made concerning trade implications or otherwise? Why should we have imported lamb or imported beef roll stamped USDA Choice versus having it New Zealand Choice, Australian Choice? The grading standard, I believe, should be the same. I want the same for us, our product; USDA Choice in Japan for example. I believe that would be to our benefit and to the Japanese consumer. What is the impediment to keeping us from doing the same under current law?
Ms. WILCOX. Could I ask Mr. Clayton to answer that question, Mr. Stenholm?
Mr. STENHOLM. Sure.
Ms. WILCOX. He came with me from AMS.
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Mr. CLAYTON. Mr. Chairman, just for the record, I am Kenneth Clayton, Associate Administrator of the Department's Agricultural Marketing Service.
Mr. Stenholm, I think you have phrased an interesting area of inquiry and certainly at the moment there is nothing to prevent New Zealand, Australia, Canada, anybody from marketing a product with whatever grade standards in the United States. The use of grades in the United States is voluntary. Obviously, the most common language of trade, the prevalent language of trade in the United States, certainly, are USDA grade standards.
It is probably important to keep in mind that the basic function of grade standards, which basically is a language of commerce, a language of trade that lets buyers and sellers communicate, really has application where you have got differences in product that could make a difference to those involved in the marketing or ultimate consumption of a product. Therefore, you have grade standards to describe those differences in product quality. There are lots of schemes that one could come up with, certainly, to describe that quality.
Mr. POMBO. Mr. Stenholm, would you yield for just a minute?
Mr. STENHOLM. I will be happy to.
Mr. POMBO. I want you to specifically answer the question in terms of most consumers, if they see a product, whether it is beef or lamb, ruled USDA Choice assume that that is an American product, and that is not necessarily true. How could we identify as quality grade USDA Choice or Prime or whatever as an American product versus an imported product?
Mr. CLAYTON. Well, I probably would want to think that through a little bit more thoroughly before trying to give a definitive answer to that. Certainly, product as it is traded in the United States and internationally, for that matter, does get traded on the basis of USDA grade standards, and that is an identified language of trade which is used here and in markets across the country. To what extent consumers perceive a product with a USDA grade as being of U.S. origin is a fair question to which I don't have an answer. I don't know. I have not seen really a study on that that would explicitly draw the link in a way that I would be comfortable with. So, I don't know that I can really answer that part of it.
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Again, though, I would reiterate that it is a language of trade. Whatever we have in the marketplace needs to make sense to people who are buying and selling and consuming product. Having arguably a single language of trade certainly, is, I think, arguably more efficient for all those engaged in the marketing of product. It certainly is easier, I would think, for consumers to deal with, and so there is, I think, benefit to having a single language of trade.
The issue of country of origin as it might then relate to that is, granted, a related question. How one would differentiate, I think I would defer for the time being, and I want to think about that a little bit more in terms of how if one were going to do that you would do it most appropriately so that, again, you continue to enjoy the advantage of a well-known and identified language of trade and not lose that, because I think that is very important here, and certainly, internationally, I think it is fair to say that the USDA grade system and USDA grading, for that matter, are kind of the gold standard in terms of marketing particularly our beef and other meat products overseas. We would not want to lose that, certainly.
Mr. STENHOLM. I would agree with that, and I thank you for that answer, and, again, that is why I am respectfully asking the Department to look at the grading question not as part of the country of origin but as a separate question. We all need more time, and we all need more time to think it through, but there is a very relevant question for which there is an answer out there. And, Mr. Dooley, you were not here earlier when I associated myself with a lot of the questions that you asked and commended our colleagues that answered very honestly and very forthrightly the questions that you asked, and I think this is something that all of us need to keep in mind and consider as we pursue this question. Thank you, Mr. Chairman.
Mr. POMBO. Thank you, Mr. Stenholm, and I will join with you in requesting that information for the committee. I think it is not only relevant but very important information, and, as you have stated, grade stamping is optional and voluntary. It is not a requirement for the sale of fresh meat in this country to be grade stamped, and yet it seems to me like if you want to use USDA Choice grades or quality grades as an international means of distinguishing the difference in international language of distinguishing quality, I have no problem with that. I believe that we are probably the most consistent of anywhere in the world in terms of our quality grading. But I don't see any problem with using that quality grading and rolling New Zealand lamb ''New Zealand Choice.''
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Mr. STENHOLM. Would the chairman yield on that?
Mr. POMBO. Yes.
Mr. STENHOLM. Every country interested in international trade should agree to a standard. USDA Choice would be equal to New Zealand Choice, Australian Choice, Canadian Choice, Mexican Choice, Argentine Choice, but the consumer would know that the choice grade, whether it had New Zealand or United States or Canada would mean the same thing. The question is what else do you put on it, and there is an implication that if our beef is in Japan and it is rolled Japanese Choice——
Mr. POMBO. That it is Japanese.
Mr. STENHOLM. That it is Japanese. And the issue here is we want it to be labeled what it is without incurring unnecessary costs. In this case, I think we are talking about the same amount of ink, one purchase of a stamp.
Mr. POMBO. The same person rolling it on.
Mr. STENHOLM. That is for the study.
Mr. POMBO. I know that other Members had additional questions of this panel. Unfortunately, we have an extremely important debate occurring in the floor at this moment, and I know we lost a few of our members over there because of that. Additional questions will be submitted to you in writing. If you could answer those in a timely fashion, it would be greatly appreciated by the committee. But, thank you, both of you, very much for your testimony, and I will excuse this panel.
Ms. WILCOX. Thank you, Mr. Chairman.
Mr. POMBO. The next panel, Mr. George Swan, Mr. Dean Kleckner, Mr. A. H. ''Chico'' Denis, and Mr. R. Jay Taylor.
Thank you all very much for joining us here today. I am going to start with Mr. Swan. All of your written testimonies will be included in the record. If you could summarize those written testimony and keep it within the 5-minute time limit, the committee would greatly appreciate that. Mr. Swan, if you are ready, you can begin.
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STATEMENT OF GEORGE SWAN, PRESIDENT, NATIONAL CATTLEMEN'S BEEF ASSOCIATION
Mr. SWAN. Thank you, Chairman Pombo and Mr. Peterson. Thank you also, and members of the committee, for holding this hearing today. I am George Swan, currently president of the National Cattlemen's Beef Association. I am the fourth generation rancher from House Creek Ranch in Rogerson, ID. We commend your leadership and continuing efforts to examine this issue which is very important to the concerns of the cattlemen and cattlewomen of this great country.
During 1998, beef imports were equal to about 8 percent of total U.S. beef production. This beef is generally blended into ground beef or processed beef products and sold at the retail meat case without informing consumers that it is not U.S. production. In addition to beef imports, nearly 1.1 million head of live cattle were imported from Canada directly to U.S. packaging plants in 1998. Of all the value out of the production took place in Canada, these cattle were processed, and in fact they were basically laundered as U.S. products.
NCBA adopted in January 1997 policy to require imported beef and meat products to be labeled as such. An NCBA task force addressed challenges proposed by various segments of the beef industry to facilitate implementation of labeling. The NCBA country-of-origin labeling task force had these recommendations: first, the definition of U.S. beef include all beef produced from cattle slaughtered in the United States except those cattle brought into the United States in sealed trucks for slaughter. In addition, this definition will not include imported beef trimmings, imported boxed beef, or beef produced from imported carcasses.
Second, all fresh muscle cuts offered for sale at the retail meat case and not meeting the definition of U.S. beef will be labeled as imported. The imported label will be required regardless of whether the product is graded with USDA quality grade, and that identity will be maintained to the retail meat case.
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Third, U.S. beef labels should be available for use on ground, processed beef products if individuals or firms wish to meet the criteria established for the domestic label and market the products accordingly. Otherwise, they would be labeled ''Blended Product'' or ''Blended with Imported Beef.''
And, fourth, due to the unique complexity of labeling ground beef, a pilot study of significant scope and magnitude should be conducted to test consumer response to and cost of labeling ground beef as imported U.S. beef or a percentage of imported and U.S. beef. If it is not found that this labeling would not impose a significant cost on U.S. producers, this label will become mandatory industrywide. Additional research funds will be directed toward developing additional information about potential improvements in source verification and accountability and consumer acceptance of ground beef through labeling.
Mr. Chairman, consumers demand quality and consistent products, and producers in this country are continually trying to meet that demand of those consumers, our customers. Country of origin labeling will give consumers the ability to make informed decisions when purchasing meat and meat products. A national consumer poll commissioned by NCBA and conducted by Worthlin Worldwide in November 1998—and some of that data was presented earlier by your colleagues—showed that consumers overwhelmingly support the concept of putting country-of-origin labels on fresh meat in the supermarket. A follow-up survey in March 1999 found statistically consistent figures that 76 percent of the consumers agreed with the statement that the United States should require labels on meat that show country of origin labeling. On the other side of the coin, only 24 percent said that country-of-origin labeling was unnecessary. In a question that was asked in March and was not asked in November in the survey—we asked the consumers regarding the United States and importers, if they purchased or saw packages in the meat case like packages of hamburgers and steaks with the different countries origins labeled there—United States, Canada, whatever—if they were faced with that choice whether they purchased their product of the United States or an imported product, 91 percent of the consumers said they would choose the U.S. product. Of those who said they would choose U.S. beef, 69 percent would do so because they prefer to buy American, loyalty to U.S., to support U.S. businessmen and also the farmers and ranchers. Thirteen percent thought U.S. beef would be safer, and 9 percent felt it would be of higher quality. NCBA believes that through country-of-origin labeling we can improve our ability to market U.S. beef and ensure that we are getting the full value for resources we are spending to promote our product.
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Labeling is not a new concept. Many countries around the world require such labeling on foreign products. In some of our largest markets—Japan, for example—we have taken advantage of labeling to better identify our product with the Japanese consumer. The growth in that market since the barriers were eased has resulted in a market that can send $1.5 billion worth of clearly market and identified U.S. beef. In every other market in which we compete with Canadian beef, their products are clearly marked as to its country of origin; it is part of their marketing strategy. They are obviously willing to put resources and effort into promoting their product in other countries. So, why not in the United States?
The National Cattlemen's Beef Association is prepared to participate in a process of evaluating critical marketing and trade issues within the beef industry. NCBA will explore providing additional input as other issues arise. I would like to thank you for this opportunity today, Mr. Chairman, and I would also like to enter into the record two letters that I have here today. One of them addressed to you in response to some of costs incurred, and I would also like to introduce as part of the testimony.
Mr. POMBO. Without objection, they will be included in the record.
[The prepared statement of Mr. Swan appears at the conclusion of the hearing.]
Mr. POMBO. Mr. Kleckner.
STATEMENT OF DEAN KLECKNER, PRESIDENT, AMERICAN FARM BUREAU FEDERATION
Mr. KLECKNER. Thank you, Mr. Chairman, members of the committee. I am Dean Kleckner. I am president of the American Farm Bureau. I am a corn, soybean, and a 2,000-head hog producer in north central Iowa. We strongly support legislation that will require country-of-origin labeling for all products. We believe that consumers have the right to know. I think this is the consumers' right-to-know issue where the food they are buying is produced in order to be able to distinguish American products from imports and to be able to buy those products produced by their fellow Americans. Consumer surveys show this, as has been indicated many times this morning.
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We feel that it is important to change the current practice of allowing cattle to be imported into the United States and then when processed, carry the USDA inspection label. This misleads the consumers into thinking they are buying a U.S.-produced product—I have heard that several times this morning; it is certainly true. Imports of lamb into the United States have more than doubled in the last several years from 7 to 16 percent of consumption. Nearly 70 million pounds of lamb are now imported. Some retailers that sell American lamb now have both domestic and imported in the meat case without differentiation. In addition, some imported lamb is graded by USDA and sold at retail simply as USDA Choice lamb. Foreign lamb is frequently advertised as USDA inspected lamb without a mention of whether it is domestic or imported. Fruit and vegetable imports are seeing this same type of import growth with little opportunity for consumers to identify domestically-produced fruits and vegetables.
We also believe that it is important that beef produced in the United States should be able to proudly display the American flag and be labeled as such. This gives consumers the knowledge they need to make decisions as to where their food is produced. While we feel it is important to label most beef products, certain challenges arise in the case of ground beef—you just heard Mr. Swan mention that as several others did. In some instances, a product may be from more than one country. A system should be adopted to make all parties comfortable with the labeling of ground beef. We urge members, you folks, to work with the industry to come up with that system.
Because of WTO provisions, we encourage all labeling to state the actual country of origin rather than just label the product ''Imported.'' We believe that WTO rules prohibit using the words ''imported'' on products. Our folks tell us that this is called an unfair trade barrier, but the labeling the actual country of origin on the label would not be an unfair trade barrier.
Legislation has been introduced in both the House and the Senate to require that imported meat and meat products be labeled. Under current law, labeling is permitted but not required. Not only would this legislation provide consumers with information they want but it would help bring U.S. labeling laws into uniformity with requirements of many of our trading partners around the world.
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We appreciate the initiative of Representatives Chenoweth and Bono for introducing country-of-origin labeling legislation. We support them; we believe they can be made better, both of them, through committee action, and, Mr. Chairman, we look forward to working with you in that process. One concern we have with Mrs. Chenoweth's bill is how to label the meat product from stocker calves coming into the United States. We believe that the product coming from these cattle should be labeled as American since a major portion of their life is in the United States, and they are fed American beef. I think—as I heard this morning—with Canada, it could be some of the same thing there. There ought to be a way to work that out that would be satisfactory to everybody.
In conclusion, the bottom line, country-of-origin labeling is simply a matter of informing the American consumer and helping to assure consumer confidence in their purchases. Enhancing market opportunities for domestic meat, meat products, and all agricultural commodities by requiring labeling of imports is critical to the agricultural industry.
We want to thank this committee for holding this hearing and particularly you, Mr. Chairman, and I will respond to questions when the time is right. Thank you.
[The prepared statement of Mr. Kleckner appears at the conclusion of the hearing.]
Mr. POMBO. Thank you.
Mr. Denis.
STATEMENT OF A.H. ''CHICO'' DENIS, CHAIRMAN OF THE BOARD, RANCHERS LAMB, REPRESENTING THE AMERICAN SHEEP INDUSTRY ASSOCIATION
Mr. DENIS. Thank you, Mr. Chairman. I want to agree with the other panelists in thanking you and the rest of the subcommittee for holding this hearing. The labeling and the grading of the lamb meat has been a long-time concern for the lamb industry. My name is Chico Denis. I am producer; have been for about 40 years, and I have been about 30 years in the lamb feeding business, and I am currently chairman of the board of Ranchers Lamb.
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Ranchers Lamb is new slaughter plant that we put together and built in San Angelo. We currently kill from 6,000 to 13,000 lambs there a week. We have a big stake in this meat grading and labeling. We believe that all the edible meat in the United States should be labeled as to country of origin. We have our shirts and our toys—as has been mentioned here this morning—already labeled. Those costs have been dealt with, and there was no big upheavals in their markets. We believe also like the others that this is a consumer interest. The consumer has a right to know what the product they are buying is and where it comes from. It should not be construed as a trade issue or a trade restriction issue. It is simply a matter of informing the consumer where their product is coming from.
Right now, increasingly in our industry, in the lamb industry, we are seeing the products mixed between domestic and imported product. It goes into a box—let us say a box of legs of loins or whatever, and the box is stamped ''USDA Choice'' because of the grading loophole that has been discussed here this morning, and then the grocer nor the consumer nor anybody else can tell whether that is a domestic product or a mixed product or a totally imported product.
This gives a distinct price advantage to the importers, because they are able to mix a cheaper product in their boxes, and we have a very difficult time in competing with them. It also makes it very difficult for us to advertise our product as good, American lamb, because the consumer can't tell what she is buying, and if she were inclined to buy it, couldn't find it, because it is not marked; it is not distinguished.
We believe that the grading of the foreign products should be stopped. It should never be stamped with a USDA shield. The consumer, as you have heard this morning, believes that to be a domestic product whenever they see that shield. We believe that there is no reason for the Government to deceive the American consumer in this fashion, and it should be stopped. The meat should be inspected and stamped that it has been inspected and passed by USDA just like it is, but it should not be stamped with a USDA grade. This practice along with the country-of-origin labeling has allowed the importers to have an indistinguishable product that they put into the market at a price that the domestic price cannot compete with.
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The increase in imports of lamb meat that Mr. Kleckner referred to is very real. We have seen since 1997 when the surge occurred approximately a 40 percent decrease in price for feeder lambs as well as for slaughter lambs, and when you are in the business, that is very real. My written testimony has the exact dollar figures for those prices for the record.
The imports still are increasing. The Australian and New Zealand people are doing a very good job in getting more and more product over here. As long as they are able to sell it without differentiating it, it will continue to increase. When their currency devalues or anything happens, it becomes more attractive to send it over here, and we have no quotas or tariffs or anything that will stop an unlimited amount from coming in.
We just went through an ITC, an International Trade Commission hearing on 201. We got unanimous decision both in the injury and the remedy phases. We need some help from this subcommittee and active participation in getting the administration to give us effective trade relief in that area.
The country-of-origin labeling and the stopping of the grading of the imported meat will help us. By differentiating our product, we can then go out through advertising and educating of the consumer; convince the consumer that we have a better product that they should buy. That will restore optimism to our industry. The lamb industry is sort of in the doldrums, in the tank right now, and we need to get that restarted. If we can get the confidence back in our producers that there will be a profitable venture, then we will see our industry recover.
Again, I would like to thank you, Mr. Chairman, and the rest of the members of the subcommittee for holding this hearing. It certainly has come at a good time