AFF Sentinel Vol.5#40

From There to Where with a "Thus?!?"

The long-dreaded mCOOL is here but after more than six years of wrangling and re-shaping, key points are in flux on this far-reaching event.

While producers, feeders and packers wrestle with the realities of recordkeeping and changing processes and systems, politicians in Washington D.C., are demanding even more changes in regulation, if not new legislation.

Friday, Sept. 26, USDA's Agricultural Marketing Service (AMS) spooked everything by issuing a sentence in a guidance document that instantly changed what livestock feeders and packers had been assuming for months.

What the na?ve and the poor thinkers had not understood all along was that tracking the identities - even a general origin identity - of the nearly 300 pieces of meat that comes from a typical beef carcass, for example, was going to be complicated, risky and expensive. The risk comes from a packer and retailer guaranteeing the origin of a single piece of meat that has been through slaughter lines, coolers, grading, sorting, branded program qualifying, fabrication, aging, sorting, shipping, cutting and more shipping - not necessarily in that order or that simple a process - to the satisfaction of retail label checks, FSIS inspectors, mCOOL documentation audits, retail insurance advisors and lawsuit-happy attorneys.

The minute we read the compromise language in the Farm Bill it was obvious to us what packers would do. They could avoid the liability risk of mixing a carcass from a Canadian or Mexican feeder calf in with a U.S. load, as well as avoid millions in costs in reconfiguring processing lines, coolers and systems by putting all cattle in the second "Multiple Countries of Origin" category. No major packer was going to voluntarily spend huge amounts to guarantee U.S.- only category meat without a substantial, demonstrable demand or premium for U.S.-origin meat. Over 90 percent of the muscle cuts in American meat cases are already from U.S. cattle and consumers already assumed that.

Both the law and the interim rule clearly specified that U.S.-origin cattle could be included in the Multiple Origin category.

Then AMS dropped Friday's guidance bomb.

"If meat covered commodities derived from U.S. and mixed origin animals are commingled during a production day, the resulting product may carry the mixed origin claim (e.g., Product of U.S., Canada, and Mexico). Thus, it is not permissible to label meat derived from livestock of U.S. origin with a mixed origin label if solely U.S. origin meat was produced during the production day."

That's a giant leap for a humble "thus." What's going on here?

What USDA is attempting is blunting the political cavalry charge that has descended on Washington, charging their mCOOL law is being abused. Congressmen, radical farm groups and activists have railed that USDA's regulations didn't follow the law and that packers are planning to flout the "intent of the law." So after six years, the intent isn't in the language? The problem is, do-gooders often have no understanding of how the systems they are "fixing" actually work, no concept of cost and no perception of the penalties in reputation, fines and operational disruptions if a business runs afoul of federal food labeling regulations.

Congressmen are fuming about most of the meat going into the Multiple Origins category and their apparent failure to create billions of pounds of specifically labeled U.S. beef. Additionally, they are fuming that further processing like cooking or marinating meat exempts it from mCOOL regulations or that foodservice is also exempt.

When the House Ag committee's chairman set a handful of experts to crafting compromise language to make mCOOL's costs less than draconian, the meat industry lobbyists were trying to preserve flexibility for processor management on a shift basis, one USDA official explained. He claims those who crafted the language are "chagrined" that the shift-by-shift concept has been expanded by the meat industry to putting most meat into the Multiple Origins category.

Perhaps, but we're guessing not all are chagrined.

But the thinking is that if the packers can't find some way to live with the shift basis -- and major cost increases -- and manage to supply some U.S.-only labeled meat, Congress will re- open the mCOOL section of the Farm Bill. And while they're at it, rather than just "fixing" the meat category definitions - costing millions and millions - they'll package the removal of some exemptions in the bill, the bill will pass and turn a mere costly upheaval into a bloodbath.

That doesn't really explain the power of "Thus," but it's Washington political strategic thinking to ponder.

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