Thursday, January 22, 2015

New front emerges in battle over COOL

The epic fight over mandatory country-of-origin labeling of meat has been fought in the legal, political and diplomatic arenas for several years. Now, proponents of the law have taken the battle to the academic arena as well.

I just got off a conference call with Auburn University ag economist Robert Taylor, whose new study asserts the economic losses suffered by the Canadian and Mexican cattle industries as a direct result of COOL appear negligible. From a National FArmers Union press release:
[A]fter close examination of more robust data sources to assess the impact of COOL on market access, the study found:

--COOL has not had a significant negative effect on the price paid for imported slaughter cattle relative to comparable domestic cattle. In fact, the fed cattle price basis declined after the law went into effect. “The price basis is lower in the six years since implementation of COOL than it was the preceding four years,” the study notes;

--COOL did not negatively impact imports of slaughter cattle. “Qualitative and econometric analysis of Mandatory Price Reporting (MPR) and monthly trade and price data cast considerable doubt on assertions that COOL negatively affected imports of slaughter cattle,” says the study. Failure to recognize the effects of imported and domestic captive supplies of slaughter cattle and beef demand uncertainty, along with other factors, played a larger role in reduced import demand than acknowledged in previous studies.

--COOL did not significantly affect imports of feeder cattle. “USDA monthly data on imports of 400-700 lb. cattle did not show COOL having a significant negative effect of imports of feeder cattle from either Canada or Mexico relative to placements in U.S. feedlots,” the study points out.
Taylor's study is at odds with the Canadian government's contention the law has cost producers north of the border close to $1 billion a year. That figure is based on research by UC-Davis ag economist Dan Sumner. As I reported in November:
The problem, Sumner explained, is that American feedlots and processors must separate streams of cattle from different countries and keep track of them all. That has limited access for cattle from Canada and Mexico, as many slaughterhouses stopped accepting foreign cattle or paid a lower premium for them to offset their added costs, he said.
Taylor said his data is based on detailed mandatory price reporting by meatpackers to the Agricultural Marketing Service, while Sumner relied on private Canadian cattle industry data.

I'll be reaching out to Sumner and to the U.S. Trade Representative's office for reactions. Watch for my story at CapitalPress.com.

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