IS IT COOL IN SAN ANTONIO TODAY?
NMA Executive Director
National Meat Association
Southwest Meat Association
Good morning! Thanks for being here this morning, when a River Walk and a leisurely latte would be infinitely preferable to listening to me on a subject that is exhausting not merely our industry but also several branches of our government. To date, the only one unaffected is the judicial branch, but I’ll predict here this morning that they too may become involved. Certainly the kinds of letters that retailers are sending to their meat suppliers suggest a really good chance that lawyers see huge opportunities here to educate not only their children, but their children’s children!
We arrived in this mess through a series of mistakes. I am reminded by my distinguished countryman, Winston Churchill, who said: We’re in an age of great events and little men. Now I’m not up here to defame the male gender, so today we’d say: little persons, and I’m not referring to kindergarten class! I’m talking about the United States Congress which hustled through an amendment to the Farm Bill in 2002 to provide for Country of Origin labeling of meat and fish, but not poultry, and a bunch of other ag commodities, initiated by Congresswoman Mary Bono of California and carried by a majority vote. Those feathers are going to eat our lunch again!
The responsible leadership in Congress had already suggested when the subject was discussed that there needed to be more study – someone needed to speak to the issue of paperwork and what such a mandate would cost, but in haste to get a Farm Bill in 2002, such sagacious advice from people like Congressman Charles Stenholm and Congressman Larry Combest, the Democratic and the Republican ag leaders at the time, both from Texas, that a voluntary program would make sense was thrown to the wind.
You may ask how such a bill was passed. It’s instructive to know. On the 4th October 2001, the House of Representatives, on a roll call vote, adopted the Farm Bill 296 to 121 with a mandatory fruit and vegetable labeling amendment. On November 13, 2001, the Senate Agriculture Committee approved Title X of the Senate Farm Bill containing mandatory country of origin labeling, and on February 13, 2002 the Farm Bill passed the Senate.
As is customary when the Senate and the House version of a bill differ, a Farm Bill Conference was convened in March-April 2002, and the bill that emerged out of Conference contained a mandate for labeling meat. The Farm Bill was then ratified by both Houses on an “up or down” vote.
This is how bad laws get passed! You may have heard enough, but since you’ve stayed this long, I’m going to ask the homeland, podium and door security subcommittee to bar the exit doors and keep you tied to your chairs for the rest of this riveting disastrous story that is likely to turn your hair as white as mine!
The Administration, in fact the Secretary of Agriculture herself, is responsible for carrying out the law, and with COOL on the statute books, she turned to the Agricultural Marketing Service to develop the appropriate regulations. Leaders of your organization and National Meat Association have visited Washington together in the Spring for several years, so we have become acquainted with one of the more friendly agencies within USDA. Generally, the leadership at AMS is open to hearing from our industry. They provide mostly marketing services, and they like to work with us and to get our cooperation in such programs as commodity product acquisition, grading and certification services, and even in mandatory price reporting which replaced their excellent voluntary system because of another bad law!
Thus, the officials at this agency, under the oversight of Under Secretary Bill Hawks, went to work to respond to the mandate of a highly prescriptive law, written by lawmakers who know very little about the complicated business of growing livestock and converting them into meat and meat products. They published a Notice in the Federal Register in October 2002 after they had developed an estimated cost for meeting the mandate of the law and they invited comments from all interested parties about their implementation plan. They got them too! In fact, their Notice raised many more questions than it answered, and was debated strongly by proponents and opponents alike.
If you don’t think it isn’t a cumbersome requirement, just think about this. The AMS was explicitly told that they could not require mandatory livestock identification, and the U.S. doesn’t have mandatory livestock id, but the labels must inform retail shoppers of the country of origin. Now butchers know that they grind meat from more than one animal when they make hamburger. Indeed they are quite likely to grind meat from animals that come from different countries – and they have to tell consumers the country of origin of the meat. They’d better be prepared to have a much larger label to do this. In fact, the responsibility of a butcher may become more complicated than the responsibility of an airline pilot, if they have to meet the mandate of the U. S. Congress for country of origin. The problem is that this information is just not available, and even if the United States adopted a national cattle identification system today, it would be at least ten years before all the livestock that enter the food chain would bring with them birth and residency information to meet the requirement of the law.
Right now, USDA is drafting a formal proposed regulation to implement COOL. It has no choice in the matter. It has laid out the estimated cost in the Notice, it has accepted comments, and the next step in rulemaking is to issue a proposed rule to implement the law that is on the books. Once AMS has received comments on the proposal, it will have to publish a final regulation. Compliance date is September 30, 2004.
There are some legislators, not merely those who argued against the original statute, but quite a few others in the Congress that know full well the folly of this foolish COOL requirement. One of these is the Congressman from San Antonio, Henry Bonilla, who is the Chairman of the Agriculture Appropriations sub-Committee. He was successful at inserting language during consideration of the Agriculture Appropriations bill for FY 2004 which begins in October 2003 to deny funding to implement the meat portion for COOL. This effort alone does not send COOL down the drainpipe of oblivion, but it sends a message that there is support in the House of Representatives about the folly of this requirement. I’m here, in Congressman Bonilla’s backyard, so to speak, to thank him for recognizing just how unworkable this law really is. It sends a message to the United States Senate how the other chamber feels. But remember, COOL wouldn’t be here today if it were not for the other chamber. It is the United States Senate that got it into the Farm Bill, and some of the leaders in the Senate have promised a fight, including the Ranking Minority Leader himself, Senator Tom Daschle from South Dakota.
COOL remains particularly popular with some of the farm state Senators of both parties, including Senators Charles Grassley and Tom Harkin from Iowa, Tim Johnson, the junior Senator from South Dakota, and Max Baucus and Conrad Burns from Montana and others. Some of their constituents see COOL as a way to counter meat imports – and that’s imports of beef, lamb and pork. They see the trucks coming from Canada, and it puts fire in their bellies. The supporters of COOL in the countryside argue that USDA doesn’t need cattle identification for COOL, since they don’t like that idea at all. That means record keeping which you all know a lot about, and they don’t want it! The supporters want only imported cattle to be identified. All others would be “U.S.” cattle by default. But that’s not the way the law is written. We’ll need more than no funding money for the meat only portion to get rid of COOL, but nevertheless we’re enormously grateful to Congressman Bonilla for his leadership on this issue. Would that there were more leaders in our Congress like him!
Most major retailers are issuing very legalistic letters to their suppliers, suppliers of meat like you, telling you what they expect and that they want a commitment from you that you’ll have the documentation to support country of origin claims on the meat you sell them and hold them harmless. This kind of stuff may persuade some of you to sell exclusively to foodservice which is exempt from COOL. Retailers have to be within the definition of PACA, the Perishable Agricultural Commodities Act, to be subject to COOL. This is a 1930s law which defines a retailer as a buyer/seller of perishable agricultural – fresh and frozen fruits and vegetables, solely for sale at retail with a cumulative invoice value in a calendar year of more than $230,000. The definition specifically excludes butcher shops, fish markets and small grocery stores below the threshold level.
What retailers expect from their meat supplier is: records and a verifiable audit trail to establish the accuracy of COOL info; Indemnify them for any fines and other costs, including their attorney’s fees, if the information you provide or fails to provide meets the requirements; Segregate all covered commodities by COOL until you deliver to them, and maintain the document trail to prove it; and provide them with an audit by a third party such as USDA.
In the interim, so they can be assured that you will be able to comply with the law, suppliers are being asked to supply them with a letter of intent by September 30 this year saying that you’re planning to do all of this, and a copy of your action plan.
In February this year, some of those who had mistakenly supported COOL but had no idea how onerous it would be began to recognize their folly. As a result, producers looked to the government to help explain to those who so badly wanted this law just how it would play out. Thus began what has become known as “listening sessions” in many rural parts of the United States conducted by the Agricultural Marketing Service. These sessions have been well-attended, not only by grass roots people impacted by the COOL requirement, but also by their elected officials. Earlier this week, one was held in Illinois, and I understand that House Speaker Dennis Hastert was supportive of what USDA laid out to his constituents in terms of the complicated problems.
I’ve gone on long enough here this morning. I’m going to leave up here a copy of the portion of the 2002 Farm Bill that provides for COOL for those of you who haven’t seen it. Also, a copy of USDA’s Q&As that will answer some of your questions is here. Quite frankly, the next big move will be in the United States Senate where leading opponents have vowed to overturn the Bonilla amendment in appropriations to deny funding for COOL. Senator Dasche says: We have the votes to overturn. Senator Tim Johnson says that there are cost-efficient ways to develop mandatory regulations despite the scare talk of the meat packing industry. Senators Tom Harkin from Iowa, Max Baucus from Montana, Craig Thomas from Wyoming, Conrad Burns from Montana and Charles Grassley from Iowa represent a formidable bi-partisan coalition, supported by folks like Public Citizen, Livestock Marketing Association, and others. The lead organization supporting COOL is Ranchers-Cattlemen Action Legal Fund, otherwise known as R-CALF, supported by the Western Organization of Resource Councils.
So finally, COOL needs a legislative fix. It cannot be fixed in the regulatory arena. The legislators that need to get this done is the Club of 100 – the United States Senate. These are the guys that you need to reach to make a difference. And remember, we need only move a few votes in the middle to get the job done!
Thanks for listening this morning here in the high country of San Antonio.