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Benefits of country-of-origin labels outweigh costs

by the Organization for Competititve Markets

(Tuesday, Nov. 26, 2002 -- CropChoice guest commentary) -- Country of origin labeling benefits will outweigh USDA’s cost estimate of thirteen cents per week for consumers. Labeling provides opportunities to build consumer trust, loyalty and brand equity in their purchasing of beef, pork, lamb, fish, fruits, vegetables and peanuts are grown, raised and processed in the United States. The USDA estimates, though likely too high, were released and published in the Federal Register last week. [Federal Register: November 21, 2002 (Volume 67, Number 225)]

Surveys show that 90% of consumers want to know where their food is grown and processed, just as they now are informed as to where their clothes are made. Producers will now have the opportunity to showcase U.S. produced products which are produced and processed under the most demanding food safety system in the world. There is no evidence that consumers are unwilling to pay thirteen cents per week in return for the ability to choose their meat, fish and produce with confidence and knowledge of its origins.

Despite the fact that no program has yet been developed, USDA estimated the overall cost of compliance at approximately $1.97 billion. The cost estimate is not just for livestock, but for all covered commodities. It includes the overall labor cost for all producers, all food handlers (including processors), and all retailers. The U.S. population is 284,796,887. The annual cost per consumer is thus $6.91 or 13 cents per week.

Unfortunately, USDA only estimated the cost of the program while failing to address the benefits, which is a key econometric error. In addition, it is difficult to understand how USDA could estimate the cost side of the equation when the program has been neither designed nor implemented. For example, USDA could choose to implement regulations to track only foreign products, while allowing the domestically produced product to be labeled as a product of the United States. This strategy would minimize the burden on many domestic industry players.

The Organization for Competitive Markets is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys, and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities.