Key Changes
The 2002 Farm Act amends the Agricultural Marketing Act
of 1946 to require retailers to inform consumers of the country
of origin for covered commodities. The term "covered
commodity" is defined as muscle cuts of beef, lamb, and
pork; ground beef, ground lamb, and ground pork; farm-raised
fish and shellfish; wild fish and shellfish; perishable agricultural
commodities; and peanuts. Perishable agricultural commodities
are defined as fresh fruits and vegetables.
The 2002 Act states, with few exceptions, a retailer may
use a "United States country of origin" label if
the product is from an animal that was exclusively born, raised,
and slaughtered in the United States. In the case of farm-raised
seafood, the product must be from fish hatched, raised, harvested,
and processed in the United States. For wild seafood, it must
be harvested in waters of, and processed in, the United States.
Also, the label must distinguish between farm-raised and wild
harvest seafood products. Peanuts and perishable agricultural
commodities must be exclusively produced in the United States
to carry that label. This Act gives new labeling responsibility
to USDA for the country-of-origin labeling of fish, fruits,
vegetables, and peanuts.
To convey country-of-origin information to consumers, retailers
may use a label, stamp, mark, placard, or other clear and
visible sign on the covered commodity, or on the package,
display, holding unit, or bin containing the commodity at
the final point of consumption. Food-service establishments—such
as restaurants, bars, food stands, and similar facilities—are
exempt.
The Secretary of Agriculture is directed to issue guidelines
for voluntary labeling by September 30, 2002, and to promulgate
requirements for mandatory labeling no later than September
30, 2004. The Secretary may require any person who prepares,
stores, handles, or distributes a covered commodity for retail
sale to maintain a verifiable recordkeeping audit trail. Suppliers
are required to provide information to retailers indicating
the country of origin of the covered commodity. The Secretary
shall not use a mandatory identification system to verify
country of origin but may use, as a model, certification programs
already in place. The 2002 Act also provides enforcement procedures,
including fines up to $10,000 for retailers willfully failing
to comply.
Summary of Current Requirements
Currently, Federal law—the Tariff Act of 1930 as amended,
the Federal Meat Inspection Act as amended, and other legislation—requires
most imports, including many food items, to bear labels informing
the "ultimate purchaser" of their country of origin.
Ultimate purchaser has been defined as the last U.S. person
who will receive the article in the form in which it was imported.
The law requires that containers (e.g., cartons and boxes)
holding imported fresh fruits and vegetables, for example,
must be labeled with country-of-origin information when entering
the United States. If produce in the container is packed in
consumer-ready packing and sold to the consumer, that item
must already be labeled as well. Consumer-ready packages,
such as grapes in bags or shrink-wrapped English cucumbers,
although they are packed in a box, must have country-of-origin
labels on each consumer-ready package. In contrast, a retailer
may take loose produce out of a container and display it in
an open bin, selling each individual piece of produce that
has not been labeled. A placard or other labeling indicating
country of origin is not required.
If the article is destined for a U.S. processor or manufacturer
where it will undergo "substantial transformation,"
that processor or manufacturer is considered the ultimate
purchaser. As a result, meat and other items have not been
required to carry a country-of-origin mark after cutting or
processing in the United States.
USDA's Food Safety and Inspection Service (FSIS) has issued
regulations that allow voluntary labeling of fresh
beef products—using terms such as "U.S.A. Beef,"
"Fresh American Beef" (products born, raised, and
slaughtered in the United States), or "Product of the
U.S.A." (products that, at a minimum, have been prepared
in the United States). All FSIS approved labels, however,
must be accurate, truthful, and not misleading. In addition,
any claims made on the label must be supported through documentation.
Economic Implications
The 2002 Farm Act directs the Secretary to promulgate regulations
for a mandatory labeling program by September 30, 2004. USDA's
Agricultural Marketing Service (AMS) has been delegated this
rulemaking responsibility. AMS will give the public opportunity
to comment on the proposed requirements, including any costs
associated with a mandatory country-of-origin labeling program.
Many of the economic implications of mandatory country-of-origin
labeling rest in the recordkeeping and tracking systems that
may have to be developed and maintained to verify country-of-origin
labels. Costs may be incurred by meatpackers, processors,
retail stores, international traders, and consumers. With
meat labeling, for example, only meat from animals born, raised,
and slaughtered in the United States can be considered U.S.
product. Keeping track and verifying the source country of
imported meat cuts, such as whole steaks, roasts, and chops,
might be less difficult—and presumably less expensive—than
verifying the source of mixed inputs in ground beef processed
in the United States. Ground meats are often a mix of domestic
and imported meats and trimmings.
Consumers may benefit through increased information at the
point of purchase. U.S. producers could benefit if a "United
States country of origin" label increases the demand
for their products.
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