Sorting Out the COOL Rule
August 6, 2008

NCBA has labored on Capitol Hill for some time to keep the Country of Origin Labeling (COOL) law from becoming a paperwork nightmare for cow-calf producers.  Efforts to develop a compromise version of COOL during the 2008 Farm Bill debates resulted in the more moderate interim final rule on COOL published Aug. 1 in the Federal Register.  The interim rule incorporates provisions that make mandatory labeling more feasible for producers.

"Our focus now is on how best to implement COOL in a manner that provides maximum benefit and minimal disruption to our ranchers," says NCBA President Andy Groseta, an Arizona cattle producer.  "NCBA will continue to work on behalf of our cattlemen to put in place an effective and accurate labeling system.  Additionally, we will be leading the effort to educate producers on how to comply with the new rule."

Current Status
The interim final rule on COOL becomes effective Sept. 30.  A comment period until that date is meant to allow analysis of the rule and suggestions for any final changes before the final rule is put in place.  It is doubtful any major changes can be made, but small tweaks may be an option.  During the six month period following the Sept. 30 implementation date, USDA's Agricultural Marketing Service (AMS) will conduct an industry education and outreach program concerning the provisions and requirements of this rule.  Although there is not a six month grace period for implementation, AMS will be focusing more on education than on enforcement. 

Who does COOL Apply to?
This rule applies to retailers and packers who sell and/or supply the covered commodities to consumers.  The covered commodities include muscle cuts of beef (including veal) and ground beef.  Live cattle are not commodities and the rule does not specifically apply to cattle producers, but since we supply the live animals that become the covered commodity, we know that we will see these requirements trickle down from the retailers and packers to the core of the production chain.

Who does COOL NOT Apply to?
COOL does not apply to covered commodities produced or packaged before Sept. 30.  Small retailers are also exempt from COOL.  Only retailers licensed as such under the Perishable Agricultural Commodities Act (PACA) of 1930 are subject to the law and are required to label covered commodities for country of origin.  Under PACA, a retailer is any person engaged in the business of selling any perishable agricultural commodity at retail.  Retailers are required to be licensed when the invoice cost of all purchases of perishable agricultural commodities exceeds $230,000 during a calendar year.  The term perishable agricultural commodity means fresh and frozen fruits and vegetables.  There are about 4,000 PACA licensees that operate about 36,000 retail stores.  This definition excludes butcher shops and exporters.  Many small "mom and pop" type retailers will not be required to comply with COOL. 

Food service (restaurants, hotels, caterers, etc) are exempt from COOL.  Salad bars and delis located within retail establishments that provide ready-to-eat foods are also exempt. 

Processed food items are exempted from labeling and include any muscle cut of beef or veal that has undergone a change in character, or that has been combined with at least one other covered commodity or food component.  Processing includes cooking, curing, smoking, extruding, breading, and/or the addition of sauce.  These are just a few examples.  The simple addition of water, salt or sugar does not constitute processing when it is only added to the meat as a simple step to prepare for cooking and consumption.  Some examples include meatloaf, meatballs, fabricated steak, breaded veal cutlets, corned beef, sausage, and marinated/flavored beef.

The Four Labeling Categories for Muscle Cuts of Beef and Veal
U.S. Origin: Muscle cuts of beef and veal must be derived exclusively from animals (1) born, raised, and slaughtered in the United States (including animals born and raised in Alaska and Hawaii and transported for a period of time not more than 60 days through Canada to the United States and slaughtered in the United States); or (2) present in the United States on or before July 15, 2008, and once present in the United States, remained continuously in the United States.
Multiple Countries of Origin that include the United States: If an animal was born, raised, and/or slaughtered in the United States, and was not imported for immediate slaughter, the origin of the resulting meat products derived from that animal may be designated as Product of the United States, Country X, and/or (as applicable) Country Y where Country X and Country Y represent the actual or possible countries of foreign origin.  An example of that label would be "Product of the United States, Mexico, or Canada."
Imported Direct for Slaughter: If an animal was imported into the United States for immediate slaughter (spends less than two weeks in the United States), the origin of the resulting meat products derived from that animal shall be designated as Product of Country X and the United States.  An example of that label would be "Product of Canada and the United States."
Imported Beef: Boxed beef imported into the United States must be labeled with its country of origin before it comes into the U.S.  An example of that label would be "Product of Australia."

Other Provisions
Labeling of Ground Beef: Ground beef shall list all countries of origin contained within that batch, or that may be reasonably contained in that batch.  In determining what is considered reasonable, when a raw material from a specific country is not in a processor's inventory for more than 60 days, that country shall no longer be included as a possible country of origin.
Remotely Purchased Products (e.g., Internet sales): Retailers may provide country of origin information on the sales vehicle (e.g., Internet site) or at the time the product is delivered to the consumer.
State and Regional Labeling Programs: These marketing programs (e.g., "California Grown," "Go Texan," and "Pennsylvania Proud") are not affected by this rule.  State, regional or locality label designations are acceptable in lieu of country of origin labeling as long as they are recognizable as being in the United States.  Regional examples include "Napa Valley," "Rio Grande Valley," and "Pride of Appalachia."  The term "America" or "American" is not sufficient as it could denote countries from North or South America.  This rule also replaces any state country of origin law that may be in place.

Labeling of the Product
The label must be in a conspicuous location and legible to allow consumers to identify the country(ies) of origin.  Retailers may commingle covered commodities from more than one country of origin provided all possible origins are listed.  The COOL notification can be on the individual package of beef or on a placard or sign as long as it is conspicuous and noticeable to the consumer.

Recordkeeping for Retailers and Packers
Retailers must maintain records or other documentary evidence that permits verification of origin claims made at retail.  These records may be maintained in any location and, unless specified otherwise, must be maintained for a period of one year from the date the declaration was made at retail.  Upon request, these records must be provided to any duly authorized representatives of USDA within five business days of the request.

For covered commodities sold in pre-labeled consumer-ready packages, the record must identify the covered commodity and the retail supplier.  For products that are pre-labeled with the origin information on the shipping container (or other type of outer container), the label itself is sufficient evidence on which the retailer may rely to establish the product's origin at the point of sale.  In this case, retailers must still maintain a record identifying the covered commodity and the retail supplier.  In addition, to allow substantiation of the origin claim, the retailer must either maintain the pre-labeled shipping container at the retail store for as long as the product is on hand, or ensure the origin information is included in the record identifying the covered commodity and the retail supplier.  For products that are not pre-labeled, the retailer must maintain records that identify the covered commodity, the retail supplier and the origin information.

The supplier of a covered commodity responsible for initiating a country of origin declaration (the packer) must possess or have legal access to records that are necessary to substantiate that claim.  In the case of beef or veal, a producer affidavit shall be considered acceptable evidence on which the slaughter facility may rely to initiate the origin claim, provided it is made by someone having first-hand knowledge of the origin of the animal(s).

Recordkeeping for Producers
As stated above, we expect that an affidavit will be all that is expected of cattle producers in making their determination of country of origin.  Usual business records can be used to verify those claims in the event of an audit by the packer or retailer.  However, USDA has not, and will not, issue a standardized affidavit.  NCBA will be working with industry partners to develop a standardized affidavit that can be used by all producers.  Until that process is complete, we will not be able to tell exactly what will be required on the affidavit.

Unanswered Questions
NCBA is working to get firm and solid answers to several outstanding issues.  These include:
1.  Can the use of the government brand on imported cattle ("M" brand on Mexican cattle and "CAN" brand on Canadian cattle) be the only criteria to make an origin claim on?
2.  In the absence of these government brands, why can't the assumption be that the animal is from the United States?
3.  What constitutes "first-hand knowledge" of origin?  Can that claim be made at the livestock market and/or feedlot, or does it have to be made prior to that animal or lot of animals leaving the producer's cattle operation?
4.  What exactly will the affidavit look like and will it be standardized for the whole country?
5.  What label category will the retailers choose and how will that impact producer recordkeeping?

Bottom Line
NCBA's recommendation is that producers ensure they have some sort of record on hand (import documents, calf book, health records, or other typical business record) to verify where your cattle came from.  Country of origin claims can be made for an individual animal or a group lot of animals.  For those producers who participate in a National Animal Identification System (NAIS) compliant program, the information contained within the system on those animals will be all that is needed to comply with COOL.  No further records will be required.

For More Information
To view copies of the interim rule and additional information, please click here.