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89–035 PDF 2003

S. HRG. 108–096

THE POTENTIAL BURDENS ASSOCIATED WITH THE

NEW COUNTRY-OF-ORIGIN LABELING (COOL) LAW

HEARING

BEFORE THE

SUBCOMMITTEE ON MARKETING, INSPECTION AND 

PRODUCT PROMOTION

OF THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

APRIL 22, 2003

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

THAD COCHRAN, Mississippi, Chairman 

RICHARD G. LUGAR, Indiana 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

PETER G. FITZGERALD, Illinois 

SAXBY CHAMBLISS, Georgia 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

JAMES M. TALENT, Missouri 

ELIZABETH DOLE, North Carolina 

CHARLES E. GRASSLEY, Iowa 

TOM HARKIN, Iowa 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

THOMAS A. DASCHLE, South Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

ZELL MILLER, Georgia 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

MARK DAYTON, Minnesota

HUNT SHIPMAN, Majority Staff Director 

DAVID L. JOHNSON, Majority Chief Counsel 

LANCE KOTSCHWAR, Majortiy General Counsel 

ROBERT E. STURM, Chief Clerk 

MARK HALVERSON, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page

HEARING(S):

The Potential Burdens Associated With the New Country-of-Origin Labeling 

(COOL) Law .......................................................................................................... 01

Tuesday, April 22, 2003

STATEMENTS PRESENTED BY SENATORS 

Talent, Hon. James M., a U.S. Senator from Missouri ........................................ 01

WITNESSES 

Blunt, Hon. James M., a Reprsentative in Congress from the State of

Missouri ................................................................................................................ 03

Hawks, Bill, Under Secretary of Marketing and Regulatory Programs, U.S. 

Department of Agriculture .................................................................................. 04

Panel I 

Bull, Ken, Vice President, Cattle Procurement, Excel, Wichita, Kansas ............ 18

O’Brien, Mike, Vice President of Produce, Schnuck Markets, Inc. ...................... 16

Panel II 

Disselhorst, Ken, President, Missouri Cattlemen’s Association .......................... 29

Howerton, Phil, Missouri Port Association ............................................................ 25

Owens, Steve, Co-Owner, Joplin Regional Stockyards, Inc. ................................. 23

Thornsberry, Max, President, Missouri Stockgrower’s Association ..................... 27

Panel III 

Day, David, Board Member, State Board of Directors, Missouri Farm Bureau . 39

Kremer, Russ, President, Missouri Farmers Union .............................................. 37

APPENDIX 

PREPARED STATEMENTS: 

Talent, Hon. James .......................................................................................... 44

Bull, Ken ........................................................................................................... 89

Day, David ........................................................................................................ 110

Disselhorst, Ken ............................................................................................... 103

Hawks, Bill ........................................................................................................ 66

Howerton, Phil .................................................................................................. 95

Kremer, Russ .................................................................................................... 106

O’Brien, Mike .................................................................................................... 73

Owens, Steve ..................................................................................................... 93

Thornsberry, Max ............................................................................................. 100

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Boyle, Patrick J., President and CEO, American Meat Institute ................. 118

Casey, Richard, on behalf of the National Grocers Association, Missouri 

Grocers Association ....................................................................................... 122

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD—Continued

Johnson, Hon. Tim ........................................................................................... 116

National Grocers Association ........................................................................... 124

Schachtsiek, Lowell .......................................................................................... 121

Tyson Foods, Inc. .............................................................................................. 132

(1)

THE POTENTIAL BURDENS ASSOCIATED WITH 

THE NEW COUNTRY-OF-ORIGIN LABELING 

(COOL) LAW 

TUESDAY, APRIL 22, 2003

U.S. SENATE, 

SUBCOMMITTEE ON MARKETING, INSPECTION, AND PRODUCT

PROMOTION, COMMITTEE ON AGRICULTURE, NUTRITION AND

FORESTRY, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10 a.m., in the 

Mills Anderson Justice Center Auditorium, Missouri Southern 

State College, Joplin, Missouri, Hon. James M. Talent presiding. 

Present or submitting a statement: Chairman Talent. 

STATEMENT OF HON. JAMES M. TALENT, A U.S. SENATOR 

FROM MISSOURI 

The CHAIRMAN. The subcommittee will come to order. This is an 

on-the-record hearing of the Subcommittee on Marketing Inspection and Product Promotion of the Committee on Agriculture in the 

U.S. Senate. It is a great pleasure for me to be here and to welcome our witnesses in the audience. 

I want to thank Missouri Southern for providing these great accommodations. It is, as I said, a great pleasure to be here. I am 

going to explain the procedures a little bit and then make a brief 

opening statement and then recognize my good friend and colleague, Roy Blunt, in whose district we are now. 

Because this is an actual hearing, one of the points here is to collect information on the record with the view for making some recommendation to the Senate later this year. We are constrained at 

least in some degree by the actual procedures of the Senate. 

What we are going to do is, I am going to give an opening statement, which is typical, and then defer to Mr. Blunt who is a guest 

of the subcommittee today. He can give one if he wants to. 

Then we are going to have three panels. The first panel is only 

one witness, and I will introduce him in just a minute. Then there 

will be several witnesses on the second panel, and two witnesses 

on the third panel. 

After everybody in each panel has given their statements—and 

we will encourage the witnesses to be brief with their statements. 

I have spoken with them, and most of them have done that, then 

we are going to have an opportunity to ask questions. Then when 

we finish the three panels, we will be finished with the hearing. 

2

If this were a town hall meeting, or sometimes we will call a less 

formal meeting, I’d be happy to take questions from the audience. 

A couple of people have asked me about that. There’s no procedure 

in the Senate which allows us to do that. I will be around afterwards and very willing and eager to visit with people who have forums or concerns. 

Because the point here today is to get information about how we 

are going to implement the Country-of-Origin Labeling law that 

Congress passed in the Farm bill last year, I did want to get Congressman Blunt to come to the hearing. 

In the bill that passed last year, the Department of Agriculture 

was required to promulgate recommendations for mandatory country-of-origin labeling for beef, pork, lamb, and other fresh commodities by September 30th, 2004. 

The official implementation date for mandatory COOL, as we call 

it, the Country-of-Origin Labeling law, is not until 2004, but the 

beef, lamb, and pork industries have to prepare now for the auditing and recording provision in the law. 

Producers are entitled to know and need to know what they will 

be expected to provide in order to comply with the law, and that 

is the reason for the hearing. The research that we have done at 

this point, and a lot of it is just informal contacts with people from 

various parts of the industry on different sides of this issue. 

I believe that there is still a consensus, as there was last year, 

that country-of-origin labeling is a good idea, at least in principle. 

I am a huge believer in value-added enterprises in the agricultural 

sector. Labeling products as coming from the United States gives 

us an additional market. In addition, consumers would like to 

know, conveniently, where their foods come from. I believe that as 

a consumer. The producers I have talked to also believe that as 

consumers as well. 

The first thing is that there is a consensus that the Country-ofOrigin Labeling law is good, at least in principle. 

The second thing I want to say is that there certainly is a great 

deal—there is a great deal of controversy over how this law is 

going to be implemented. The concern has been raised by producers 

as well as other parts of the food production chain whether the cost 

of implementation may not be so great, particularly on producers, 

as to cancel out part or all of the benefits of the law. 

What I want to do is to collect information as, if you will, an honest broker—I don’t come into these hearings with any preconceptions—and then forward a recommendation to the Senate. 

Earlier this year I sent a letter to Under Secretary Bill Hawks 

requesting the Department of Agriculture hold a series of listening 

sessions around the country to give producers an opportunity to 

share their concerns and to get information about the new regulations. They have agreed to those and, in fact, have begun them. I 

do want to thank Under Secretary Hawks for that and also for 

being here today. 

I will close by saying I have always been a proponent of valueadded agriculture. It is the future of family production. If identifying and labeling beef, pork, lamb and other products means 

greater profits to the American producers, I will strongly support 

that. 

3

However, I am also a former chairman of the Small Business 

Committee, and I do know that new laws and new regulations can 

bring new regulatory burdens, and often we don’t anticipate at the 

time when we pass the law what the full extent of those burdens 

are going to be. 

I am looking forward to the testimony today, and I am certain 

that we will all gain a better understanding of what effects COOL 

is going to have on farmers and consumers here in Missouri and 

around the United States. 

[The prepared statement of Senator Talent can be found in the 

appendix on page 44.] 

With that I am happy to welcome and to recognize my friend and 

your great Congressman, I will make that editorial comment, and, 

yes, that is for the record, Congressman Roy Blunt. 

STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF MISSOURI 

Mr. BLUNT. Senator, thank you for holding this hearing here. 

Thank you for the interest and the leadership you are showing in 

this issue. It is a great privilege for us to see you chairing this important subcommittee, and dealing with this issue and bringing 

this hearing here to Southwest Missouri. 

I can certainly argue that based on the dynamics of this entire 

question, that the Southwest Missouri area may very well be 

Ground Zero in terms of the long-term impact of what’s finally decided by the Senate and the House, and if we have to take further 

action and more likely what’s decided by our friends at the Department of Agriculture. 

If you took 100-mile circle almost anywhere in the seven congressional districts, you would find more cows and calves than anywhere else in the United States. Of course, that chain of ownership, the determination of where animals came from starts right 

there. 

Secretary Hawks and I were visiting earlier. We both had experience in the past where we were in the registered cattle business, 

and both decided somewhere in that process that the ranching 

business, for us at least, was not worth the effort of identifying 

which of those were black Angus calves belonging to which of those 

blank Angus cows. Many others have made that same determination in producing superior quality beef for market. 

Lakeland, as you suggested, Senator, is a positive marketing tool 

and is often used voluntarily by many people who produce products. There is concern about the language in the 2002 Farm bill 

that I voted for and how that language is implemented. Some of 

that concern is justified; some of it probably will turn out not to 

be justified. 

That’s the purpose of the hearings that you have asked the Department and the Secretary to hold. What we don’t want to have 

here is another example of the law of unintended consequences 

where we move forward with an idea that has positive merit in 

terms of marketing and turn it into a nightmare because of the 

regulations that are established. 

The intent of the law is not to create mandated record keeping 

that challenges the record that you have to do for the IRS. The inVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
4

tent of the law was to use labeling as a marketing tool and not as 

a way to come up with some regulatory nightmare forcing people 

out of the market or forcing small owners out of the market for 

sure. 

The statute states that USDA cannot, quote, ‘‘Use a mandatory 

identification system,’’ end quote, to verify origin. What is to be required to document the place of birth of a Southwest Missouri animal—a pig, a cow, a sheep, another animal, a lamb—that would be 

on the way to market? How do you identify that animal, and how 

do you identify that animal through the entire chain that eventually winds up at the supermarket or the meat counter? 

This and many other questions need to be answered through 

hearings like this one. I know your good friend and mine, our new 

agricultural chairman in the House, Chairman Goodlatte, is interested in this as well. Of all of the districts in the country, his district in Southwest Virginia agriculturally is as near to mine as almost any other, a high concentration of beef and poultry, and dairy. 

He is interested in these topics certainly. I appreciate your interest 

and was glad to have the opportunity to join you here at this hearing we are having in Southwest Missouri. 

The CHAIRMAN. I want to thank Congressman Blunt. Every new 

law causes some concern because change causes some concern. The 

thing to do is to find out the extent to which that concern is valid 

and what, if anything, we need to do about it. That’s the purpose 

of this. 

Without any further ado, we will go right to our first panel which 

consists of one witness, Mr. William. T Hawks, who I will introduce 

simply as the Under Secretary of Marketing and Regulatory Programs for the Department of Agriculture. 

Secretary Hawks, we want to thank you for coming again to 

Southwest Missouri and this time anticipating testifying formally 

before the subcommittee. Please give us your statement. 

STATEMENT OF BILL HAWKS, UNDER SECRETARY OF

MARKETING AND REGULATORY PROGRAMS, U.S.

DEPARTMENT OF AGRICULTURE 

Mr. HAWKS. Thank you, Senator Talent, Congressman Blunt. It 

is certainly a pleasure to be in Southwest Missouri for the hearing 

where the vast majority of these cattle come from. Certainly it is 

a great place to be. 

It is always a pleasure to be out in countryside anytime but a 

special pleasure to be here today and to discuss the mandatory 

Country-of-Origin Labeling law. As he said, I am Bill Hawks, 

Under Secretary for Marketing and Regulatory Programs, and I 

have the ultimate responsibility of implementing this law. 

As you know, the 2002 Farm bill mandated country-of-origin labeling at the retail point of sale for beef, lamb, pork, fish, shellfish, 

perishable agricultural products as well as peanuts after 2 years. 

We also want to make clear that the Office of Management and 

Budget’s Statement of Administration Policy on Senate Bill 1731, 

the Agriculture, Conservation, and Rural Enhancement Act of 2001 

found this provision was objectionable, highly objectionable. We felt 

like there would be some unintended consequences and have some 

potential impact on trade. 

5

Having said that, I assure you that we at USDA are fully committed to carrying out the intent of this law to the best of our abilities. These provisions are part of the Farm bill, and we are working 

diligently to implement them. 

This program began on October 11, 2002, when we published the ‘‘Guidelines for the Voluntary Country-of-Origin Labeling’’ in the 

Federal Register. The voluntary guidelines became effective upon 

publication and are to be used by retailers who wish to notify their 

customers of country of origin of the covered commodities they purchased prior to the mandatory implementation on September the 

30th, 2004. 

The Farm bill defines the criteria for covered commodities to be 

labeled as ‘‘U.S. Country of Origin.’’ To receive this label, beef, 

lamb, and pork must be derived exclusively from animals born, 

raised, and slaughtered in the United States. 

Although the COOL provision of the Farm bill requires that all 

covered commodities be labeled at retail as to their country of origin and provides a very specific definition of ‘‘U.S. Country of Origin,’’ it does not specify how to label imported, mixed, or blended 

product. Under the COOL requirement, the original country-of-origin identity would need to be carried through to the retail level. 

Products with an origin that includes production or processing 

steps that occur in more than one country would need to bear labels that identify all of those countries. For example, pork from 

animals born in Canada and raised and slaughtered in the United 

States would have to be labeled in that manner. 

The COOL legislative language does not specify what records are 

acceptable to verify country of origin claims. It only says that the 

Secretary may require persons in the distribution chain to maintain a verifiable record keeping audit trail to verify compliance. 

The law also requires any person in business of supplying a covered commodity to a retailer to provide to the retailer information 

indicating the country of origin of the covered commodity. At the 

same time, the law prohibits the Secretary from establishing a 

mandatory identification system to verify the country of origin of 

a covered commodity. Therefore, retailers and their suppliers must 

maintain records that verify the country of origin of covered commodities. 

Mr. Chairman, just as I had stated, the Secretary’s prohibited 

from implementing a mandatory identification system. Therefore, 

AMS has posted on its website examples of documents and records 

that may be useful to verify compliance with the country-of-origin 

labeling law, and I would like to submit those from the website for 

the record. 

The CHAIRMAN. The information will be made part of the record. 

[The information referred to can be found in the appendix on 

page 46.] 

Mr. HAWKS. The law directs the United States Department of 

Agriculture to partner with the States to assist in the administration and enforcement of these provisions. As you are aware, the 

USDA has a long history of working with States, and we proved 

that working together worked. The State of Florida, for instance, 

has had a longstanding law of country-of-origin labeling for fruits 

and vegetables. I was there just week before last, and we have had 

6

people to go and visit. Clearly fruits and vegetables are not as 

problematic as the labeling of the meat products. 

The CHAIRMAN. Mr. Secretary, before you get into the record 

keeping, let me just clarify a couple things for me, the record and 

people in the audience of what you just said, including the major 

exceptions to the law of which are poultry—— Mr. HAWKS. Correct. 

Senator TALENT [continuing]. Is not covered under the law. Also, 

any of the meat that are—or otherwise would be covered with that 

end up in the food service industry, which is restaurants. I asked 

this question just informally visiting before, but it is your understanding that a product sold at retail but packaged for the consumer to open up and eat, for example, a dinner that they sell in 

the deli section of the store—that would be food service and would 

not be covered? 

Mr. HAWKS. That is correct. 

The CHAIRMAN. I guess nuts other than peanuts. 

Mr. HAWKS. Nuts are still included and would require the country of origin. We also think that if you have mixed nuts, that they 

bring on another issue. It is contents. It is components of the production. 

The CHAIRMAN. OK. 

Mr. HAWKS. Thank you, Senator Talent. 

The CHAIRMAN. Go ahead with the rest of the statement. 

Mr. HAWKS. OK. It is apparent that the country-of-origin labeling 

would require the maintenance of these records to satisfy these 

concerns. 

On November the 21st of 2002, in accordance with the Paperwork Reduction Act, the Department of Agriculture issued a ‘‘Notice of Request for Emergency Approval of a New Information Collection’’ and record keeping requirement. The costs associated with 

the new record keeping generated a lot of comments and a lot of 

concerns. I have said that on any given day I would have one group 

in my office telling me the numbers were too low. In the afternoon, 

they would be too high. The next morning, one would be too high, 

and the next morning it would be too low. Therefore, we extended 

the comment period for an additional 30 days to have opportunity 

for everyone to have the input there. We have gone out for public 

comments on numerous times. 

As a matter of fact, I would like to submit for the record these 

Federal Register notices. The first one is the October 11th, 2002, 

Notice establishing the voluntary country of origin guidelines. The 

next one is the November 21st, 2002, Notice for information collection. The next one is the January 22nd extension of the time period 

for cost estimates on the record keeping component. 

The CHAIRMAN. Sure, without objection. 

[The information referred to can be found in the appendix on 

page 53.] 

Mr. HAWKS. Once a proposed rule for the Mandatory Country-ofOrigin Labeling requirements are drafted and published, we will 

then formally go out and ask for additional public comment. In addition to that, we will be holding, as you have talked about, the 12 

listening sessions around this country. They are about to begin. I 

will personally be at about half of those. My administrative aide, 

7

A. J. Yates, will be at the other half of those. You can see that we 

are taking this information gathering very, very seriously. It is certainly incumbent upon us to work with you, the Members of the 

Congress and the public to try to make sure that anything we do 

in the Department of Agriculture minimizes the burden on the producers. 

Mr. Chairman, in keeping with your time parameters, I will end 

my comments there and prepare to answer questions. 

[The prepared statement of Mr. Hawks can be found in the appendix on page 66.] 

The CHAIRMAN. Thank you, Mr. Secretary, and I do appreciate 

your shortening your statement for the purposes of testimony 

today. The entire statement, of course, will be put in the record, 

and I encourage those who are interested to read it, and my office 

will be happy to make it available. 

One thing I want to establish at the outset is that what you have 

done at this point administratively is very preliminary. I am not 

going to ask you to go through all the tortuous details as to how 

you pass a regulation, but that is all your preliminary estimates; 

is that correct? 

Mr. HAWKS. That is correct. I may, just for the record and for 

your benefit as well, talk a little bit about that regulatory process. 

From here, as we prepare to do the mandatory regulation, we will 

be doing an extensive cost benefit analysis. We will work with the 

economists there in the Department of Agriculture to try to determine the costs associated with country-of-origin labeling. We will 

be then circulating governmentwide this regulation before it is published in the Federal Register. We will have had then the listening 

sessions and these sessions that you are doing as we prepare this 

final mandatory regulation, hopefully later this fall. 

The CHAIRMAN. Can you tell me what steps you are taking to 

make sure that you hear from all sides of this and all sectors of 

the——

Mr. HAWKS. Yes, sir. It is very important for us to hear from all 

sides and all concerns. Just as you are doing in your hearing today, 

you are having multiple people from multiple sides of this. We will 

have the same things. The listening sessions are open to the public. 

We will be giving our presentation on the law. We will be giving 

a presentation on the issues that we consider our current thinking 

of those issues that are not that prescriptive in the law. We will 

allow participants there to enter their comments on anything that 

they wish to take into that. Hopefully we shall have a broad cross 

section of input. After we have done that, then there will be an additional comment period for the mandatory regulation. 

The CHAIRMAN. I want to emphasize that that is very important 

and I appreciate your candor in saying right up front that the Administration through the Department did not support this law in 

the first place. There’s a natural inclination on the part of the producer community to believe that we may be—not you in particular—that the Department may be biased in implementing it 

and biased in completing some figures. One of the ways that you 

can refute that bias is by showing everybody, look, we are listening 

to all sides and trying to be impartial in terms of who you are hearing. 

8

Mr. HAWKS. Senator, we certainty did. As I alluded in my comments, my office is always open. My door is always open. I would 

have proponents and opponents come in the same day. Sometimes 

they do that intentionally to me. I intend to hear all sides and hear 

all comments as we move forward as I am sure you have. 

The CHAIRMAN. I am going to ask one more question, and then 

I am going to defer to Congressman Blunt, and I will probably have 

some more after that. 

Several ways of solving the record keeping requirement or at 

least lessening the burden on producers have been suggested, and 

I want to know your opinion, first of all, whether these ways would 

be allowed under the current law. Second, just maybe in general 

what you think of them. OK? 

First, we are going to have people here today testifying on the 

second panel who are going to suggest that we grandfather in, if 

you will, cows that are already in the system because you can’t go 

back and make up or reconstruct a verification record for a dairy, 

let’s say, that you have had for eight or 10 years. 

Then the second thing is a suggestion for a self-certification system where a producer would be able to certify on their own where 

a cow came from, or for that matter, a hog. First of all, do you 

think the current law permits that, or do you have to change the 

law to allow that, if necessary bend a little backward a little bit, 

if you can, and allow us to do that? Second, what do you think in 

general of those? 

Mr. HAWKS. Senator, I am always open to bending over backward 

when it comes to farmers, having farmed all my life in Mississippi. 

The fact of the matter is the law is very particular. We do not have 

the latitude with the current reading of the section. I can assure 

you that we’ve had multiple attorneys from the Department of Agriculture to review that. The answer to that grandfathering is that 

the law does not allow us to do that. 

The second part of that, the self-certification can be a component, 

but we have to have an auditable and verifiable trail so we think 

that the self-certification would not in and of itself be sufficient to 

meet the letter of the law. We feel very compelled to protect the 

integrity of this law. It is the right of the consumer to know that 

the USDA says that this is a U.S. made product, born, bred, and 

processed in the U.S.A. We feel very compelled to make sure that 

that’s correct. 

The CHAIRMAN. I recognize Congressman Blunt. 

Mr. BLUNT. Well, let’s talk about that, Mr. Secretary. Does the 

USDA administer the school lunch program now? 

Mr. HAWKS. Yes. 

Mr. BLUNT. Is that a yes? 

Mr. HAWKS. Yes, sir. 

Mr. BLUNT. Is it a requirement in that program to buy U.S. products? 

Mr. HAWKS. Yes, sir, it is. 

Mr. BLUNT. Why haven’t we had this kind of chain of ownership 

requirement in that program you administer, is the first question? 

The second question is, isn’t there some way you can take the current administrative structure that has apparently worked successfully for the school lunch program, and use that same process that 

9

the Department has defended for years now to determine these 

questions of country of origin for other nonschool-consumed items? 

Mr. HAWKS. Yes, sir. To answer your question for the record, 

very clearly we do administer the school lunch programs. As a matter of fact, that is one of the—I have that responsibility as well. 

The second part of your question, did the system that we use for 

the school lunch program as well as B.S.E. 30—there are several 

of these. It is a command and control type system. We basically 

take control of that, and we walk it through. The law is—with the 

current reading is that it is a process verification. We’ve got to 

verify those records for the trail. The current thinking is those 

would not meet the letter of the country-of-origin labeling. 

Mr. BLUNT. I guess I don’t understand how you think you meet 

the letter of the law now for the school lunch program. Just explain 

the difference to me. Now, the school lunch program says that you 

use U.S.-produced products, right? 

Mr. HAWKS. Right. 

Mr. BLUNT. You verify some way that that is the case? 

Mr. HAWKS. Correct. 

Mr. BLUNT. How do you do that now? 

Mr. HAWKS. Right now, the way we do that is, as I explained, 

it is a command and a control. 

Mr. BLUNT. That’s what I didn’t understand. 

Mr. HAWKS. We basically take control of that product at a point 

in time there. We actually control the flow. This one is just a chain 

of custody verification. Our current thinking is that this would not. 

Mr. BLUNT. On hamburger day at the school cafeteria, at what 

point does the school know you certify the school that this is a U.S. 

hamburger patty that they’re going to be serving that day? 

Mr. HAWKS. When we purchase that hamburger. We actually do 

the purchasing. That is part of the purchasing requirement, that 

it be a U.S. product. At that point in time, we literally take control 

of that product. 

Mr. BLUNT. Your current view of the school lunch program is 

that it is purchased in the United States, not produced in the 

United States? 

Mr. HAWKS. It is. There’s also some additional things here. We 

talk about warm breath slaughter in the United States. Right now 

it is processed. The slaughter part is what you are dealing with 

there. 

Mr. BLUNT. Do you understand my confusion on the two things 

being so dramatically different? 

Mr. HAWKS. Yes, sir. It is a valid question. To be quite frank 

with you, that is one that I struggled with myself, and I asked 

those same questions of my staff. 

Mr. BLUNT. Well, maybe that has some merit for further study, 

but I want to think about that. I may want to get back to you on 

that topic and see what we could do there. As you well understand, 

there will be real reluctance to reopen the Farm Act in a way that 

redefines this fact, the point where most people thought we were 

headed. 

What I believe I heard you say in your testimony was that you 

clearly do not have the ability to mandate an identification system 

10

under the law. It may be expressly prohibited as I indicated in my 

earlier comments. Is that right? 

Mr. HAWKS. I will object to that term. We are expressly prohibited from creating a mandatory—— Mr. BLUNT. Did I also hear you say that you were prohibited 

from doing that because of the way the law is written that retailers 

must do that? 

Mr. HAWKS. Yes, sir, retailers must, and retailers may require 

the chain back for the country of origin. 

Mr. BLUNT. Can or must require? 

Mr. HAWKS. They must. 

Mr. BLUNT. The way the Department’s interpreting the law right 

now is that the law was written in a way that USDA couldn’t come 

up with a system but that retailers had to. 

Mr. HAWKS. That is correct. Let me explain just a little bit as 

to how I would see the way we would administer this. The law is 

very explicit that it has to be labeled country of origin at the retail 

level. What I can see is we would go into the supermarket, if you 

will. We would look at the product and see it is labeled our product 

of U.S.A. We would ask that retailer to provide us information back 

through the chain, the process, the feed lot, the producer. 

All the way back through that chain, we would have to have a 

verifiable, auditable trail back. What the retailer requires of the 

people down the chain, the law is very explicit there. The retailer 

has to require that, or the person that’s supplying to that retailer 

has to furnish that information to them so that they can meet the 

letter of the law. 

Mr. BLUNT. Every indication to our packers has been exactly that 

since the regulations went out, that they don’t want to buy cattle 

for future consumption that they can’t trace the chain of ownership 

back to the calf. This may be an unfair question, but since you are 

a good guy who’s farmed all his life. 

The CHAIRMAN. This is a congressional hearing. 

Mr. BLUNT. I said that particularly for the Senator. Do you have 

a sense, Secretary, of what would be the easiest way you could do 

this if—do you still have a herd of cattle is another question, I 

guess. This is an aside. 

Mr. HAWKS. Well, Senator, on the record—— Mr. BLUNT. No, no, I am just a Congressman. 

Mr. HAWKS. Forgive me. I understand that, Congressman. To answer a couple of your questions, no, I do not have a herd of cattle 

now. Actually, AVIS, the agency that I went to put me out of the 

cattle business some years ago. I have said in my Senate confirmation hearing that I was really looking forward to having responsibility for that agency. I do not have a herd of cattle now. 

Mr. BLUNT. Do you have a sense, Mr. Under Secretary, is my 

question. As a person that understands this industry, what would 

be in your view—give me a pattern here that you were going to try 

or if you were a producer trying to figure out the easiest way to 

do this. Is this a cow vaccine, ear tag kind of chain, or how do you 

really do this? 

Mr. HAWKS. Congressman, in light of the law being so prohibitive 

of me or the Department of Agriculture prescribing that system, I 

would be very reluctant to share that with you here today. That’s 

11

the purpose of having these hearings. That’s the purpose of having 

this session. Maybe some of our presenters later today will have 

some good ideas. I’d prefer to hear from them. 

Mr. BLUNT. That’s not a bad position to take, and hopefully at 

the end of these listening sessions, you will produce, as a result of 

this session, some ideas that you’ve heard that may make this 

workable. The other thing I want to pursue before I turn this back 

to Senator Talent and move on to the other great witnesses that 

have assembled here today, this whole idea of current animals. 

How do you propose that be dealt with? 

Mr. HAWKS. Congressman, the law is very prescriptive again as 

we talked about earlier. The animals that—particularly those that 

are the breeding animals, older animals today that we will be marketing after the mandatory system comes in, unless they have a 

verifiable trail, they will not be able to go into retail as I see it 

today. I would just have to say if I was a cattle producer today and 

I had a calf crop on the ground I would find some way to verify 

where they came from. 

Mr. BLUNT. Senator, thank you. 

The CHAIRMAN. Thank you, Mr. Blunt, for those questions. I just 

noticed that on my cup of coffee from McDonald’s they say the 

beans come from Columbia, Brazil, and Central America, so they’ve 

done some product-of-origin labeling. Maybe we need to check with 

McDonald’s for that. 

I want to push you a little. I understand why you don’t want to 

say how you would do it. As tempted as I am to insist with you, 

to the extent that I can, I am not going to because I understand 

you are in a situation where if you don’t say anything, we get all 

over you. If you do say something, then it is all over the press. As 

long as you have these listening sessions that are open and taking 

information, I can live with that. 

I do want to push you on the whole question of how prescriptive 

this is. Let me just suggest a couple of things to you and get your 

comments on it. First of all, there is a provision in the law, as you 

say, prohibiting you from a mandatory national tracing system. 

That can be taken as some indication from the Congress that you 

have some discretion not to require such extensive records as you 

might otherwise think. Then the second thing is that the law says 

that the Secretary, quote, may require a verifiable record keeping 

audit trail, not shall require. Why don’t those two provisions give 

you more discretion than you are saying you now have? 

Mr. HAWKS. Senator, having served in the legislature before coming to Washington, DC, I certainly understand the difference between may and shall. I also feel in this one, as we stated, that it 

is very explicit that we are prohibited from doing this kind of deed. 

I feel in order to protect the integrity of this system, we have to 

have that verifiable trail. If we do not have the capability of absolutely determining the origin, then we would be doing a disservice 

to the public. We would be doing a disservice to the consumer that 

would be taking this product and believing that this is from the 

United States. 

My answer to that is to protect the integrity of this system, we’ve 

got to have some kind of a system in place or some kind of a process in place where we are prohibited from doing the system. These 

12

guidelines—not necessarily guidelines, these suggestions that have 

been made be used to do this. They’re very good. I would say that 

with our current thinking, our hands are basically tied on that. 

The CHAIRMAN. Let me just make sure I have covered everything 

for the record and also some other areas of interest to me. Congressman Blunt mentioned the school lunch program. Of course, 

many states also have labeling programs in place. I haven’t heard 

a lot of controversy about them. Now, wouldn’t it be possible for 

you to take the processes of, to canvass the states, pick the one 

that seems to be working the best, use that one so that we all know 

we have a model out there that’s working? 

Mr. HAWKS. Well actually, Senator, we looked at a lot of those 

state laws. As I alluded to earlier, we sent people to look at some 

of the various states that have those. They are not as prescriptive. 

The born, raised, slaughtered on the meat side of this is one that’s 

more difficult. Another issue there, assuming we took the state program, then that would potentially get us in trouble. What would 

prevent us from using a province in Canada or something other 

than that? That’s one of the reasons that we are trying not to do 

that. There are some excellent state programs, and we are visiting 

those, and we are trying to make sure that we are doing what we 

are needing while staying within the prescriptive confines that we 

have in this law. 

The CHAIRMAN. You said both the respective school lunch programs and the state programs, a big issue you see is the fact that 

the law as it was passed would require three-fold, in essence, reporting or labeling requirements. Those laws and those orders or 

those guidelines don’t, so that changes it. In your judgment that’s 

the big reason why they won’t work. 

Mr. HAWKS. Yes, sir, Senator, that is exactly the reason. The 

school lunch program is one that the requirements there are different as I alluded to in my comments to Congressman Blunt. The 

law there is not the born, raised, slaughtered so that gets us in 

some trouble. We have multiple definitions across government of 

what is in a product. This one is so explicit. 

The CHAIRMAN. I’d like your department or staff to produce in 

more detail the differences you see between the school lunch and 

this statutory requirement. Like Congressman Blunt, I don’t understand the details here. I am not going to ask you to go into greater 

depth here, but I am going to want to know that. We may come 

back at a subsequent time and ask for further testimony. Let’s get 

some more for the record there. Just tell me for the record about 

how much of the meat sold in the retail market in the United 

States is U.S. beef. What percentage of the market is imported, do 

you know? 

Mr. HAWKS. Well——

The CHAIRMAN. I am switching gears here. 

Mr. HAWKS. You are switching gears on me. My number says it 

is approximately 10 to 20 percent. 

The CHAIRMAN. Imported? 

Mr. HAWKS. Imported. 

The CHAIRMAN. OK. That’s at retail? That doesn’t—— Mr. HAWKS. That’s at retail. 

The CHAIRMAN. That does not include food service? 

13

Mr. HAWKS. No. 

Mr. BLUNT. Well, how do we know that? 

Mr. HAWKS. Because I have a very good staff. 

Mr. BLUNT. You know what I am saying. We know that now, and 

if we know that 80 to 90 percent is not imported, why can’t we 

come up with some of that same chain that produces that same 

kind of verification? 

Mr. HAWKS. The reason we know now is we do track it as it 

comes across the border. We know how much is coming in. Where 

we lose that identity is where it is being processed from there. 

Mr. BLUNT. Well, maybe I am not making my point clear. If we 

know that, if we know what’s coming in, why can’t we produce a 

set of rules and regulations that require the exclusion rather than 

inclusion of it? If not only you know what comes in as a finished 

product, my sentiment is that it is also easier to know what cattle 

come across the border in a truck and identify them than it is to 

identify the 80 to 90 percent of the beef that’s already here. 

Why do we put the obligation on the U.S. producer instead of 

putting the obligation on the livestock that comes across the border 

or comes in across the border some way? 

Mr. HAWKS. Congressman, that is an excellent question. The answer to that is very simple. The law requires that it is born, raised, 

slaughtered in the United States. 

Mr. BLUNT. Maybe the law can be viewed in a way that you can 

identify what is born, raised, and slaughtered in the United States 

in another way that’s easier for American producers, is what I am 

saying, Mr. Secretary. There are borders and there are checkpoints. 

I know one of the big concerns is what about the cattle that come 

in from South America or Mexico and come to a feed lot in Missouri 

or Kansas. It seems to me it would be easier to identify those animals than it would be to identify the 90 percent of the animals that 

don’t come in. 

Mr. HAWKS. I very clearly hear what you are saying and understand what you are saying. There again the law is so prescriptive. 

It says that we have to identify them in this manner, and we identify those that are coming in. It is not as prescriptive on how we 

identify those that come in from other countries. 

Mr. BLUNT. Go ahead. 

The CHAIRMAN. What Congressman Blunt is saying, look, you require that you keep a close touch on cattle that comes in from another country, and you keep track of that. Then anything that is 

not one of those is American. Now, it doesn’t eliminate all the problems because it comes in and then it goes to American feedlots and 

then it is processed. That would be like born in Mexico, raised in 

United States, processed in United States, and you still have the 

complications, but—— Mr. BLUNT. My point is, you are tracking so many fewer animals 

that way. You have animals in a feed lot and I am also assuming 

that of the 10 to 20 percent that’s sold at retail that’s not of American origin, that a very relatively high percentage of that comes in 

already as a slaughtered animal. We are only dealing with the live 

animals that come in in some process of their life headed, I assume, toward a feed lot or to a packing plant that have to be identified. 

14

It seems to me you say you have 3 percent of the animals at a 

feed lot, are animals that came in after they were born came in the 

United States, shouldn’t it be easier to keep track of that 3 percent 

than it is to expect American producers to keep track of the other 

97 percent? Obviously we can look at this very specifically and see 

it, that it is absolutely possible to go in that direction. Just common sense would lead you to believe that we know it is easier to 

check these animals coming in than it is to verify every animal 

that’s here. 

The CHAIRMAN. We will give you time to answer that, and then 

we will bring it up at the next panel. 

Mr. HAWKS. Well, thank you, for the input. There again, the law 

is so prescriptive we feel like from a thorough reading of the law 

that we are not allowed to do that right. I very sincerely hear what 

you are saying. I understand what you are saying. I have heard 

that. Being a farmer myself, it makes sense. The law is so prescriptive that we don’t feel that——

Mr. BLUNT. I don’t want to belabor this. I am lucky to be part 

of this hearing that the Senator’s had here and invited us. Anyway, 

I don’t want to go too far with this. I don’t know why the stores 

couldn’t require the packers to give that information on nondomestic animals rather than to give them information on domestic 

animals. All we say is each store must keep records documenting 

country of origin for all covered commodities, and retailers and/or 

packers found to be in violation of the law will be fined up to 

$10,000 for violation. It seems equally reasonable to me and much 

easier if the stores approach that from the other direction, that 

they tell the packers that the packers have to tell them which animals came in that were not animals that originated here. 

The CHAIRMAN. Whatever tracing system that were in place, it 

would only apply to imported beef. 

Mr. BLUNT. Absolutely. 

The CHAIRMAN. If it was not one of those, then you would know 

that at various stages it was in America. That would cut down on 

the record. 

Mr. BLUNT. I will assume the full——

The CHAIRMAN. Mr. Secretary, you probably know a whole lot 

more than I know about this, but if you spend enough time in 

Southwest Missouri, we are going to figure this thing out for you. 

[Applause.] 

Mr. HAWKS. Senator, I have never doubted that they call it the 

Show Me State for a reason. 

The CHAIRMAN. Welcome to Missouri. 

Mr. HAWKS. It is always a pleasure to be in Missouri, and I am 

earnestly wanting to work with you to find a common sense solution. 

The CHAIRMAN. I am not going to make you give up any more 

of a legal analysis at this point. That is also something I am going 

to followup on. I’d like the materials that you used to draw that 

conclusion that the law required you to do this rather than to allow 

people to prove, in effect, negatively that if it is not marked as 

something that comes from outside the country, than it was from 

America. 

15

Mr. BLUNT. It would seem to me that the packer and the retailer 

has the penalty if they fail to do that. Easier to trace a relative 

handful of livestock through the system and see if the packer’s failing to identify them than it is to trace the vast preponderance of 

the animals through the system. We might have some variable 

to——

The CHAIRMAN. Well, we will followup on that line with the next 

panel also. I just want to make certain there’s nothing else. Just 

let me get your opinion on an issue that some of the packers have 

raised because if we assume that this will require a very extensive 

identification system in place, beginning at the producer level—and 

certainly there’s a danger of that. That’s the point of having a hearing. 

The smaller producers, part-time ranchers, may not want to go 

ahead and do that or may not do that as well. The packers raise 

the issue that well, OK, one way they could deal with that would 

be simply to bid on livestock that comes from the bigger producers 

who can do that in a more sophisticated fashion. Some of the concerns we have, No. 2, if that were to happen, is there a possible 

violation of packers having to do that? I want you to think about 

that. Unless Congressman Blunt has further questions, we will let 

you go. 

Mr. HAWKS. Senator, in response to that, it is quite reasonable 

for a packer to because they’re obligated to provide to the retailer 

the information as to the country of origin. There are some figures 

there. They’re entitled to ask for any information that is needed to 

meet the letter of the law. It is also reasonable to accept any business practice that they can justify. They have to be applied uniformly, and it will not adversely affect any person in a group. To 

say that they have the same opportunity , everybody has the same 

opportunity. 

The packers would need to notify the producers up front as to 

what the requirements were. It just goes without saying that anyone in this industry should have the right to run their business in 

a manner that is prudent. With those criteria met, there would be 

no violations of the practice. 

The CHAIRMAN. Well, that’s certainly a sentiment that we can all 

go away with. Everybody should be able to. We will end your testimony on this panel unless Congressman Blunt has—— Mr. BLUNT. Thank you, Mr. Secretary. 

The CHAIRMAN. We do thank you for coming and for allowing 

yourself to be questioned in this fashion. There’s a lot of people in 

the government that wouldn’t want to do that, and we really do appreciate you for being here, and I look forward to working with 

you, Mr. Secretary. Thanks so much. 

Mr. HAWKS. Thank you, Senator, and Congressman Blunt. 

The CHAIRMAN. If the next panel will get assembled, we will go 

right to you. 

While you are assembling, I will say that the record will remain 

open for 5 days after this hearing so that people can submit written statements. 

Mr. BLUNT. Senator, while this panel’s getting ready, I would 

love to be able to stay, but I worked this into my schedule. I have 

to leave by quarter after 11, but it won’t be because of lack of interVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
16

est in this panel and what they have to say. I know I will have access to the record on the hearing. This is particularly important in 

this part of our state, and I am grateful for you taking the time 

as you are. 

The CHAIRMAN. Thank you. All of you just got an example of why 

your Congressman is such a great Congressman. He made some 

really good points, and we appreciate your being here. 

Mr. BLUNT. Thanks so much. 

The CHAIRMAN. You are welcome. Now that the official administration person is not testifying, I will just say we want to keep this 

informal. If you have a question you want to ask during the recitation, since you have to leave, just jump in. I want to make certain 

you have a chance to get through your testimony, but that doesn’t 

mean that we can’t jump in with questions. All right. We will go 

from left to right as I am looking at you. I will just introduce each 

one of you as you are ready to go. First, we have Mr. Mike O’Brien 

who is the vice president of produce for Schnuck Markets. Thank 

you for being with us, Mr. O’Brien. 

STATEMENT OF MIKE O’BRIEN, VICE PRESIDENT OF 

PRODUCE, SCHNUCK MARKETS, INC. 

Mr. O’BRIEN. Senator Talent, members of the agricultural subcommittee, fellow panelists and other distinguished guests. I am 

Mike O’Brien, vice president of produce for St. Louis-based 

Schnuck Markets, Incorporated, a family owned and operated supermarket chain of 100 stores in six states. 

I am here today to help communicate concerns regarding the 

Farm Security and Rural Investment Act of 2002 as it relates to 

country-of-origin labeling. At Senator Talent’s request, I will be 

speaking on behalf of the Food Marketing Institute and its 2,300 

member companies representing 26,000 stores. 

Although well-intended, we believe that part of the law specific 

to country of origin misses its mark. Designed as a way to show 

support to domestic farmers and producers, the COOL law gained 

credibility through claims it would enhance food safety and security. 

From our standpoint, it will do neither. What it will do is level 

repercussions upon the industry. The COOL law, as it stands, will 

have a far-reaching and negative impact on the entire food distribution marketplace—from growers and ranchers to wholesalers 

and retailers—and ultimately to consumers. 

I want to emphasize that retailers are not opposed to country-oforigin labeling. Schnucks, like many retailers, has been providing 

this type of information to consumers on a variety of products for 

quite some time. However, country of origin as defined by the law 

extends back to the farm or ranch on which the product originated. 

Let me take you through a few of the finer points of the COOL 

law as retailers fully understand it. The COOL law requires that 

retailers be made primarily responsible for informing customers of 

the country of origin of similar to a law now in effect in Florida, 

but there are big differences. 

Florida’s Produce Labeling Act of 1979 only requires signs or labels for imported produce. It makes no mention of record, segregation, audits, or $10,000 fines. The Florida law was designed to help 

17

sell more Florida produce. Should our government really be involved in marketing? 

No one knows our customers better than we do. We work hard 

to deliver what our customers tell us they want and need. Last 

year, out of 22,000 calls logged by the Schnucks Consumer Affairs 

team, only nine even remotely pertained to country of origin. I am 

certain that most people would favor having as much information 

as possible provided at the point of purchase, but at what price? 

The USDA estimates that the food production and distribution 

system will spend $2 billion in labor alone to establish record keeping systems in the first year. However, these early estimates do not 

take into account the impact of potential fines or additional expenses retailers will face from farmers, shippers, handlers, wholesalers, distributors and other retailers if they overhaul their entire 

record keeping, labeling, warehousing and distribution systems—

all of which will be passed on to the consumer. 

The supermarket industry as a whole operates on a very small 

margin basis. The industry average before tax net profit is 1 percent of sales. That means we only make a penny for every sales 

dollar. 

Schnucks estimates that in the first year alone the implementation process will easily exceed $3 million. Imagine what a devastating blow this would be to the profitability of smaller retailers, 

suppliers and producers. Under the law, the Missouri tomato grower, for instance, the epitome of a small farmer, must adhere to the 

same guidelines as the large growers in Florida and in Mexico. 

Simply put, this law will be a burden to the very people it is trying 

to protect. 

After the retailer, cow and calf operators will be the hardest hit 

by this law. Cattle born in February of this year fall under the law. 

That means farmers should be reacting to this law right now, and 

many still have no idea of what to expect. 

There are some glaring inconsistencies in this law. For instance: 

I mentioned earlier that food service facilities were excluded, yet 

they represent 50 percent of the market for the same covered commodities retailers receive. Poultry is noticeably excluded from the 

list. Peanuts must be marked for the country of origin but not pecans, almonds or pistachios. Why include peanuts at all? Planters, 

Fishers and Schnucks Private Label company all currently source 

100 percent of their products from the United States. 

The CHAIRMAN. Mr. O’Brien, where are you in your testimony? 

I am trying to follow it. 

Mr. O’BRIEN. I cut it back for you. I am on page 8. 

The CHAIRMAN. The committee members can go on as long as 

they want, but we encourage witnesses to be as brief as possible. 

I am sorry to interrupt. 

Mr. O’BRIEN. Fresh and frozen vegetables are treated differently. 

Birds Eye, for instance, must now include country of origin on frozen green beans, but the law does not apply to Del Monte’s canned 

green beans. Frozen apples are covered, but frozen apple pies are 

not. We ask that you re-evaluate this legislation and consider the 

unintended results that may follow its implementation. I thought 

of four off that. 

18

1) In reality, this law may make it cheaper to buy from foreign 

rather than domestic sources. 

2) The law could give chicken and turkey products an unfair advantage in the marketplace over beef, pork and seafood. 

3) In order to limit exposure under this law, retailers will be 

compelled to source covered commodities only from those who can 

afford the systems necessary to comply. This will devastate some 

of our smaller suppliers and make maintaining product nearly impossible. 

4) Retailers cannot absorb the cost associated with implementing 

the law. Consequently, we will have to ask suppliers and producers 

to share the load. This will inevitably and unavoidably result in 

higher costs to consumers. 

Again, we thank Senator Talent for holding this hearing today. 

We are all in support of the consumer’s right to know. If that was 

the intention of the law, we don’t think it gets us there. 

Consumer confidence today is very low, and spending habits have 

become more conservative. This has put a strain on all types of retailers. We are asking that you help ensure that this legislation 

does not further burden the food system. 

In conclusion, let me say that our customers always come first. 

If our customers want country-of-origin labeling and are willing to 

pay for the additional costs associated with such a program, the supermarket industry will meet that demand as it meets consumer 

demand every day. On behalf of Schnuck Markets, FMI and its 

member retailers, I thank you for your time and consideration of 

the issue. 

[The prepared statement of Mr. O’Brien can be found in the appendix on page 73.] 

The CHAIRMAN. Thank you, Mr. O’Brien. Our next witness is Mr. 

Ken Bull, vice president of cattle procurement. 

STATEMENT OF KEN BULL, VICE PRESIDENT, CATTLE 

PROCUREMENT, EXCEL, WICHITA, KANSAS 

Mr. BULL. Thank you very much, Senator Talent and Congressman Blunt, for giving me the opportunity to testify before your 

committee today on what I believe is a well-intentioned, yet severely flawed law. 

Mandatory country-of-origin labeling—COOL for short—for beef 

and pork is a concept that has been discussed for many years. As 

I understand it, supporters believe that American consumers want 

to know more about where their food comes from and are willing 

to pay more to support the infrastructure necessary to identity preserve their food. Some supporters, I believe, are motivated by another reason. That is to block the trading of cattle and meat with 

U.S. trading partners, especially Canada and Mexico. 

COOL is now the law, and we are actively trying to figure out 

how we are going to comply with it. I appreciate the chance today 

to highlight for the committee the complexities that we will face as 

a result of the law. 

First, this is a retail labeling law that mandates there must be 

a verifiable audit trail to prove that the labels on products are true 

and accurate. The law also prescribes penalties of $10,000 for violations. 

19

In an effort to better understand the law, I recently met with 

AMS staff in Washington to ensure that my read of the law was 

correct, and it is. A verifiable audit trail means that I must be able 

to provide documents that back up the claims made on the meat 

I market to our retail customer. In order for me to do this, the feeder or auction barn from who I buy must be able to provide these 

documents, and I must be able to attach these documents to the 

meat I sell at retail. 

In addition, I have been notified by retailers that if I intend to 

sell them meat in the future, I will have to assume liability for any 

misrepresentation on their labels. You can imagine I am going to 

take every step necessary to ensure that I am keeping my customer 

and myself in compliance with the law. Finally, retailers are demanding that I develop an auditable record keeping system that 

will give them the assurance the we will be able to comply and not 

subject them to possible problems. 

An additional concern that has not been identified is that under 

the Meat Inspection Act, which is governed by another agency, the 

Food Safety Inspection Service, to apply a false label to a product, 

is to ship a misbranded product. This is punishable as a felony, and 

the product involved is likely subject to recall. I am not going to 

risk going to jail for selling the product, or going to subject my company to a recall. Again you can bet I am going to do everything I 

can to follow the law. I simply cannot certify anything I do not 

know to be absolutely true. This interpretation of the Meat Act was 

confirmed when I met several weeks ago with the Deputy Administrator of FSIS and the chief of the labeling branch. 

While we already do some branding today and we support branding, it is based on attributes that reflect the market niche a retailer 

wants to uniquely fill. These brands are reliant on factors that are 

applied in our plant and more importantly are cost effective. The 

COOL brand relies on factors from the birth of the animal, following it through the production phase, into our plants, then on to 

retail, all at significant cost and questionable demand. 

We invest significant revenue in developing and marketing 

brands. These investments are done only after significant research 

to demonstrate that the benefits or returns will far outweigh the 

costs. 

There is much speculation on the cost of COOL, and certainly I 

have my own idea, but frankly I believe the true cost is that there 

stands to be a significant change in the cattle and hog industry as 

a result of this law. We have done cost estimates that quickly led 

us to conclude that we are not going to be able to make the investments it would take to be able to run our plants the way we run 

them today. 

To create the kind of identity preservation system this law requires would cost us $40–50 million per plant. Then even then we 

would be at the risk of an unintentional mistake. 

A far more likely scenario is that packers would call on feeders 

that have the best, most reliable, audit proof record systems, especially electronic ear tags. I met with the Deputy Administrator of 

the USDA Packers and Stockyards Administration to ensure that 

this was consistent with P&S regulations, and I have been assured 

that steps such as these are entirely within the scope of the law. 

20

We will seek to maintain a proactive dialog with the Agency as this 

unfolds. We believe we are on solid footing with P&S in saying that 

if we suspect records are not reliable, we will have a difficult time 

being able to bid on those livestock. 

We believe one probable outcome of the law is that packers 

would most likely dedicate plants as U.S.A.-only origin or mixed origin plants and then segregate production by days so that only likeorigin animals are processed on given days. This would eliminate 

marketing options that producers currently enjoy. 

Today we sort beef carcasses in 27 different ways—by grade, by 

certified programs, and other factors. Under this law, we layer in 

at least a doubling of these sorts. Our coolers are the size of football fields and the changes this law necessitates are not cheap. One 

example of an unrealized cost is that currently FSIS has regulations that require us to leave 3-minute gaps between grade sorts 

and grade changes. Downtime in our plant is around $1100 a 

minute, so increasing the number of these 3-minute gaps adds up 

in a hurry. 

Of particular concern is something we learned from AMS, and 

that there is zero tolerance for error. In our meeting with AMS, we 

painted a hypothetical scenario that goes like this: Say we processed a group of cattle on Monday, and in reviewing our records, 

we found that somebody made a mistake, either ourselves or the 

producer, and a Mexican-born animal got into the mix of 1500 head 

of U.S. born, raised and slaughtered. We learned from AMS that 

in that scenario all 1500 head would be potentially mislabeled or 

misbranded meaning that we have possibly created a huge list of 

violations for our retail customers. We must notify the retailer, and 

the retailer must not market the product because it would be a 

willful violation on every package of meat from that 1500 head of 

livestock. All of the product from these 1500 head that was going 

into retail is now subject to a Class III recall, bringing great harm 

to our reputation and our brand. This meat would now have to be 

diverted into a food service channel at additional cost and substantial discount—all by virtue of a simple human error—with no impact to food safety whatsoever. 

Another huge concern for us is the impact on cow/calf operators 

and the dairy industry. There are beef cows as much as a dozen 

years old, and many of these animals do not have acceptable documentation. Dairy cows live five to 8 years, and many have crossed 

the Canadian border. There is insufficient documentation in the 

dairy industry as well. Much of the cow beef ends up as lean trim 

that is blended with less lean trim for ground beef production and 

sold at either retail or food service. Under the law, this cow will 

be relegated to food service as its only market for a long time. If 

you are a cow/calf or dairy operator, you’ll want to pay close attention to this loss of the retail demand base and the marketability 

of these animals. AMS again has confirmed our observations, and 

I would strongly encourage producers to understand this likely possibility. 

In closing, there is much to learn about the law as its enforcement unfolds. USDA has to implement the law that was passed, 

and from where I sit, the Department is doing just that. My hat 

is off to Under Secretary Hawks and his team in doing this 

21

unenviable job. AMS, P&S, FSIS all have their work cut out for 

them. Do we? I am happy to answer any questions you might have. 

Mr. BLUNT. Well, I do have a question while I am here and you 

are here. I appreciate your job, being responsible for buying and 

keeping track of these animals. I’d like to go back to the question 

I asked Secretary Hawks. 

Assuming that you have to identify virtually one of the two 

groups of animals or maybe you have to identify every animal that 

you buy, how much more difficult would it be or less difficult for 

you to only identify the animals that have crossed the border? 

Mr. BULL. That’s a great question, Congressman. First of all, this 

is just to clarify, packers aren’t the ones that’ll be doing the identification. We are basically the buyers of a commodity. The question 

that you are asking is how many are coming across the border and 

is there some mechanism that could be put in place. 

You might have people describe that that would be a trade violation. That’s up to markets to interpret, whether or not putting that 

burden only on imported animals is a problem. If animals are coming directly from a country directly into our packing plants as the 

only method of entering the country, then you might get a solution. 

The problem is you have anywhere from 500,000 to 1.2 million 

feeder cattle coming across the border from Mexico and going to 

cow/calf grazing countries where they’re out on stockers. They go 

into the feedlots. They’re commingled at auctions. They’re blended 

in. Then in looking at the other border, the Canadian border, we 

have feeder cattle coming across the border. We have fat cattle 

coming across the border. There appears to be cows that come 

across that border as well. These animals all get dispersed within 

the system in the United States and commingled with other cows. 

You would have to create a system that no one can alter on those 

animals. 

Mr. BLUNT. That’s exactly the same system you have to have for 

all the other animals, be it imported or domestic animals. 

Mr. BULL. That’s correct. 

Mr. BLUNT. It is just so many more animals you are keeping 

track of on the same basis. 

Mr. BULL. The other problem is let’s say we come up that imported animals have to have electronic ear tags. 

Mr. BLUNT. Right. 

Mr. BULL. Maybe that’s one solution. You are a producer and you 

have more marketability if your animals don’t have an electronic 

ear tag which designates them as U.S. It would be very easy to 

make sure that that animal loses its ear tag. You almost have to 

do the converse as a way to police your system. In other words, you 

have to identify the animals that become part of the population, 

wherever the animal is from. 

Mr. BLUNT. Well, either that, or you have to set up a violation 

regimen where you really watch those animals more closely and enforce the violation. 

Mr. BULL. It is easier because really that person has to go back 

to the producers who are buying those animals and having to understand how they’re managing those animals and how they would 

feel for their part. Our job is to take whatever label is identifying 

22

those animals when they get to our plant and make sure that label 

is there. 

Mr. BLUNT. You said 500,000 head of cattle come across the 

Mexican border? 

Mr. BULL. Yes, it is 500,000 who will make it through this year 

will be about——

Mr. BLUNT. Out of a total of what? 

Mr. BULL. Slaughtered in the United States, about 28 million. 

Mr. BLUNT. We have an option of keeping track of 800,000. It is 

28 million less 800,000. 

Mr. BULL. You have about a million six coming from Canada. It 

is about 2 and a half million out of the 28 million or slightly under 

10 percent. 

Mr. BLUNT. You are helping me even feel more strongly about 

the point I am trying to make, Mr. Bull. Thank you. 

The CHAIRMAN. Yes, I see where Mr. Blunt is headed. Now, what 

Mr. Hawks said was that the statute doesn’t let us do that. First 

of all, the question was the statute does or doesn’t let you do that. 

The second thing, this is if it truly doesn’t or if we need to clarify 

that, that might be something we could recommend. If we had a 

system that you felt secure enough for tagging or marking animals 

that had come from another country or I guess that went to a less 

common feeder lot from another country and then if the animal 

didn’t have that mark or that tag, then that would be the documentation saying that it was an American animal because of what 

it didn’t have. 

I am thinking out loud here. I understand the Department’s reservation about that in part because that’s not how a bureaucracy 

does things. It is a little too logical. You know what I mean? It is 

like the IRS is not going to let you use the absence of something 

to prove the validity of the deduction. In the right circumstances, 

there’s no reason for why you couldn’t. 

Mr. BULL. The bigger issue, that really faces us is not whether 

or not we can identity preserve those 2 and a half million animals 

that are interspersed in our system. The real problem is how we 

comply with this at the retail labeling end. Let’s assume that you 

are right and we are able to identify those 2 and a half million 

head. 

My job, then, if an animal comes to me and bears none of those 

identifications, then I get to assume that you passed that on to 

Schnuck as a product of the United States. Let’s assume that in 

the record keeping system somebody going back through that trail 

now finds that that’s a Mexican animal that had an ear tag removed somewhere in that system. Now, I have now got that whole 

batch of animals in violation, and Schnuck’s now has all that product that they can’t——

Mr. BLUNT. You also have the same problem if somebody takes 

that domestic ear tag and puts it in the ear of an animal that 

comes into the system. If somebody wants to violate that system, 

it is relatively easy to do. The only thing that stops you from doing 

that is the penalty. Part of the question here is what’s really best 

for the U.S. producer and what’s the easier group of animals to 

keep track of. 

23

The CHAIRMAN. I agree with you. If I was your lawyer, I would 

raise the prospect of that hypothetical you gave me. A herd of 

10,000, you find out one of them is a Mexican cow. That’s a bureaucratic tendency, to come in and say the whole thing’s shot. You’ve 

got to recall them all. 

One way of dealing with that would be either—in this case with 

more legislation, if necessary, to give people a different place in the 

production chain, a safe harbor. In other words, to say look, if you 

have done thus and so, you are safe. Spell it out. 

I certainly have no—and I don’t think any other supporters still 

have problems saying if you had done your responsibilities to check 

all the tags to make sure that whatever system goes into place, 

that it is not a foreign animal and then you find out through fraud 

or some mistake that there’s one animal in there we can create 

safe harbors for you. It is complicated, but we are beginning to 

make some progress. If you need to go—— Mr. BLUNT. I do need to. Thank you, sir, for including me this 

morning. Thank you all for taking time out for this. I will take the 

testimony with me, and we will take a look at it. 

[The prepared statement of Mr. Bull can be found in the appendix on page 89.] 

The CHAIRMAN. Next is Mr. Steve Owens who is the co-owner of 

Joplin Stockyards. I am very interested to hear your comments on 

all these issues. 

STATEMENT OF STEVE OWENS, CO-OWNER, JOPLIN REGIONAL 

STOCKYARDS, INC. 

Mr. OWENS. I also want to thank you, Senator Talent, for inviting me to this, and also Congressman Blunt. 

Again, my name is Steve Owens. I am the vice president and coowner, along with Jackie Moore, of Joplin Regional Stockyards, and 

we have two locations in Southwest Missouri. Our first location is 

what we call the Joplin facility, and it is located 13 miles east of 

here on I–44. We also have a facility in Springfield which is located 

at Kansas and Division in Springfield, Missouri. 

Our primary business is marketing cattle for producers located 

in Missouri, Oklahoma, Arkansas and Kansas. Joplin Regional 

Stockyards has 105 employees to help service our approximately 

20,000 cattle producers. Over the last 2 years we have averaged 

selling approximately 455,000 cattle per year at a value of 

$225,485,000. Our services include three regular weekly auctions, 

seasonal value-added sales, commingled cattle sales, video cattle 

sales, and all of our auctions are broadcast live over the internet. 

Our primary market area is within a 150-mile radius for a facility that’s not used based on how cattle flow. This primary market 

area includes 27 countries in Missouri, 6 counties in Arkansas, 8 

counties in Oklahoma and 6 counties in Kansas. Our service area 

for our video cattle reaches out to about a 400-mile radius. Within 

our primary market area, there are 43,805 producers representing 

2,855,901 total cattle and 1,315,543 beef cows. This is based on 

1997 census information. 

The 2002 Farm bBill includes law that requires mandatory country-of-origin labeling at the retail level on certain commodities 

which includes beef. This mandatory labeling will start on SepVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
24

tember 30th, 2004. For beef to be labeled as U.S. beef, it must be 

from an animal that is exclusively born, raised, and slaughtered in 

the United States. The law also states that a verifiable record audit 

trail be maintained by those who prepare, store, handle and distribute a covered commodity, but specifically says that a mandatory 

identification system shall not be used. There will be a fine of 

$10,000 per violation incurred at either the retail or packer level. 

This labeling law is only in effect on beef sold in the retail sector 

(grocery stores) and is not on the beef that’s sold in the food service 

industry. 

We have spent the last 4 months trying to determine how this 

law is going to effect Joplin Regional Stockyards and more importantly how it is going to effect the cattle produced in our market 

area. We support the labeling of beef United States producers 

produce because of its quality and safety characteristics when compared with that of other countries. We also feel that the system utilized to achieve it needs to be taken into consideration to determine 

the cost and benefits. From our investigations, and our meetings 

and discussions with various people in the industry and the government, the following is our projected effect the mandatory labeling law will have on our producers: 

We feel that the system will be mandated by retailers and packers to meet the requirements of the law, because that’s where the 

law is directed, at the retailers and packers. We feel that this system will require that suppliers of cattle, (that being feed yards, 

stockers, calf/cow producers) will need to maintain accurate record 

keeping for these animals born and raised in the United States. 

Even though the law specifically prohibits a mandatory identification system for producers, it also requires the country of origin 

be specified for all commodities, including those of United States 

origin. This is how we view the USDA is interpreting that law. 

Since the law is directed at the retailer/packer, they will mandate 

an identification system from their suppliers. 

Producers will be required to maintain records that will prove 

U.S. origin and identify these cattle in some way before or at the 

time of first marketing. The producer will be required to sign an 

affidavit or possibly—and it appears this is more likely—some type 

of third-party verification to these facts. 

From our discussions with our producers in our area, they are 

more concerned about the facts and potential scenarios leading us 

to believe that a significant number of them will elect to either not 

participate or quit raising cattle altogether. There will be a cost of 

meeting the requirements of this law that include record keeping, 

identification and additional cooler space at the packer and retail 

level. These costs will more than likely be passed back to the producer. 

The benefits of mandatory labeling are harder to determine. Will 

the consumer pay more for U.S. beef? We believe that a majority 

of Americans do desire beef born and raised in the United States. 

Do they have enough extra money to spend on U.S. beef to make 

the law beneficial to U.S. cattle producers? 

We believe that this is yet to be determined. We feel that a bigger concern for the producers in our area is the additional hassles 

that this law creates. The majority of our producers are part-time 

25

or hobby cattlemen. They raise cattle as an income supplement to 

another job. In Missouri there are 60,204 beef cow operations of 

which 47,137 have less than 50 head. The average cow herd in our 

market area is 30 head, which means there are significant producers who have 20 or less cows. 

The potential requirements of this law will outweigh any financial benefit that the small producer will receive from mandatory labeling. Missouri is reflective of what the average beef cow producer 

resembles in the United States. 

Joplin Regional Stockyards is supportive of labeling of beef, but 

we feel that the requirements of the current mandatory guidelines 

as we understand them will be very burdensome, especially on 

smaller cattle producers. We feel that a system that does not require the producer to identify his cattle or a voluntary system that 

will help us determine the true benefits of product labeling is a 

more prudent choice at this time. The risk of permanently damaging the cattle-producing segment of our agriculture economy is 

significant. 

[The prepared statement of Mr. Owens can be found in the appendix on page 93.]. 

The CHAIRMAN. Thank you, Mr. Owens. Our next witness is Phil 

Howerton, Chairman of the Pork Producers. Phil, it is good to have 

you here today and hear your comments. Please go ahead. 

STATEMENT OF PHIL HOWERTON, MISSOURI PORK 

ASSOCIATION 

Mr. HOWERTON. Senator Talent and distinguished guests, my 

name is Phil Howerton, a pork producer from Chilhowee, Missouri, 

and I am here to testify on behalf of the Missouri production costs 

to hog operations, it will reduce U.S. pork exports globally, it will 

decrease domestic U.S. pork consumption, and it provides an unfair 

economic advantage to the chicken and turkey products, to name 

a few. Let me embellish further on each of these points. 

Mandatory COOL will not raise live hog prices long-term and 

could result in lower hog prices due to the law’s requirement of extensive record keeping, segregation and tracking of imported animals by producers and packers. Given the lack of research evidence 

of consumer interest in country-of-origin labeling for pork, the increased packer, processor, retailer and USDA costs associated with 

labeling will be passed back to producers in the form of lower hog 

prices. 

Mandatory COOL will add production costs to my hog operation 

in order to meet the burdensome verifiable record audit trail standard set in the law. It appears to us that any certification and audit 

system must have at least three components—a detailed records 

system, legal documents to guarantee origin, and third-party audits 

of these records. All of these impose direct costs on producers, not 

to mention the potential liability for noncompliance. 

Mandatory COOL will reduce U.S. pork exports. An economic 

analysis of the mandatory COOL program performed by economists 

for the U.S. pork industry and Iowa State University concluded 

that by the year 2010, U.S. pork exports could be 50 percent lower 

than they would be without the labeling program. This is because 

Canada, which currently supplies 5.7 million head of live hogs to 

26

the U.S., would be forced to process these hogs in Canada. Canada’s pork output would increase, and since consumption will not 

grow by that much, this pork will compete directly with U.S. pork 

both inside the U.S. and in the common export markets. Lower 

U.S. exports would reduce the U.S. pork industry’s value-adding effect for corn and soybean, thus impacting all of the U.S. agriculture. The U.S. will likely once again become a net importer of 

pork. 

Mandatory COOL will cause a reduction in domestic pork consumption. According to the same study, a full trace-back system 

implemented under COOL will increase U.S. farm-level pork production costs by 10 percent or $10.22 a head. This is equivalent to 

a 10 percent increase in the cost of on-farm production or approximately $1.02 billion for the U.S. pork industry. Assuming the 10 

percent increase in costs is passed on to the retail level, U.S. consumers will likely demand 7 percent less pork due to higher prices. 

A presumably less costly certification and audit system will have 

a smaller but still negative effect on U.S. consumption. 

Mandatory COOL puts small independent producers at a significant economic disadvantage to large integrated operations. A recently published study conducted estimated that pork supplier implementation costs for integrated hog production or packer processing systems to be $3.25 a head. The process for farms with nonintegrated production systems was $6.25 to $10.25 per head. This 

leads to a $7 per head disadvantage for small producers that would 

quickly put them out of business. Another recent study conducted 

also cites the loss of over 1,000 independent farmer and large integrators in their place. 

Mandatory COOL provides significant economic advantage to 

chicken and turkey products. Poultry is the main competitor of beef 

and pork in the retail meat case and is exempt from mandatory 

COOL and thus will not face any additional costs to the poultry 

chain. 

The flawed mandatory country-of-origin meat labeling law also 

raises more questions than it answers. Here are two that really 

trouble me: Why does mandatory COOL exempt chicken and turkey products and the entire food service sector—restaurants, fastfood establishments, lunchrooms, cafeterias, lounges, bars and food 

stands? Does Congress believe that U.S. consumers only have the 

right to know where their pork, beef and lamb come from but not 

their chicken and turkey—and only when they eat out—and only 

when they eat at home and not when they dine out? The second 

one, USDA’s mandatory COOL guidelines clearly have periodic audits in mind when they require a verifiable record keeping audit 

trail. How frequently and how in-depth will such audits be and 

who will pay for them? 

Additionally, will the legal affidavit requirements by packers be 

required of producers for each load of hogs? Finally, what are the 

liability ramifications of these requirements? 

Senator Talent, it is becoming increasingly clear that due to the 

effort of providing mandatory country-of-origin meat labeling, it is 

going to be a very costly experiment. The additional costs including 

the liability issues required by this program far outweigh any benefits that might accrue to pork producers at the farm level. Thus, 

27

the Missouri Pork Association urges you to oppose the implementation of the mandatory country-of-origin meat labeling. We believe 

that the mandatory country-of-origin meat labeling program should 

remain voluntary and be market driven rather than government 

mandated. 

Thank you for allowing me to testify today, and I would be 

pleased to answer any questions. 

[The prepared statement of Mr. Howerton can be found in the 

appendix on page 95.] 

The CHAIRMAN. I appreciate that. Let me make one thing clear 

on behalf of the subcommittee and what I feel is certainly within 

our purview and what isn’t. You are perfectly free to express your 

opinions, and Mr. O’Brien and Mr. Thorn were also. The only thing 

about mandatory country-of-origin labeling is whether it is a good 

idea or not. I am not going to go into that in terms of deliberation 

with the subcommittee because that was a decision made when 

Congress passed the law. 

What I do want to get into is how we can implement it in such 

a way that it ends up helping, or at least not hurting, the producers that this was designed to help. Now in the context of that, 

I do expect the most vigorous proponents of COOL to answer the 

concerns that have been raised about whether or not it will be extremely costly. 

When you say it is going to increase the cost of the average producer of hogs by 10 percent, that’s a real significant profit. We need 

to make certain that that does not, in fact, happen. I don’t think 

anybody wants that to happen. That’s really what I am going into. 

I appreciate your testimony, and we will go now to Max 

Thornsberry, who’s president of the Missouri Stockgrower’s Association. 

STATEMENT OF MAX THORNSBERRY, PRESIDENT, MISSOURI 

STOCKGROWER’S ASSOCIATION 

Mr. THORNSBERRY. Senator Talent, I thank you for allowing us 

to be here today, and it is a distinct honor to testify for you on behalf of the Missouri Stockgrower’s Association. We are a relatively 

new organization in the State of Missouri that represents cattle, 

hogs, lambs and meat goats. We are affiliated with R-CALF-USA 

which is a national affiliate of nearly 10,000 members representing 

grass-roots cattlemen and cattlewomen all over the United States. 

I am not here today to discuss the negative or positive aspects 

of this law. I am here to visit with you about a law that has already been passed and signed by our President and approved by 

our Congress. I am here today to visit with you about why we 

think it should be implemented and how we could do that in the 

best manner for our producers. We have just held two informational gathering meetings in the state of Missouri. I am not following my testimony. You have it in written form. 

The overwhelming majority of those people who attended those 

meetings gave us basically two opinions: One was we want the opportunity to differentiate our product in the marketplace, and we 

believe the country-of-origin labeling is that method. Two, we want 

this law to cause us the least of amount of grief and record and 

government regulation. 

28

Senator Talent, it appears like common sense is falling out the 

window when it comes to the USDA. We hear one group in USDA 

saying third-party verification is not a part of the law. That’s what 

Mr. Bill Sessions told us at both of our meetings, that it is not required. Yet Mr. Hawks today said that if a packer wants to require 

third-party verification, that’s their business. 

We believe that opens the door for a Pandora’s box of opportunities for these packers to gain proprietary information about our inventory, about our operations and other aspects of our business 

that are private. That’s between us and the IRS and nobody else. 

If we open the door and allow them to require or give them the opportunity and allow them to review our records, to review our 

verification and audit trails, then they will know exactly how many 

cattle I own, what sections I own, how many calves I produce. 

They already have a computerized system in inventory control 

that bar none is the best in the world. I don’t believe that we need 

to allow those in an adversarial role to have complete control of our 

inventory and business. We do believe that this law can be implemented with policies, and we believe that there are a couple of 

things we should discuss today. 

First off, the Missouri Association believes a grandfather period 

should be attached to the country-of-origin labeling law. I am not 

in agreement with Mr. Hawks that that cannot be accomplished. 

Cattle that are purchased prior to September 2004 may not be legally identified as born and raised in the U.S.A. A grandfather period would allow these older animals to enter the food chain without discrimination. 

The USDA identifies all imported live animals. At the present 

time because of tuberculosis, we brand every calf that comes across 

the border of Mexico with an M on its cheek. That brand follows 

that animal all the way through the box. It would be very easy to 

do the very same thing with cattle or meat coming from other locations. Meat that comes into this country from Australia and New 

Zealand carries on the side of that box a product of whichever 

country it is coming from. It would be very easy to track that with 

the computerized system we have. 

For many reasons, some proof of ownership is reasonable as several times we’ve mentioned. It is possible for an enemy of the 

United States to rustle a load of cattle, inject them all with a prohibited medication or disease and sell them throughout several 

states, particularly states like Missouri that do not have a brand 

identification law. Under the current system of operations, many 

states do not require any proof of ownership to sell cattle. States 

without a brand law do not follow cattle ownership closely. A minimum proof of ownership will greatly reduce the chances of this terrorist scenario that I have defined. 

The USDA has put out a list of required records to prove proof 

of ownership. They are very simple. They are veterinary bills, feed 

bills, cow/calf records that we keep in the normal process of operation. Here my colleagues testify that this is going to be such an 

onerous system that nobody will ever possibly be able to comply. 

Yet Bill Sessions tells us it is going to be a very simple, easy system. 

29

I say today, Senator Talent, that common sense must prevail. 

Our producers want to differentiate our product in the marketplace. As the Free Trades of America Act reaches its maturation, 

we are going to be in a very negative position. If we allow meat 

in here from every country throughout the world, we need to find 

a way to differentiate our meat. We need a way to draw attention 

to our meat. 

That’s all we are asking for. We are not asking for something 

that’s complicated and unusual and difficult. Missouri has a country-of-origin labeling law that functions very effectively right now. 

I’d like to add one thing, Senator Talent, The Missouri livestock 

producers—we are the No. 2 cow/calf state in the nation. There is 

well over 2 million independent—or calf/cow in this nation, and almost 70,000 in cow/calf producers. 

We pay a dollar a head on every animal we sell. Sometimes that 

animal goes at auction for three, four, or nine and generates three 

more dollars. Those dollars have been used to develop a demand in 

our country for beef. That demand is the best in the world bar 

none. Every nation in the world wants to participate in what we 

get paid for. 

Yet Canada did not support us in our war on terrorism. Mexico 

did not support us in our war on terrorism, and Brazil actually offered political asylum to Saddam Hussein. We have more at stake 

here than just labeling our own product. There is an element of patriotism that exists in this country, and I believe those consumers 

will support Missouri producers if given an opportunity. Thank 

you. 

[The prepared statement of Mr. Thornsberry can be found in the 

appendix on page 100.] 

The CHAIRMAN. Thank you. Our final witness on this panel is 

Ken Disselhorst, president of the Missouri Cattlemen’s Association. 

STATEMENT OF KEN DISSELHORST, PRESIDENT, MISSOURI 

CATTLEMEN’S ASSOCIATION 

Mr. DISSELHORST. Thank you very much. Good morning. My 

name is Ken Disselhorst. I am currently serving as president of the 

Missouri Cattlemen’s Association. The Missouri Cattlemen’s Association is a producer’s group organization with a membership of 

107 counties across the state of Missouri, and it is also affiliated 

with the National Cattlemen’s Beef Association. I am proud to be 

here today to discuss with you country-of-origin labeling. The issue 

is a concern to me and the members of the Missouri Cattlemen’s 

Association as well as beef producers across the country. Members 

of the Missouri Cattlemen’s Association have also had many opportunities to hear presentations from the United States Department 

of Agriculture staff as well as many industry experts. 

We again have identified about six key issues in this debate that 

certainly concerns us. I will just briefly touch on them because 

many of them have already been discussed with some of the other 

panelists. Again, the use of animal identification, how’s that going 

to affect our industry, and how we are going to comply with producers to verify an auditable trail. Also, industry demand of a 

third-party verifier, who those people are going to be, what’s obviously going to be the cost of those folks. Certainly I don’t believe 

30

there will be very many of those or any of those folks who will do 

that for free. What’s the kind of burden that’s going to be putting 

on the consumer demand and industry demand requirement as we 

see it right now? The impossibility, again, of verifying cows, cows 

that have been purchased and not necessarily born on a producer’s 

property. Again, we support some kind of a grandfather clause or 

something that’s going to allow these producers to sell the product, 

sell their cows, and have the opportunity to at least make it into 

the retail chain. 

The CHAIRMAN. Let me jump in there because you and Max both 

mentioned the grandfather clause which makes sense on the surface of it to me. The problem is that it is not so much a question 

of whether that cow could be sold without having to be labeled, but 

the problem that’s being raised is how you prove where a particular 

cow comes from or what category it belongs to. 

If you say these cows are grandfathered, the retailer and therefore the producer—here’s the argument on the other side of that— is that someone has to be able to prove that that cow is one of the 

grandfathered cows. 

Mr. THORNSBERRY. It is simple. What——

The CHAIRMAN. You are going to have to tag the cow with something to show it is a grandfathered cow. How do you write that into 

it? How do you trace it? What kind of records do you have to supply? Do you see what I am saying? 

Mr. THORNSBERRY. Yes. 

The CHAIRMAN. Otherwise if someday USDA goes and does an 

audit of a retailer and the retailer says, Oh, no, this stuff isn’t labeled that way because these were all cows that were grandfathered. They say, OK, well, prove that. How do they prove that? 

Mr. DISSELHORST. This is one of the unintended consequences, I 

believe, with the law itself is the fact that, again, how is a producer 

going to present documentation that that calf was born or that cow 

was born in this country if he had purchased that cow through Joplin Regional Stockyards as a break cow or what have you and he 

doesn’t know who the owner was, and that cow may have had a 

couple of owners before it went through the stockyards for purchasers? Again, it is one of those unintended consequences that a 

producer just simply isn’t going to be really able to comply with. 

That is a concern, and I understand the other side of it. It is really 

a——

The CHAIRMAN. Would you guys be satisfied with— forget for a 

second, although the current law permits it, which is something 

lawyers fight over. Would you be satisfied with a self-certification? 

In other words the producer certifies—I am giving an affidavit to 

the auction barn or wherever this is a grandfathered cow. I have 

had this cow four or 5 years old. I certify this. Whoever then is audited produces that certification. That’s it then. The law—you can’t 

go behind that certification. I kind of thought that’s where you 

were headed, Max. Is that what you are thinking? 

Mr. THORNSBERRY. What I’d personally like to see is identify the 

foreign cattle and foreign meat and leave our domestic cattle alone 

by default. They’re born, raised and slaughtered in the United 

States. You just can’t do that. It is not possible. Sure, it is possible. 

We trace every Mexican steer through the United States. We have 

31

an international health paper for every day he’s here in the United 

States. All it would require is a little bit more effort on our part, 

and we could do that. 

The CHAIRMAN. Right. That’s very intriguing. We’ve talked about 

that before. You say you do not require that because if it is not a 

foreign-born animal or raised or processed, then you’d assume it is 

an American. Our producers don’t have to do anything. That’s your 

answer? 

Mr. THORNSBERRY. Yes. 

The CHAIRMAN. You prefer to stick with that, and as long as 

that’s possibly workable, then you don’t have to get into self-certification anyway. 

Mr. THORNSBERRY. Yes, our problem is we are dealing with a 

market-driven program. We are concerned about extra costs to the 

beef system, not only costs to identify the calves at the producer 

level but also what of our friends in the retail, the packers, the 

feeders, the stocker grower, what they have to do to comply with 

the language of the law. 

Mr. DISSELHORST. I am not sure that self-certifications maybe 

eases the burden from the cow/calf guys, but what’s the cost that’s 

still going to be there for the rest of the beef system? That was another thing I wanted to mention was that Ernest Davis, a professor 

at Texas A&M, had indicated that they felt like the costs to the 

beef system could be as high as $8.9 billion. 

We’ve already heard some testimony about who’s going to pay 

that bill. In our opinion, the consumers probably aren’t going to be 

as willing to pay for that as what some may have hoped. As they 

talked about already, that cost is going to end up being passed 

down the chain. Certainly the cow-calf producer has no one to end 

up absorbing that cost. 

Even though we are going to have motivation to comply with the 

law if self-certification is allowed, what are those calves actually 

going to be worth? They’re going to be worth probably less than 

what they would have been worth because of all the added costs 

of implementing the law all the way through the beef system. 

That’s certainly a big concern of ours. I want to be clear about the 

fact that, again, we have this important right as beef producers to 

be able to market and promote product made in the U.S.A. However, again, we believe it to be a market-driven approach. 

I wanted to talk about a program that I am aware of. One labeling program is being promoted by Carolyn Carey in California. I 

had an opportunity to visit with her quite a bit this week. Miss 

Carey has done a tremendous job about promoting a ‘‘Born in the 

USA’’ label. She has put forth an effort to make the labeling program effective. In fact, her program has been approved by the Food 

Safety Inspection Service at USDA. She has also had a tremendous 

interest in her program and is currently marketing beef in the San 

Francisco Bay area as ‘‘Born in the USA.’’ Based on producer participation as well as consumer interest, 

Miss Carey’s labeling program has certainly been a success. Under 

her program, producers and processors alike are required to keep 

information that guarantees the accuracy of this label. I brought a 

copy of this label with me. That’s the label that goes on that product that they’re labeling in the retail chain. My point is that a volVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
32

untary program, if the producers are willing to do what it takes to 

verify that label under the current program, can be successful. 

Again, if there are markets out here in the country with consumers who are willing to pay extra to verify this trail or to pay 

extra for a product that is labeled in the USA, we definitely want 

to give producers the opportunity to do that. That’s why the markets should drive this issue. 

It was interesting, the comments about out of 22,000 calls to the 

Schnuck’s store, only nine consumers had indicated about country 

of origin or country of origin and the product. We believe consumers are more concerned about egg food safety, making sure that 

they purchase a product that is very safe and wholesome for the 

family that they can obviously serve. Certainly consumers will 

brand rate it—brand or Kraft or what have you—all over the stores 

and are more brand conscious about products maybe than they are 

of country of origin. 

We certainly believe a market-driven approach that, if there are 

segments in the country and obviously out in San Francisco there 

are retailers and there are places—that people are demanding this 

type of product and identification, that producers certainly have 

that opportunity to participate in that. There are several reasons 

involved. 

Again, I want to finally stress the urgency of this issue. Cow/calf 

producers sold this fall. Again, we have to gear up this industry of 

being able to meet the demand of people that are buying our cattle, 

which has already been stated, and certainly the Missouri Cattlemen’s Association wants to promote the beef that our members 

produce and are proud of the label of USA. 

The challenge is in identifying a labeling system that will help 

us do that and not put us at risk. I want to commit to working with 

you and your staff and all these producers to identify changes in 

the law or regulations that will help accomplish this task. Thank 

you very much. 

The CHAIRMAN. Go ahead. 

Mr. O’BRIEN. I just want to make a couple of comments on the 

general retailers, though. In the first place, this seems to be—and 

I am kind of a minority here because I am the produce guy and 

not a meat guy. I heard from a couple of panelists that fruits and 

vegetables will be easy. It will not be very easy. It will be very laborious, and it’ll be very difficult for us to keep records. Keep in 

mind that you are asking us to keep records at store level where 

you can walk in and ask the produce manager or—— The CHAIRMAN. Explain the laborious part. 

Mr. O’BRIEN. The laborious part is keeping the records at store 

level. For example, bananas, where do we grow bananas from in 

the United States? They come from South America, and they come 

from Central America, and they’re marked that way. Now, the banana code for our warehousing system is the same, and it goes to 

all stores. We can track it to the back door, but we cannot track 

it to the store, whether it comes from Costa Rica or whether it 

comes from Nicaragua. It says to keep bananas. 

The produce system’s not all that easy. We’ve got a PLU code for 

an asparagus. It is the same PLU code. It is an industry code for 

asparagus whether it comes from Peru, California, or whether it 

33

comes from Mexico. To keep those records at store level when we’ve 

got possibly asparagus from Peru and Mexico within our system, 

we are not really sure how to do this. 

What we have to do is to really overhaul our warehousing system 

and our invoicing system and start over. That’s going to be very expensive. That’s not just Schnuck’s Markets. It is the entire industry, and we are not sure how we are going to do that. It is not just 

meat. It is produce and the seafood, too. I want to make that point. 

The other point I want to make is on self-certification. It sounds 

very——

The CHAIRMAN. Let me see if I can establish some consensus 

here on some of this. I will get back with you on that. You are talking about the extra cost to retailers. You talked about 40 or 50 million per plant. I want to get into why you think it is 40 or 50 million per plant. Now, are we in agreement that to the extent that 

this generates extra costs, those will, at least in large part, get 

passed down the chain to the producers? Does anybody disagree 

with that? 

Mr. BULL. Senator Talent, just a comment on that. We have increased our marketing budget from 10 years ago from half a million dollars to over $20 million. That is all in marketing and branding products. We totally support that as a way to bring revenue 

into the industry. All of our brands have sent back a revenue that 

goes to producers. They’re very expensive. 

Make no mistake that what Mr. O’Brien’s bringing up are very 

real costs of trying to identity preserve different things to our system. If we come up with a self-certification system at the ranch, 

that may save that cost burden there. It doesn’t get the fee line out 

of their cost burden in trying to make sure their segment is properly managed. Those cattle can go from pen to pen. It sure doesn’t 

relieve my burden in my packing plant to identity preserve those 

animals more to the retailer as well. 

To address my costs, $40- to $50 million would be the costs if we 

tried to take each and every animal coming through our business 

and tried to identity preserve that animal through the—and as I 

said in my testimony, we can’t afford to do that. What we would 

have to do is take alternate ways of trying to come up with a way 

of identity preserving batches of animals to try and bring that cost 

down. 

It would bring it down significantly, but still it would be a $15-

to $20 million per plant to re-tool to try and identity preserve even 

batches of animals on this type of level to our modern packing facilities today. 

The CHAIRMAN. The point that Ken made was that there was a 

great danger of this getting passed down to the producers, as I understood it. 

Mr. THORNSBERRY. I disagree with that. I disagree quite adamantly as a matter of fact. If you read the law and I am assuming 

that everybody has sat down and read the law. With the words of 

the law, this is a retail law. The onus of this law is on the retailers. 

I am sorry, but that’s the way it was written. That’s the way it 

passed. That’s the way it was signed. It is their responsibility to 

identify the product, nobody else. 

34

I agree with Ken. Most of our Missouri producers are sophisticated enough to identify their own cattle. The idea that nobody has 

any records of any kind is ridiculous. I deal with people every day 

as a veterinarian. I give them a bill. I show them where I worked 

the cattle and how many I worked. How many calves I castrated. 

How many heifers I vaccinated. Every farmer has these records 

and has to have them for IRS and tax purposes. That’s what the 

USDA says it requires. 

Now, I do agree with Ken that if we are forced to deal with a 

third-party verification subcommittee does everything it can to 

make sure that common sense does prevail, that these costs are as 

low as possible, because I am concerned otherwise they will get 

passed on. 

Let me talk about what you said about third-party verification. 

I disagree with you about this, Max. The Department, whatever its 

other failures in this, is, I believe, correct in assuming that it is 

supposed to enforce this in such a way that will allow for meaningful audits and checks. In other words, it shouldn’t assume that 

Congress passed a law that said, OK, it is very important that this 

be done, but you can just take everybody’s word for the fact that 

it is being done. 

Mr. THORNSBERRY. I don’t mean to imply that. We do have the 

records to back up our own—they were there. What I am saying 

is they should not allow the packing industry to force third-party 

verification on us when the USDA does not require third-party 

verification anywhere in the system that I am aware of. If I sign 

up for drought resistance and I walk in there, I sign my name. 

That’s all they require. 

I am not saying that because it does have to be born and bred 

in the U.S. that it should not require some verification. Who’s going 

to be the third party? Is it going to my pastor? Is it going to be 

my veterinarian? Is it going to be a local lawyer? Is it going to be 

a county commissioner? You know, if we get into that, we’ve opened 

a Pandora’s box that is just phenomenal, in my opinion. 

Plus, we should not be forced to give them that information. If 

the USDA wants it, that’s fine. Let them audit it back here. I 

should not be forced to give that information to a packing company 

that is basically in an adversarial role with me. He’s trying to buy 

my cattle as low as he can buy them, and I am tying to sell them 

as high as I can. 

The CHAIRMAN. You are saying it is one thing to have to keep 

the records, but they shouldn’t audit you through the packers. 

Mr. THORNSBERRY. That’s correct. The USDA can audit——

The CHAIRMAN. You don’t think that this will resolve down the—

let’s forget about the idea we talked about just a second. If I understood you right, and you suggested it. It may be a gigantic way to 

reduce this burden, just documenting foreign produce or animals or 

whatever. I will get to you in just a second. Assuming we don’t do 

that. Then if we do have to be able to identify domestic cattle, you 

don’t think the record requirements will flow then on our producers? 

Mr. THORNSBERRY. If we are allowed to follow the guidelines that 

William Sessions has given us—we all have feed bills, veterinarian 

bills, cow/calf records. We already have them. They’re in our shoe 

35

box, and we know where they are, and we can provide them when 

they’re asked for. 

The CHAIRMAN. I am pushing you on this because it is precisely 

the issue here you’ve thought a lot about all of this. Wouldn’t you 

at least have to be able to prove that that cow that he sold at the 

auction barn or that went up through the system from him were 

the cows to which that record pertains? You know what I am saying. You can always produce the record saying yeah, I had a cow 

in here, and I bought this much feed and the rest of it, but how 

do we know that that’s the cow that got sold? 

Mr. THORNSBERRY. That’s where you get into the provisions of a 

mandatory identification system. They’re not asking to know the 

identification of every cow. They’re asking to know if you owned 

this old cow. 

Mr. O’BRIEN. Max, I am going to approach this from a retail 

standpoint. Because of the $10,000 fines, we have to insist on 

third-party audits because self-certification doesn’t really mean a 

lot to us when it comes to identity of a shoe box. We need to make 

sure whether it is a tomato from Florida because we don’t have 

ownership until it comes to our door. We are going to have to ask 

for a third-party audit because we are the ones that have to pay 

the $10,000 fines because it does come down to retail. 

Mr. BULL. You are in a position where you have to——

The CHAIRMAN. Maybe to reference this point, the packing industry has no desire to be auditors of records. Just as the USDA has 

no desire to be auditors of the records. The last thing I want to do 

is to be training staff to go out and audit records. 

We are seeing the packers come out and say we need some assurance these records are going to be accurate in trying to comply with 

the retailers and with our read on the law. Without our ability to 

understand with a high level of integrity when those animals are 

coming to us, we can’t possibly label them correctly. Hoping that 

Max or his producers have these records properly done in a shoe 

box, when that animal comes into my plant, how will I know with 

any type of assurance that that animal is going to be properly labeled? I am the one putting up—so what are you going to require, 

then, from the producers you buy from? What kind of things would 

you anticipate as a buyer? 

Mr. BULL. Again, Senator, we can only respond to what retailers 

have asked us to do and our interpretation of the risks. Clearly, if 

we are going to put a label on an animal, we need to know what 

that animal is. We need to have an assurance that that label is 

proper when we put it on. We are going to need an identification 

system that helps us, when that animal leaves our plant, we know 

those things. Clearly, we are going to need to know that before that 

animal leaves the plant. 

The CHAIRMAN. What would satisfy that? 

Mr. BULL. Here lies the biggest problem as far as we are concerned, and that’s because the USDA is specifically limited from 

defining that structure. They’re leaving it up to industry to try and 

figure that out. That’s where we are all having the problem. I say 

to producers, for us to be able to comply to apply that proper label 

on there to meet their requirement and to give them that assurVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
36

ance, we need to have that information prior to that animal coming 

to our plant. 

Mr. OWENS. The third-party verification—let’s assume that the 

mandatory identification system, as described in the law, that 

every animal’s going to have to have identity from my producers. 

The third-party certification or self-certification. If the system requires hiring a third person to come inspect the farm operations of 

a guy that’s got 5, 10, 15 cows, that might be the last straw. 

If that system does stay in the same place, I believe that there 

is some benefit to self-certification by the person who delivers it to 

my market. He signs off that these cows were born and raised on 

my farm and that he does have the records to prove that. In the 

law, by him signing that affidavit, that should relieve the retailer 

packer or whoever’s above—relieves them of that obligation. To me, 

the third-party verification on farms is—it will not be—— The CHAIRMAN. There’s no reason why. Whatever the current law 

requires, if that’s what everybody approves, we ought to do, because normally it is possible to do that with some kind of provision 

so that the tracing stops at the point where you reach self-certification. I can trace it back to this kind of cattle, and this herd is 

certified born and raised on this farm, and that’s it. Then you are 

protected because that’s good enough. You agree with that. They’re 

required by law to accept that. 

Mr. OWENS. I’d have to agree with Congressman Blunt because 

if the guy that serves my producers identify those cattle coming in, 

I assume that’s probably the ideal situation on labeling systems. 

The CHAIRMAN. That still leaves you all with all the—— Mr. O’BRIEN. Time. 

The CHAIRMAN. I was intrigued, Mr. O’Brien, with your testimony because I hadn’t thought of it. Actually this will require you 

to change all your labeling machines? 

Mr. O’BRIEN. In the meat department, we have to change all our 

labeling. If we buy product that was born in Canada, raised and 

slaughtered in the United States right now, we don’t have a labeling machine that would handle that long label. We have to work 

out the details in labeling, and plus the fact we have a line through 

all our stores. 

As you are working through boxes and if the next box changes, 

you have to change that label. You have to stop the assembly line 

for ‘‘Manufactured in the United States’’ and start over. That’s 

going to really slow down our activity. The biggest point is our 

warehouse will not handle it right now. It just doesn’t handle that. 

We’d have to completely buy a new warehousing system and inventory system that we are required to keep in stock for 2 years, 

whether it is born and raised in the United States or not. 

The CHAIRMAN. It doesn’t seem plausible, but the very fact that 

you are required to keep track of something new is going to require 

you to change your system. Now, whether you can do it with software or something, that’s another issue. 

Mr. O’BRIEN. Well, that’s something we are looking into and trying to figure out how to do. You have to think about the tonnage 

that we run through our warehouse and our produce department 

and meat department and seafood department. It is huge. That’s 

how we operate. We operate as a buying business, and we only 

37

make a penny out of every dollar; that’s it. We turn that thing 

three times a week. 

The CHAIRMAN. All right. We have another panel, and I have 

asked—— Mr. DISSELHORST. Senator, many of our members are all concerned about liability issues that come back to them as producers, 

whether they will be able to generate beef business in a commodity-based business, where if there had been e. coli or some 

breakouts, that break usually stops at the processors. 

Obviously, with this type of auditable trail, that’s not one of the 

liabilities that’s going to be on producers. It is not fair to someone 

who may be unable to produce or purchase liability insurance for 

issues such as this, whether it be injectionsites, what have you. 

That is a concern, and something I’d like your committee to at least 

talk with the insurance industry about so we can get some answers. 

The CHAIRMAN. Well, I will say if self-certification is the answer 

to the extent that the answer is on the part of the producer, you 

are right, Max. We need to go over the law again and make certain 

about what it says. That’s an unusual enough thing. Well, you are 

right. In agriculture it is a little bit less unusual. Maybe they do 

have the liability to do it. I am saying what’s the simplest way to 

get us to that point? We will wrap things up here, and I thank you 

all for coming. It is been a vigorous and good panel. I will excuse 

you and then ask the next panel to come up, Mr. Kremer and Mr. 

Day. 

[The prepared statement of Mr. Disselhorst can be found in the 

appendix on page 103.] 

The CHAIRMAN. I am pleased to have this last panel and maybe 

get a larger overview from Mr. Kremer and Mr. Day. Let’s start 

with Russ Kremer who is the president of the Missouri Farmers 

Union. 

STATEMENT OF RUSS KREMER, PRESIDENT, MISSOURI 

FARMERS UNION 

Mr. KREMER. Thank you, Senator Talent. I truly appreciate this 

opportunity to testify before this committee regarding the countryof-origin labeling law passed by Congress as a provision of the 2002 

Farm bill. My name is Russ Kremer. I am a diversified livestock 

producer and president of the Missouri Farmers Union. I am going 

to abbreviate this here to try to help you out. We believe that the 

mandatory country-of-origin labeling law, long supported by Farmers Union and other farm, ranch and consumer groups, is the single most important effort to help ensure the survivability and enhanced economic opportunities for the U.S. independent livestock 

and produce farmers. 

We have supported mandatory country-of-origin labeling of agricultural commodities and products as a way to provide consumers 

with the knowledge to make more informed choices about the products they purchase and to serve as a beneficial marketing tool for 

U.S. producers. In the global economy, our farmers and ranchers 

play on an unlevel field. We are at a disadvantage because of the 

value of our dollar and are oftentimes forced to compete with countries that produce in a system with much lower labor, environVerDate 0ct 09 2002 14:11 Sep 03, 2003 Jkt 089035 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\89035.TXT SAG1 PsN: TOSH
38

mental and sanitation standards than our U.S. producers and processors produce under. 

I am an independent producer who is very proud of what I 

produce. I feel that we produce a Cadillac product that is safe, 

wholesome, free of unnecessary chemicals and additives, processed 

under very rigid high standards for sanitation, labor and environment. Yet when I take this product to marketplace, this Cadillac 

product is not differentiated from the lower value imported model 

with its uncertain assurance of quality and safety. I wish there was 

a consumer testifying today because consumers overwhelmingly 

throughout the U.S. would overwhelmingly support this law. 

First, there was a study by Colorado State that found 73 percent 

of consumers in Denver and Chicago surveyed last March would be 

willing to pay much more for beef with a country-of-origin label. On 

average, those respondents would be willing to pay an 11 percent 

premium for a country-of-origin label on a steak and a 24 percent 

premium on hamburger meat. Preference for labeling source of origin, a strong desire to support U.S. producers. These are some 

things that we found as a farmers union to develop a value-added 

meat cooperative. 

The CHAIRMAN. Mr. Kremer, before you go on, let me ask: Are 

all of you in agreement that these costs are going to get passed on, 

can everybody agree with that? If it is true that some people are 

willing to pay a little bit more, some of the one-time costs, in particular, might get passed on to the underbrush. 

In other words, you might be able to charge a little bit more. Nobody wants to raise the costs, particularly if it is a one-time thing 

for a new warehousing system or something like that. It gets 

passed on and dumped. You raise a good point. If those surveys are 

correct, then there might be more money coming in to the system 

to support it. 

Mr. KREMER. We’ve also done studies in the area around St. 

Louis where consumers would be willing to pay a 10 to 20 percent 

premium if they knew where the product came from. We could very 

well pass the volume to—— The CHAIRMAN. Maybe St. Louis is the front doorstep, but the 

beautiful backyard is right here in our area. 

Mr. KREMER. We’ve talked about the misinformation, about some 

of the horrors that’s happened, and quite frankly we feel that that’s 

a misinterpretation we have of the guideline that we were asked 

to follow as far as mandatory. People have made that seem like it 

is a mandatory requirement, and we have not written the rules yet. 

That’s why we are here today, to interpret that and find practical 

solutions. 

Our organization’s deal is that voluntary labeling is not the answer. We’ve had this for 30 years, and we’ve had various success 

with that. I really feel like COOL is a great measure, and the intent is clear, and it can be implemented with little burden to producers at a minimal cost. Last year in Southwest Missouri, a mandatory country-of-origin labeling for meat for very little costs at all 

was implemented quite successfully. In fact, it is a society bill, and 

retailers elected not to have anything to do with that. 

That’s what the intent of this law is to do, to promote American 

meat. To the extent existing record systems and import information 

39

can be utilized and tailored to meet country-of-origin labeling requirements for consumer notification, the less costly and more efficient the labeling system will be for all parties. The most practical 

one that has been brought up and effective means of verifying the 

country of origin is to accurately identify the produce or meat and 

animals that come into this country and to strongly enforce the 

verification and traceability of those products. 

The vast majority of U.S. livestock and crop producers do not import any livestock or produce products that would subject their operations to foreign origin verification. If import labeling procedures 

are strictly enforced, then all other products could be presumed 

U.S. produced, thus preventing burdensome record keeping and 

verification procedures imposed on those producers who choose to 

continue a ‘‘domestic only’’ production system. 

Programs such as the School Lunch Program currently operate 

under similar procedures. Farmers and ranchers who do market 

imported products should have an appropriate record system. Existing identification programs, such as health certificates from the 

USDA Animal and Plant Inspection Service or import information 

gathered by U.S. Customs Service can be coordinated and used to 

identify the country of origin for imported commodities. 

We also suggest that USDA consider the following when writing 

the rules for mandatory COOL: 

No. 1, we’ve heard this before but establish a grandfather or 

grandmother clause that will allow all livestock presently in the 

United States to be considered products of the U.S. 

No. 2, USDA must ensure that retailers cannot impose a greater 

burden on suppliers than is required by the law or the rules. USDA 

can accomplish this by stating that only USDA may conduct audits, 

and all suppliers and retailers must rely solely on the markings on 

livestock or representations made on sales transaction documents. 

No. 3, USDA should interpret the law to maximize the number 

of commodities that will be labeled. For example, enhancing a commodity by adding water, flavoring should not exclude a commodity 

from the labeling. 

In conclusion, we are very excited about the potential benefits of 

a successfully implemented COOL law. I believe that stronger 

farmer-consumer relationships will be forged. Consumers will support our U.S. farm families and demand and choose our quality 

products. Family farm operations will become more profitable, and 

the consumer will be assured safe, wholesome food. It is a win-win 

situation. Thank you. 

[The prepared statement of Mr. Kress can be found in the appendix on page 106.] 

The CHAIRMAN. The next witness is Mr. David Day who’s a board 

member of the Missouri Farm Bureau. 

STATEMENT OF DAVID DAY, BOARD MEMBER, STATE BOARD 

OF DIRECTORS, MISSOURI FARM BUREAU 

Mr. DAY. Good afternoon, Senator. My name is David Day. I am 

a cattle producer from south central Missouri, and I serve on the 

Missouri Farm Bureau State Board of Directors. The Missouri 

Farm Bureau is the state’s largest general farm organization with 

over 99,000 family members. In addition, our organization is part 

40

of the American Farm Bureau Federation which represents a majority of the nation’s livestock producers. The Farm Bureau appreciates the opportunity to comment on country-of-origin labeling. 

Senator Talent, we want to say a very special thank you to you for 

your continued interest and leadership on this issue. 

Farm Bureau does support mandatory country-of-origin labeling. 

Many farmers and ranchers feel that the products they grow in the 

United States should be labeled as a product of the United States 

at the retail level. Today, more and more products are being imported to the United States, giving our consumers greater choices 

in the marketplace. 

By and large, people know little about where these products 

originated. By including country-of-origin labeling in the 2002 

Farm bill, we believe Congress intended to provide a program that 

would help consumers make informed decisions when purchasing 

products at the retail level and help producers receive a valueadded return on their agricultural products. 

While our organization supports COOL, we are concerned about 

the impact the unintended consequences could have on our state’s 

livestock producers. USDA has done an admirable job of developing 

rules for the voluntary program, and we applaud their willingness 

to seek input from those the regulations will affect the most. 

Currently, many producers have misconceptions about COOL because they have not received adequate information to determine 

how the program will affect their operations. In addition, under the 

current USDA guidelines for voluntary labeling, we are uncertain 

of the benefits or costs associated with the program. It is crucial 

that USDA develop a program that does not hinder producers with 

burdensome regulations or significantly increase their production 

costs. 

In labeling products as to the country of origin, we have several 

concerns on how covered commodities will be traced from the farm 

level to the retail level. First, we strongly believe that the statute 

prohibits USDA from instituting the proposed record keeping requirement. This has been talked about earlier. The statute clearly 

states and I quote, ‘‘The Secretary shall not use a mandatory identification system to verify the country of origin of a covered commodity,’’ end quote. Nevertheless, the Agricultural Marketing Service, or AMS, proposes that each producer and others in the supply 

chain keep a record of every covered commodity for at least 2 years. 

The proposed rule also mandates that these records be available 

for inspection by AMS to verify that each animal, or covered commodity, is of the origin claimed. The only possible way that we see 

to accomplish such a record keeping requirement would be to have 

every animal identified. Again, that would be a mandatory identification system, which is specifically prohibited. 

Second, we believe that any record keeping requirement must be 

uniform in nature. Since AMS does not outline a uniform record 

keeping system, each retailer may implement a system that differs 

from others. As a result, producers may lose opportunities as they 

could be forced to select which supply chain they enter. We believe 

there should be some degree of uniformity to insure all market opportunities are maintained for all producers. 

41

Last, producers will not be prepared to meet mandatory guidelines in September 2004 because as it is written now, the older animals will not be documented for country of origin. Once outstanding questions about the program are resolved, we strongly 

recommend that USDA implement a transition period as the voluntary guidelines become mandatory to prevent producers from 

being adversely effected. In addition, we believe all members of the 

supply chain must actively be involved in developing the final program rules. 

Again, we commend you, Senator, and your subcommittee for 

holding this hearing. In closing, I would like to enter into the 

record comments that Missouri Farm Bureau sent to the USDA. 

[The information referred to can be found in the appendix on 

page 112.] 

[The prepared statement of Mr. Day can be found in the appendix on page 110.] 

The CHAIRMAN. Sure. No objection to including it in the record. 

It seems to me that one of you said something about we have to 

be doing something about cows that are currently in the system 

where nobody’s kept records on them because nobody knew they 

had to do that. You both talked about grandfathering in some respect. 

As I said, I don’t know if that gets us past the other issues because you are still going have to prove it is a grandfathered cow. 

At least as to that, would you agree that we have some consensus? 

We need something to make certain there is no liability on people 

for those cows they’ve had in the system for some time. Is there 

agreement on that? 

Mr. BULL. Yes, there is. 

Mr. O’BRIEN. Export for everything presumed, and basically let 

everything that’s currently in the system now——

The CHAIRMAN. Be presumed USDA. 

Mr. O’BRIEN. Be presumed U.S. produced. That’s the simplest 

way. 

The CHAIRMAN. You know, I do think just from what I have 

heard that both sides of this issue are open to some simple 

changes. I do want to say we are all frustrated with the bureaucracy and nobody more so than I. We have to allow for the possibility that they may be correct in saying the statute doesn’t give 

them a lot of flexibility in all of these areas. 

This just might require somebody else on the staff. Nobody in 

Congress is going to want to reopen this. To get some consensus 

that some simple changes or common sense changes allow us to get 

95 percent of what we want here while relieving everybody of a 

bunch of costs, then surely that’s a direction that we ought to go 

in. 

Mr. BULL. I agree. If we can track the animals that are imported, 

that would certainly lighten the burden on the producer out in the 

field. Again, the fact that it is common sense may be the barrier 

here, but I do think it makes a lot of common sense to go that 

route. 

The CHAIRMAN. What I found is that there’s a huge percentage 

of what you are trying to do, everybody agrees on doing, and they 

want to do. The problems arise in the more extreme cases or the 

42

unusual case. It would be better if everybody would just lighten up 

a little bit. 

OK. What I am saying is somebody tells you there may be one 

cow in a herd of 10,000 that may be mismarked. So what? We have 

to allow some flexibility to be in this kind of rule in those circumstances so you don’t have to recall the whole thing or send it 

back. Nobody wants to do that, not packers, not retailers, nobody. 

Mr. O’BRIEN. The overwhelming response in the event is that 

producers say don’t make us the victims. Let’s come up with something appropriate, and I feel we couldn’t do that. 

The CHAIRMAN. I don’t want to make anybody a victim of this because part of the problem is this. If anybody is really nailed, anybody in the chain, that cost is going to get spread all over the place. 

If we can make some common sense changes that preserve those 

kind of things—or get them to do it. Get the Department to do it 

and preserve what we are trying to do and lessen the costs and 

trouble for everybody, then clearly, we ought to move in that direction. 

This lead that we got from Congressman Blunt, about marking 

and tracing only the animals we import. He raised all sorts of 

issues there. It is a very promising lead. We have to see what the 

trade laws would say. You know, on the other hand, after the way 

the Europeans treated our genetically modified product, I don’t 

think that we should go to any great length to warrant reviews of 

trade laws ourselves. 

Obviously, I am wrapping up. Do any of you have anything you 

want to add? I do want to make clear before we adjourn the hearing that everybody has 5 days to submit a written statement. That 

includes members of the audience. I have a card here with the address. It’ll be right up here. If anybody wants to, they can copy off 

the address or the e-mail address. 

You send your comments to Robert E. Sturm, S-t-u-r-m, who is 

the Chief Clerk of the Committee on Agriculture. He is at 328-A 

Russell Senate Office Building, Washington, DC, 20510. E-mail address is Robert underscore Sturm, S-t-u-r-m, at agriculture dot senate dot gov (robert—sturm at agriculture.senate.gov). Or if you just 

want, you can get the testimony in my office or Congressman 

Blunt’s office. I am sure they will be happy to get that. Thank you 

all again, and this subcommittee is adjourned. 

[Whereupon, at 12:22 p.m., the Subcommittee adjourned.] 

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A P P E N D I X

APRIL 22, 2003

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