Source: https://www.federalregister.gov/documents/2013/03/12/2013-05576/mandatory-country-of-origin-labeling-of-beef-pork-lamb-chicken-goat-meat-wild-and-farm-raised-fish
Timestamp: 2019-12-16 12:39:02
Document Index: 356141275

Matched Legal Cases: ['§\u200965', '§\u200965', '§\u200965', '§\u200965', '§\u200965', '§\u200965', '§\u200965', '§\u200965', '§\u200965']

A Proposed Rule by the Agricultural Marketing Service on 03/12/2013
15645-15653 (9 pages)
2013-05576
https://www.federalregister.gov/d/2013-05576 https://www.federalregister.gov/d/2013-05576
Start Preamble Start Printed Page 15645
The major cost of implementing the proposed amendments will be incurred at the packing or processing facility, in the case of pre-labeled products, or at the retail level, in the case of products labeled at retail. The estimated number of firms that would need to augment labels for muscle cut covered commodities is 2,808 livestock processing and slaughtering firms, 38 chicken processing firms, and 4,335 retailers. This totals 7,181 firms that Start Printed Page 15646would need to augment the mandatory COOL information presented on labels for muscle cut covered commodities.
The second scenario relates to muscle cut covered commodities derived from animals that were imported for immediate slaughter as defined in § 65.180. In this scenario, under the current COOL regulations, these products are required to be designated as “Product of Country X and the United States.”
Under this proposed rule, the origin designation for meat derived from animals imported for immediate slaughter would be required to include information as to the production steps taking place in the countries listed on the origin designation. However, the country of raising for animals imported for immediate slaughter as defined in § 65.180 shall be designated as the country from which they were imported (e.g., “Born and Raised in Country X, Slaughtered in the United States”).
The current COOL regulations allow for commingling of different origins. For example, under the current COOL regulations, for muscle cut covered commodities derived from animals born, raised, and slaughtered in the United States that are commingled during a production day with muscle cut covered commodities derived from animals that were raised and slaughtered in the United States, and are not derived from animals imported for immediate slaughter as defined in § 65.180, the origin is allowed to be designated, for example, as Product of the United States, Country X, and (as applicable) Country Y. Similarly, under the current COOL regulations, for muscle cut covered commodities derived from animals that are born in Country X or Country Y, raised and slaughtered in the United States, that were commingled during a production day with muscle cut covered commodities that were derived from animals that are imported into the United States for immediate slaughter as defined in § 65.180, the origin is allowed to be designated as Product of the United States, Country X, and (as applicable) Country Y.
This proposed rule would eliminate the allowance for any commingling of muscle cut covered commodities of different origins. As discussed above, all origin designations would be required to include specific information as to the place of birth, raising, and slaughter of the animal from which the meat is derived. Removing the commingling allowance allows consumers to benefit from more specific labels.Start Printed Page 15647
Costs: Two conditions are necessary to inform retail consumers of the location in which production steps occurred. First, the relevant information must be collected by packers from producers and then passed to retailers. Second, the information must be made available by retailers to consumers through a placard, sign, label, sticker, or other format. Because of the steps that have been taken to achieve compliance with existing mandatory COOL requirements, the first condition has been met. That is, we do not anticipate that this proposed rule will require additional recordkeeping or any new systems to transfer information from one Start Printed Page 15648level of the production and marketing channel to the next. The Agency is seeking comment on these assumptions and welcomes data that would help to inform a more refined analysis of the impacts of the rule at various points in production. The information provided to consumers at retail would be augmented to include information on the location(s) in which the three major phases of production occurred. Thus some incremental costs of implementing the proposed amendments would result from modifying the label (or other format) to reflect the additional production step information. We are specifically asking for comment and data regarding the extent to which there may be additional costs to collect and transmit data along the production and marketing chain, and how current production, distribution, and retail merchandising practices may be affected by the proposed rule.
In addition, commingling currently allowed under the current mandatory COOL regulations would no longer be available under the proposed amendments. For example, the current regulations allow muscle cut covered commodities derived from animals born, raised, and slaughtered in the United States that are commingled during a production day with muscle cut covered commodities derived from animals born in one or more other countries to be designated as, for example, “Product of the United States, Country X, and Country Y” (§ 65.300(e)(2)). That type of commingling would not be allowed under the proposed amendments, as the labels must be specific as to where the animal was born, raised, and slaughtered.
Given that the information needed to label production steps is already available and that most packers already segregate animals of differing countries of origin in the slaughter and processing of those animals,[1] the most widespread cost of implementing the proposed amendments is expected to be related to label change; this cost would be incurred partially at the packing or processing facility and partially at the retail level.
In a 2010 survey of retail meat cases, 31 percent of beef, 58 percent of pork, 60 percent of lamb, and 94 percent of chicken packages were case ready packages.[2] For retailers, products pre-labeled with production step locations would require no additional costs, as suppliers would add the production step information. Retailers offering case ready packages that do not include the production step information required under this proposed rule would need to communicate that information to consumers by some other means, such as placards or stickers. The Agency requests comment and data on the means retailers would utilize to communicate the production step information required by this proposed rule.
The estimated number of firms that would need to augment labels for muscle cut covered commodities is 2,808 livestock processing and slaughtering firms, 38 chicken Start Printed Page 15649processing firms, and 4,335 retailers (Table 1). This totals 7,181 firms that would need to augment the mandatory COOL information presented on labels for muscle cut covered commodities.
Cost estimates provided in a March 2011, Food and Drug Administration (FDA) report [3] represent one possible approach for estimating the cost of including the additional production step information to currently required COOL labels for muscle cut covered commodities. There are limitations, however, to the applicability of the FDA label cost model to the task faced by retailers in informing consumers of the production step locations as proposed herein.
Based on 2009 data, the Food Safety and Inspection Service (FSIS) estimated there were approximately 121,350 raw meat and poultry unique labels submitted by official establishments and approved by the Agency (76 FR 44862). This number would represent an upper bound on the number of unique labels that would be affected by this proposed rule, as there are raw meat and poultry products that are exempt from COOL requirements, (such as a teriyaki flavored pork loin and other processed food items as defined by § 65.220) or that are not affected by this proposed rule (such as turkey), and that are not sold at retail establishments (such as products sold to hotels, restaurants, and institutional customers). The Agency welcomes data that would account for such products and thus allow for refinement of the estimate of the number of labels affected by the proposed rule.
There are additional distinctions between the FDA model and the COOL regime to support the conclusion that the model's assumptions regarding coordinated versus uncoordinated label changes have limited applicability in this situation. As previously mentioned, COOL information already is made available to consumers under current regulations, and that information can be provided through a variety of means, including placards, signs, labels, stickers, or other formats. Thus, the Agency believes that the label changes contemplated in this proposed rule could be phased in with similar costs as predicted for a coordinated label change under the model. For instance, placards could be used to convey the augmented production step information pending synchronization with a coordinated label change cycle. Also, many, if not most, of the muscle cut covered commodities are sold as random-weight items with price, weight, and other information (including COOL information) printed for each individual package, thus allowing production step information to be provided in a similar manner. Assuming the upper bound estimate of 121,350 unique labels, the Start Printed Page 15650estimated midpoint cost of the proposed rule for a label change is $32,764,500 with a range of $16,989,000 to $47,326,500 million.
Table 1—Estimated Number of Affected Entities, Share of Firms by Size, and Labeling Cost of Rule Revision *
Estimated cost of rule revision
311611 Animal (except Poultry) Slaughtering <500 Employees 1,504 1,518 97.6 $1,491,344
500+ Employees 37 115 2.4 112,981
Total 1,541 1,633 1,604,325
311612 Meat Processed from Carcasses <500 Employees 1,203 1,232 94.9 1,201,366
500+ Employees 64 173 5.1 169,962
Total 1,267 1,405 1,380,328
311615 Chicken Processing <500 Employees 36 N/A 94.7 N/A
500+ Employees 2 N/A 5.3 N/A
Total 38 156 153,261
445110 Supermarkets and Other Grocery (except Convenience) Stores, Sales >$5,000,000 <$50,000,000 Sales 4,106 6,050 95.0 5,943,762
$50,000,000+ Sales 217 19,846 5.0 19,497,504
Total 4,323 25,896 25,441,266
452910 Warehouse Clubs and Supercenters <$50,000,000 Sales 0 0
$50,000,000+ Sales 12 4,260 100.0 4,185,194
Total 12 4,260 4,185,195
GRAND TOTAL 7,181 33,350 32,764,500
* We assume that each establishment, regardless of size or industry, incurs the average estimated label revision cost per establishment = $982.44. Numbers may not sum due to rounding.
As mentioned in the summary above, this rulemaking was contemplated after the Agency reviewed the overall regulatory program in light of the WTO's finding that the current mandatory COOL measure is inconsistent with the United States' WTO obligations. The objective of this proposed rulemaking is to amend current mandatory COOL requirements to provide consumers with information on the country in which productions steps occurred for muscle cut covered Start Printed Page 15651commodities, thus fulfilling the program's objective of providing consumers with information on origin. The legal basis for the mandatory COOL regulations is Subtitle D of the Agricultural Marketing Act of 1946 (Act) (7 U.S.C. 1638 et seq.).
There are two measures used by the Small Business Administration (SBA) to identify businesses as small: sales receipts or number of employees.[4] In terms of sales, SBA classifies as small those grocery stores with less than $30 million in annual sales (13 CFR 121.201). Warehouse clubs and superstores with less than $30 million in annual sales are also defined as small. SBA defines as small those manufacturing firms with less than 500 employees and wholesalers with less than 100 employees.
While there are many potential retail outlets for the covered commodities, food stores, warehouse clubs, and superstores are the primary retail outlets for food consumed at home. In fact, food stores, warehouse clubs, and superstores account for 75.6 percent of all food consumed at home.[5] Therefore, the number of these stores provides an indicator of the number of entities potentially affected by this rule. The 2007 Economic Census [6] shows there were 4,335 supermarkets and grocery stores (not including convenience stores), warehouse clubs, and superstore firms operated for the entire year with annual sales exceeding $5,000,000 (Table 1). We assume that stores with overall sales above this threshold would be most likely to be subject to the PACA and therefore subject to mandatory COOL and the proposed amendments. We recognize that there may be retail firms, particularly smaller retail firms, subject to PACA but that do not actually hold a PACA license. Therefore, a lower annual sales threshold may be appropriate for estimating the number of retailers subject to PACA. However, the $5,000,000 threshold provides estimated firm and establishment numbers that are generally consistent with the PACA database listing licensed retailers.
The 2007 Economic Census [7] provides information on manufacturers by employment size. For livestock processing and slaughtering there is a total of 2,808 firms (Table 1). Of these, 2,707 firms have less than 500 employees. This suggests that 96 percent of livestock processing and slaughtering operations would be considered as small firms using the SBA definition. For chicken processing there are a total of 38 firms, only two of which are classified as small. Thus, only 5 percent of the chicken processors are small businesses.
As with the current mandatory COOL program, the proposed rule has no requirements for firms to report to USDA. Compliance audits will be conducted at firms' places of business. There are no recordkeeping requirements beyond those currently in place, and we believe that the information necessary to transmit production step information largely is already in place within the affected industries. As stated in the RFA of the COOL final rule, the current COOL Start Printed Page 15652requirements provide the maximum flexibility practicable to enable small entities to minimize the costs on their operations. This proposed rule in large measure retains these flexibilities. In addition, small packers, processors, and retailers are expected to produce and stock a smaller number of unique muscle cut covered commodities compared to large operations. Thus, labeling costs for small establishments likely will be lower than the estimated mid-point average of $982 for all establishments.
2. Section § 65.240 is revised to read as follows:
A covered commodity may bear a declaration that identifies the United States as the sole country of origin at retail only if it meets the definition of United States country of origin as defined in § 65.260. The United States country of origin designation for muscle cut covered commodities shall include all of the production steps (i.e., “Born, Raised, and Slaughtered in the United States”).
If an animal was born and/or raised in Country X and/or (as applicable) Country Y, and slaughtered in the United States, the resulting muscle cut covered commodities shall be labeled to specifically identify the production steps occurring in each country (e.g., “Born and Raised in Country X, Slaughtered in the United States”). If an animal is raised in the United States as well as another country (or multiple countries), the raising occurring in the other country (or countries) may be omitted from the origin designation except if the animal was imported for immediate slaughter as defined in § 65.180 or where by doing so the muscle cut covered commodity would be designated as having a United States country of origin (e.g., “Born in Country X, Raised and Slaughtered in the United States” in lieu of “Born and Raised in Country X, Raised in Country Y, Raised and Slaughtered in the United States”).
(1) Perishable agricultural commodities, peanuts, pecans, ginseng, macadamia nuts and ground meat covered commodities that have been Start Printed Page 15653produced in another country shall retain their origin, as declared to U.S. Customs and Border Protection at the time the product entered the United States, through retail sale.
2. “A Snapshot of Today's Retail Meat Case: 2010 National Meat Case Study Executive Summary.” http://www.beefretail.org/​CMDocs/​BeefRetail/​research/​2010NationalMeatCaseStudy.pdf.
4. Small Business Administration. http://www.sba.gov/​sites/​default/​files/​files/​Size_​Standards_​Table(1).pdf.
5. ERS, USDA. Food CPI, Prices and Expenditures: Sales of Food at Home by Type of Outlet. http://www.ers.usda.gov/​Briefing/​CPIFoodAndExpenditures/​Data/​table16.htm.
7. U.S. Census Bureau. 2007 Economic Census. Historical Data Tabulations by Enterprise Size. 2007 Annual Tabulations: U.S., All Industries. http://www.census.gov/​econ/​susb/​data/​susb2007.html.