Why the opposition of COOL?
January 10, 2014
Every meeting I have attended during the last couple of years on the subjects of consumer demand and desire, along with every article I have read – this includes presentations to the Cattlemen's Beef Board and Certified Angus Beef – I have heard experts and analysts say "consumers want to know where their beef comes from" and "today's consumers increasingly want to know where their beef originates from."
There can be nothing more fundamental to giving consumers information about the origin of their beef than country of origin labeling (COOL).
As producers, we have spent over $2 billion on the government mandated beef checkoff to promote and educate consumers about beef. In reality, COOL is a core tool in promoting the U.S. cattle industry.
There is nothing more important to a competitive, free market than the ability to differentiate one's product, and that's what COOL does.
So why the opposition?
Opposition to COOL cannot be based on costs; most of the costs are already in place and have been for some time. Even so, COOL is projected to cost only about $80 million a year – not the $2.8 billion referenced by the National Cattlemen's Beef Association (NCBA) in a recent Wall Street Journal opinion-editorial. U.S. beef production is about 25 to 26 billion pounds annually. That's about 3/10ths of one penny per pound, or about 1/10th of one penny per serving.
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It can't be because of increased government regulation as some have suggested. After all, the new COOL rules clearly state that the regulations do not increase the record-keeping and verification requirements for the U.S. industry. The 2013 Final Rule released May 23, 2013, and published in the Federal Register states: "there are no record-keeping requirements beyond those currently in place" from the 2009 rules.
It can't be because COOL does not add value to our beef. Our Beef Checkoff Long Range plan outlines these goals: 1) being the world's most trusted and preferred source of beef and beef products…. 2) to provide the safest, highest-quality most consumer friendly beef and beef products…. 3) leverage the brand equity of the U.S. beef industry (e.g., cattle ranching, beef production, product development, etc.) to promote U.S. beef in foreign markets. These goals recognize the tremendous value and equity in the nomenclature or the name "U.S. Beef." In fact, the primary beef checkoff contractor is NCBA and NCBA's lobbying and legal efforts to kill COOL contrast starkly with our industry's Long Range Plan. What good is any of the above – how do we achieve these goals – if we don't identify our product?
Country of Origin research has time and time again shown COOL to affect consumer product evaluation, providing the industry another demand driver if the market and consumer are informed.
A recent survey, by The Boston Group, of 5,000 consumers in the U.S., China, France, and Germany found that more than 60 percent of U.S. consumers surveyed would pay more for products "Made in USA." This is consistent with other research in this area.
In addition The Boston Group noted that when savvier companies open a new U.S. plant, they promote it. They post on Facebook. They discuss publicly how many people they hire and the service they provide to the community, and they stress the high quality of U.S. made products. These companies get it. It's called marketing and partnering with your consumers and their interests; not fighting their consumers in Congress or the courts to hide where their product originates. With marketing strategies like this at play, it's little wonder beef keeps losing market share. (The Department of Agriculture estimates that the 2011 U.S. per capita consumption of beef was 57.4 pounds – down 13 percent from ten years ago and down about 25 percent from 1980. Per capita consumption of beef in 2012 is estimated at 54.1 pounds, and for the first time in 100 years, Americans are consuming more chicken than beef).
There's no doubt that U.S. cattle producers are now competing in a global market. COOL is part of the marketing mix if we want to compete effectively. U.S. cattle producers get it, and that's why they said in a USDA survey that they wanted to use their beef checkoff dollars to promote U.S. Beef–born, raised, and slaughtered.
With the recent announcement by USDA to liberalize our FMD standards on Brazilian beef, there will be other countries in South America that follow with the same request and more foreign beef will enter our U.S. market – perhaps even live cattle and COOL will become even more important.
Interestingly, a joint academic study, which included Auburn University, University of Florida, Iowa State University, and Purdue University reported, "COOL is an important part of providing consumers with the information and choice they desire… Every credible study has shown that consumers value this information and some studies show a significant willingness-to-pay to get this information."
Only one study noted that consumers would not pay more, and it was a Kansas State University study that Montana Stockgrowers Association claimed in an opinion editorial last summer was a five-year study. The problem is, COOL had only been in effect for three years. Also, they claimed there had been no impact to demand, but beef demand index's show a loss in demand in 2009 (the year COOL was implemented) followed by two positive years-2010 and 2011.
The new COOL rules were published in late May with a six-month outreach/education process by USDA which ended November 23. When they went into effect. I haven't seen the sky fall. In fact, it looks to me like prices for cattle and beef have both gone up, with predictions for prices to only get better.
There is a tremendous effort going on to stop COOL through the new farm bill. This effort has nothing to do with huge costs, or lack of consumer interest, or how we treat Mexico and Canada, or even those scare tactics about retaliatory tariffs. I've come to believe that the opposition knows COOL will empower cattle producers and consumers, and that scares the heck of out some of these folks who want you to produce a commoditized, unidentified product.
I understand that change does not come easy for some of the older, traditional commodity groups but times are changing and we need to change with them or we will see our industry continue to contract and lose market share under this same old stagnant leadership.