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AFFI sees unintended consequences in COOL regulations.

Much of the discussion regarding USDA's voluntary country-of-origin labeling (COOL) guidelines has centered on the effects on the U.S. beef and pork industries. But these effects will go far beyond livestock. For example, a white paper issued last week by the American Frozen Food Institute (AFFI) found that if the voluntary COOL guidelines were made mandatory, they likely would have significant unintended consequences on members of the frozen food industry who process and distribute frozen produce and frozen seafood products. Among these consequences are incentives to increase sourcing of some products from abroad and to decrease sourcing of domestic products, and to relocate domestic manufacturing facilities to locations abroad. "These consequences are ironic given that the intent of new labeling regulations was to aid U.S. agriculture," says AFFI.

Among other things, the AFFI paper cites examples showing that the presence of certain processing operations within the United States and the use of domestic ingredients can subject food products to marking requirements that are significantly more complex and costly than those that would apply if the products were processed in other countries, or did not contain domestic ingredients.

In 2002, 41 percent of total U.S. vegetable acreage was sold to the processed foods market, according to USDA. Providing incentives for food processors to source from other countries could reduce demand for a significant portion of domestic vegetable producers' output, says AFFI.

The paper finds that the logistical quandaries and costs of the new COOL scheme would not be outweighed by actual marketing benefits of selling products that list the United States as a source of the contents. Surveys conducted independently for AFFI in 1996 and again in 2003 found less than 1 percent of respondents cited country of origin as a factor influencing their purchasing decisions related to frozen produce. "This result was virtually identical in the 1996 and 2003 surveys, despite the high level of publicity related to country of origin labeling proposals in the intervening years," says AFFI.

A survey conducted independently for AFFI in January 2003 found respondents were concerned about the potential consequences of the new regulations; with 42 percent selecting as their top concern the potential loss of jobs due to processors or manufacturers' relocating outside of the United States. Only 6 percent indicated they were not concerned about stated potential consequences - including increased prices for frozen fruits and vegetables due to higher production costs, loss of jobs, and increased incentive to source fruits and vegetables for freezing from outside the United States. The results of the survey are consistent with steadily building anecdotal evidence that the new requirements in practice are not as attractive as some once considered them to be in theory.

AFFI urges Congress to hold hearings to identify actions necessary to mitigate the negative consequences identified in the white paper. "It is AFFI's view that the severity and validity of the feared consequences necessitate remedial actions, potentially including repeal of the new country-of-origin marking scheme; promotion of an enhanced voluntary marking program rather than issuance of a new regulation in 2004, with the understanding that the voluntary program that resulted from the farm bill is not suitable; or, at the very least, elimination of the duplicative marking requirements on frozen-food products, the paper concludes.
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Title Annotation:American Frozen Food Institute, country-of-origin labeling
Comment:AFFI sees unintended consequences in COOL regulations.(American Frozen Food Institute, country-of-origin labeling)
Publication:Food & Drink Weekly
Geographic Code:1USA
Date:Mar 3, 2003
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