CME: Factors Driving US Pork and Cattle Imports07 December 2012
US - The clock is finally and officially ticking on US policymakers regarding mandatory country-of-origin labeling. The US has until May of next year to bring the labeling rules on meat into compliance with the ruling handed down earlier this year by a WTO Dispute Settlement Body, write Steve Meyer and Len Steiner.
The WTO arbitrator stated that 10 months from the 23 July 2012 adoption of the appellate panel’s report was a reasonable time period
for the US to meet the requirements. So 23 May 2013 is the date on
which, if the US is not in compliance, Canada and Mexico may commence
taking retaliatory action against the United States.
A statement from Canada’s Trade Minister, Ed Fast, and Agriculture Minister, Gerry Ritz said, in part, that, “The WTO Appelate Body has recognized the integrated nature of the North American supply chain and marked a clear win for our livestock industry.” Further, they said they were “particularly pleased” that the WTO set a compliance period much closer to the period requested by Canada than the much longer period (18 months) that the US had requested.
The challenge for American officials is to figure out just how to change the current US rules to meet the WTO ruling. US Trade Representative Ron Kirk was quoted by a MeatPoultry.com article saying that the US remains committed to providing consumers with country-of-origin information about meat and poultry (we have no idea why he threw poultry into that statement since the US imports practically no poultry products) but that they would indeed be brought into compliance.
Our contacts indicate that federal officials are trying to re-write the rules for MCOOL to meet the WTO requirements.
Based on our knowledge of the enabling legislation and the Final Rule which took effect in March 2009, we think that will be difficult, meaning that a resolution to this issue would have to come from Congress in the form of an amended law. And we all know how effective Congress is at passing virtually anything these days.
“Small” things like MCOOL — at least they are small in the eyes of DC — almost always require some vehicle to carry them through the process. The Farm Bill would be a logical vehicle for an ag/food issue such as MCOOL but action on a Farm Bill does not seem imminent. If a one-year Farm Bill extension is passed, some other vehicle will have to be found.
MCOOL’s major impact was on the labeling of product derived from imported animals. The differentiation requirements forced packers to segregate product and, in most cases, handle animals imported for direct slaughter and animals born in Canada or Mexico and then fed in the US on specific days.
These segregation practices as well as adding stock-keeping units for the differently labeled product increased costs. Canadian and Mexican producers have argued that those costs were taken out of prices paid for their animals, thus causing economic harm.
The charts below show weekly import data for hogs (we only bring pigs in from Canada) and cattle with the vertical red line in each chart indicating the implementation of MCOOL in 2009. MCOOL is obviously not the only factor driving imports.
Canada’s competitiveness has been harmed by the strength of the Canadian dollar. Drought conditions in Mexico have forced more cattle to US ranches and feedlots. Southern packers market beef from Mexico-born cattle to largely Hispanic markets.
A resolution to the WTO case and better relationships with our neighbors are both positive outcomes but don’t expect any big changes in imports come 23 May 2013.
Live Hog Imports from Canada
Live Cattle Imports from Canada
Live Cattle Imports from Mexico
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