mCOOL costs

[Bill]

The Naïve Leading Us to Slaughter?

Betting Against Trickle Down


No country has attempted what mCOOL would mandate on a beef industry the size of America's. Analysts have envisioned the challenges and costs. All estimates we're aware of have put the cost in the billions for the entire production chain.

Economists have warned that much or all of the cost will be passed back through the chain. Retailers will be reluctant to pass much of the cost on to consumers - the competitive gap with chicken is big enough - and most consumers see little or no value in the mCOOL information. Some analysts are assuming that any reaction from consumers would be negative. All sectors would likely be affected by the political and economic fallout from trade repercussions.

E. E. "Ernie" Davis, then Texas A&M University professor and ag economist, pointed out in 2003 that retailers and packers are margin operators. They can pass their added costs back to their supplier, i.e. the retailer to the packer and the packer to the feeder. He could have added that feeders are also margin operators.

In his first look at mCOOL, Davis estimated the cost to Texas alone, from producer through retail, at $922 million. That's figuring only one-third of retailers handling mixed-origin beef.

Davis told Feedstuffs that nationally, counting 43 plants that handle 90 percent of slaughter, the cost estimates were $16 million per plant, or $688 million (not including 600+ smaller plants). If even half the retail stores decided to handle mixed-origin product at an average cost of $16,132 per store, the retail sector cost could reach $6.9 billion. The whole chain total could reach $9 billion. That's not counting the other stores who would still have documentation and recordkeeping costs, plus another 126,126 smaller retail stores.

In Choices, the Association of Agricultural Economists magazine, Brester, Marsh and Atwood (2004) noted that the Sparks (now Informa Economics)/Cattle Buyers Weekly study estimates were smaller than Davis' but in line with USDA. Sparks/CBW estimates totaled $1.65 billion: retail - $850 million; packers - $500 million; feeders - $150 million; and cow-calf - $198 million.

Then Hanselka, Davis, Anderson and Capps Jr. (Choices) did an economic survey of companies in all segments of the production chain, investigating operational set ups, what changes compliance would force and estimated costs. This approach yielded a total cost of $1.9 billion: retail - $818 million; packers - $603 million; feeders - $356 million; and cow-calf - $97 million.

USDA-AMS estimates for meat, seafood and produce - for recordkeeping only - came to $1.9 billion total: retail - $628 million; processors - $340 million; and producers - $1 billion.

Texas A&M also examined the effect on South Texas, where they estimated 80 percent of the Mexican feeder cattle are fed. Loss of those cattle would cost South Texas $700 million directly ($336 to the cattle- feeding sector and $365 to the packer sector) plus 1,978 jobs, not including feedlot and backgrounding jobs.

Take a round, middling figure, say $2 billion dollars, divide by the fed-cattle slaughter (27 million), (slaughter cows end up as bulk ground beef rather than hundreds of muscle cuts) and that comes to $74 per head the beef industry is supposed to eat. And that doesn't include anything from export market losses, which the BSE issue painfully illustrated, can amount to over $100 per head, depending on the degree of upheaval.

Only the totally naïve can really believe such a major overhaul to the entire chain would not cost big money and disruption.

There are those who refuse to believe economic consequences trickle down the production chain. During the worst of our export market closures, an R- CALF convention audience laughed uproariously when USMEF's Phil Seng told them packers would have paid more for fed cattle if the export markets had been open. They simply didn't believe packers would pay more even for fed cattle - the nearest link in the chain - if packers were selling more beef at higher prices. R-CALF and their allies only see packers and feeders as robber barons on different levels. They don't believe in trickle down.

So it is possible that some cow-calf operators think they'll never see these costs. As National Farmer's Union's Tom Buis told Congress, if fish are being labeled and fish "don't have ear tags," [USDA] shouldn't "have a problem labeling 1,000-pound beef cattle."

Such naïveté will cost us dearly.





References

"Estimate of Start-Up Costs for Country of Origin Labeling Requirements to the Texas Beef Cattle and Beef Sectors," Ernest E. Davis, Prof. & Extension Economist, Texas A&M University, 2003

"Who Will Bear the Costs of Country-of-Origin Labeling?" Gary W. Brester, John M. Marsh, professors, and Joseph Atwood, associate professor, Agricultural Economics & Economics Departments, Montana State University; Choices, 4th Qtr. 2004, American Agricultural Economics Assn.

"Country-of-Origin Labeling for Foods," Geoffrey S. Becker, specialist in agricultural policy, Congressional Research Service Report for Congress, July 30, 2003.

"COOL start-up costs put at $9 billion; AMS issues listening dates, locations," Rod Smith, Feedstuffs, April 7, 2003

"Cool Cost Assessment," Sparks/CBW COOL Consortium, Sparks Companies, Inc., April, 2003.

 

[Anonymous]

Bill-- You forgot the CANADIAN #1 reason against M-COOL--- they are afraid their product can't compete on the open market. They would rather the retailers be able to LIE, CHEAT, and use FRAUD and DECEPTION so Canadian beef can be passed off as US beef to make it marketable....

Rode the US cattlemens shirttails so long, you guys forgot how to stand on your own two feet-EH Bill..... :wink: .

 

[Kato]

Canadian #1 reason against MCOOL is the lower price of cattle.

(this doesn't just mean Canadian cattle either :!: )

Other than that, we have no problem because the U.S. beef producers have been riding on our shirttails long enough by claiming credit for the top quality beef that's been sold in your high end restaurants as U.S. beef. :wink:

We can stand on our own two feet just fine, but first we have to be able to afford some boots. 8)

 

[Bill]

Careful Kato!

""Never argue with an idiot; they'll drag you down to their level and beat you with experience."

:roll:

 

[PORKER]

Bill , Those estimates and values are false since the 2005 worldwide patents from ScoringAg . the cost per pound of beef ,pork,lamb ,produce ,peanuts and fish will cost $0.0025 per pound of retail product. Good computer technology does make recordkeeping easier and cheaper. E. E. "Ernie" Davis is all wet with his technology from 2000 as the fish COOL works.

Latest news;New attention on food labeling law;
Some in Congress seek implementation of 5-year-old program to give country of origin on meat, other foods

ASSOCIATED PRESS


Shoppers are in the dark about where much of their food comes from despite a 5-year-old law requiring meat and other products to carry labels with their country of origin.

That soon may change. Reports of tainted seafood from China have raised consumer awareness about the safety of imported food and many of the law's most powerful opponents have left Congress.

"The political dynamic is such that there's just no getting around it," said Colin Woodall, director of legislative affairs for the National Cattlemen's Beef Association. The livestock group has opposed a mandatory labeling program.

The Agriculture Department never put in place the labeling requirement because then-majority Republicans repeatedly delayed it, most recently to 2008. The law's leading opponents are grocery stores and large meatpacking companies, many of whom mix U.S. and Mexican beef, along with other businesses involved in getting products to consumers. They say the tracking and paperwork needed to comply with the law is too burdensome and would cause them to raise prices.

Those interests had influential allies on Capitol Hill - mostly Texas Republicans - before Democrats took over this year. President George W. Bush, a Texan who has strong ties to the cattle industry, never has liked the labeling law, either.

The labeling requirement, popular with small, independent ranchers who sell their own products, applies to certain cuts of beef, lamb, pork, as well as to peanuts, fruits and vegetables. Processed foods are exempt. So are restaurants and other food service establishments. The labeling program was not delayed for seafood.

House supporters of the labeling law are working to make sure it goes into effect next year. Congress plans hearings this week on whether the Food and Drug Administration can ensure the safety of the nation's food supply.

In the wake of increased U.S. complaints about tainted Chinese products, the Chinese government announced that it has suspended imports of chicken feet, pig ears and other animal products from seven U.S. companies. Beijing claimed the American meat had contaminants.

"When consumers hear about all these things in China, their tendency is to avoid things from China," said Chris Waldrop of the Consumer Federation of America. "But they can't because we don't have country-of-origin labeling, so they are left in the supermarket to their own devices."

Regina Hildwine, director of food labeling and standards for the Grocery Manufacturers Association, says the labels will be "additional noise" on crowded packaging. "There's a lot more information on a label that's more important for a consumer to understand, like nutrition facts," she said.

Rep. Ray LaHood (R-Ill.) said he will try to beat back language in a spending bill that would establish firm guidelines to begin the labeling in September 2008. LaHood is siding with the meatpacking companies and grocery chains.

"It's going to cause a lot of heartburn," he said.

 

[MoGal]

Well, does it or doesn't it??

According to the RCalf site:

The United States already requires imported meat to be labeled. However, when the packer receives imported meat in clearly labeled containers, the packer separates the meat from the container through further processing and repackaging. Current law does not require the packer or wholesaler to retain the original label after such further processing or repackaging. It would be a simple and relatively inexpensive matter for packers to retain the original label with the meat.
In fact, packers already segregate carcasses for varous certification programs such as breed claims like "Angus Beef" or "Midwestern Beef". Clearly, producers need not be saddled with "ghost costs" associated with rebuilding a product origin tracking system that is already in use.



Okay, my ??? if this is already done then why all the hullabaloo with everyone?? Its already documented as imported beef and the meat packers will have to keep it segregated as originally labelled. There shouldn't be any extra expense to anyone that produces beef.

 

[Sandhusker]

Well, does it or doesn't it??

According to the RCalf site:

The United States already requires imported meat to be labeled. However, when the packer receives imported meat in clearly labeled containers, the packer separates the meat from the container through further processing and repackaging. Current law does not require the packer or wholesaler to retain the original label after such further processing or repackaging. It would be a simple and relatively inexpensive matter for packers to retain the original label with the meat.
In fact, packers already segregate carcasses for varous certification programs such as breed claims like "Angus Beef" or "Midwestern Beef". Clearly, producers need not be saddled with "ghost costs" associated with rebuilding a product origin tracking system that is already in use.



Okay, my ??? if this is already done then why all the hullabaloo with everyone?? Its already documented as imported beef and the meat packers will have to keep it segregated as originally labelled. There shouldn't be any extra expense to anyone that produces beef.

You've got a huge problem with your logic, Mo Gal, you're employing common sense.

 

[QUESTION]

MoGal here is the real reason for COOL. R-CALF believes that if every piece of meat is labeled with another country it can take advantage of patroitism and dominate the market. The probem lies in the fact there are other countries that can produce beef just as good if not better than US beef. What would happen if the US consumer decides that some other beef is better than US beef? Not even mentioning price issues. The myopic veiw of r-calf would certainly get the US in trouble. They are to focused on doing what they think needs doing rather than what is best for the US cattleman. A prime example is the closure of the border to canadian cattle and although it really hurt to start with and is still tough going it has created an instant packing industry in canada . Before BSE 80% of western canadian calves were shipped stateside for feeding and slaughter. Now partially thanks to R-CALF that is down to 5%. And a canadian feeder industry and packers that can kill more than we can supply. Look at all the lost jobs in the US. They causing the loss of all secondary processing dollars. Recently a canadian producer owned packing plant went down on a corperate raiding mission to Grand Island NE. and has US citizens moving north and are from every level within the plant down there as well several packing plants in the northern states have been aquired by NB livestock an canadian cattle merchant. Keep it up R-CALF if you want to ship most of your cattle to be slaughtered in canada that is great, :wink: then we can test everything and see how many US cattle actually do have BSE. 8) I am sure we won't find too many maybe 3 or 4 thousand. LMAO 8)

 

[Sandhusker]

MoGal, if you want to know why R-CALF is pushing COOL, you should ask an actual R-CALF member and take with a grain of salt any comments from individuals who try to demonize the orginization every chance they get. I'm a member, and I'll tell you.

Basically, you can't make any money if people don't buy your product and they can't buy it if they can't find it. We're talking high school marketing here.

Also, all this "free trade" horse crap that we've sold our soul to is ushering in the day when Tyson, Cargill, Smithfield, et al will be able to buy all the South American beef that they want - at prices for less than US producers can produce it for. If that comes to pass under the current scenario, the US cattle industry as we know it is dead. We'll go the same way as the US textile industry.

R-CALF believes that COOL, along with a checkoff that promotes only US beef, give US producers a fighting chance. You hear a lot of people crabbing about R-CALF and COOL, but I haven't heard any of them come up with a better idea - a lot of bitching, moaning, and badmouthing, but no ideas. I wonder what they'll wish they had done when it's too late....

 

[Ben Roberts]

Sandhusker wrote- "You hear a lot of people crabbing about R-CALF and COOL, but I haven't heard any of them come up with a better idea - a lot of bitching, moaning, and badmouthing, but no ideas. I wonder what they'll wish they had done when it's too late...."[/quote]



Excuse me, there has been several better ideas posted here!

Best Regards
Ben Roberts

 

[Sandhusker]

Sandhusker wrote- "You hear a lot of people crabbing about R-CALF and COOL, but I haven't heard any of them come up with a better idea - a lot of bitching, moaning, and badmouthing, but no ideas. I wonder what they'll wish they had done when it's too late...."

Excuse me, there has been several better ideas posted here!

Best Regards
Ben Roberts[/quote]

ONE idea - yours. Ben, your idea is the tops, I'll grant you that, but it'll never happen. Too many people see us "all in this together" with the packers and then you have a huge group of people who will never join anything.

 

[katrina]

MoGal here is the real reason for COOL. R-CALF believes that if every piece of meat is labeled with another country it can take advantage of patroitism and dominate the market. The probem lies in the fact there are other countries that can produce beef just as good if not better than US beef. What would happen if the US consumer decides that some other beef is better than US beef? Not even mentioning price issues. The myopic veiw of r-calf would certainly get the US in trouble. They are to focused on doing what they think needs doing rather than what is best for the US cattleman.

If your raising beef and it's not what the consumer wants, what's the reason for being a cattleman??? :roll: I think it's high time us beef producers take responsibility for the product we raise... It's time for quality cattle to bring premium prices and the lesser bring accordingly... Nomore what ever the certain weight brings a certain price no matter the quality. Thus pushing out the poor quality cattle because it's not profitable..

And Kato, I hope you get those boots and those boots are made for walking!!

 

[Kato]

MoGal wrote:
Well, does it or doesn't it??

According to the RCalf site:

The United States already requires imported meat to be labeled. However, when the packer receives imported meat in clearly labeled containers, the packer separates the meat from the container through further processing and repackaging. Current law does not require the packer or wholesaler to retain the original label after such further processing or repackaging. It would be a simple and relatively inexpensive matter for packers to retain the original label with the meat.
In fact, packers already segregate carcasses for varous certification programs such as breed claims like "Angus Beef" or "Midwestern Beef". Clearly, producers need not be saddled with "ghost costs" associated with rebuilding a product origin tracking system that is already in use.



Okay, my ??? if this is already done then why all the hullabaloo with everyone?? Its already documented as imported beef and the meat packers will have to keep it segregated as originally labelled. There shouldn't be any extra expense to anyone that produces beef.

You've got a huge problem with your logic, Mo Gal, you're employing common sense.

True. But carry the logic a little bit farther. If you were Cargill for instance, why would you bother to even get into segregating Canadian cattle at an American plant? It would be so much easier to just take advantage of the fact that the Canadian live price will drop due to that same bother, and then buy the Canadian live cattle in Canada, process them in Canada, and then ship the beef south.

Win situation for Cargill. They got the cattle cheaper, and they can still move just as much Canadian beef in the U.S. market with a larger profit margin as a bonus.

Lose lose situation for us and you. We get paid less for our cattle. You lose more packers and therefore more customers for yours, and then you get paid less for your cattle. Don't for a minute think that when faced with deciding whether to pay more for U.S. cattle, or lay off American workers and shut down lines, that they are even going to think about paying more for U.S. cattle.

The major players in this business will come out on top. Don't worry about that. I would bet they have a long list of contingency plans, and none of them involve paying more for U.S. cattle.

 

[Bill]

MoGal here is the real reason for COOL. R-CALF believes that if every piece of meat is labeled with another country it can take advantage of patroitism and dominate the market. The probem lies in the fact there are other countries that can produce beef just as good if not better than US beef. What would happen if the US consumer decides that some other beef is better than US beef? Not even mentioning price issues. The myopic veiw of r-calf would certainly get the US in trouble. They are to focused on doing what they think needs doing rather than what is best for the US cattleman.

If your raising beef and it's not what the consumer wants, what's the reason for being a cattleman??? :roll: I think it's high time us beef producers take responsibility for the product we raise... It's time for quality cattle to bring premium prices and the lesser bring accordingly... Nomore what ever the certain weight brings a certain price no matter the quality. Thus pushing out the poor quality cattle because it's not profitable..

And Kato, I hope you get those boots and those boots are made for walking!!

Great comment and what you wrote applies to both sides of the border.

The majority of the Canadians I know who were opposed to our MID system were marginal to poor operators whose cattle did not and could not perform with others. If cattle with below average performance, below average carcass or whatever casts beef in a bad light with the consumer can be traced back to the ranch or farm creating the problem then so be it.

There is a big difference between having cows and being a cattle-man/woman. MID in the US will help improve your product which benefits us all.

 

[katrina]

Competition whether it's between two countries ( US or Canada) or between you and your neighbor is a healthy commerise(sp)..
As long as the rules are equal for both sides......... No more if ya wear a cowboy hat or a country with better lobbist....... :lol: Don't get me started on China!!

 

[MoGal]

My bringing that up only goes to show that meat is already segregated and there shouldn't be added costs to any country as LAW requires beef imported to be labelled as such.

Of course the packers don't want to keep it segregated, but China has changed all that and there WILL be changes forthcoming. You don't kill American pets and get by with it ( I wish they had the same reverence for human life).

I think many Americans will chose USA beef over Japan, Mexico, Korean, Brazil, Argentina, Paraguay and other countries. Many Americans are already tired of this "global trade" sending jobs overseas, creating minimum wage jobs to take their place and lowering the standard of living for many Americans.

Let the "people" at least have the choice of choosing what country their beef purchase comes from. At least from this site its given me some more ideas as we have a USDA inspected meat locker plant in Perryville (about 10 miles away) and maybe I should look into fattening our own from our own corn, however I wonder if folks in St. Louis would come 85 miles to get beef.

 

[Sandhusker]

MoGal wrote:
Well, does it or doesn't it??

According to the RCalf site:

The United States already requires imported meat to be labeled. However, when the packer receives imported meat in clearly labeled containers, the packer separates the meat from the container through further processing and repackaging. Current law does not require the packer or wholesaler to retain the original label after such further processing or repackaging. It would be a simple and relatively inexpensive matter for packers to retain the original label with the meat.
In fact, packers already segregate carcasses for varous certification programs such as breed claims like "Angus Beef" or "Midwestern Beef". Clearly, producers need not be saddled with "ghost costs" associated with rebuilding a product origin tracking system that is already in use.



Okay, my ??? if this is already done then why all the hullabaloo with everyone?? Its already documented as imported beef and the meat packers will have to keep it segregated as originally labelled. There shouldn't be any extra expense to anyone that produces beef.

You've got a huge problem with your logic, Mo Gal, you're employing common sense.

True. But carry the logic a little bit farther. If you were Cargill for instance, why would you bother to even get into segregating Canadian cattle at an American plant? It would be so much easier to just take advantage of the fact that the Canadian live price will drop due to that same bother, and then buy the Canadian live cattle in Canada, process them in Canada, and then ship the beef south.

Win situation for Cargill. They got the cattle cheaper, and they can still move just as much Canadian beef in the U.S. market with a larger profit margin as a bonus.

Lose lose situation for us and you. We get paid less for our cattle. You lose more packers and therefore more customers for yours, and then you get paid less for your cattle. Don't for a minute think that when faced with deciding whether to pay more for U.S. cattle, or lay off American workers and shut down lines, that they are even going to think about paying more for U.S. cattle.

The major players in this business will come out on top. Don't worry about that. I would bet they have a long list of contingency plans, and none of them involve paying more for U.S. cattle.

If it was a win situation for Cargill, they wouldn't be fighting it.

 

[Bill]

My bringing that up only goes to show that meat is already segregated and there shouldn't be added costs to any country as LAW requires beef imported to be labelled as such.

Of course the packers don't want to keep it segregated, but China has changed all that and there WILL be changes forthcoming. You don't kill American pets and get by with it ( I wish they had the same reverence for human life).

I think many Americans will chose USA beef over Japan, Mexico, Korean, Brazil, Argentina, Paraguay and other countries. Many Americans are already tired of this "global trade" sending jobs overseas, creating minimum wage jobs to take their place and lowering the standard of living for many Americans.

Let the "people" at least have the choice of choosing what country their beef purchase comes from. At least from this site its given me some more ideas as we have a USDA inspected meat locker plant in Perryville (about 10 miles away) and maybe I should look into fattening our own from our own corn, however I wonder if folks in St. Louis would come 85 miles to get beef.

If I was only 85 miles from a major centre like St. Louis I would darn sure drive the 85 miles to deliver it.

Are there local farmers markets closer to you? If you supply a quality and consistant product you will quickly establish a client base and then they will come to you. People are concerned about there food and many want to know where it came from and WHO produced it. What country it came from isn't enough.

No better way to add value than to eliminate more of the "middle men".

 

[IL Rancher]

Yes.. They would come 85 miles.. Or more, or deliver it if the price is rigt. Spent the day on Tuesday running Pork and beef into Chicago land but have had people come out to the farm for it.. 100 miles, give or take depending on location.. Better than cool for them, it is Farm/ranch of Origin and being able to look the producer in the eye and shake their hand. For some this is worth dollars per pound on product (For example, our fat hogs bring close to 2 bucks a pound live weight).

 

[Maple Leaf Angus]

Yes.. They would come 85 miles.. Or more, or deliver it if the price is rigt. Spent the day on Tuesday running Pork and beef into Chicago land but have had people come out to the farm for it.. 100 miles, give or take depending on location.. Better than cool for them, it is Farm/ranch of Origin and being able to look the producer in the eye and shake their hand. For some this is worth dollars per pound on product (For example, our fat hogs bring close to 2 bucks a pound live weight).

:agree: :clap: :clap: :clap: :clap: :clap:

Il., you nailed it. It is this mindset that will prosper in any trading scenario. You, Randy, question, Robertmac, PPRM, BenRoberts, to name a few on here, can live with or without COOL.

Those who 9!$$ and moan about competition and want to erect trade barriers in an effort to protect their shaky or bloated enterprises will inexorably slide into self-dissolving, lazy mediocrity regardless of how much protection they get from the realities of theworld around them!