Food Consumption/Nutrition/Food Safety, International Relations/Trade, Q13, Q18,

Peel, Derrell S.

English

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  4th Quarter 2008 • 23(4)  CHOICES  3
AAEA
Agricultural & Applied
Economics Association
A publication of the 
Agricultural & Applied 
Economics Association
Implementation of Country of Origin  
Labeling (COOL) in the Beef Industry
Derrell S. Peel
JEL Classifications: Q13, Q18
Implementation of mandatory country of origin labeling 
(COOL) began on Sept. 30, 2008 after years of discussion, 
controversy, modification and delay. Even yet, the recently 
published final rules made additional changes and the re-
cent WTO challenge by U.S. trade partners means that un-
certainty remains and additional modifications in COOL 
are likely in the future.
The central notion of COOL, to provide consumers 
with information about the source of beef products, seems 
simple enough and not likely to generate much inherent 
opposition. However, the issues involved in development 
of the COOL law and the implementation in the beef in-
dustry have proven to be the source of significant conten-
tion. Much of the support for the inclusion of COOL in 
the 2002 Farm Bill came from elements of the beef indus-
try but the provisions were immediately resisted vigorously 
by other industry sectors and have continued to be a light-
ning rod for policy disputes that have often pitted producer 
against producer (Kay, 2003, 2003). The controversy over 
COOL within the beef industry can be broadly grouped 
into three areas of contention: 1) the specific language and 
implications for implementation of the COOL law; 2) the 
motivation for the law; and 3) the question of costs and 
benefits to the industry.
The Devil is in the Details
The  original  COOL  provisions  of  the  2002  Farm  Bill 
emerged  very  late  in  the  final  negotiations  of  the  farm 
bill with specific language that had not been considered 
or deliberated by many of the various interests affected by 
the law. The law was written with the intent to ensure cer-
tain outcomes, e.g. processed products were excluded but 
ground meat could not be exempted; and also to exclude 
certain outcomes, e.g. that USDA would not require an 
animal identification system in order to implement the law. 
Opponents immediately noted that the language would 
make implementation more difficult and more costly than 
necessary (Kay, 2004). 
Opponents also charged that the language of the bill 
seemed to have been deliberately crafted to minimize po-
litical opposition by including provisions such as an ex-
emption for food service and the exclusion of the poultry 
industry. The compelling argument that consumers have 
a right to know where their food comes from is compro-
mised by the exclusion of almost half of total beef con-
sumption from the law. The disassembly of beef carcasses 
into many different products destined for a wide variety 
of final markets means that virtually all cattle and meat 
must be tracked under COOL. Rarely is it known or likely 
that all the products from an entire animal will end up as 
processed products or in food service markets and therefore 
not subject to COOL requirements. This means that the 
industry must incur the costs of COOL on total produc-
tion in order to generate the label information for about 
half of beef consumption. Table 1 shows the 2007 levels of 
cattle slaughter, beef production, and cattle and beef trade 
and the various labels that are being used to meet COOL 
requirements. 
The exclusion of poultry was ostensibly based on the 
fact that little poultry is imported. Concerns were raised 
that the trade picture could change over time and also that 
any additional costs on red meat production and market-
ing not shared by the poultry industry was an inherent dis-
advantage for red meat industries. Ultimately poultry was 
included in COOL in the 2008 Farm Bill modifications 
to the law.3  CHOICES  4th Quarter 2008 • 23(4) 
COOL and Trade
Opponents of COOL have suggested 
that  the  underlying  motivation  of 
some of the strongest supporters was 
not  an  overriding  concern  for  con-
sumer information. Although COOL 
was not promoted openly as a trade 
issue, COOL has been widely viewed 
as an attempt to construct a trade bar-
rier against imported cattle and beef. 
Many  COOL  supporters  suggested 
that the law could be easily invoked 
by requiring only that imported ani-
mals and products be identified and 
tracked  (R–CALF,  2003).  This  ap-
proach  was  immediately  rejected  as 
an overt violation of U.S. trade prin-
ciples and one that would not stand 
up to trade challenges. Subsequently, 
supporters  of  the  resulting  compre-
hensive  labeling  law  suggested  that 
it would only be necessary to track 
imported product and that all other 
product could be “presumed” to be 
U.S.  in  origin  thus  avoiding  addi-
tional costs for the U.S. industry. This 
view was, in large part, the reason that 
the COOL law prohibited the use of 
a  mandatory  animal  identification 
system to implement COOL. 
COOL and Food Safety
Consumers  often  confuse  COOL 
with food safety and at times COOL 
supporters have deliberately perpetu-
ated this confusion (See Government 
Accountability  Project,  2007;  and 
Ernst,  2007  for  different  views  of 
COOL and food safety). COOL is 
a marketing program as highlighted 
by the fact that COOL is adminis-
tered by the Agricultural Marketing 
Service (AMS) of USDA rather than 
the  Food  Safety  Inspection  Service 
(FSIS)  and  the  Animal  and  Plant 
Health Inspection Service (APHIS).   
The general principle of food safety 
is that product safety should not be 
the subject of marketing and label in-
formation. Food (or indeed any prod-
uct) that is not fundamentally safe for 
consumption or use is not permitted 
in the market and labeling a prod-
uct known to be dangerous does not 
make  it  acceptable.  Certainly  there 
are plenty of challenges to the U.S. 
food safety system and food imports 
can and should be the subject of con-
tinual efforts to maintain a high level 
of food safety. COOL does not affect 
any food safety standards nor change 
any potential sources of food in the 
marketplace. Suggesting that COOL 
is a food safety measure detracts from 
legitimate concerns about food safety 
and  efforts  to  insure  that  imported 
food products do not pose a risk for 
consumers.
The Challenges of Implementing 
COOL in the Beef Industry
The  rather  straightforward  concept 
of  COOL  is  by  no  means  simple 
to  implement  in  the  beef  industry. 
COOL is a retail law that applies to 
meat. Cattle are not considered a cov-
ered  commodity  under  the  COOL 
law. Nevertheless, cattle producers are 
indirect suppliers of a covered com-
modity and are obligated to provide 
origin  information  to  downstream 
industry sectors in order to verify the 
origin of meat. Cattle often change 
hands  several  times  and  are  com-
mingled and sorted numerous times 
before  reaching  the  packing  plant. 
Assembly of cattle from widely dis-
persed  small  cow–calf  producers 
into larger lots occurs at the stocker 
and feedlot levels before being com-
mingled into large enough groups to 
comprise a shift or operational day at 
a packing plant. Unlike hogs or poul-
try  that  are  usually  maintained  in 
closed production groups until pro-
cessing, cattle are much more likely 
to move through several production 
groups which increases the difficulty 
of  tracking  domestic  and  imported 
Table 1.  Beef and Cattle Supplies, Trade and COOL Labels
200 Supply COOL Labels
All Cattle and Calves, Jan 
1, 2008 
9. Million Head 
Calf Crop  3.3 Million Head  Prod. of USA
Steer and Heifer Slaugh-
ter (FI)** 
2.49 Million Head  Prod. of USA; or
Prod. of USA and Canada; or
Prod. of USA and Mexico*
Cow and Bull Slaughter 
(FI)** 
.23 Million Head  Prod. of USA; or
Prod. USA and Canada*; or
Prod. of USA and Mexico*
Cattle Imports, Total 
          Canada
          Mexico 
2.49 Million Head
     1.40 Million Head
       –0.8 Slaughter
        –0. Feeders
     1.09 Million Head 
Prod. of USA  and Canada*
Prod. of USA and Mexico
Beef Production (FI)**  2.0 Billion Pounds  Prod. of USA; or
Prod. of USA and Canada; or
Prod. of USA and Mexico*
Beef Imports  3.0 Billion Pounds  Prod. Of Country X
Beef Exports  1.82 Billion Pounds 
*Meat from mixed origin animals and commingled product is labeled with the 
appropriate countries, which may be listed in any order. Only if an entire day’s 
production consists of animals imported for slaughter does the foreign coun-
try have to be listed first, e.g. Product of Canada and USA. Also, only in the rare 
circumstance that a packer processed Mexican and Canadian cattle in the same 
day would the Product of USA, Canada, and Mexico label be appropriate.
** Federally Inspected.  4th Quarter 2008 • 23(4)  CHOICES  3
cattle through the system.
Supporters  and  opponents  of 
COOL in the beef industry can be 
found  in  all  sectors  of  the  beef  in-
dustry and in all regions. COOL has 
sometimes been characterized as pro-
ducers versus the meat industry (Kay, 
2007).  Certainly  the  meat  industry 
has generally opposed the law, fearing 
the costs involved. However, among 
producers  there  have  been  strong 
supporters and equally strong oppo-
nents to COOL and to a large extent 
these can be distinguished regionally 
(NCBA, 2008). In general, the stron-
gest  support  for  COOL  has  come 
from producers in the northern part 
of the United States while opposition 
has been the strongest in the southern 
half of the country. 
In many ways, the COOL debate 
has  highlighted  fundamental  dif-
ferences in cattle production in the 
two parts of the country. COOL was 
perceived to be easy and low cost to 
implement  in  the  northern  regions 
where  larger  cattle  operations,  sell-
ing larger groups of generally heavier 
cattle  directly  to  feedlots  represents 
a  relatively  streamlined  production 
system. In southern regions, cattle are 
often bought and sold several times 
and  move  through  a  complex  and 
diverse set of stocker and feedlot pro-
duction systems with much assembly, 
sorting and commingling. The pros-
pect of tracking animals in order to 
verify origin in this region was viewed 
as likely a much more burdensome 
and costly effort.
It  is  evident  that  USDA–AMS 
was caught in the middle of a very 
difficult  task  in  trying  to  develop 
rules  that  meet  the  intent  of  the 
COOL law and maintain consistency 
with  other  laws.  For  example,  the 
law provided for exemptions for pro-
cessed food products. Developing the 
COOL definition of processing pre-
sented several challenges particularly 
with respect to Customs and Border 
Protection  (CBP)  treatment  of  im-
ported  products.  In  general,  CBP 
requires all imported products to be 
labeled as imported to the final con-
sumer or until they are “substantially 
transformed”,  in  other  words  pro-
cessed into new products. Meat from 
imported cattle cannot be considered 
processed when slaughtered and fab-
ricated nor can imported meat used 
in the production of ground beef be 
considered  processed  under  COOL 
despite the fact that it is substantially 
transformed under CBP rules. These 
and  other  similar  considerations 
forced USDA to walk a fine line in 
developing definitions and terminol-
ogy for the implementation of COOL 
that  would  not  create  conflicts  and 
inconsistencies with other rules.
The  original  proposed  final  rule 
that AMS published prior to the first 
mandatory implementation date was 
the subject of much controversy. The 
rule called for a rigorous set of au-
ditable records at all industry levels. 
Critics charged that USDA was de-
liberately making COOL more bur-
densome than necessary. However, a 
review of the rule shows that the ap-
proach  was  generally  similar  to  the 
approach that AMS uses in providing 
third party verification of a host of 
voluntary marketing programs. Food 
labeling under the COOL law must 
be consistent with food labeling pro-
visions of the Food and Drug Admin-
istration (FDA). The general “truth in 
labeling” provisions of FDA rules are 
what preclude the use of a presump-
tion of U.S. origin for beef. All label 
claims  must  be  truthful  and  verifi-
able. The need to comply with FDA 
rules was often overlooked by critics 
of USDA rulemaking efforts. Never-
theless, in a last minute change and 
apparent abandonment of this prin-
ciple, the final rule for COOL imple-
mentation allows anyone who visually 
appraises cattle and finds no “CAN” 
or “M” brands, official Canadian or 
Mexican tags, or other indication of 
foreign origin to issue an affidavit of 
U.S. origin for the cattle.
Through  the  intervening  political 
debates, delays and modifications in 
COOL,  culminating  in  Congress’ 
modifications to COOL in the 2008 
Farm Bill, AMS has significantly re-
duced  the  records  requirements  in 
COOL,  particularly  for  cattle  pro-
ducers. In the summer of 2008, a co-
alition of industry groups developed 
language for producer affidavits that 
are being used as the primary docu-
mentation for cattle to verify origin 
claims  for  COOL.  These  affidavits 
and AMS rules that allow cattle to be 
commingled in groups rather than re-
quiring records linking specific source 
and destination groups have signifi-
cantly reduced the potential burden 
of  COOL  on  cattle  producers.  In 
fact, the last minute provision allow-
ing visual appraisal to establish origin 
claims essentially removes all record-
keeping requirements for producers. 
Although  the  COOL  law  prevents 
USDA from implementing an animal 
ID  system  for  COOL,  the  current 
National  Animal  Identification  Sys-
tem (NAIS), which began in 2004 to 
enhance animal disease detection and 
control, provides COOL verification 
and animals with an official “840” tag 
require no additional documentation 
for  COOL  (USDA–APHIS).  How-
ever, meat packers, distributors and 
retailers still must segregate label and 
track meat from different origins. 
Will COOL Benefit the Beef 
Industry?
The underlying theme of all the issues 
raised above is the fundamental de-
bate about the net benefit of COOL 
to  the  beef  industry.  COOL  sup-
porters believe that U.S. consumer’s 
preferences for U.S. beef will provide 
enough premium to more than offset 
the added costs, which they perceive 
to be relatively low. Although there 
is  no  doubt  that  some  consumers 
have strong preferences for U.S. beef, 
COOL opponents question whether 
there is enough premium on enough 
products on that portion of beef that 
moves through retail markets as fresh 
or frozen beef to pay for the added 38  CHOICES  4th Quarter 2008 • 23(4) 
costs on all beef, even if those costs 
are relatively small. Moreover, even a 
small increase in beef cost may have 
negative impacts on demand for oth-
er beef products that are particularly 
price sensitive and intensely competi-
tive. COOL critics have noted that 
there  has  been  nothing  to  prevent 
voluntary origin labeling in the past 
other  than  an  apparent  recognition 
that the costs exceeded the expected 
benefits. Several studies have exam-
ined the potential benefits (See Dunn 
and Gray, 2008 for a summary). Nu-
merous studies have produced widely 
varying estimates of costs under dif-
ferent assumptions and a constantly 
changing set of proposed rules. Re-
cent estimates of the cost of COOL 
implementation  are  smaller  than 
earlier estimates but still vary widely 
(Kay, 2008).
The idea of COOL is simple and 
carries a lot of emotional appeal to 
both producers and consumers. Few 
would argue that, in general, provid-
ing more information to consumers 
is a good idea. However, information 
is costly and the optimal level of in-
formation  must  reflect  the  costs  of 
providing the information relative to 
the benefits. The U.S. beef industry 
is enormously complex and the costs 
of providing this information are not 
trivial. The long path toward COOL 
implementation has highlighted many 
of these challenges and the inherent 
danger of a top–down mandate on an 
industry. The extent of both the costs 
and  benefits  of  COOL  are  not  yet 
known and only time will tell what 
will be the ultimate impact of COOL 
on the beef industry.
For More Information:
Dunn,  D.  and  Gray,  C.  Wilson. 
(2008). Country of origin labeling 
(cool) and producer implications. 
Economic Observations, Coopera-
tive Extension Service, University 
of Idaho.
Ernst, D. (2008). Opinion:Country–
of–origin labeling will not increase 
food safety.  Arizona Daily Star. 
Available  online:  http://www.az-
starnet.com/allheadlines/182703.
Government  Accountability  Project 
(GAP). (2007). Cool Letter. Avail-
able online:  http://www.whistle-
blower.org/doc/2007/CoolLetter.
pdf. 
Kay,  S.  (2003,  March  3).  Debate 
about cool intensifies. Cattle Buy-
ers Weekly. 
Kay, S. (2004, November 29). Fight 
over mandatory cool will contin-
ue.  Cattle Buyers Weekly.
Kay, S. (2007, February 19). Flawed 
MCOOL  law  needs  revisions. 
Cattle Buyers Weekly.
Kay,  S.  (2008,  September  29). 
MCOOL will cost beef industry 
Cattle Buyers Weekly .
NCBA. (2008). Policy Position Sum-
mary  from  website.  Available 
online:  www.beefusa.org/gov-
eCOOL.aspx. 
PL 107–171. (2002). Farm Security 
and Rural Investment Act.
R–CALF  United  Stockgrowers  of 
America.  (2003).  Blueprint  for 
maximizing the benefits of man-
datory country of origin labeling 
while minimizing costs to produc-
ers  and  unnecessary  government 
and  industry  regulation.  Avail-
able online: http://www.r-calfusa.
com/.
USDA–APHIS,  National  Animal 
Identification  System  (NAIS) 
website. Avialable online: http://
animalid.aphis.usda.gov/nais/.
Derrell  S.  Peel  (derrell.peel@okstate.
edu) is professor in the Department of 
Agricultural  Economics,  Oklahoma 
State University.

Implementation of Country of Origin Labeling (COOL) in the Beef Industry

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