USDA: Food Labels to Cost US Industry $3.9 Billion

WASHINGTON - A federal law backed by U.S. farm groups to require country-of-origin labels on meat, seafood, produce and peanuts, could cost American foodmakers up to $3.9 billion in its first year, the Agriculture Department said this week. The cost estimate was published as part of the USDA\'s proposed regulations to carry out the law, which becomes mandatory after Sept. 30, 2004. Consumer advocates and some farm groups say the labels will distinguish U.S.-grown meat from competitors at the grocery story. But American grocers and meat groups want the law repealed, saying it will be too costly and create a record-keeping nightmare. The Bush administration opposes the law, which was included in Congress\' broad rewrite of U.S. farm policy last year. The Republican-led House has voted to block the labels for meat, and the issue is still pending in Congress. The Senate, controlled by Republicans with a narrow majority, is a stronghold of support for the mandatory labels. The USDA said in its proposed regulations that it found \"negligible\" benefits in the new labels. \"USDA also finds little evidence that consumers are likely to increase their purchase of food items bearing the U.S. origin label as a result of this rulemaking,\" it said. Estimated costs for growers, producers, processors, wholesalers and retailers range from $582 million to as much as $3.9 billion in its first year, the USDA said in its proposed regulations. Kenneth Clayton, associate administrator for USDA\'s Agricultural Marketing Service, said food sales would need to increase by up to 5 percent to offset the additional costs. Some label supporters criticized the USDA estimates. \"I find it almost insulting that USDA expects us to believe that the closest they can estimate the cost of implementing country-of-origin labeling spans a range of $3.5 billion,\" said Sen. Tom Harkin, an Iowa Democrat. Country-of-origin labels are currently voluntary. When the labeling law becomes mandatory, labels on supermarket packages of beef, veal, pork, lamb, fish, shellfish, fruits and vegetables and peanuts must list all of the countries in which they were produced. Only items raised and processed in the United States can be labeled solely as a U.S. product. Failure to comply can result in fines of up to $10,000 per incident. Restaurants, food stands and cafeterias are exempt. Food retailers and meat groups said it would be too costly and complicated to track each commodity as it travels from the farm to the consumer\'s plate. The National Pork Producers Council said the proposed rules would bankrupt thousands of pig farmers and \"destroy\" U.S. exports. However, other farm groups disagreed, saying U.S. food products were in high demand overseas and labeling would give consumers the option to choose. \"Numerous surveys by consumer groups, academics and others have demonstrated overwhelming support for the program by consumers,\" said Tom Buis of the National Farmers Union. Industry officials, consumer groups and others have until late December to submit comment on the proposed regulations. Story by Randy Fabi REUTERS NEWS SERVICE