Beef and Lamb:

Implications of Labeling by Country of Origin

RCED-00-44: Published: Jan 27, 2000. Publicly Released: Feb 7, 2000.

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Lawrence J. Dyckman
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Pursuant to a congressional request, GAO provided information on mandatory country-of-origin labelling for beef and lamb, focusing on the potential: (1) compliance costs associated with mandatory country-of-origin labelling for fresh and processed beef and lamb; (2) enforcement costs associated with such a requirement; (3) trade issues associated with such a requirement; and (4) benefits of mandatory country-of-origin labelling.

GAO noted that: (1) mandatory country-of-origin labelling for meat as prescribed under H.R. 1144 would necessitate changes in the meat industry's practices, which would create compliance costs across all sectors of the industry; (2) the meat industry has estimated an annual cost of $182 million for meatpackers and processors to maintain information solely on the country-of-origin for beef; (3) the grocery industry has estimated that the nation's 156,300 large and small retail grocers would incur annual costs of about $375 million for record-keeping, inventory management, and the labelling of meats in their stores; (4) U.S. packers, processors, and grocers would pass their compliance costs back to their suppliers in the form of lower prices or forward to the consumers in the form of higher retail prices; (5) the Department of Agriculture (USDA) estimated, on the basis of a 1998 proposal to label imported beef and lamb at the retail level, that its Food Safety and Inspection Service would incur a cost of $60 million per year to enforce country-of-origin labelling; (6) that estimate did not take into account all of the requirements of H.R. 1144, including the enforcement costs for other sectors of the meat industry, such as the pork industry, or costs for ensuring the identity of meat from imported animals raised at U.S. feed facilities before being slaughtered; (7) according to federal officials and industry trade representatives, mandatory country-of-origin labelling for beef and lamb, as provided for in H.R. 1144, could have negative ramifications for U.S. trade; (8) officials with the Office of the U.S. Trade Representative and the Department of State said that U.S. trading partners could raise concerns that such country-of-origin labelling requirements might adversely affect their exports to the United States by raising costs or lowering the demand for their products; (9) at least 11 U.S. trading partners have some requirements for labelling and might decide to more strictly enforce them if a new U.S. law were enacted; (10) countries that do not require such labelling might impose them; (11) according to federal officials, a stringent U.S. law would make it more difficult for the United States to oppose an impending European Union proposal for country-of-origin labelling; (12) H.R. 1144's labelling requirements would benefit consumers who prefer to purchase U.S. beef and lamb by giving them the information to make that choice; and (13) if consumers were to increase their purchases of domestic beef and lamb, U.S. cattle and sheep producers, and others, could realize increased sales or higher prices.

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