As if being a guinea pig for the new country-of-origin labeling law wasn't humbling enough, supermarkets and their seafood suppliers have something else to grumble about: They're being kept in the dark.
Retailers and their seafood suppliers are scrambling to implement procedures and policies to comply with the new regulations, as the Sept. 30 date for implementation of the first comprehensive, federally mandated, country-of-origin labeling program for food looms. Unlike meat and fresh produce, the supermarket seafood department failed to secure a two-year extension to comply with the COOL requirements included in the 2002 Farm Bill.
One small matter stands in the way, though: No one outside the U.S. Department of Agriculture knows exactly what the regulations will require. USDA has said it's working on putting the final touches on the specifics, and plans to release the final requirements prior to Sept. 30. A spokesman for USDA's Agricultural Marketing Service emphasized they won't differ substantially from the preliminary guidelines issued last year.
That's little consolation for seafood suppliers like Fishery Products International. In recent months, the Danvers, Mass., company has been inundated with retailer requests for everything from substantial changes in invoice documentation to detailed sourcing information on packaging to letters of indemnification. The requests cover a broad spectrum of seafood products and, moreover, differ from retailer to retailer.
Given the lingering confusion over what the law will require, it's no wonder retailers, who will bear a significant compliance burden, are seeking to cover all the bases, noted Fishery Products International's director of regulatory affairs.
"This law is forcing a lot of different interpretations as to what types of products are involved," said Bill DiMento. "Retailers and their suppliers have their hands in the air as to what's going to be required and what specific seafood lines are going to be covered." Attempts by USDA to clarify the rules ahead of their release have been muddled at best, DiMento said. While it's clear that most whole seafood commodity products will have to carry origin labels -- but combined or restructured products won't -- questions abound with respect to products that occupy a gray area between the two.
DiMento commented, for example, that at one point, USDA said peeled boiled shrimp sold in covered plastic rings with cocktail sauce would be exempt. Six months later, the agency retracted that interpretation. Another question revolves around whether fish products of one country that undergo processing in another country, such as breading of a filet, will need to carry dual origin labels.
Given the uncertainty, the company's supermarket customers are erring on the side of overcompliance. "I think it's likely that half of what we've been asked by retailers to label as to origin is ultimately going to be proved unnecessary," he predicted.
Moreover, DiMento said, it's highly unlikely the government will begin fully enforcing the labeling law as of Sept. 30. Given the time it will have taken USDA to release final rules, and considering the challenges of implementation, a delay of up to two years is possible. With a long reprieve, retailers likely will have time to digest the new regulations and prepare the proper store labeling.
Yet facing fines as high as $10,000, as well as potential lawsuits for non-compliance, retailers aren't taking chances. In addition to working closely with suppliers, supermarket operators of all sizes have been busy honing internal tracking and pricing systems, developing new sign programs, and evaluating their handling procedures.
Jack Gridley, meat and seafood manager at Dorothy Lane Markets, a three-store chain in Dayton, Ohio, has been preparing for the new regulations on several fronts. In addition to securing more supplier documentation and making plans to perhaps winnow his supplier list down for easier paperwork, Gridley is also readying new seafood signs. They will have a color-coding element for ready customer identification of major origin categories. Green signs will denote farm-raised product; red signs will indicate wild products.
"There might be some headaches involved in reworking some of our internal systems and retraining, but I don't see this as a big deal," Gridley said. "Products like tuna that come in from different parts of the world at different times of the year may present some signage problems, but I'm moving ahead to get ready for the mandatory program."
The lack of final guidelines has hampered Pete Davis' efforts to move ahead with a comprehensive sign program for the 11 stores in the Bristol Farms chain. Davis, meat, seafood and sushi director for the Carson, Calif.-based retailer, said without knowing the specifics of what will be required regarding sign and type size and style, it's hard to proceed with a program. He has looked into outsourcing a sign program that would use slide-in name plates, as well as an in-house program that would use a chalkboard.
"I'd like to be able to put forth a real nice signage program that enhances our department rather than clutters it up," he said. "But I'm a little reluctant to do a new sign program and then have to do it all over again if it's not right. Everything is pretty murky right now."
In the meantime, Davis said he's been working up a plan to retain invoices and other related seafood paperwork for up to a month to satisfy expected recordkeeping requirements. He said he has no plans to scale back on the variety of seafood he carries or change the makeup of his limited seafood supplier base.
While retailers may be wise to get out in front of the coming regulations, a danger they face is adding substantially to the cost of compliance. By some estimates, supermarkets are expected to absorb $1.8 billion in compliance costs in just the first year of the mandatory labeling requirements. Doing more than may be necessary, either internally or via suppliers, may only compound those costs, said Linda Candler, vice president of the National Fisheries Institute.
"If suppliers are asked, for example, to change bags to reflect expected labeling changes, and then it turns out that the labeling isn't in the right place on the bag, there are costs involved in having to rerun them," she said.
Specifics of the seafood origin labeling program may be in short supply now, but one thing is fairly certain: Sometime after Sept. 30, all eyes will be on the supermarket seafood department as it becomes the laboratory for the first major supermarket COOL program. So far, there's little consensus as to what the impact will be on seafood, not to mention products like meat and fresh produce, which are scheduled to be in compliance by 2006.
Mike Flanagan, co-chair of the food industry team at the Milwaukee office of Foley & Lardner, a law firm that represents a number of food producers and retailers, said mandatory labeling could put seafood at a competitive disadvantage.
"Consumers are turning to seafood for a number of reasons, but there is the potential that fish could become more expensive relative to meat because of the added compliance costs," Flanagan said.
Echoing the sentiment of many retailers and suppliers, NFI's Candler said there's scant evidence that labeling means much to consumers.
"We've opposed this from the beginning because of the costs and the fact that there's no solid research showing that the consumer even wants this information," she said.
