FMI URGES IMMEDIATE STEPS ON COOL LAW

Christina Veiders

CHICAGO -- The country-of-origin labeling law, which takes effect on Sept. 30, 2004, is immediate and retailers need to be prepared, Deborah R. White, associate general council, regulatory affairs, for the Food Marketing Institute told attendees last week during FMI's Speaks presentation.

The labeling law was passed as part of a provision tacked onto the 2002 farm bill (Farm Security and Rural Investment Act) during a period when terrorism and protecting the food supply chain became critical issues. Even before current events, such a law was favored by domestic producers to protect U.S. sales from imports of fresh produce and meat, and by some consumer advocacy groups who say such labels are needed because it is the consumer's right to know.

However, the law is viewed as protectionist and anti-competitive by retailers, wholesalers and processors -- all of whom will bear the responsibility for complying with the law. "Some of the products [covered under the law] reflect the political issues of the people who passed the law," said White. "It's not the consumer's right to know, food safety, or any of the other lofty principals that underlies all this. Beef, pork and lamb are included. Chicken, turkey and dairy are not included. It covers food sold at retail grocery stores but not at McDonald's. So there are really imbalances within the law."

White said the food distribution industry is beginning to wake up to the unintended consequences and costs of implementing the law. The Agricultural Marketing Service of the U.S. Department of Agriculture (USDA) and Office of Management and Budget estimated recordkeeping and paperwork alone for the first year would cost the industry $3.6 billion.

White urged retailers to partner with their suppliers to comply with the law, or risk stiff penalties of $10,000 for willful violations. Suppliers face $10,000 penalties per day for violations, plus cease-and-desist orders, injunctions and restraining orders.

Retailers are ultimately responsible for informing consumers of the country of origin of products that fall within the classification of covered commodities -- domestic and imported meats, fish, fruits and vegetables, and peanuts.

"If you think about it," said White, "it's different than any other label law. In this case, the retailer is responsible for getting the information to consumers."

She explained that the law is complicated, and the definition encompasses the entire life cycle of the product. Information and labeling defining country of origin for beef would include where the calf was born, fed and slaughtered, she said. For fish, information would include the time and place the fish was caught and then processed. "It's very different, and we are talking about some 800 different covered commodities," said White. FMI held daily seminars during the conference on the new law, and recommended retailers take the following action:

Ask suppliers to sticker or label each covered commodity.

Ask suppliers to indemnify retailers so if the label is wrong, suppliers will bear the fines and not the retailers.

Ask suppliers to get audited so retailers can rely on supplier information in case questions of accuracy arise.

Said White, "The most important thing is to communicate with your suppliers. They have the information and can get it to you. You can't look at a banana and know whether it came from Costa Rica or Guatemala. You have to get that from the supplier, and with the breadth of covered commodities, you've got a lot of suppliers to work with."

Unless the producer community changes its mind on the new law, White expected the mandatory law to remain intact. However, retailers such as Winn-Dixie Stores, Giant Foods of Landover, and Wakefern are attempting to raise awareness of costs and problems with the law to legislators and the USDA.

Attending FMI's special seminar, Donna Taylor, produce manager for the five-unit Graul's Markets, Annapolis, Md., said, "I am afraid it will put a lot of small farmers out of business. They either don't have the technology or the will to jump through all the hoops [to comply]. It's scary the repercussions this law can have and how far it can go. It's going to affect the livelihood of many people."

Taylor said when she returns home from the conference, she would contact her suppliers -- one of them being Supervalu -- to find out how they planned to comply with the law. "We have to be in a position to cover ourselves and make sure we don't get fined. It will be a matter of taking care of yourself on this one and making sure everyone up the road is doing it, too," she said.

Also attending the seminar, Glenn Moon, produce supervisor for Hy-Vee, West Des Moines, Iowa, said, "I can see where there will be a lot of suppliers, particularly in the frozen food area, who didn't think they would be a part of this -- and now they will be." Moon said there still are unanswered questions as to how the law will affect supermarkets' food-service departments, such as will the salad bar now have to be labeled by country of origin?