Testimony

on behalf of the

NATIONAL CATTLEMEN'S BEEF ASSOCIATION

in regard to

Country of Origin Labeling

submitted to

Senate Committee on Agriculture, Nutrition and Forestry

The Honorable Richard G. Lugar, Chairman

submitted by

George Swan

President

National Cattlemen's Beef Association

May 26, 1999

____________________________________________________________________________

Initiated in 1898, the National Cattlemen's Beef Association is the marketing organization and trade association for America's one million cattle farmers and ranchers. With offices in Denver, Chicago and Washington D.C., NCBA is a consumer-focused, producer-directed organization representing the largest segment of the nation's food and fiber industry.

Statement by George Swan, President, NCBA

Senate Committee on Agriculture, Nutrition and Forestry

Hearing on Country of Origin Labeling

May 26, 1999

Thank you Chairman Lugar, Senator Harkin and Members of the Committee for holding this hearing to discuss country of origin labeling. NCBA commends your leadership and continuing efforts to examine the issues and concerns of interest to cattlemen and women, and for working with us to find ways to improve our ability to more effectively market U.S. beef. I am George Swan, President of the National Cattlemen's Beef Association. I am a fourth generation rancher on the House Creek Ranch, Rogerson, Idaho.

During 1998, beef imports were equal to about 8 percent of total U.S. beef production. This beef is generally blended into ground beef or processed beef products and sold at the retail meat case without informing consumers that it is not U.S. production. In addition to beef imports, nearly 1.1 million live cattle were imported from Canada directly to U.S. packing plants during 1998. Although all of the value- added production took place in Canada, these cattle were processed - in effect they were "laundered" - and sold as U.S. beef.

Because the majority of our members felt this was a false representation of U.S. beef, NCBA adopted policy during the January 1997 Convention to require imported meat and meat products be labeled as such. An NCBA task force was appointed to address challenges posed by various segments of the beef industry and to facilitate implementation of labeling. The NCBA Country-of-Origin Task Force recommended that:

· The definition of "U.S. Beef" include all beef produced from cattle slaughtered in the U.S., except those cattle brought into the U.S. in "sealed" trucks for slaughter. In addition, this definition will not include imported beef trimmings, imported boxed beef, or beef produced from imported carcasses.

· All fresh muscle cuts offered for sale at the retail meat case, will be labeled as to their country of origin, required regardless as to whether the product is graded with USDA Quality Grade. That identity will be maintained to the retail meat case.

· The "U.S. Beef" label should be available for use on ground/processed beef products if individuals or firms wish to meet the criteria established for the domestic label beef and market the products accordingly. Otherwise it would be labeled "blended product," or "blended with imported beef."

· Due to the unique complexity of labeling ground beef, a pilot study of significant scope and magnitude should be conducted to test consumer response to, and costs of, labeling ground beef as "imported," "U.S. Beef," or percentage of "imported and U.S. Beef." If it is found that this labeling would not impose a significant cost on U.S. producers, this labeling will become mandatory industry-wide. Additional research funds will be directed to developing additional information about potential improvements in source verification and accountability - and consumer acceptance of ground beef - through labeling.

Since this policy was adopted, NCBA has worked with Senators Craig and Johnson and other members of this Committee, as well as Senator Burns and others to introduce legislation and pursue consideration in Congress. We certainly appreciate their hard work to broaden the political support for country of origin labeling. We also are aware that last year's effort to enact labeling legislation was hampered by the venue in which it was being debated -- namely, the appropriations process.

That is why we are both appreciative and excited by your calling this hearing. It represents a critical step toward ensuring this issue is considered in the proper forum and with all sides having an opportunity to discuss their positions as we, hopefully, continue to move forward. We also are confident that USDA's report, another important part of this process, will soon be completed and help us verify our belief that by requiring country of origin labeling on beef in the retail meat case, cattle producers can better serve their customers -- namely, consumers.

Consumer Choice

Consumers demand quality and consistency, and producers are continually working to meet consumer demands. With the current system, there is limited ability to identify the source of product that does not meet consumer demands. Country-of-origin labeling will give consumers the ability to make informed decisions when purchasing meat and meat products and the relative value of meat from different countries will be determined through competitive forces in the marketplace.

A national consumer poll commissioned by NCBA and conducted by Wirthlin Worldwide in November 1998 showed that consumers overwhelmingly supported the concept of putting country of origin labels on fresh meat in the supermarket. A follow-up poll in March, 1999, found statistically identical results showing that 76 percent of consumers agreed with a statement that the U.S. should require labels on meat that show country of origin. On the other side of the coin, only 24 percent of consumers said country of origin labels were unnecessary.

In questions added to the March poll, consumers were asked which product - U.S. or imported - they would purchase if they saw packages of ground beef and steaks in the meat case, all priced the same, with various types of country of origin labels. Faced with a choice between beef with labels saying "Product of the United States" and "Imported Product":

· 91 percent of consumers said they would choose the U.S. product;

· 1 percent would choose the imported product;

· 6 percent said it didn't matter.

Of those who said they would choose U.S. beef:

· 69 percent would do so because they prefer to buy American, loyalty to the U.S., to support U.S. businesses and to support our farmers;

· 13 percent thought U.S. beef would be safer and 9% felt it would be of higher quality.

In a similar question, consumers, faced with a choice of beef with four different labels saying Product of… Canada, Australia, United States and New Zealand:

· 89 percent said they would buy the U.S. beef;

· 3 percent said Canadian beef;

· 1 percent each said they would buy Australian and New Zealand beef;

· 6 percent said it made no difference.

Similar to responses to the question of "American" versus "Imported," the survey showed that:

· 73 percent would choose the U.S. product because they prefer to buy American, loyalty to the U.S., to support U.S. businesses and to support American farmers;

· 11 percent thought U.S. beef would be safer;

· 6 percent said it would be of higher quality.

Marketing U.S. Beef

NCBA believes that through country of origin labeling, we can improve our ability to market U.S. beef, and ensure that we are getting the full value for the resources we are spending to promote our product. Labeling is not a new concept. Many countries around the world require such labeling on foreign product. In some of our largest markets, Japan for example, we have taken advantage of labeling to better identify our product for Japanese consumers. The growth in that market since the barriers were eased has resulted in a market that consumed $1.5 billion worth of clearly marked and identified U.S. beef.

NCBA also believes there is an inherent value to beef producers, including those from other countries, in being able to market their product as "U.S. Beef." I cannot give you quantifiable data to support our belief -- at least yet. However, logic suggests this is the case given the extreme reaction by Canadian producers and officials when this issue was considered in Congress last year.

In every other market in which we compete with Canadian beef, their product is clearly marked as to its country of origin -- it is part of their marketing strategy. They obviously are willing to put resources and effort into promoting their product in other countries. Why not in the United States? Again, we believe it is because they are getting extra value for their product by wearing our brand.

Conclusion

Country of Origin labeling, which was considered by the 105^th Congress, is an ongoing issue and a priority for American cattle producers. U.S. cattle producers want to assure consumers they are getting the beef they want, not to mention the U.S. beef producers' marketing dollars promote.

NCBA will be discussing country-of-origin labeling with retailers, packers, food processors and other industry groups in the near future to find the best solution for meeting consumer expectations. In fact, we have had an initial meeting with retailers to put in motion a process similar to that we have used to reach agreement on the price reporting issues. NCBA will also be working within a producer coalition that includes the American Farm Bureau Federation, the American Sheep Industry Association and the National Farmers Union to achieve our goals.

The National Cattlemen's Beef Association is prepared to participate in the process of evaluating critical marketing and trade issues within the beef industry. NCBA looks forward to providing additional input as other issues arise. Thank you for the opportunity to present this information.