NCPA - National Center for Policy Analysis

Food Labels Will be Costly

October 29, 2003

New labeling requirements to tell American consumers the country of origin for their meat, fish and produce would cost producers, processors and retailers as much as $4 billion a year and could hurt exports, say government and industry sources.

The Farm Bill of 2002, passed by Congress and signed by President Bush, requires retailers to notify customers of the country of origin of the commodities by next September. The labels are meant to let consumers know where food is grown or raised, and to allow them to choose American products, rather than foreign.

The Bush administration, some lawmakers and many in the food industry prefer to have a voluntary system replace the mandatory requirements before next year's deadline.

  • The estimated benefits associated with this rule are likely to be negligible, says the U.S. Agriculture Department.
  • The estimated first-year cost for growers, producers, processors, wholesalers and retailers -- largely for tracking and recordkeeping -- ranges from $582 million to $3.9 billion.
  • The estimated cost to the U.S. economy in higher food prices and reduced food production 10 years after implementation ranges from $138 million to $596 million, the department said.

Covered commodities include beef, veal, lamb, pork, fish and shellfish, perishable agricultural commodities such as fresh and frozen fruits and vegetables, and peanuts, the Agriculture Department said.

Consumer and industry groups have 60 days to comment on the proposal before regulators begin drawing up the final rule. While the Agriculture Department may alter the regulations slightly, opponents of mandatory labeling are looking to Congress to repeal the requirement entirely.

Source: Jeffrey Sparshott, "Labeling rule called too costly," Washington Times, October 28, 2003.


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