COOL Compromise Shows Association Leadership But Battle Scars Remain

Country-of-origin labeling has long been a contentious issue in the produce trade. We still remember the phone call from a key retailer after the Pundit wrote a cover story in PRODUCE BUSINESS called Nothing Cool About It in which the retailer said he thought the issue was lost after the law passed in the dark of night in 2002 but that our piece motivated him to lead a fight against COOL — a fight that culminated in a delay of over half a decade and a new agreement on a much improved bill:

Industry Negotiates Key Improvements to COOL
in U.S. House Farm Bill Country of Origin Labeling
to Go Into Effect September 30, 2008

As part of the 2007 Farm Bill to be considered by the U.S. House of Representatives tomorrow, the produce, meat and retail industries have negotiated important improvements to reduce the regulatory burden and cost of the country-of-origin law now on the books.

United Fresh and PMA have worked together for the past several years with a coalition of produce associations and the retail supermarket industry to find common ground that would deliver country-of-origin information to consumers, without the burden of the law first passed in 2002.

Implementation of that law had been delayed twice by Congress based on industry concerns about its unintended consequences and cost. In September 2006, these organizations reached a compromise agreement that we have advanced with Members of Congress.

  

Since that time, the environment to consider country-of-origin labeling has changed significantly, fueled by recent food safety issues such as the Chinese import situation. Many key members of Congress have made known that they would not allow further delay in the 2002 law, and instead urged all parties to negotiate any improvements that they felt needed in the law. Their bottom line was that mandatory COOL for meat and produce would go into effect on September 30, 2008, but they were willing to consider improvements in the law if consumer groups, meat and produce suppliers, and retailers could agree.

With the oversight of the House Agriculture Committee, representatives of the meat, produce, and retail industries have negotiated over the past week a series of compromises with consumer and farm groups. Yesterday, a number of produce stakeholder organizations reviewed the proposed changes to the law and endorsed an agreement to move forward with mandatory COOL with the following changes that will be included in the Farm Bill:

1. Significantly reduced penalties for mistakes in labeling at point of purchase, including a “good faith” standard that reduces the liability for retailers unless shown to be disregarding or willfully violating the law. This helps ease the burden on retailers, so long as they are working to comply with the law. Note that produce suppliers must provide country-of-origin information to retailers, and the truthfulness of that declaration is still subject to PACA law.
2. Retailers would not be liable for misinformation provided by suppliers, which should eliminate the need for retailers to audit their suppliers to ensure compliance.
3. No new record-keeping. Normal records kept in the regular course of doing business are sufficient to comply with the law. This is an important relief from the original law that threatened an extreme cost burden on the total supply chain.
4. A specific provision to allow labeling of a U.S. State, region or locality in which a product is produced to meet label standards as product of U.S. Therefore, a descriptor such as Minnesota Grown or Pride of New York would be sufficient labeling to comply with law. Produce suppliers and retailers across the industry strongly advocated for this change due to the many marketing programs and state/regional affiliations currently appearing in produce labeling.

With these provisions agreed to through tough negotiations with farm and consumer groups under the direct supervision of Congressional leaders, our associations will support these changes throughout Farm Bill consideration. Of course these changes are not law until finally passed by Congress and signed by the President, which we expect to occur by the end of the year. But, given the current state of negotiation on these issues, all parties believe these agreements are likely to hold through the process.

Because our associations have worked closely on this issue for several years, we are issuing this joint information alert to members of both associations. We would like to publicly acknowledge the work of United Fresh in negotiating these agreements with other stakeholders in Washington, DC, and PMA in assessing the impact of various specific proposals considered throughout the process.

In addition, we would like to thank the many produce associations and the Food Marketing Institute for working together to find common ground on what has been one of the more contentious issues facing the produce supply chain in many years. The next step will be to focus on the regulatory process at USDA as the Department develops the “rules of the road” to implement COOL in a way that provides useful information to consumers with minimal cost and negative impact on the total produce supply chain.

In politics, as in Train Surfing, timing is everything, and the fact that the Farm Bill came up in the aftermath of the Chinese food safety problems, which we dealt with many places including here, here, here and here defeated any chance of killing the bill.

Still the negotiations were mostly successful in eliminating the most egregious problems with the bill — although we don’t see any relief for fresh-cut manufacturers mentioned. This is a problem because blends can use product from different sources on different days, and fresh-cut processors will now have to either restrict their purchases or maintain stocks of many packaging iterations.

We were hoping for an allowance that packaging could contain a generic phrase such as “may contain product of Canada, Mexico, Italy and the United States,” but though the meat people negotiated some leeway on this, there is no mention of give in the produce category.

The real issue is how much work is going to be done for no benefit. Growers who have been pushing for this are going to be shocked at how little consumers care.

The reason is that geography is a feature and not a benefit, and features are a hard sell.

Yes, more than 70% of consumers say they want this information — which shows the kind of answers you get when you basically ask consumers whether they are concerned consumers who want information to make informed decisions or are they ignorant and lazy people who couldn’t care less. For the most part, this information will have no effect, and when it does have an impact, it will often tell you as much about people’s prejudices as about any nation’s food safety system.

In light of all the controversy over talks between PMA and United regarding a merger, one can’t help but get a chuckle out of these lines from the release:

Because our associations have worked closely on this issue for several years, we are issuing this joint information alert to members of both associations. We would like to publicly acknowledge the work of United Fresh in negotiating these agreements with other stakeholders in Washington, DC, and PMA in assessing the impact of various specific proposals considered throughout the process.

Of course, the associations deserve a high-five for working together and not duplicating effort, but still, the paragraph reads like a carefully choreographed scene from a Kabuki Opera with each party bowing to the other over and over again.

The COOL issue shows both that the line between marketing and government relations is blurry — which seems to add weight to calls for a merger and, also, that we did just fine with the two national associations, which argues against a merger.

But the battle over COOL left scars in the produce trade which may mean that things won’t go as smoothly next time. The initial falling out between United and WGA was, at least nominally, over the way COOL was handled.

In the aftermath of that fallout, many grower groups put together an ad hoc organization to keep an eye on events from the perspective of growers.

WGA’s new D.C. office, which we dealt with here and here can find its origination in the discussions held at that time in which growers talked about opening a D.C. office if United became insufficiently grower-oriented.

Although many thought that WGA and United had mended fences, the WGA Washington office is a lineal descendent of the battle over COOL.

United and PMA can co-exist because PMA does not lobby. PMA may provide information, and will review proposals; it will fund coalitions, but it doesn’t put a separate produce industry position before legislators.

Next time an issue like COOL has to be fought out, the lobbyists from United will say one thing and the lobbyists from WGA will say another — and WGA won’t be looking to agree with United, because then what is the point of having a DC office? WGA will be looking for ways to disagree with United because that establishes a need for the WGA office.

It is this division of the industry — between WGA and United, not the division between PMA and United — that threatens the trade’s “united” position on Capitol Hill.