COOL is Here.

With the Country of Origin Labeling Law going into effect this week, there is confusion over interpreting the law, how exactly to comply, and where to find the correct information. This week we will focus on some of the new information coming out as the deadline approaches.

The Arizona Daily Star has a great refresher course of the law and how it will affect consumers and wholesalers alike. You can also read our previous post, Are You Ready for COOL? for the fundamentals of the labeling law.

Even though they have had over six years to fix the matter, people are finding loopholes within the law and lawmakers are expected to address them in the next few days. The Alexandria Echo Press elaborates:

The farm bill language explicitly states exclusively born, raised and processed U.S. animals cannot be used in the multiple country category (category 2). This loophole allows packers to use the label intended to be for U.S.-born, raised and processed animals on products that are mixed with animals from other countries.

The Madison Daily Leader continues:

The COOL start-up will not take place without some last-minute concerns expressed by 31 U.S. senators, including Sen. Tim Johnson, D-S.D., who issued a press release on Thursday. The senators asked Agriculture Secretary Ed Schafer to review the department's COOL policies and correct some possible loopholes in the labeling program.

The 31 senators asked Schafer to revisit several COOL policies, starting first with a USDA rule that could allow meat packers and processors to combine U.S. meat with meat from animals that were produced in foreign countries. The bipartisan group of senators was concerned that processors could still label the product as U.S.-produced.

Despite the attempt to fix the loopholes, some argue that the new law does not go far enough. RedGreenandBlue.org presented their list of five flaws in the COOL law. Number one on the list was concern over pet food:

The law does not apply to pet food. In 2007, contaminated gluten and rice protein from China was used to make pet food, resulting in the death of thousands of dogs and cats across America. The food was also used to feed pigs, chickens, and farmed fish which entered the human food supply, but no illnesses were reported. The same pet food would be exempt from the new labeling because only the ingredients were imported, not the final product. Mixtures do not apply under the law— not even fruit salad.

At PacFoods, we have spent the past few weeks reading ourselves for the new law. Here are our top three choices for the best places to find information:

1) The AMS Powerpoint presentation (clicking this link will download the presenation directly onto your computer) on the new law is a quick, easy to navigate presentation that strips the confusing legal jargon from the law and makes it easy to understand.

2) Write the USDA directly at COOL@usda.gov. As a food distributor, it was important to know how the law affected our business. The response time was under a week, and they were able to clearly answer our questions.

3) The Frequently Asked Questions PDFs on the AMS website are updated often and also clearly break down the rules in understandable terms.

How do things look at the end of a dark week?

This week everyone watched as the financial crisis caused a massive tumbling of stocks, only to see the market recover on news of a $700 billion bailout by the government to take over the bad debts that started the rapid decline. While the proposal still needs to be passed by Congress, just the news that someone was working on fixing things sent stocks soaring.

Commodities specifically saw a jump. Marketwatch reports:

Corn for December delivery rose 15 cents, or 2.8%, to $5.42 a bushel on the Chicago Board of Trade. It rallied to an intraday high of $5.48 a bushel earlier. Despite the gain, corn ended the week down 3.7%.

Boosting corn prices was the Bush administration's sweeping plan for isolating financial institutions' troubled mortgage-backed assets. Congressional leaders promised quick work toward a legislative solution.

Insiders at Forbes cited potential inflation increases for the gain:

One trader said grains were drawing investors concerned that the government's injection of billions of dollars into the financial markets could lift inflation.

"It's all about inflation today, screaming inflation and it's bullish for all commodities including grains," said Vic Lespinasse, analyst for GrainAnalyst.com.

"The government action is inflationary," he said, adding that the favorable crop weather in the U.S. Midwest grain belt was an otherwise bearish factor for grains.

Not all news has such as bright a silver lining as the bailout plan. The Des Moines Register reports unsettling news about the corn and soybean supply:

Washington, D.C. - The food-vs.-fuel debate isn't going away, even if this year's corn and soybean crops averted disaster.

Assuming the government's latest crop forecast is right and this fall's corn and soybean harvests are sufficient to meet demand, stocks of corn and soybeans are still expected to fall to historically low levels. That's even as biofuel production and global grain consumption are likely to keep growing.

Corn supplies are projected to fall by one-third to just more that 1 billion bushels, or about one month's consumption, when harvest starts next fall. Supplies could be even tighter; many analysts think the latest production forecast is overly optimistic.

Did last week's financial crisis impact your business? Does it impact your future plans? Leave a comment and let us know.

Further Reading:

CNN on The Week that Broke Wall Street

CNN on the bailout proposal

Des Moines Register on how higher food prices can benefit global warming and US waistlines.

Des Moines Register on how a professor is using science to yield bigger corn crops.

The Wall Street Journal on the FDA ruling for genetically altered food labeling.

Were low prices just a summer vacation?

The two main factors behind food prices, corn and oil, took hits this week that could increase food prices into the winter.

First, while the country begins the rescue and recovery of those affected by hurricane Ike, market watchers are seeing the first signs of the impact Ike will have on the nation's business sector. The hurricane caused about a fifth of the nation's oil refineries to be shut down. These refineries accounted for 20% of the national's oil. While some Texas residents saw prices spike as high as $5.00 a gallon, experts do not think the entire country will see prices get that high. There is also hope that if oil remains low and that the refineries get back to production quickly, we could see prices fall. MSNBC Reports:

(Tom) Kloza (with the Oil Price Information Service) said prices are more likely to be higher throughout the Southeast because they get fuel from Gulf refineries. He expects nationwide prices to begin falling later in the fall, perhaps as low as $3 a gallon by year's end, based on current oil prices of about $100 per barrel.

Secondly, despite news that this year's corn and soybean crop will still be some of the largest on record, the Agricultural Department trimmed its projections. The New York Times Reports:

The Agriculture Department reduced its forecast for corn production to 12.1 billion bushels, from its 12.3 billion estimate last month. The department projected the soybean crop to be slightly lower, at 2.93 billion bushels, down from an earlier estimate of 2.97 billion.

The news caused corn and soybean futures to rally, with corn taking more than a 5% increase, to end at $5.63 per bushel. The report was issued before the markets opened on Friday, causing major meat producers such as Tyson and Pilgrims Price to suffer stock losses in the morning. By the end of the day, however, most major companies had recovered. You can read more about how the report affected companies via Forbes.com.

How bad is the news? The Chicago Tribune reports that it is not just the trimmed projection, but the details of the report that could potentially have negative affects:

The report indicated that dry weather in August is taking a toll on production, just as lower prices kicked up demand for corn and soybeans. As a result, the harvests might not be large enough to replenish corn and soybean stocks going into next year.

That is certain to put pressure on food industry manufacturers and consumers, who are contending with higher prices for everything from milk to steak.

With demand for corn and soybeans up next year, farmers will have to choose which crop should cover the majority of their fields. Much of that choice will boil down to which crop generates the highest profit, which will be decided largely by prices in the futures market.

"We're going to have a huge battle for acres next year," said David Hightower, editor of the commodities newsletter The Hightower Report.

Further Reading:

MarketWatch on Friday's corn rally.
NPR on Ike and the oil refineries.
The Wall Street Journal on the soybean stockpile worries.

Picture by Noel Zia Lee. The original can be seen here.

Are you ready for COOL?

COOL is the country of origin labeling law that was enacted in 2002, but delayed repeatedly, until the 2008 Farm Bill expanded the categories of food that needed to be labeled. The final date was set for mandatory implementation on September 30th of this year. From NewswireToday.com:

The Country of Origin Labeling law (COOL) will become effective on September 30, 2008. All Cool covered commodity, livestock, produce, fowl, fish, shellfish, nuts and peanuts will have a means of traceability records for the AMS USDA COOL Law. Retailers have to provide to consumers the country of origin, by a label on the package or be fined $1000.00 per item. These retail markets will not purchase products which are not compliant with the COOL law, and they can audit your records if you are producer/grower or a packer-shipper. Any person engaged in the business of supplying a covered commodity to a retailer, whether directly or indirectly, must maintain records to establish and identify the immediate previous source in the food chain.

If you weren't confused already, they also just threw in one more rule. Meat AMI explains:

The U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) has issued an interim final rule (IFR) allowing for generic approval of changes to meat and poultry product labeling necessitated by mandatory country of origin labeling (COOL). To be consistent with the COOL statute and the Agricultural Marketing Service (AMS) IFR published on August 1, 2008, the FSIS IFR also will become effective on September 30, 2008, and its provisions do not apply to covered commodities produced or packaged before September 30, 2008.

Because many meat and chicken products are covered commodities under COOL, FSIS is amending its regulations to 1) provide that adding country of origin labeling statements to comply with the AMS IFR will be considered to be generically approved and 2) require that a country of origin statement on the label of a meat or poultry product that is a covered commodity to be sold by a retailer must comply with the AMS’ interim final rule.

So how do you know if you need to be COOL ready, or if you are buying from a COOL compliant company? Where do you start? I suggest begenning at the scource: the AMS has very comprehensive training materials you can download directly from their site by clicking here, including training presentations, exams, and quizzes. They also have a lengthy but informative pdf of questions and answers you can find here.

Also in the works in a new site called countryoforiginlabel.org. While they do not have all of their information up yet, look to this site in the coming weeks for information and help understanding and implementing COOL.

Finally, The Cattle Network has a breakdown of the changes from the 2002 Farm Bill that will be part of the 2008 COOL program, including that differences in foods that are covered.

Further Reading:

Wisconsin Ag Connection on the Interin Final COOL rule.

Americans For Country of Origin Labeling

The Beef Association overview of COOL, including a timeline.