Aquaculture Magazine

October/November 2015

With CoOL – be careful what you wish for

Every country has a sense of pride and, if given the opportunity, people will say that their country produces better product than any another. Given a question in a survey of ‘what country produces the best product’ people will nominate their own – surely that is human nature.

By Roy Palmer*

As a Fishmonger you know that you need to have a solid background to your discussions with consumers. Regrettably just saying it is local or domestic product when the price is higher is not a discussion you need to be involved in with the majority of your customers. There needs to be more to the story.

Surveys taken about consumer desires before they have purchased are soft, nice and fluffy but they are not worth anything. What consumers’ desires are as against what they actually purchased are irrelevant. What do consumers actually purchase? Evidence can be obtained from till rolls or surveys with consumers with their trolleys of paid-for goods. What do those surveys always show? They show that shoppers buy on price, then taste, then brand. Origin is nice to know but it does not appear in the surveys that are about the commitment when money changes hands.

Around the globe there are debates going on about CoOL (Country of Origin Labeling) and regrettably people come at the discussion with their hearts instead of their heads. Primary producers, especially the smaller operators in developed countries, have often seen CoOL as some sort of panacea to their wavering bottom lines. I have heard the debates in EU, USA and Australia.

Seafood is, without any doubt whatsoever, the largest traded food product globally. So seafood people should really understand how world trade works and what the rules are. If anyone has any doubt please check out World Trade Organisation (WTO) Agreement on Rules of Origin (https://www.wto.org/english/docs_e/legal_e/22-roo_e.htm).

If you are in a country that has a high dependence on imports for your seafood consumption (that, by the way, means most of the so-called developed world), a move to CoOL for your industry means massive change, extra work, extra costs, etc. for no guaranteed benefit.

The CoOL requirements have a convoluted history in the USA. The 2002 Farm Bill, and later the 2008 Farm Bill, amended the Agricultural Marketing Act of 1946 to require retailers, such as full-line grocery stores, supermarkets, and club warehouse stores, to inform consumers of the country of origin of various meats, fish, shellfish, nuts, fruits, and vegetables. Suppliers of covered commodities to retail establishments must provide the retailers with country of origin information. This information may appear on the product, on a master shipping container, or in a document that accompanies the product through retail sale. Importantly food service establishments, such as restaurants and cafeterias, are specifically exempt from CoOL requirements.

The laws in Australia are very similar but a massive push of recent date saw the seafood industry try to ensure the laws flowed onto food service establishments, such as restaurants and cafeterias.

The United States is surprisingly often on the wrong end of the WTO rules when it comes to CoOL. Earlier this year the WTO was forced to castigate the United States’ mandatory Country of Origin Labelling (COOL), highlighting that it violates international law. That ruling paved the way for Canada and Mexico to impose billions of dollars of retaliatory tariffs on US goods.

It is interesting to review why this judgement was made so that the seafood industry understands the issue. In 2009 the United States introduced mandatory Country of Origin Labelling. This was done in response to ‘small scale’ beef producers who believed consumers would support local product and pay more. You can see even here that, with that statement, the producers seemingly were not so much interested in looking after the consumers but themselves.

It seemed to only be a minority in the meat industry that was pushing the politics on this because it was reported that the US Pork president from Iowa told the House Agriculture Subcommittee that losing Mexican and Canadian markets valued at $2.4 billion could cost 16,000 American jobs. Additionally Professor Gary Brester from Montana State University’s Department of Agricultural Economics, who has written several papers analyzing the cost-benefit of country of origin labeling said consumers were not that interested in where their food was produced. “Since 2009 we now have data and the question is, ‘Do consumers pay more for US labelled beef products and how much more?’,” said Dr Brester. “The answer is they don’t pay any more. It sounds good, but the reality is the costs are higher than what consumers are willing to pay.”

The US Department of Agriculture following further investigations found the system had failed, and estimated CoOL had cost the beef industry $1.3 billion, the pork industry $300 million and chicken producers $183 million in label changing, meat segregation and auditing costs.

The report, commissioned by the US Department of Agriculture, concluded that the overall cost was $2.6 billion for all covered commodities; beef, pork, lamb, goat, chicken, fish, fresh and frozen fruits and vegetables, ginseng, peanuts, pecans, and macadamia nuts. Additionally it also found consumers were forced to pay more. So from this wonderful example it highlights that you have to be very careful what you wish for.

So if CoOL is not going to assist, what can be done?

A move by your domestic industry to produce to a quality standard and/or a home country promotion is likely a far better option as it would lift the domestic country in the eyes of the consumer and would, in turn, be a positive promotion activity.

Unlike with CoOL there is evidence from the Label Rouge (Red Label), a sign of quality assurance in France, which bears this out. Products eligible for the Label Rouge are food items (including seafood) and non-food and unprocessed agricultural products such as flowers. According to the French Ministry of Agriculture: “The Red Label certifies that a product has a specific set of characteristics establishing a superior level to that of a similar current product.”

Label Rouge is the only official quality mark which imposes specific standards for taste and is granted to products with flavour and quality superior to that of standard products in the same sector. Products are assessed against a detailed specification for sensory criteria by consumer panels and product experts in trials set up by independent and accredited laboratories. To ensure consistency Label Rouge is not awarded on a permanent basis and maintenance of a significant quality difference must be continually assessed through external audits and analyses.

As well as demonstrating full compliance with health and safety regulations, quality and production criteria relate to harvest, catch method, husbandry, production, processing and marketing. Every stage of production and distribution is implicated and controlled traceability is required throughout. In seafood there is much evidence that producers who have gone down this pathway are reaping the rewards, and striving for improvement in consistency in quality for our products should also be our aim.

Governments could engage with the industry, as they have in France, to enable this to happen and this would be a win for all, including the consumer. You can see Label Rouge information at http://www.aqualabel.fr/web2/index.php or https://youtu.be/ywYb9ahHjU8 (it is in French).

Happy Fishmongering!

THE FISHMONGER


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