New Country of Origin Labeling Law

Q&A on New Country of Origin Labeling Law with United Fresh Produce Association SVP of Public Policy Robert Guenther

United Fresh has published a new guide on how to comply with the country of origin labeling law (COOL) that went into effect September 30, 2008. Robert Guenther, Senior Vice President of Public Policy for United Fresh, discusses some of the key issues of the USDA’s Interim Final Rule (IFR) and how it will affect the produce industry in the following Q&A.

Q: Can you provide some background on the country of origin law?
A: Since legislation mandating COOL became law with the 2002 Farm Bill, United Fresh has worked intensely with the USDA and congressional leaders to ensure the regulations developed to implement the law were fair, practical and cost-effective for the produce industry. Because of concerns about the regulatory burden of the 2002 law, the effective date of this law, originally due to go into effect September 30, 2004, has been delayed twice by Congress until September 30, 2008. All stakeholders in the COOL debate in Congress reached agreement on important revisions to the 2002 law. These revisions are contained in the 2008 Farm Bill legislation, which became law on June 18, 2008 (P.L. 110-246).

The USDA has provided a 60-day comment period for the IFR. United Fresh will prepare comments to the USDA on the IFR and welcomes additional feedback.

Q: What does the new guide cover?
A: The new guide discusses important issues regarding the IFR for the produce industry, including recordkeeping and labeling requirements. The guide also makes recommendations to United Fresh members, including wholesalers and distributors. The 2002 and 2008 Farm Bills together outline the list of covered commodities to which country of origin labeling applies: whole muscle cuts, ground beef, pork, lamb, chicken and goat meat; perishable agricultural commodities; fresh and frozen fish and shellfish; and peanuts, pecans, macadamia nuts and ginseng. Under the rule, perishable agricultural commodities also include fresh and frozen fruits and vegetables.

Q: Who will benefit from the new guide?
A: The entire distribution chain for the produce industry – from growers to retailers –will benefit from the new guide. Proactively managing the supply chain is the key to COOL.

Q: Who developed the guide and why?
A: The guide “What You Need to Know Now About Complying with Country of Origin Labeling Rule” has been prepared by the United Fresh Produce Association to help industry members understand, as well as prepare for compliance with COOL rules. COOL for produce is part of a larger labeling law for meat and other products, this guide, however, was developed to focus on the produce implications. Industry also provided feedback on the guide.

As of September 30, 2008, all fresh produce sold in retail stores in the United States must comply with a mandatory COOL rule. For produce, this means products that are harvested before September 30 will not be required to comply with new COOL regulations. All supply chain partners are encouraged to work together to understand the USDA rule and take steps now to reduce total supply chain cost, as well as minimize potential for market disruption.

Q: What is the timeline for enforcement on the IFR?
A: The USDA has indicated there will be a six-month education and outreach program regarding the provisions and requirements of the rule following September 30. Although it is unlikely that USDA will inspect individual retail stores for compliance while focusing on education, industry should work diligently to comply with the regulation during this period.

Q: What are some of the most significant changes under the IFR?
A: Two of the most significant changes deal with state labeling and recordkeeping. State labeling (i.e. Idaho potato, Washington apple) is now allowed and unnecessary recordkeeping has been minimized. The IFR permits state, regional or local labeling in lieu of country of origin for perishable agricultural commodities of U.S. origin, as well as imported products.

Just as it is important to understand what COOL is, it is important to know what it is not. COOL is NOT a food safety law. Produce can be grown safely in countries around the world, or it can be grown without regard to good agricultural and handling practices. That is not dependent upon a sticker or a label, but upon the commitment of the persons handling that product throughout the distribution chain.

Here are the specifics:

Retailers
USDA “encourages retailers to use placards and other signage as a way to more clearly indicate information to consumers as to the origin of the covered commodity.” Retailers will not be liable for misinformation provided by suppliers. The IFR also removes the requirement for retailers to retain records at store level and expressly states that records may be maintained at any location, not just at store level. Under the IFR, retailers and suppliers have within “5 business days” of a request to either send records to USDA electronically or by fax. The retailer and supplier are required to maintain records for a period of one year after the origin declaration was made at retail.

Suppliers
For suppliers, the IFR states that for pre-labeled products, the label itself is sufficient evidence on which a retailer may rely to establish the product’s country of origin. In addition, suppliers are required to maintain a record of the immediate previous source and the immediate subsequent recipient of the product that is pre-labeled with country of origin. For non pre-labeled products, these records must indentify the country of origin of the products. The supplier must maintain records that identify the covered commodity for a period of one year from the date the origin declaration was made at retail.

Imports
For an imported covered commodity, the importer of record as determined by Customs and Border Protection (CBP) must ensure that records provide clear product tracking from the United States port of entry to the immediate subsequent recipient. The records must also accurately reflect the country(ies) of origin of the item as identified in relevant CBP entry documents and information systems. The records must be maintained for a period of one year from the date of the transaction.

Food Service Establishments
Food service establishments are exempt from the country of origin labeling requirements. Food service includes salad bars and delicatessens operated at retail stores.

Additional information regarding the specific requirements for COOL and recordkeeping can be found in the white paper.

Q: Who is responsible for enforcement?
A: USDA is the only agency that can initiate enforcement actions against a company found to be in violation of the law. The IFR notes that the USDA must determine that the retailer or supplier has not made a good faith effort to comply with the law. The IFR also allows for a 30-day period in which retailers and suppliers may take the necessary corrective action after receiving notice of a nonconformance. Civil penalties are limited to $1,000 for each violation. The law is clear that the retailer or supplier is not subject to fines unless the Secretary determines they have willfully violated the statute related to false information about COOL.

Q: How will COOL be demonstrated to consumers?
A: The IFR states that the USDA will permit country of origin to be demonstrated to consumers in a variety of ways, including a label, placard, sign, stamp, band twist tie, pin tag or other clear and visible sign on the covered commodity or on the package, display, holding unit or bin, as long as it is legible and conspicuous. In addition, country of origin can be provided in three ways: (1) a statement (e.g., produce of the U.S.); (2) country name only (e.g., U.S.); or (3) use of a checkbox.

The new white paper, "What You Need to Know Now about Complying with Country of Origin Labeling Rules" is available for downloaded at www.unitedfresh.org.

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