Industry group says new labeling system is overburdensome and may result in job loss

Capital Press Staff Writer

3/20/03 - Leaders of the American Frozen Food Institute are warning that the new voluntary “country of origin” identification program for food products sold in the United States are overburdensome and may result in unintended consequences that harm the industry, including job loss for American workers.

In addition, consumers don’t really want it, according to a “white paper” outlining recent case studies, consumer research and industry perspectives on the issue.

The AFFI paper, presented during the organization’s 2003 Western Frozen Food Convention in San Diego, urges Congress to “hold hearings to identify actions necessary to mitigate the negative consequences” of the country of origin policy, which although voluntary now, is slated to become mandatory in 2004.

About 1,200 people attended the February AFFI conference — “Fresh Ideas Exclusively Frozen.”

“It is AFFI’s view that the severity and validity of the feared consequences necessitate remedial actions, potentially including repeal of the new country of origin marking scheme,” according to a statement issued by the 60-year-old national trade organization, which includes 525 corporate members, which AFFI says represents more than 90 percent of the frozen food production in the U.S.

The paper argues that the use of domestic ingredients by American companies may require label marking requirements that are more cumbersome and cost-prohibitive than what would apply if the products were processed in other countries, or contained no domestic ingredients.

“The new marking scheme is seriously broken,” said Leslie G. Sarasin, president and chief executive officer of AFFI. “It needs to be fixed.”

The paper acknowledges that supporters of the USDA country of origin marking provisions will continue to argue that the “costs and consequences” of the new program won’t be as dire as critics suggest — and that they will accuse the food industry of “crying wolf.” But while the marking program may not itself drive processors out of business, when added to other regulatory requirements and market disadvantages that U.S. food companies face, the scheme could become “the straw that breaks the camel’s back” for some, according to the paper.

Kelly Brown, executive vice president for Smith Frozen Foods in Weston, Ore., said any time labels need to be changed, a “conservative estimate” is that the process will cost his company around a half million dollars in reworking and redesign expenses.

Brown said his company processes a lot of vegetables — peas, carrots, lima beans, corn — for other companies under their brand labels. He worries that even if the new USDA labeling requirements don’t do severe and “onerous” economic damage to the Smith operation directly, Smith Frozen Foods Inc. can’t escape the cost burdens that impact the company’s clients.

“I don’t know that the regulations help any more than what the current regulations do,” Brown said. “I’m assuming that the push on this is to make us as a nation more safe, but I’m not at all convinced that’s what this will do.”

If the country of origin marking guidelines are made mandatory, they likely would have “significant unintended consequences on members of the frozen food industry who process and distribute frozen produce and frozen seafood products,” according to the AFFI paper.

Among the top concerns, the marking program will lead to increased sourcing of some products from abroad and to decreased sourcing of domestic products — and will entice processors to relocate domestic manufacturing facilities to locations abroad.

“These consequences are ironic given that the intent of new labeling regulations was to aid U.S. agriculture,” the paper’s authors wrote.

The AFFI study argues that even in voluntary country of origin marking program is “not suitable” in its current form, and that problems will only be worsened if it becomes mandatory. The new country of origin marking program is not as attractive in practice as it was advertised in theory, said Sarasin.

That the program provides a disincentive for frozen food companies to locate blending facilities within the United States is a common concern among American food processors, according to the study. Only about six percent of respondents to the industry surveys indicated such potential consequences were of no concern to them.

“The potential for job loss, real concerns on the part of consumers and second thoughts on the part of stakeholders outweigh any clamoring for a ‘damn the torpedoes, full speed ahead’ approach to policy-making,” said Sarasin.

At the very least, AFFI argues that “elimination of the duplicative marking requirements on food products” is an absolute must.

The AFFI paper — available at online at — includes descriptions of the treatment of various food products under the new marking scheme, and also includes the results of a recent consumer survey conducted independently for AFFI by Opinion Research Corporation in January 2003.

According to the consumer survey, less than one percent of those who took part indicated that the “country where a product is from” is of great importance to them when they make a purchase.

Price, taste, brand, quality and nutritional value are the most important elements that motivates consumer buying. That study noted that a similar market inquiry in 1996 revealed much the same information on consumer preferences.


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