16 July 2007

3 minute read

North America

There is talk of amending the mandatory country-of-origin labeling (MCOOL) law that is to take effect in September 2008. The law not only needs to be amended but it needs to happen quickly. Some of the animals that will be slaughtered after September 2008 are already on the ground.

The law as it stands will cost producers substantially without adding any benefits. Individual animal identification for cattle will be necessary to provide the paper trail required by the legislation. The law will also add cost at the slaughter plant because of the records needed for each wholesale cut from an animal.

When an industry has about 90 percent of the market and only 75 percent of the customers are willing to pay more for the domestic-produced product, there will be no premium.

One proposal that is being discussed is for all animals fed in the U.S. to be labeled "product of the U.S." Any slaughter-ready animal imported to be slaughtered would be labeled "product of country X, slaughtered in the U.S." This change would be more important to the cattle industry than the hog or sheep industry because of the structure of the industries. There is so much commingling of cattle that the law would require individual animal identification for cattle.

Short of outright repeal of the law, the proposed change to permit animals fed in the U.S. to be labeled as a product of the U.S. is the next best option for the total industry.

Again, any payoff to producers by getting a higher price for U.S.-produced product is near zero, and even the possibility that it would slow or stop fewer animals from Canada and Mexico from being imported is very speculative as to the outcome. Therefore, the odds are near 100 percent that the industry would incur major increases in costs without any significant opportunity for higher prices for the product. How much value consumers get from knowing what country a product comes from is not clear. But, for this information to be valuable to consumers, they must have confidence in the accuracy. It is obvious that this information, as the law is now written, will be expensive.

The weighted average live price for fed cattle through Thursday was up $3.25 per cwt for the week at $89.75 per cwt. The weighted average wholesale price for the five-market area at $141.85 per cwt was up $5.85 per cwt from seven days earlier.

Wholesale beef prices Friday morning showed Choice beef at $143.33 per cwt, up $3.73 per cwt from seven days earlier. Select beef was up $3.69 per cwt at $137.25 per cwt from a week earlier Friday morning.

Feeder steers and heifers at Oklahoma City this week were $3-5 per cwt higher than last week. Steer and heifer calves at Oklahoma City were $1-2 per cwt higher than seven days earlier.

The prices by weight groups for medium- and large-frame number one steers this week at Oklahoma City were: 400-500 pounds $127-145 per cwt, 500-600 pounds $117-139 per cwt, 600-700-pound calves $113.25-119.50, 600-700-pound yearlings $117-127.75 per cwt, 700-800 pounds $111-117.75 per cwt, and 800-1,000 pounds $103-114 per cwt.

Slaughter this week under Federal Inspection was estimated at 672 thousand head, down 3.2 percent from 12 months earlier.

TheCattleSite News Desk