Industry reacts to new USDA ‘Product of USA’ rules

Tuesday, September 24, 2024

‘Pork producers, retailers & processors in the U.S. weren’t asking for this.’

By Matt Jones

The U.S. Department of Agriculture (USDA) recently announced a rule change regarding the voluntary ‘Product of USA’ or ‘Made in the USA’ labels on meat, poultry and egg products. The rule change will come into effect in 2026, but in the meantime, pork producers on both sides of the border have expressed concerns that the regulations could disrupt supply chains and negatively impact businesses in the sector.

The new rules state that to use one of the labels in question, all products contained therein must be derived from animals that are born, raised, slaughtered and processed in the U.S.

On the surface that seems simple enough, however, concerned parties have noted that the pork sectors of the U.S. and Canada are highly integrated, with feeder animals and weanlings often being supplied to U.S. operators by Canadian producers. Under the rules as they currently stand, the ‘Product of USA’ label can be used as long as the “last major transformation” of the product occurred in the U.S. – for example, a pig raised on a Canadian farm and processed in the U.S. can be identified as a ‘Product of USA.’

“You could go into a Costco store pretty much anywhere in Canada and if you look at their pork products, they’re all ‘Product of USA,’ and that isn’t discriminating against the Canadian live shipments of pigs into the U.S.,” says Cam Dahl, general manager at Manitoba Pork. “Because if you ship a weanling to the U.S. and it’s raised in the U.S., that is still eligible. In Manitoba alone, we ship three million weanlings into the U.S. every year. And when the new rule comes into effect, they are going to be discriminated against.”

Ostensibly, the rule change is intended to protect U.S. products and consumer confidence, but Dahl notes that such “protectionist” measures could hurt both sides with few benefits. For one thing, even with agreements such as the United States-Mexico-Canada Agreement (USMCA) easing the process of crossing the border, if U.S. producers are sourcing their weanlings from Canada rather than a domestic source, they are obviously doing so for a reason.

“Pork producers in both Canada and the U.S. benefit from an integrated market,” says Dahl. “That means that consumers on both sides of the border benefit from an integrated market as well.”

Executive director of Alberta Pork, Darcy Fitzgerald, adds that it is not solely Canadian producers who are concerned.

“Pork producers, retailers and processors in the U.S. weren’t asking for this for the pork industry,” says Fitzgerald. “This is not our issue; we’re so integrated in what we do. It’s one of those things that just becomes a hindrance for the industry. And it’ll be a cost onto the consumer as well.”

From Fitzgerald’s perspective, the label makes little difference. When Canadian and U.S. products are sold side-by-side, the consumer is concerned with price and quality of the product.

“In North America, we do have this integration between our three countries, with free-trade agreements,” says Fitzgerald. “We’re pretty unique in the world in what we do and how we work together. And when we delve into the subject, we see that there really is no problem in the industry. Retail, processing, producers are all working together trying to provide an affordable product that’s sustainable.”

Dahl notes that while the rule won’t come into effect for another year and a half, his producers are already getting indications from U.S. processors that they don’t want to take pigs that were born in Canada.

“It’s two years away, but we’re already getting those indications that it’s going to be a problem,” says Dahl.

The concern over the changes is not limited to the northern side of the border. The U.S. Meat Export Federation (USMEF) stated, in comments to the USDA attributed to president and CEO Dan Halstrom, that they are concerned that the changes would negatively impact the U.S. industry on several fronts.

Under the proposed rule, “packers would then be required to sort specifically for Product of USA, requiring only domestic livestock for the product that will circulate in the domestic market but might be bound for export,” reads their statement. “The intent of the rule was to not impact exports, but the opposite is true because the proposed rule contradicts current Product of USA labelling that is mandatory for export, which would lead to the need for product segregation. At the time of production, it is often unknown whether product will be sold on the domestic or international market. It is therefore not feasible to have different labelling schemes for domestic and export boxes.”

A representative for USMEF further explained that the impacts on individual pork producers in the U.S. would likely depend on how their processor chooses to deal with the labelling requirements.

“Because Product of USA is a voluntary labelling claim, some processors may see value in documenting the fact that all animals were born/raised/slaughtered in the United States,” said USMEF vice-president of Communications Joe Schuele. “Others may decide that the labelling claim does not justify the additional costs, and therefore continue their current practices for sourcing animals. So, it is difficult to make any general statements about the impact on producers, because each situation is different.”

A spokesperson for the USDA’s Food Safety and Inspection Service responded to an inquiry noting that the proposed rule prevents misleading labelling but does not restrict them from any other type of labelling if it is truthful. They also noted that approximately 12 per cent of all meat, poultry and egg products have a U.S. origin claim, meaning that a significant majority of products would not be impacted by the rule change.

“USDA has a strong commitment to our USMCA partners and to keeping trade open in North America,” reads the statement. “USDA will continue to engage with our trading partners on our international trade obligations and work cooperatively with trading partners to address any questions or concerns they might have.” BP