By Ben Lilliston, Institute for Agriculture and Trade Policy
Food companies have a long history of keeping consumers in the dark about the origins of their food. But outright deception is another level of darkness. There are strong signs that global meat companies are taking advantage of a loophole to label imported beef, particularly grass-fed, as “Product of U.S.A.” That practice is hurting consumers, ranchers and our planet. The U.S. Department of Agriculture (USDA) is accepting public comments on whether they should close the loophole that allows the big meat companies to rig the grass-fed market and instead, restore fairness and transparency to our food system.
Grass-fed beef is one of the few positives in a worsening agriculture economy. One hundred percent grass-fed beef sold under a third-party certified label offers ranchers up to a 50 percent premium for those who sell directly, and up to 25 percent for those who sell into supply chains, according to the Stone Barns Center for Food and Agriculture. There are now an estimated 3,900 grass-fed cattle producers, up from just 100 in 1998.
Retail sales of grass-fed beef are doubling each year, growing from $17 million in 2012 to $272 million in 2016. U.S. consumers are seeking out grass-fed beef for a variety of reasons, including health. Grass-fed beef has a significantly better omega-6 to omega-3 fatty acid ratio, a higher concentration of conjugated linoleic acids (CLAs) and higher levels of antioxidants. Grass-fed also has a lower risk of E. coli infection and antibiotic-resistant bacteria.
Some of the big global players in the meat industry like JBS, Perdue and Cargill have invested in the grass-fed sector. Brazilian-owned JBS has operations in Australia among other countries that allow it to be a major grass-fed importer into the U.S. Cargill also has significant grass-fed beef investments in Australia to import grass-fed beef.
In recent years, U.S. grass-fed ranchers have faced increased competition from imports. An estimated 70-80 percent of grass-fed beef on the U.S. market is imported, with an undetermined portion deceptively labeled as “Product of U.S.A.”
How is this possible? Under current USDA rules, beef that is born, raised and slaughtered in another country, but processed in the U.S., can be labeled as “Product of U.S.A.” The rising use of this loophole can be traced to the Congressional decision to eliminate mandatory Country of Origin Labeling (COOL) for meat in 2015.
While a requirement to establish rules for mandatory COOL was first approved in the 2002 Farm Bill, the meat industry launched a series of legal challenges, lobbying efforts and supported two trade disputes at the World Trade Organization (WTO), both of which determined that U.S. rules on COOL constituted a barrier to trade. Congress then passed legislation to repeal mandatory COOL in the fall of 2015 and USDA finalized the repeal in February 2016.
Now meat companies follow voluntary labeling rules and there are concerning signs that some have taken advantage of the “Product of U.S.A.” loophole. Allen Williams, a 6th-generation rancher and founding partner of Grass Fed Insights, a leading consulting group on grass-fed beef, told The New Food Economy that U.S. producers owned more than 60 percent of the domestic grass-fed market in 2014; today American producers claim only about 15 percent of the grass-fed market.
Australia, Canada and New Zealand were the top three sources of beef imports into the U.S. in 2014-2015. Australia and New Zealand, with their moderate climates, are home to year-round grass-fed beef production systems. Much of the grass-fed imports from Australia and New Zealand include final processing in the U.S., according to the USDA. Such processing would allow that beef to be labeled “Product of U.S.A” under current rules.
Polls have repeatedly shown that American consumers want to know where their food comes from. A 2010 Consumer Reports poll found that 93 percent of Americans want mandatory Country of Origin Labeling on their meat. A 2016 survey by Consumer Reports found that 74 percent want to know the state of origin of their food.
The undermining of the U.S. grass-fed market goes beyond ranchers and consumers – there is growing evidence of significant environmental benefits from sustainably managed grass-fed systems. Sustainably managed grazing can build soil health for greater fertility and water-holding capacity, increase biodiversity, promote pollinators, and help reduce nutrient runoff and water pollution. Incorporating forages and ruminants into regeneratively managed agroecosystems can also minimize the damage of tillage and inorganic fertilizers and pesticides, and enhance biodiversity and wildlife habitat. Reduced costs associated with fertilizer and pesticide inputs, together with the income from the pasturage fees, makes the next crop less expensive to grow and increase profitability. Such grass-fed systems also can reduce environmental damage to water and the environment connected to grain animal feed production and giant feedlots of conventional beef production. Finally, there is emerging evidence that sustainably managed grazing systems can benefit the climate.
The USDA is accepting public comments on the petition through August 17. IATP has submitted its comments in the support of the petition. Please take a few minutes to comment to the USDA to stop this deception of consumers and harm to grass-fed producers – restore transparency in our food system.