Country-of-origin Labeling

Food manufacturers and suppliers are motivated by profits to be innovative in satisfying consumers' demands. At any given time, when shopping at a grocery store, U.S. consumers may observe new food products that retailers hope will entice. Some are very different from what we are used to—an unfamiliar vegetable or fruit, for example—while others are more modest innovations such as a low-fat variety of an existing product.

Food suppliers can voluntarily label their products with country of origin. Generally, they have not emphasized, advertised, or labeled food made in the United States, because they discount this attribute's potential to attract sufficient consumer interest. Demands for mandatory country-of-origin labeling have sparked considerable controversy. But mandatory labels are unlikely to increase food demand and likely will generate more costs than benefits.

Country-of-origin Labeling: Theory and Observation examines the U.S. food sector’s voluntary use of country-of-origin labels and mandatory country-of-origin requirements in the Farm Security and Rural Investment Act of 2002 (Farm Bill). It finds that making country-of-origin labeling (COOL) provisions mandatory would likely generate more costs than benefits. COOL would raise labeling, recordkeeping, and operating costs for many suppliers of food commodities and livestock. While the costs are likely to vary considerably from sector to sector and firm to firm, some of that cost will likely be passed on to consumers in the form of modestly higher food prices.

Congress incorporated COOL in the 2002 Farm Bill, which specified mandatory labeling rules by September 30, 2004. However, in response to growing criticism, Congress has now agreed to delay COOL for 2 years to revisit some of the legislative requirements and perhaps make COOL voluntary. Unless the law is changed, retailers will be required to identify red meats (beef, lamb, and pork), fish and shellfish, fresh and frozen fruits and vegetables, and peanuts from the United States, from another country, or from mixed origins. The 2-year delay will apply to meats, produce, and peanuts but not to fish.