1. Overview of Title XI: Livestock Four C’s for Livestock Bradley D. Lubben Extension Public Policy Specialist University of Nebraska-Lincoln

2. 4 C’s for Livestock u COOL u Competition u Conservation u Commodities Copyright NRCS

3. A Brief History of COOL u Legislative hearings and research since the 1980s u 2002 Farm Bill l Mandatory COOL by September 30, 2004 u 2004 Appropriations l Delayed M-COOL until September 30, 2006 except for fish and shellfish u 2006 Appropriations l Delayed M-COOL until September 30, 2008 u 2008 Farm Bill l Foregone conclusion that M-COOL would be implemented on September 30, 2008 l Political debate over compromise legislation for implementation

4. Initial COOL Rules §10816 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 1621 et. seq.) u Labeling required on origin for covered commodities l Muscle cuts and ground cuts of beef, lamb, and pork l Wild and farm-raised fish and shellfish l Fresh and frozen fruits and vegetables l Peanuts u Labeling required at retail l Retailer defined by Perishable Agricultural Commodities Act as retailer with at least $230,000 invoice value of perishable agricultural commodities (fresh and frozen fruits and vegetables) u Verifiable recordkeeping system available for audit u Penalties for violation of COOL

5. COOL Rule Changes §11002 of the Food, Conservation and Energy Act of 2008 u Adds goat meat, chicken, ginseng, pecans, and macadamia nuts u Revises label designation for beef, lamb, pork, chicken, and goat meat l Muscle cuts Product of U.S. – born, raised, and slaughtered in U.S. Product of [foreign country] and U.S. – imported for slaughter Product may be of [foreign country(ies)] and U.S. – multiple countries of origin Product of [foreign country] l Ground product Product may be of [foreign country(ies)] and U.S. – all possible countries of origin u Adds grandfather clause l Animals present in U.S. as of July 15, 2008 are designated to be of U.S. origin

6. COOL Rule Changes §11002 of the Food, Conservation and Energy Act of 2008 u Revises recordkeeping l “Records maintained in the course of the normal conduct of the business of such person, including animal health papers, import or customs documents, or producer affidavits, may serve as such verification.” l “The Secretary may not require a person that prepares, stores, handles, or distributes a covered commodity to maintain a record of the country of origin of a covered commodity other than those maintained in the course of the normal conduct of the business of such person.” u Revises penalties l Upon violation, 30-day period to comply l $1,000 per willful violation after 30 days

7. COOL Rule Implementation and Implications u Interim final rule expected near end of July for September 30 implementation u Recordkeeping for livestock producers effectively starts July 15 l Animal identification with the U.S. “840” tag in National Animal Identification System may be safe harbor designation of U.S. origin

8. COOL Rule Implications u Recordkeeping requirements for livestock producers set by market l USDA recordkeeping requirements established for suppliers of covered commodities subject to audit Meat from retailers, wholesalers, and processors Not animals from producers l Retailers, wholesalers, and processors will determine what records they require of upstream suppliers, including producers u Mandatory labels may provide little information to consumers if there is no segregation and all labels say “may be of” u Questions remain l Costs of labeling, segregation(?), and recordkeeping l Consumer willingness to pay l Market differentiation of COOL or of COOL with other process attributes l Welfare impacts across consumers, producers, and marketing system

9. Competition u Competitive markets l Electronic access to information from Livestock Mandatory Reporting Act (§11001) l Amends definition of “association of producers” in the Agricultural Fair Practices Act (§11003) l Oversight of USDA enforcement of Packers and Stockyards Act (§11004) u Contracting l Production Contracts (§11005) Producer right to cancel poultry and swine contracts for not less than 3 days Conspicuous disclosure of additional capital investments that may be required in poultry and swine contracts Choice of law and venue for poultry and swine contract dispute litigation Mandatory arbitration clauses cannot be mandatory part of livestock or poultry contracts l Establishment of criteria defining reasonable time for remedy of breach of poultry or swine contracts (§11006) u No packer ban l Senate proposed language banning packer ownership, feeding, or control of livestock l Language removed in conference

10. Conservation u Working lands programs l CSP – livestock issues in resource concerns or conservation activities l EQIP – 60% of funds target to livestock production practices u Reserve programs l CRP – management of expiring acres – share to grazing land u Preservation programs l GRP Copyright NRCS

11. Commodities u Commodity programs for wool, mohair, and honey l Non-recourse marketing assistance loans reauthorized at existing rates Wool - $1.00/lb graded, $0.40/lb non-graded Mohair - $4.20/lb Honey - $0.60/lb l Loan rates increased for graded wool and honey in 2010 Graded wool - $1.15/lb Honey - $0.69/lb u Other commodity programs and policies l Farm income support programs l Insurance and disaster assistance programs l Energy programs and policies

12. Other Issues u National Sheep Industry Improvement Center funding (§11009) u Animal health l Trichinae Certification Program to improve export marketability of pork (§11010) l Compensation for costs related to control of low pathogenic avian influenza (§11011) l Oversight of National Aquatic Animal Health Plan (§11013) u Bioenergy l Study on bioenergy operations – benefits and costs of animal manure as fertilizer and/or energy production (§11014) u Marketing l Interstate shipment of state-inspected meat and poultry (§11015) State inspection that meets federal requirements allowed - state inspector with a Federal stamp For operations up to 25 employees – larger operations can transition to Federal system Federal reimbursement of at least 60% of state costs l Fee-based program for inspection and grading of catfish with additional fish species added upon petition to Secretary (§11016)

13. 4 C’s for Livestock u COOL u Competition u Conservation u Commodities Copyright NRCS

14. Questions? Answers? Copyright USDA