Written on:August 12, 2014
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“The Segregation Cost Arguments Do Not Hold Water”

By: J. Dudley Butler

Some opponents of COOL seem to use the term commingling as a synonym for segregation. Nothing could be further from the truth. Meat is commingled. Cattle are segregated. COOL does not deal with live animals. It deals with the sale of commodities such as beef and pork at the retail level.

The COOL statue does not allow commingling of covered retail products. The use of commingling is factually misleading, legally illegitimate, and rhetorically repulsive. Commingling breeds consumer confusion and deception. It only takes common sense to recognize that any commingling of meat that is required to be labeled by the COOL statute is an affront to the intent of the statute. The statute was designed to inform consumers about the origin of the animal from which the product comes. The terms “born”, “raised” and “slaughtered” are very significant to the intent of the COOL statute.Therefore the COOL Rule does not allow comingling so that the consumer is accurately informed of where the animal from which the retail product was derived was born, raised and slaughtered.

COOL does not compel the segregation of cattle. However, Canada and Mexico have continued to base their WTO arguments on the costs associated with segregation of cattle or the fact that sometimes prices paid for cattle of Canadian and Mexican origin are discounted. They do this with the hope that the WTO panel will buy into their charade and issue another ruling in their favor. They know they fooled them once so why not try it again?

However, any discounts are really marketplace issues brought on by the nuances of consumers or grow out of the concentrated power of meatpackers. Contrary to the previous arguments of the opponents of COOL, all cattle are not the same. So their statement “that cattle are cattle whether they are from Manitoba, Mazatlán or Montana” is not only ludicrous but down right slanderous to U. S. cattle producers. Cattle are different and this is one of the reasons that cattle have been segregated for years. Segregation of cattle did not start with the COOL statute. Neither the COOL statute nor the 2013 COOL regulation requires segregation of cattle.

Cattle are purchased by different methods. The majority (approximately 60%) of all cattle purchased by meatpackers that are required to report to the USDA Packers and Stockyards Program are purchased on a carcass basis and carcass-based purchases are the predominant method used by meatpackers to purchase hogs. Therefore, with or without COOL, meatpackers must continue segregating the majority of all their cattle purchases and hog purchases based on each animal’s (both cattle and hogs) owner in order to finalize the purchase transactions for those livestock.1

Segregation is also used for many other reasons. In fact, the segregation of cattle is a common practice in the industry. Cattle entering the U. S. from Canada are either branded or tattooed with a “CAN”. Cattle from Mexico are either branded or tattooed with an “M”. They are easily recognizable. Additionally, cattle are segregated for the following reasons:

Branded programs such as “All Natural”, “Organic” and “Certified Angus Beef”
- For export eligibility
- National School Lunch Program
- Department of Defense Prime Vendor Program
- Age and source verified programs
- USDA quality grading

For paying sellers that sell on grade and yield basis
- Illness
- Size
- Weight
- Breed vs. cross breed
- Brahman influence,
- Gainability
- Sex
Quarantine (Mexico) – to check for brucellosis, tuberculosis and spayedheifers.

Meatpackers already have very sophisticated and computerized tracking systems that allow them to track meat throughout their plants, freezers and shipping facilities. This is done to ensure proper payment, customer satisfaction, quality control and proper delivery of goods and services.1

There is no causal connection between the Final COOL Rule and any damages caused by the costs of segregation. Any claims of discrimination, irreparable harm and undue burdens dealing with discounts paid for Canadian cattle and Mexican cattle are not caused by COOL but are caused by several things. One cause can behistory of disease problems in certain countries.3

They can also be caused by consumer choices based on personal preferences, the breed of cattle, prior food sources, lower yield and lower beef quality just to name a few. They are also causedby corporate concentration and the inherent power of meatpackers in the marketplace accompanied by their greed.In other words, they have the power to do it so they do it.

The costs associated with COOL are less than one half cent per pound of beef produced. Therefore, any claims of undue burdens dealing with excessive costs required to comply with the 2013 COOL regulation are unfounded and lean toward speciousness.

Or as we would say down south “that dog just won’t hunt.”

1 The U.S. Department of Agriculture (“USDA”) explains:
In a “carcass-based” purchase, the price is quoted and the final payment is determined based on each animal’s hot weight, which is the weight of the carcass after it has been slaughtered and eviscerated. Carcass-based purchase methods often involve schedules of premiums or discounts based on animal quality and other features, such as time of delivery and number of animals in the transaction.
2012 Annual Report, Packers and Stockyards Program, U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration, at 36, available at http://www.gipsa.usda.gov/Publications/psp/ar/2012_psp_annual_report.pdf.

2 Available technology now enables a meat hook to associate every carcass and resulting meat product with the live animal from which they are derived all the way to an individual packaged meat product, ready to be sold at a supermarket. Today’s plant can also record important information about each carcass, like its weight and grade, which can be tied to billing and sales systems. http://www.xerafy.com/blog/wheres-the-beef-rfid-tracking-within-slaughterhouses/

An amazing part of this story is the fact that every pound of beef can be tracked throughout the meatpacking plant, from steer to box and package. Implicit in this part of the story is the information system. Besides tracking the product throughout the facility, the plant IT manages the inventory management of every by-product from hides to bone. http://www.cisco-eagle.com/case-studies/Excel-Beef-Dodge-City-KS

3 Canada has a history of problems with Bovine Spongiform Encephalopathy (Mad Cow Disease) and Mexico has a history of problems with Bovine Tuberculosis and Brucellosis.

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