August 30 , 2008

ISSUE 1230

COUNTDOWN TO COUNTRY OF ORIGIN LABELING - BE PREPARED

The U.S. Department of Agriculture has issued an Interim Final Rule to implement mandatory country of origin labeling this fall. The rule is a significant improvement from the Proposed Rule issued in 2003 after passage of the 2002 Farm Bill. It reflects the changes in the statute made by Congress in the 2008 Farm Bill, and it incorporates many of the provisions recommended by industry. This overview is not a complete description of the interim final rule, but it addresses many of the key provisions, particularly those that were especially onerous in the initial proposed regulation.

GENERAL PROVISIONS - Covered commodities include Perishable Agricultural Commodities as defined by the Perishable Agricultural Commodities Act (PACA) -- fresh and frozen fruits and vegetables. Covered commodities are exempt if they are an ingredient in a processed food item. A processed food item is one that has undergone a change in the character of the commodity or one that has been combined with at least one other covered commodity or substantial food component.

IMPLEMENTATION - The interim final rule is effective Sept. 30, although it operates prospectively. However, the requirements do not apply to covered commodities produced or packaged before Sept. 30 in order to clear the channels of trade and allow for an educational and outreach program.

PRE-EMPTION - The notice discusses pre-emption under its review of Executive Order 13132 Federalism. The conclusion is that even though the statute does not have a specific pre-emption provision, Congress did intend it to pre-empt state laws. The notice refers to existing state programs such as Florida’s. The rule states that “To the extent that these state country of origin labeling programs encompass commodities that are not governed by this regulation, the states may continue to operate them. For those state country of origin labeling programs that encompass commodities that are governed by this regulation, these programs are pre-empted.”

COUNTRY OF ORIGIN NOTIFICATION - Retailers are required to provide notice of country of origin at the point of sale (individually, bulk bin, carton, crate, barrel, consumer package, etc.). Origin markings may be accomplished via stickers, bands, ties, labels, signs, bin placards or other formats. The markings must be legible and be placed in a conspicuous location so that they can be read and understood.

The country of origin declaration may be in the form of a statement (Product of USA), the name of the country only (USA), or in the form of a check box. Only abbreviations approved for use under CBP rules (i.e. USA, UK, etc.) are permissible. State designations are acceptable for U.S. origin designation for perishable agricultural commodities only.

A bulk display or container at retail may contain a covered commodity of multiple origins provided all possible origins are listed.

Food service establishments (including those located within retail establishments, such as a supermarket) are exempt from the labeling requirements.

RECORDKEEPING - Suppliers of a covered commodity are responsible for providing country of origin information to their customers. The information may be provided on the product, on the master shipping container, or in a document that accompanies the product through retail sale.

Suppliers must maintain records to establish and identify the immediate previous source (if applicable) and immediate subsequent recipient of a covered commodity for a period of one year from the transaction date.

Importers of record (as determined by CBP) must provide clear product tracking from the port of entry into the United States to the immediate subsequent recipient and accurately reflect the country of origin of the item.

For retailers, records and other documents relied upon at the point of sale to establish country origin must be maintained for a period of one year from the date the origin declaration is made at retail. For pre-labeled products (i.e. PLU stickers), the label itself is sufficient evidence on which the retailer may rely to establish the product’s origin.

Upon request by USDA representatives, suppliers and retailers shall make available records maintained in the normal course of business that verify the origin claim. The records must be provided within five business days of the request and may be maintained in any location.

ENFORCEMENT - Penalties for violations have been reduced to up to $1,000 for each violation (down from $10,000). The U.S. Secretary of Agriculture must provide retailers and suppliers with a 30-day period during which the retailer or supplier can take the necessary steps to comply with the law after receiving notice of a violation. A fine can be levied by the Secretary only if the retailer or supplier has not made a good-faith effort to comply and continues to willfully violate the law.

To assist our members in understanding and complying with COOL, FFVA is one of several industry sponsors of a free Web-based seminar from 11 a.m. to 12:30 p.m. Friday, Aug. 8. You must pre-register by Aug. 7 to participate. To do so, go to http://63.236.98.206/webportal3/reg.html?Acc=6484619444&Conf=129681 to receive audio dial-in instructions. Computer log-in instructions will be sent separately to all pre-registered attendees before the seminar. For more information, call FFVA at (321) 214-5000.

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