Agribusiness and Finance
David P. Anderson, Guest Editor
David P. Anderson and Oral Capps, Jr.
In 2002, Congress mandated country-of-origin labeling (COOL) for beef, lamb, pork, poultry, and fish. Arguments over COOL implementation continue today. Curiously, little definitive information was presented during the legislative debate on COOL costs and benefits or on consumer willingness to pay for labeled products. In this Choices issue, we piece together current economic research on costs, benefits, supply and demand shifts, willingness to pay, and future industry trends associated with COOL. Emphasis is placed on the beef industry.
Gary W. Brester, John M. Marsh, and Joseph Atwood
Estimates are reported on how COOL implementation would alter market prices and quantities of meat and livestock of beef, pork, and poultry sectors. We find retail beef and pork demand would have to increase by 4.0-4.5% to insure producers are not worse off.
Demand Shifts in Beef Associated with Country-of-Origin Labeling to Minimize Losses in Social Welfare
Dan D. Hanselka, Ernest E. Davis, David P. Anderson, and Oral Capps, Jr.
An assessment is presented on the costs of implementing a beef COOL program. The estimated additional annual costs total $1.9 billion. We find that relatively modest shifts in demand at each level of the marketing channel would offset the COOL implementation costs.
Wendy J. Umberger
COOL proponents argue that US consumers perceive US meat products to be of higher quality than imported products and thus that consumers would pay a premium to obtain US-labeled meat products. Research results indicate that although some consumers are willing to pay a premium for the source assurance provided by COOL, the premiums would only exist if US beef was perceived to be safer and of higher quality than beef from other countries.
John D. Anderson and Darren Hudson
The implications of COOL for vertical coordination and vertical integration are discussed. The authors argue that in the beef industry, COOL is likely to increase market concentration and vertical ownership from production to processing.
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