business news in context, analysis with attitude

MNB reported Friday that lawmakers on Capitol Hill agreed this week to postpone Country of Origin Labeling (COOL) regulations for meat products until 2008 as part of a $100 billion bill covering food and farm programs. The COOL rules were originally supposed to take effect in 2004, then were postponed to 2006. This latest delay caused Sen. Tim Johnson (D-South Dakota) to describe the system as “utterly corrupt.”

We wrote that “US ranchers were counting on the labels as a way of differentiating their products from meat products imported into the country. Retailers, on the other hand, have generally seen COOL rules as putting an unseemly burden on them.”

One MNB user felt we did not characterize retailers’ opinion accurately:

Retailers don't oppose labels, just the form the government has proposed from the 2002 Farm bill and the fear from 9-11 that only USA-grown was safe.

The big picture is that there will be a new farm bill, with debate next year where the authorizing committees can debate this. USDA is holding hearings in every state. Go to their website.

The regulatory recordkeeping provisions and legal liability are opposed by all along the supply chain, including suppliers.

You only quote the pro-mandatory protectionist voice of Sen. Tim Johnson (SD) who is representing producers and more specifically R CALF. The Cattlemen do not want mandatory COOL. Every retailer wants to market the way they wish. As a consumer you should be able to see that the potatoes are Long Island grown or just packed by someone with an office in Long Island. Labeling w/ the primary code: Product of the USA gives those cos. a pass. Ever bought a tomato in Florida in the summer? (It may be packed in FLA but it is more likely grown in PA or Canada!) As a customer, that is what I want to know.

The Agriculture Appropriations legislation contains a rider that moves the effective date to September 30, 2008, for all fresh commodities except seafood. Shellfish and seafood labeling has been effect since April. Your report confuses the issue and the position of the supermarket industry.

Sen. Johnson is reiterating his position on the floor on Friday October 28 at 10:35 a.m. So what? He's against the majority in Congress and the view of most of the food industry that has looked at the $10,000 per violation fines and recordkeeping provisions. Why should someone promoting Angus Beef now- USA grown have to pay more? It's consumer demand that will drive the change.

The House of Representatives is voting today on what the conferees from the House and Senate decided to put into the bill. You should wait on your report until the issue is decided. The Senate won't vote until next week.

The authorizing committee, the House Agriculture Committee in the 108th Congress approved voluntary legislation on a BIPARTISAN basis.

The pro-labeling groups are the meat producers from the Northern tier states (who have enjoyed high margins with an 18-month embargo on Canadian cattle) and the meat packers. Consumers simply are not demanding this.

Producers can promote USA grown now. Many retailers have special programs in this regard.

You might want to read about the organics rider where there was a split and raise cain there. Also see how farmers markets have grown on the USDA website.....that might be worth reporting. What are farmers markets doing differently from supermarkets, or have an abundance of produce choices at retail driven local farmers to create niche marketing on a local scale?

There is, of course, an ongoing debate in this space about Wal-Mart, and as a subset of that discussion, debate about whether or not MNB is fair to Wal-Mart or too critical of the company. But MNB user Jim Trella has his own opinion:

Could you be any more Pro-Wal-Mart? I have been studying and watching retailers for years, and if Wal-Mart is just "trying to address what all other companies are grappling with", than why is it all other companies do not use the same tactics. Costco, Target or Home Depot pay their employees well. Particularly the last 2, and they are doing well in terms of growth, profit and ROI for their shareholders. We never seem to see current or former employees of these companies banding together to file lawsuits against their employer for any one of the business practices that Wal-Mart has used or been accused of using from employing illegal aliens, to anti-union tactics, now to cutting healthcare benefits by making more employees part-timers to less 401k contributions by Wal-Mart.

Where does it end? Wal-Mart built their empire and reputation on "We Sell for Less" but at what price? I will admit vendors are falling all over themselves to get into Wal-Mart because of the huge volume they move through Wal-Mart stores and in return for the large volume, they get drastically lower margins and sometimes dangerous dependence on a single account, which is certainly their own fault. However, one would think that Wal-Mart would only try and squeeze efficiencies into cost savings to pass onto the consumer by squeezing the vendors for lower prices, using more technology in distribution/supply and logistics and in their purchasing. (Which is a whole other story considering this is the flag waving company that Sam Walton founded and now they account for 15% of all imports from China). Why must they squeeze efficiencies from their employees’ healthcare and other benefits?

I don't think Wal-Mart is the fabulous place to work and good corporate citizen they claim to be, and are trying to show that they are by creating "green" stores and asking for a raise in the national minimum wage on the surface and having business practices like this behind the scenes. Wal-Mart has had a great ride to the top, but they can not continue to be they juggernaut they have been forever,= especially with what seems to be the American consumer, trade associations, other large retailers and the media being angry at them for how they do things, in order to keep prices low and remain at the top. Sure they have every right to want to stay on top and try hard to keep the position they have, as do all retailers, but at what cost? Wal-Mart can't even open a store when it wants now without lots of people being up in arms to stop it. The world is watching Wal-Mart very closely now, and it is certainly "pile on" time for anyone who wants to take a shot at the big bully on the block, but I think Wal-Mart is going to have to change the way they do business, and maybe even the way it markets itself for its success to continue. Otherwise, the gang up on Wal-Mart frenzy is going to continue and this company will really take some lumps financially.

Remember, other big companies such as GM, IBM, GE and Microsoft all got to where they are and had some business practices they people did and still do hate. They have taken some lumps along the way, but they continue to buy their products. (Well, maybe not GM…)

We suspect there may be a few people who think we could be more pro-Wal-Mart…
KC's View: