Meat Groups Lose Bid to Block Country-of-Origin Labeling

North American meat producers including Tyson Foods Inc. and Hormel Foods Corp. lost a bid to suspend new country-of-origin labeling rules as a U.S. appeals court said the requirements don’t violate free speech rights or exceed regulators’ authority.

The U.S. Court of Appeals in Washington said in a decision today that groups seeking to delay the rule until a lower court decides the merits of their case are unlikely to succeed in either their free speech arguments or their claim the U.S. Department of Agriculture had gone too far with its labeling demands.

The regulations, which were adopted in May and took full effect in November, require producers to specify the country or countries where an animal was born, raised and slaughtered. Retail packages can’t mix muscle cuts from different countries under a general label.

Country-of-origin labeling is opposed by meatpackers, who, led by the American Meat Institute, claim that it forces them to segregate animals and raises costs.

“The AMI’s argument that the rule unlawfully ‘bans’ commingling fails at a key first step -- the 2013 rule does not actually ban any element of the production process,” U.S. Circuit Judge Stephen Williams wrote for the three-judge panel. “The necessary changes to production are, to be sure, costly for the packers,” he said.

Production Cycle

A 2009 version of the rule didn’t require explicit identification of the country of origin for each step in the production cycle. Instead, it called for a simple label with a phrase starting with “Product of,” followed by mention of one or more countries. The earlier version also allowed the practice of “commingling,” whereby a company could use a simple label for meat processed from animals with different countries of origin on a single production day.

Canada and Mexico complained successfully to the World Trade Organization that imprecision in the labeling unfairly hurt their exports, hoping the labels would be struck down. The USDA instead made the wording more precise in the updated rule, requiring the specific information on where meat was born, raised and slaughtered, arguing that doing so complies with the WTO decision.

Michelle Saghafi, a spokeswoman for the USDA, didn’t immediately return a phone call seeking comment on the ruling.

James H. Hodges, the interim president of AMI, said in a statement that the group disagrees with the court’s decision and is evaluating its options.

Divided Industry

The issue has divided the U.S. livestock industry. Some American producers favor the labeling because it enables consumers to identify domestically produced meat. Others object, saying it the costs outweigh any benefit.

Meat industry groups including the Canadian Cattlemen’s Association and the National Pork Producers Council appealed U.S. District Judge Ketanji Brown Jackson’s decision in September declining to put the Department of Agriculture labeling regulation on hold because the opponents hadn’t shown they’d suffer irreparable harm. Arguments on the merits of the case favored the government, she said.

The trade associations represented livestock producers, feedlot operators and meat packers.

The case is American Meat Institute v. U.S. Department of Agriculture, 13-5281, U.S. Court of Appeals, District of Columbia (Washington).

Before it's here, it's on the Bloomberg Terminal.