CU Comments on USDA proposed rule on COOL for meat, fruits and vegetables, and peanuts

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Consumers Union’s Comments on
US Department of Agriculture (USDA) Agricultural Marketing Service (AMS)
Interim final rule on Mandatory Country of Origin Labeling of Fish and Shellfish,
Docket No. AMS-LS-06-0166; LS-03-04; AMS-LS-07-0098
August 20, 2007
Prepared by
Michael Hansen, PhD
Senior Scientist

Summary
Consumers Union (CU) welcomes the opportunity to comment on USDA’s interim final rule for mandatory country of origin labeling (COOL) for fish and shellfish. Although the interim final rule may be seen as a step forward—since a law requiring COOL for fish and shellfish, meat (beef, pork, lamb), perishable agricultural commodities, and peanuts was passed in 2002 with full implementation by 2004, yet only fish and shellfish COOL has been implemented so far—there are still problems with it that result in large numbers of products being excluded from mandatory COOL.
The basic problem is that the definitions of “retailer” and “processed food item” in the interim final rule are so broad as to exclude a large number of retail products from mandatory COOL. In fact, the definition of retailer excludes fish markets! AMS has no control over the definition of “retailer,” which is spelled out in the law (Public Law 107-1712). However, AMS did define “processed food item” in a way that was overly broad and lead to the exemption of many retail items from mandatory COOL.
We believe that the interim final rule on mandatory COOL for fish and shellfish should be as expansive as possible and cover as many items as possible as it is clear that consumers desire to know where there food is coming from. Thus, we think that AMS should redefine “processed food item” to make clear that cooking, canning, freezing, and smoking are not considered forms of processing.
Background
There are two basic arguments for COOL. First, three studies conducted this year have found that consumers overwhelmingly desire COOL and believe they have a right to know such information. For example, a poll of 1,000+ people conducted by Consumers Union in early June, 2007, found that 92% thought that imported food should be labeled as to its country of origin . Another poll from earlier this year, conducted for Food and Water Watch, found that 82% of 1000 people polled in early March, 2007, supported mandatory COOL . Most recently, a poll of more than 4,500 people, conducted in mid-July, 1997 by Zogby Interactive, found that 88% of those polled said all retail food should have COOL. More importantly, some “94% believe that consumers have a right to know the country of origin of the foods they purchase.” Thus it is clear from these polls that an overwhelming majority of consumers want their foods to have COOL.
Second, COOL can also serve as a risk management measure. Developing countries such as China or India, which may not have as stringent food safety regulations and/or have not implemented/enforced those regulations as rigorously as the US, may export hazardous food products. COOL could allow consumers to avoid such food items as the need arose. For example, in 2003, there was an outbreak of hepatitis that killed 3 people and sickened more than 600 people and was linked to green onions from Mexico . Since there was no required COOL for fruits and vegetables in 2003, concerned consumers had to refrain from buying all green onions for a while. If COOL had been in effect, consumers could have simply avoided green onion from Mexico. More recently, in June, 2007, FDA announced that they would detain imports of all farm-raised shrimp, catfish, basa, dace (type of carp) and eel from China until they can be shown to be free of residues of four drugs unapproved for use in farm-raised seafood; three of the drugs (gentian violet, nitrofuran and malachite green) have been shown to be carcinogenic in animal studies . Although FDA did not issue a recall for these farm-raised Chinese seafood imports, consumers that are concerned about consuming such products could potentially avoid them as COOL for fish and shellfish was implemented for large retailers in 2004.
Consumers agree that COOL can serve as a risk management measures. The Zogy Interactive poll—conducted in mid-July, 2007—found that 90% of those polled “believe knowing the country of origin will allow consumers to make safer food choices.”
We are concerned that certain clauses in the law mandating COOL allow many products to be excluded. The law stated that, for purposes of COOL, the terms “retailer” and “processed agricultural commodity” should “have the meanings given the terms in section 1(b) of the Perishable Agricultural Commodities Act [PACA] of 1930.” As AMS noted, “Under PACA, a retailer is any person who is a dealer engaged in the business of selling any perishable agricultural commodity solely at retail when the invoice cost of all purchases of produce exceeds $230,000 during a calendar year. This definition excludes butcher shops, fish markets, and small grocery stores that sell fruits and vegetables at a level below this dollar volume threshold or do not sell any fruits and vegetables at all” (68 FR 61946, October 30, 2003). Unfortunately, this definition of retailer does not conform to what the average consumer thinks of as a retailer. It completely excludes stores that do not sell fruits and vegetables, such as a large fish market, even though fish are covered by the interim final rule. In fact, it covers only very large supermarkets. To compensate for these significant exclusions, we urge USDA to resolve any ambiguities in a way so as to maximize the number of food items with mandatory COOL.
Processed Food Item
One important issue is that the law (Public Law 107-1712) explicitly exempted food items from needing COOL when the covered commodity is an “ingredient in a processed food item” from mandatory COOL, but did not define what is meant by “processed food item.” In the 2004 interim final rule for COOL for fish and shellfish, USDA used a two-step approach and defined a “processed food item” as a retail food item “that has undergone specific processing resulting in a change in the character of the covered commodity, or that has been combined with at least one other covered commodity or other substantive food components (e.g. breading, tomato sauce),” and then gave examples of the types of processing (e.g. cooking, curing, smoking and restructuring) that would cause a product to be considered a “processed food item” (69 FR 59708; October 5, 2004).
CU believes that the definition of “processed food item” used in the interim final rule for fish and shellfish is overly broad and results in the exclusion of too many products. A year before publication of the interim final rule for fish and shellfish, USDA published a proposed rule for COOL for all covered commodities (68 FR 61944 et seq; October 30, 2003), that defined processed food more narrowly, but used the same basic two-part definition of “processed food item” as was ultimately used in the interim final rule. However, in the earlier proposed rule, AMS made clear that “a change in the character of the covered commodity” meant that the food item had “undergone a physical or chemical change such that they no longer retain the characteristics of the covered commodity thus consumers would not use the items in the same manner as they would the covered commodities” italics added (68 FR 61946, October 30, 2003). AMS made clear that cooking, canning and breading would not be considered as forms of processing that would change the characteristics of the covered commodity enough to cause consumers to use it in a different way than usual, while restructuring, smoking and curing would: “All fish and shellfish, whether chilled, frozen, raw, cooked, breaded or canned would be subject to these regulations unless they are an ingredient in a processed food item. . . . restructured shrimp or fish sticks and smoked and cured products would be considered processed food items because they no longer retain the characteristics of the covered commodity and thus consumers would not use them in the same manner as they would the covered commodity” bold added (68 FR 61948, October 30, 2003). In addition, USDA considered breading, seasonings and preservatives to be “non-substantial” ingredients that, by themselves do not constitute making a food item a “processed food item.” By the time the interim final rule was published a year later, USDA weakened their own proposed definition of “processed food item” so that cooking, canning or breading would turn a fish or shellfish into a “processed food item,” which would then be exempt from mandatory COOL.
Not only is the definition of “processed food item” in the interim final rule too narrow, it is also internally inconsistent with the notion of “substantial transformation,” which is used by the US Customs and Border Protection (CBP) to indicate country of origin and is used in the interim final rule as a synonym for processing. The law (Public Law 107-1712) (and interim final rule) states that to get a US country of origin label, farmed fish must be hatched, raised, harvested and processed in the US, while wild fish must be harvested and processed in US, a territory of the US, or a State including the waters thereof . We support this portion of the law.
In the 2003 proposed rule on COOL, AMS proposed requiring either labeling of the production steps that happened in the US or other countries, or a simplified label that would state where the product was imported from, followed by the production steps performed in the US. Thus, a farm-raised fish that was hatched, raised, and harvested in country X and processed in the US could be labeled as “Imported from country X, processed in the US.” A farm-raised fish that was hatched, raised and harvested in the US but processed in country X, would be labeled either “Product of country X” or “Product of country X, born, raised and harvested in the US.”
In the 2004 interim final rule on COOL for fish and shellfish, AMS simplified provisions that dealt with “labeling imported products that have not undergone substantial transformation in the United States,” and “labeling imported products that have subsequently been substantially transformed in the United States,” (e.g. §60.200(f),(g), respectively). The basic simplification was that only the information of where the product was imported from and whether it was processed in the US would be on the label, so that information on where all the production steps occurred doesn’t need to be on the label. Thus, if a product had not undergone a “substantial transformation” (as defined by US Customs and Border Protection), then the product’s country of origin would simply be the origin declared to the US Customs and Border Protection. If the product had been imported from country X and had been “substantially transformed” in the US, it would simply be labeled “From [country X], processed in the United States.” If the product had been hatched, raised, and harvested in the US, but was processed (e.g. undergoes substantial transformation) in country X, it would simply be labeled “From country X.”
Thus, AMS is using “substantially transformed” as a synonym for processing. However, the US CBP has made a number of rulings which make it clear that neither cooking nor smoking, by themselves, constitutes processing. For example, in a ruling in May 1989, CBP (in HQ 731763) stated that “cooking does not change the fundamental character of the imported shrimp [and] . . . does not constitute a substantial transformation.” In 1988, CPB (in HQ 729256) “ruled that the smoking of raw salmon did not result in a substantial transformation for purposes of marking. The smoking process involves the introduction of smoke to the product to alter the taste and render it ready for eating.”
Since AMS uses CBP’s definition of “substantially transformed” in lieu of “processing” for imported fish and shellfish, we think AMS should be internally consistent. Since CBP believes that neither cooking nor smoking, by themselves, constitutes “substantial transformation,” we feel that AMS should delete cooking and smoking from their list of “specific processing that results in a change in the character of a covered commodity.” In addition, we agree with AMS’ argument in the 2003 proposed rule on COOL that neither cooking, breading, nor canning should be considered forms of processing that result “in a change in the character of a covered commodity.” We believe that cooking, canning, smoking and breading should not be considered forms of “processing” that result in a fish or shellfish product being exempt from mandatory COOL.
Blended or Mixed Products
In defining country of origin for blended or mixed products in the voluntary COOL guidelines published in 2002 (67 FR 63367) AMS proposed requiring country of origin for each raw material source of the mixed or blended retail item by order of predominance by weight. AMS did this because it recognized that it would be misleading to consumers if a blended or mixed product (bag of lettuce, bag of shrimp) listed US ahead of other countries if only a small percentage of the covered commodity had US as country of origin. Thus if a bag of lettuce contained 5% lettuce that was exclusively produced in the US and 95% of the lettuce came from Mexico, it would be misleading if the country of origin was listed as: US, Mexico. By the time of the 2003 proposed rule on COOL, AMS had weakened this provision further to simply say that the country of origin declaration for mixed or blended products comprised of the same covered commodity would list alphabetically all the countries of origin for all the raw materials. We oppose an alphabetical listing, as potentially highly misleading to consumers.
By the time of the 2004 interim final rule on COOL for fish and shellfish, AMS had weakened/simplified the country of origin labeling provision for blended or commingled products comprised of the same covered commodity (such as a bag of shrimp) from more than one country of origin even further. In the 2004 interim final rule on COOL, AMS stated that the declaration on such a bag of shrimp could either list “the countries of origin contained therein or that may be contained therein” italics added.
We would prefer that companies label the actual country of origin for each of the commingled covered commodities, and that they would list the percentage for each of the countries of origin. A bag of shrimp which consists of 95% shrimp from country X and 5% from US and a bag of shrimp consisting of 95% shrimp from US and 5% from country X, would be labeled the same under the interim final rule, despite the fact that consumers may see a big difference between the two products. Alternatively, we could support the position which AMS proposed in the voluntary COOL guidelines published in 2002 (67 FR 63367) which required country of origin for each raw material source of the mixed or blended retail item by order of predominance by weight.
We are further concerned about an ambiguity in the approach for blended or commingled products laid out in the 2004 interim final rule on COOL (e.g. §60.200(h)). This section states that “When the retail product contains imported covered commodities that have subsequently undergone substantial transformation in the United States commingled with other imported covered commodities that subsequently undergone substantial transformation in the United States) and/or US origin covered commodities, the declaration shall indicate the countries of origin contained therein or that may be contained therein” (69 FR 59711). It is unclear whether in such a commingled commodity whether an imported covered commodity that is “substantially transformed” in the US could also list the US as a country of origin. On the one hand, CBP considers the country where the product undergoes “substantial transformation” to be the country of origin. On the other hand, section §60.200(g) of the 2004 interim final rule for COOL for fish and shellfish clearly states that an imported product that was imported from country X and “substantially transformed” in the US cannot list the US as a country of origin; such a product must be labeled “From [country X], processed in the United States.” We think that AMS should make it very clear that in the case of blended or commingled products, listing US as one of the countries of origin should only be allowed for US origin covered commodities, as defined in the law (Public Law 107-1712). US country of origin should not be permitted if the product is only “substantially transformed” in the US; in such blended cases AMS should follow the rule as laid out in §60.200(g), e.g. such products could only say that the product was “processed in the US.” Thus, a bag of shrimp consisting of shrimps that were imported from country X and country Y and that were substantially transformed in the US, should be labeled “From country X, country Y and processed in the United States.”
Fraudulent labeling of “wild” fish
We are also concerned about fraudulent labeling of fish and shellfish as to whether they have been farm-raised or wild caught. Although fish stores do not have to label fish and shellfish as to whether they are wild or farm-raised, if they do choose to label, the label must be accurate. Since wild-caught fish sell for more money than farm-raised fish of the same species, there is an economic incentive to potentially mislabel farm-raised fish as wild caught. We have uncovered evidence that this is happening. In November and December, 2005—during the off-season for wild caught salmon—we bought 17 salmon labeled wild and tested them for the presence of a synthetic coloring agent fed to farmed salmon to turn their flesh pink-orange as found in wild salmon . We found that 7 or the 17 salmon were farmed. Although the sample was small, we noted that supermarkets were more likely to label wild salmon correctly than fish markets. In another shopping trip in March, 2006 that focused on the stores that incorrectly labeled wild salmon as “farm-raised,” we sampled 6 “wild” salmon and all turned out to be mislabeled. Thus, only 10 of 23 “wild” salmon fillets bought in November and December 2005 and March 2006 were correctly labeled. Since the price of wild salmon is often more than twice as expensive as “farm-raised,” such mislabeling costs consumers a significant amount. Thus, we would like to see AMS take more enforcement action against such fraudulent practices.
The exclusion of fish markets from mandatory COOL may also be giving such retailers the impression that they need not be truthful in their labeling. We urge AMS to enforce truthful labeling at both and exempt establishments.