COOL

If you recall, I made some recommendations for how the U.S. can alleviate the economic downturn we are experiencing. While many of my suggestions came from a particular economic point of view, and would therefore be subject to dispute, one of them would have received universal acceptance, at least from an economic perspective. My recommendation was that government take steps to reduce the cost of doing business in the U.S. by eliminating regulations that do not produce a substantial benefit to society, but cost consumers a great deal of money. I didn't have a lot of examples at the time, but I have one now.

Apparently, the federal government has decided to take the opposite approach in at least one industry: food. To my understanding, a law was passed a few years ago and will finally be implemented next year. Since they love to come up with witty and clever names for expensive laws, this one is called COOL: Country of Origin Labeling.

What does it do? Well, you can read the 200+ pages of regulations, restrictions, and exemptions if you so desire, but in a nutshell it demands that all food items display a country of origin prominently on the consumer packaging. So, if you package frozen broccoli bought from Mexico, that package of broccoli must say, "Product of Mexico". Seems pretty benign, right?

Here's where it gets costly.

1) businesses need to pay lawyers to read the 200+ pages and turn the document into layman's terms.
2) businesses need to devote resources in label design, sourcing, packaging, quality assurance, and manufacturing to understand the new law, to determine action that has to be taken, and to implement the changes.
3) businesses need to invest in any number of the following design work, labels, new packaging, and/or new machinery.

The preceding are guaranteed to be costs associated with every business in the food industry. The following are potential risks based on how businesses find solutions to the new guidelines.

4) If a business cannot come to an acceptable solution for stickering or printing on existing packaging, that packaging will become obsolete and will need to be destroyed.
5) If businesses incorporate the country of origin into the label design, they will need to create multiple versions of the same label for every potential source. If, for instance, you buy potatoes from Canada and the U.S., then you will potentially need two labels, "Product of USA", and "Product of Canada". That will mean twice the packaging inventory.

Now there are a lot of exemptions and clever ways that businesses can meet the minimum requirements. If you buy potatoes from the US and Canada, for instance. You can combine all your potatoes before you process them, that way you can sticker or print, "Product of USA & Canada". We actually sell nuts that list 3 or 4 countries on the package. My assumption is that they probably mix the nuts of multiple countries to get more consistent quality (since different regions may yield slightly different sizes and flavors depending on soil, length of season, temperature, and rainfall). If you package food blends (e.g. peas and carrots, stir fry blend, California blend) then you don't have to print or sticker the COO on these products. But that raises the question, "If it's really not that big of a deal whether you know where your broccoli & cauliflower come from when they come in the same bag, why does it matter where they come from if they are in separate bags?"

Worst case scenario, the actual design of the package will need to be changed, manufacturers will need to spend more money segregating their product by COO, surplus packaging will be destroyed and written off, and multiple versions of the same package will need to be produced and inventoried.

Best case scenario, manufacturers will need to track the country of origin of bulk product, and will need to invest in machinery that can print or sticker the appropriate country of origin on the package as product is packed.

For those of you that don't work in manufacturing, you probably don't realize how much things like this cost. When laws were passed demanding trans fat be displayed on packaging, my company spent untold thousands of dollars on design, printing, transportation, and destruction of existing packaging. For what? So you could be assured that the can of green beans you were buying contained 0g trans fat. As if it would have been anything else.

All of this is done in the name of "consumer choice". I, for one, would prefer to choose a bigger merit increase this year instead of forcing my company to pour money down the drain accommodating wasteful legislation. I, for one, would prefer to reduce my grocery budget, which is increasing at an alarming rate, than SOMETIMES know what country my food comes from.