Dec 5, 2003
WASHINGTON, DC — December 5, 2003 — “The analysis released today showing that the cost of mandatory country of origin labeling (COOL) could severely hurt small businesses makes a most compelling case to at least delay implementation of the law if not repeal it altogether,” said Tim Hammonds, president and CEO of the Food Marketing Institute (FMI). Hammonds was commenting on the analysis by the U.S. Small Business Administration Office of Advocacy. The Office serves as an independent voice for small businesses, analyzing the impact of laws and regulations.

“The SBA finding that ‘all food retailers stand to suffer economic losses as a result of complying with the mandatory COOL regulations’ is especially disturbing,” said Hammonds. “SBA reports correctly that this impact will hit nearly 67,000 food retail stores — far more than the 30,000 estimated in the cost analyses by the U.S. Department of Agriculture.

“At a period when cost competition among retailers has never been greater, such losses could not be more poorly timed. The resulting profit declines could put many small food retailers, already on the edge of survival, out of business.”

“Those retailers that do survive may, as SBA’s analysis suggests, pass those costs along to producers, including 800,000 U.S. ranchers, also mostly small businesses, that will suffer economic hardships under the law,” Hammonds said. In the end, nobody wins from mandatory COOL — not producers, not retailers and not consumers.”

The SBA analysis reported specific cost estimates that a three-store food retailer will incur to implement the statute. Mandatory COOL will cost this retailer $7,000 per week ($364,000 per year) to segregate and label the products in all his stores. The law requires labels for fresh and frozen fruits and vegetables, beef, lamb, pork, fish and peanuts. Retail stores carry from 500 to 1,500 products covered the law.

According to the report, the $7,000 covers “increased labeling costs, employee training, signage, display allocation (including 14 separate bins for bananas alone), recordkeeping, equipment purchases, increased storage space and liability costs (to cover $10,000 fines per violation under the law).”

Hammonds concluded, “We wholeheartedly agree with SBA’s recommendation that the law’s impact on small retailers, processors and producers should be more closely scrutinized. And the agency, industry and others will have the time needed if Congress approves the two-year delay in the law’s implementation currently in the omnibus spending bill before the House and Senate.”