Food origin labels may cost up to $3.9b

WASHINGTON -- A federal law backed by US farm groups to require country-of-origin labels on meat, seafood, produce, and peanuts could cost American foodmakers up to $3.9 billion in its first year, the Agriculture Department said yesterday.

The estimate was published as part of the USDA's proposed regulations to carry out the law, which becomes mandatory after Sept. 30. Farm and consumer groups say the labels will distinguish US-grown meat from competitors at the grocery store. But American grocers and foodmakers want the law repealed, saying it would be too costly and create a record keeping nightmare.

The Bush administration opposes the law, which was included in Congress's broad rewrite of US farm policy last year.

The USDA said in its proposed regulations that it found "negligible" benefits in the new labels.

"USDA also finds little evidence that consumers are likely to increase their purchase of food items bearing the US origin label as a result of this rulemaking," the department said.

Estimated costs for growers, producers, processors, wholesalers, and retailers range from $582 million to $3.9 billion in its first year, the USDA said.

The Republican-led House has voted to block the labels for meat, and the issue is pending in Congress. The Senate, controlled by Republicans with a narrow majority, is a stronghold of support for the mandatory labels.

The country-of-origin labels are currently voluntary.

When the labeling law becomes mandatory, labels on supermarket packages of beef, veal, pork, lamb, fish, fruits, vegetables, and peanuts must show the country where they were produced. Only items raised and processed in the United States can be labeled as a US product. Failure to comply can result in fines of up to $10,000 per incident.