(Oct. 30) With varying parts of gloom, caution and hope, U.S. retail and fresh produce industry leaders were sifting through a 203-page proposed regulation for mandatory country-of-origin labeling in late October.

After conducting months of listening sessions and reviewing thousands of submitted comments, the U.S. Department of Agriculture on Oct. 27 issued the proposed rule for the controversial mandatory country-of-origin labeling program as required by the 2002 farm bill.

The proposed rule responded to several industry concerns, loosening labeling requirements on some processed fruit and vegetable items, shortening the amount of time origin records must be kept at store level and reassuring retailers that they won’t be responsible for erroneous origin information provided by their suppliers.

The USDA also issued a revised cost estimate for record keeping for mandatory country-of-origin labeling and released a cost/benefit analysis which found no quantifiable economic benefit from country-of-origin labeling.

Western Growers, the Florida Fruit & Vegetable Association and the American Farm Bureau Federation praised the U.S. Department of Agriculture’s response to industry concerns about the voluntary guidelines issued last October.

They said the agency adjusted the proposed rules for mandatory labeling and added greater flexibility for the fresh produce industry.

However, Caroline Rydell, director of congressional relations for the American Farm Bureau Federation, Park Ridge, Ill., said the lengthy rule contains some statements with which the Farm Bureau disagrees.

She said the USDA’s contention that exports could decline as a result of the regulations has received scrutiny, in addition to what are considered overestimates of compliance costs for some producers.

“We are pleased the rule is out there, and at this point we are looking forward to continuing the process,” she said.

On the other hand, the Food Marketing Institute, Washington, D.C. — the lead retail lobbying group against mandatory country-of-origin legislation — promptly repeated its call for repeal of the law based on the cost of compliance that the USDA estimated would range between $580 million and $3.9 billion in the first year for all affected industry players.

Last year, the USDA estimated the first year record keeping costs would be $2 billion, a number that drew criticism from some as being too high and others from not fully accounting for all costs.

In the Oct. 27 rule, the USDA said ongoing maintenance costs for record keeping — at $458 million per year — would fall heaviest on retailers. Annual retail costs associated with the proposed rule have been estimated at about an hour per day per store, or $217 million per year. Ongoing costs for fruit and vegetable producers were estimated at close to $2 million per year, compared to $133.9 million for cattle producers and $8.7 million for hog producers.

“Our position is that USDA changed what they could, but we are still looking at a fundamentally flawed law,” said Deborah White, associate counsel for the Washington, D.C.-based lobbying organization for the supermarket industry.

She noted the changes in the record-keeping requirements and the USDA’s attempt to shield retailers from liability in the proposed rule were akin to “moving the deck chairs on the Titanic.”

“Nobody feels comfortable relying on (the liability shield),” she said, noting that retail members of FMI have told her they will still seek commercial protection from suppliers.

AMS officials indicated the proposed regulations neither require nor preclude retailers from requiring third-party audits. An AMS spokesman said the agency would offer government audits relative to country-of-origin claims.

However, USDA officials said proposed regulations state that a retailer will not be held liable for a violation of the act by reason of the conduct of another if the retailer could not have been reasonably expected to have had knowledge of the violations.