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Volume 9, Number 7 - July 2003

This Month in Ag Connection

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Is COOL, cool??

Much controversy surrounds the USDA's mandated program on Country Of Origin Labeling (COOL). The proponents of COOL say consumers have a right to know where their food comes from and state most consumers are willing to pay extra for that particular information. Opponents say it is cost prohibitive and that the burden of cost will be passed onto the producers. The proponents say the opponents exaggerate the facts. Opponents say the proponents of COOL are too closely tied to the USDA to make clear and informed decisions.

The Farm Security and Rural Investment Act of 2002 amended the Agricultural Marketing Act of 1946 to require the Department of Agriculture's Ag Marketing Service (AMS) to issue country of origin labeling guidelines for voluntary use by retailers who wish to notify their customers of the country of origin of beef, lamb, pork, fish, perishable agricultural commodities (i.e. fresh fruits and vegetables) and peanuts. This law excludes poultry and meat sold in foodservice.

Retailers can only use the label "United States Country of Origin" if the beef, lamb, pork and fish were exclusively born, raised and slaughtered in the United States. For beef, this definition also includes cattle exclusively born and raised in Alaska or Hawaii and slaughtered in the Continental United States.

When pigs, cattle, lambs etc. are born in a country besides the U.S. but raised and processed in the U.S. the label might read something like, "Product of the United States and Country X", "From Country X hogs Raised and Slaughtered in the United States, or "Born in Country X, Raised and Slaughtered in the United States."

Estimated costs for COOL vary from as low as $123.57 million to as high as $9 billion for the beef industry alone. The USDA cost estimate for COOL states that the producer record-keeping burden could be $1 billion.

Davis's estimates of $9 billion come from the cost he said it could take for identification, documentation and auditing. According to his cost estimates the cost to cow/calf producers would be $1.3 billion, for stocker operations $9 million; for feedlots, $23 million; for packing plants, $688 million, and for retail stores $6.9 billion. Davis goes on to say costs do not consider the impact on cattle prices that will occur as costs are passed back from retailers and packers. Davis figured the $6.9 billion cost to retailers comes from the records having to be kept for 2 years by all factions of the industry (producers, backgrounders, feeders, packers and retailers) and also additional coolers at the store to keep products separate.

According to VanSickle, the USDA estimate of 2 million affected producers is far too high. His reason for a lower estimate is many producers raise crops/commodities (grains, oilseeds, cotton, and rice), that are not covered by COOL. He indicates the number is probably closer to 1.3 million. He makes the case that most producers will probably not have to do more than they are already doing in relation to record keeping unless, that is, they currently have absolutely no record keeping system in place.

Another point of argument is - will consumers pay more for COOL labeled products? In a survey conducted by Colorado State University and the University of Nebraska-Lincoln consumers were concerned most with freshness, food safety inspection, color, price and leanness. The attributes indicating production, location or source of origin of the beef, such as country-of-origin, beef raised locally and source assurance, were less important to consumers; however, they were still ranked "very" to "somewhat desirable".

The researchers also looked at how much more consumers were willing to pay for the COOL beef products. The majority (73%) of the consumers in this research survey indicated they were willing to pay a premium for COOL. However, 26% were not willing to pay a premium for COOL. According to this survey, consumers were willing to pay $0.42/lb or an 11% premium for COOL of steak and $0.36/lb (24% premium) for hamburger. Consumers were also asked to rank steak, hamburger/ground beef, roasts, or processed beef products in order of preference on labeling with COOL. Consumers ranked hamburger and steak as the beef products they would most prefer to have labeled with COOL.

The researchers concluded that consumers who were willing to pay the most for the label believed the label signified increased food safety and quality. However, they didn't do enough research in this particular project to determine whether or not the premiums would be substantial enough to cover the additional costs that might be associated with the certification and traceability programs necessary to validate the COOL label.

Information for this article was obtained from the following sites:

(Author: Wendy R. Flatt, Livestock Specialist)

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West Nile Again

With another summer coming, there is still the threat of West Nile Virus (WNV). Horses appear to react in much the same way to WNV as humans and most do not exhibit symptoms. Symptoms may be indistinguishable from those produced by other forms of equine encephalitis. The most common signs of WNV infection in U.S. horses have been ataxia (in-coordination, staggering, wobbling), weakness of limbs (inappropriate and protracted recumbency with difficulty standing up), recumbency, muscle fasciculation (muscle trembling / twitching), and death. Fever has been detected in less than one-quarter of all confirmed cases. One in three horses that exhibit symptoms of WNV will die or need to be euthanized.

Conversations with Missouri Department of Agriculture Veterinarians, local veterinarians and Fort Dodge product representatives suggest the following vaccination protocol:

Here are some Internet information resources that give an overview of WNV and summarizes last year's Missouri data.

RISE (Responsible Industry for a Sound Environment) has launched a comprehensive Web site about West Nile virus and mosquitoes. The web site, follows the progression of the deadly virus and how it affects people and pets. The site offers continuously updated news, statistics and analysis regarding the disease as well as tips on prevention and the safe and effective use of mosquito control products.

You could also review the article in the July 2002 issue of Ag Connection.

(Authors: Dr. Richard Houseman, Assistant Professor of Entomology, University of Missouri, and Mark Stewart, Livestock Specialist)

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What's In That Water?

Dripping Faucet

Livestock water is an overlooked nutrient and is actually the most important one. For example, a loss of 1/5 of body water causes death.

Factors influencing daily water intake requirements include:

Factors affecting intake include:

The following criteria should be considered when evaluating drinking water quality for livestock:

Water Puddle
  1. Odor and taste could be harmless in that they don't have an affect on health, however; it could play a role in productivity if the order and taste of the water causes a decrease in water consumption.
  2. Physio-chemical properties include pH, hardness, dissolved solids, and total dissolved oxygen. These usually do not present direct health risks but may indicate underlying problems. Excess of some chemicals normally found in water such as; nitrates, iron, sodium, sulfates and fluoride may be health risks or depress water consumption.
  3. Toxic substances may be common in water, but generally are below dangerous concentrations; examples of these are arsenic, cyanide, lead, mercury, hydrocarbons, organochlorides, and organophosphates.
  4. There really isn't any regulation on the maximum bacterial count for livestock water, but potential hazards might exist in some circumstances.

If you have questions about your livestock water supply take a water sample and send it in for analysis. Also, watch the behavior and productivity of your animals, if it is different or changes drastically, it might be due to the water your supplying to the animals. The Livestock Nutrition Laboratory Service in Columbia will analyze your water samples for minerals plus nitrate. Their number is (573) 445-4476 or for more information call your local County Extension Office.

(Author: Wendy R. Flatt, Livestock Specialist)

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Taxation Tidbits: Keeping Those Dollars Down On The Farm

Green Tractor

The new tax-cut package titled "Jobs and Growth Tax Relief Reconciliation Act of 2003" (JGTRRA) will provide substantial tax saving opportunities for farmers. The provisions offering the largest dollar savings are not new, but simply accelerated. Business owners will want to be aware of the following provisions of JGTRRA. All three of these provisions continue at least until 2005.

Section 179
This is the business asset expensing provision and the optional amount to be deducted each year has been increased from $25,000 to $100,000. This change is effective for qualifying property placed in service beginning in 2003. Reminder: Section 179 may be elected on qualifying new or used property.


Bonus Depreciation
Bonus depreciation was enacted following the 911 attacks to encourage businesses to acquire business assets. JGTRRA increased the first year bonus depreciation from 30% to 50%. However, the increased percentage is only available for qualifying property acquired after May 5, 2003. Additionally, as with the original provision - only new property qualifies for bonus depreciation.

Long-Term Capital Gains
A much debated, but surprise addition to JGTRRA was the lowering of the capital gains tax rates. For sales and exchanges after May 5, 2003 the maximum capital gains tax rate is reduced from 20% to 15%. Additionally, the 10% capital gains tax rate available at lower-income levels has been lowered to 5%. A quirk in JGTRRA has the 5% rate dropping to 0% in 2008, but just for one year. Given the frequency of tax law changes - don't bank on that 0% rate being available in 2008.

Of Special Note:
The long-term capital gains tax rate on the disposal of collectibles remains unchanged at 28% and the unrecaptured Section 1250 gain* will continue to be taxed at a 25% rate. (*Basically, unrecaptured Section 1250 gain refers to depreciation taken or allowable on depreciable real property at a rate greater than straight-line depreciation.)

(Author: Parman R. Green, Farm Business Specialist)

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Weekly Market Summary

The Missouri Department of Agriculture Weekly Market Summaries will no longer be mailed due to budget cuts. Click here to view online.

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Publishing Information

Ag Connection is published monthly for Central Missouri Region producers and is supported by University of Missouri Extension, the Commercial Agriculture program, the Missouri Agricultural Experiment Station and the MU College of Agriculture, Food and Natural Resources. Managing Editor: Kent Shannon.