The Economics of Beef Origin Labeling: From MCOOL to “Product of USA”
Eric Belasco, C-FARE Board Member and Professor at Montana State University
While many food products carry country-of-origin labeling (COOL), beef remains a notable exception. This can be confusing for consumers. Mandatory COOL (MCOOL), first authorized in the 2002 Farm Bill, required beef products to indicate where animals were born, raised, and slaughtered. However, after years of integrated trade across the United States, Canada, and Mexico under NAFTA, this requirement proved difficult to implement. Cattle frequently move across borders during production, complicating origin tracking.
In 2015, the World Trade Organization ruled that MCOOL imposed higher compliance costs on imported livestock while providing limited consumer benefit (Countryman and Bonanno 2020). Facing the threat of retaliatory tariffs from Canada and Mexico, the United States repealed MCOOL for beef in 2015.
The latest policy development in beef labeling is the voluntary “Product of USA” rule, which became binding on January 1, 2026. Unlike MCOOL, this policy does not require labeling and simply provides guidelines for when such claims can be made. To use the label, beef must come from animals that were born, raised, slaughtered, and processed in the United States.
What lessons from MCOOL help us understand this new approach?
First, labeling is not costless. The North American beef industry is highly integrated, and mandatory labeling required tracking and segregating cattle by origin. This increased operational complexity, reduced processing efficiency, and led some firms to avoid imported cattle altogether. The result was price discounts for foreign-born livestock and reduced cross-border trade—key factors in the WTO challenge.
Second, labeling only adds value if consumers are willing to pay for it. While earlier studies suggested consumers value origin information, evidence from actual market data tells a different story. Taylor and Tonsor (2013) found no significant change in meat demand following the introduction of COOL labels. In other words, consumers did not consistently reward labeled products in the marketplace.
Taken together, the economic evidence suggests that MCOOL imposed costs that exceeded its measurable benefits.
The current “Product of USA” rule reflects a different strategy. Rather than mandating labeling across the entire market, it ensures that voluntary claims are accurate. This addresses past concerns that imported beef could carry a U.S. label after minimal processing, while avoiding the system-wide costs of mandatory labeling.
Ultimately, the success of this policy will depend on consumer behavior. If origin labeling provides real value, firms will adopt it and consumers will reward it with price premiums. If adoption remains limited, it may suggest that demand for origin information is weaker than often claimed. Either way, the policy provides a natural test case for the role of labeling in agricultural markets—and an issue that will continue to generate important economic insights.
References
Countryman, Amanda M and Bonanno, Alessandro (2020). “A COOL Tale: Economic Effects of the U.S. Mandatory Country of Origin Labeling Repeal” Applied Economic Perspectives and Policy, Vol. 42, No. 4, pgs. 888-912.
Taylor, Mykel R and Tonsor, Glynn T (2013). “Revealed Demand for Country-of-Origin Labeling of Meat in the United States.” Journal of Agricultural and Resource Economics, Vol. 38, No. 2, pgs. 235-247.
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