COOL: Preliminary cost impact analysis

How much will COOL cost? The USDA's interim final rule says this about the regulatory impact:


Preliminary Regulator Impact Analysis
Summary of Comments: Numerous comments were submitted stating that USDA underestimated the implementation and maintenance costs of the COOL program. One commenter stated that the implementation costs plus two years of maintenancevcosts totaled $49 million. Another commenter provided anvestimated total implementation cost of $236,000 for planning,vsoftware, training, and capital. It provided an estimated annual maintenance cost of $279,300 for maintenance of hardware/software, operation costs, and packaging. Their
reported net economic impact was -$516,200. A third commenter stated that retailers experienced actual first year implementation costs of $9,000 to $16,500 per store for seafood
labeling, and intermediary suppliers experienced costs between $200,000 and $250,000 per firm. They reported that one retailer saw a $0.07 per pound (less than 2 percent) increase in cost of goods from its suppliers directly attributable to the requirements necessary to comply with country of origin labeling. A fourth commenter discussed the capital expenditures necessary to meet the product segregation requirements for beef and pork slaughter plants. This commenter estimated that cost to exceed $2 billion. The commenter stated their belief that even
with those plants that can be identified as “All-American” and exempt from the segregation requirement, the cost still could exceed $1 billion. Agency Response: While the Agency believes its analysis conducted in the PRIA in 2003 was accurate for that time, the Agency has conducted a new economic impact analysis because economic conditions have changed, updated data are available, and additional commodities have been added. The commodities to be regulated by this regulation are muscle cuts of beef, lamb, goat, pork, and chicken; ground beef, ground lamb, ground chicken, ground goat, and ground pork; perishable agricultural commodities; ginseng; peanuts; macadamia nuts; and pecans.

The results of this updated analysis show estimated first year incremental cost for growers, producers, processors, wholesalers, and retailers at $2.5 billion. The estimated cost to the United States economy in higher food prices and reduced food production in the tenth year after mplementation of the rule is $211.9 million. The Agency also re-estimated the paperwork costs and estimated those to be $126 million in initial and startup costs during the first year and $499 million per year to store and maintain the records thereafter.