Food labels are expected to cost businesses $2.5 billion

WASHINGTON — American companies will spend $2.5 billion next year complying with new country-of-origin food label rules, the Agriculture Department now estimates.

Consumers will pay, too. But in return, they'll know more about what they're eating. In the wake of a salmonella outbreak that's been traced to Mexican-grown hot peppers, some think that the trade-off is worth the price.

"Consumers want to know where their food comes from," said Barry Bedwell, the president of the California Grape and Tree Fruit League, based in Fresno, Calif. "We see this very much as a reasonable approach."

The department published its cost estimates this summer in a 45-page assessment in the Federal Register, the official document for federal rule-making. They're markedly lower than the department previously had estimated.

The new label requirements will kick in Sept. 30 after years of political wrangling. They'll cover beef, chicken, fresh produce and frozen fruits and vegetables, among other products.

In theory, the labels will enable consumers to pick foods prudently. This particularly could influence retail purchases during food scares, such as the current salmonella outbreak, which has sickened more than 1,300 U.S. residents since April.

"To me, it is scary to buy food that you don't know how or where it was grown," Paula J. Quell, a resident of Merriam, Kan., advised the Agriculture Department during public comments.

The trade-off is that labeling will impose new administrative burdens on business, with consumers ultimately shouldering the cost.

Consumers also could miss labeling when it matters most. Recent salmonella cases, for instance, struck diners eating salsa at small Mexican restaurants in the Southwest. The label law, though, exempts restaurants and salad bars.

The Agriculture Department reported this month that the start-up costs will be followed by $499 million in annual maintenance costs. Critics previously have contended that the Agriculture Department has been exaggerating the costs.

"This rule potentially will have an impact on all participants in the supply chain," the department noted. "The greatest impact (will be) on retailers and intermediaries — handlers, processors, wholesalers, and importers — while the impact on individual producers is likely to be relatively small."

The department added that "the expected benefits are...difficult to quantify" but probably will be "small."

The department's assessment offers some hints of how much more consumers might pay. For instance, retailers' implementation costs are pegged at 7 cents a pound for beef and 4 cents a pound for pork.

The average individual U.S. producer will shoulder initial costs of $376 and the average U.S. retailer will face initial costs of $26,149, according to the latest estimate.

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