“Made in USA” Labeling Ruling Finalized
The United States Federal Trade Commission (FTC) has issued a ruling regarding ‘Made in USA’ (MUSA) product labeling claims. The ruling will take effect on August 13, 2021. A public workshop and a Notice of Proposed Rulemaking comment period were accomplished by FTC, where the rule gained “nearly universal support for a rule addressing MUSA labels.” This rule will condemn marketers who make false, unqualified claims that their products are MUSA. Under the new rule marketers making such claims on labels should be able to prove that their products are “all or virtually all” made in the United States.
A recent study in Marketing Science revealed that consumer demand for products declines when the packaging and marketing materials removed the claim, "Made in USA", and increases when the claim was featured. The authors of the study also discovered that while the impact of sales is lacking to influence the companies to manufacture products in the US, it is enough for the company to use misleading MUSA claims. The new FTC ruling is targeted to alleviate this issue by monetarily penalizing the company for each violation.
“Today, the Federal Trade Commission took important steps to enhance its ability to enforce the Made in USA standard. I congratulate the FTC on strengthening this important protection for American consumers,” said United States Department of Agriculture (USDA) Agriculture Secretary Tom Vilsack, in a press release. “American farmers and ranchers depend upon those same labels to convey information about their products that consumers value and demand. We have taken note of the many comments submitted to USDA and the FTC regarding meat labeling and understand that the current “Product of USA” label on meat products may no longer effectively serve either of those purposes, to the detriment of consumers, producers, and fair and competitive markets,” Vilsack continued.
Many in the agricultural industry have commended the USDA for taking necessary steps regarding beef labeling. "The 'Product of the USA' label is not subject to source verification, is not tied to any kind of food safety standard and is applied by packers and retailers in a manner that does not deliver value back to the cattle producer. This label not only misleads consumers, it is yet another barrier to producers gaining leverage and distinguishing their product in the marketplace," said the National Pork Producers Council (NCBA) President Jerry Bohn. "NCBA members have voiced concerns about the potentially misleading use of the label, and we thank USDA for responding to those concerns and recognizing that non-source verified labels are a disservice to producers and consumers alike. We look forward to working with USDA to find labeling solutions that represent investments made by producers to continually improve their product and meet consumer demand."
Shortly after the FTC rule, The White House issued an Executive Order on Promoting Competition in the American Economy. Within the order, the Biden Administration states it will:
Directs USDA to consider issuing new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.
Directs USDA to consider issuing new rules defining when meat can bear “Product of USA” labels so that consumers have accurate, transparent labels that enable them to choose products made here.
Directs USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmer’s markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.
Encourages the FTC to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs—such as when tractor companies block farmers from repairing their own tractors.
The order has bipartisan support. “I am fully supportive of ensuring that meat labels are clear and accurate for consumers. The current ‘Product of the USA’ label for beef does not convey accurate information to consumers and fails to help American ranchers distinguish their product in the meat case. I believe multiple new voluntary labels such as ‘Processed in the USA’ and ‘Born, Raised, and Processed in the USA’ should be developed to help U.S. ranchers differentiate the wholesome, safe, and nutritious beef they raise,” said Senator Roger Marshall (R-KS).