Food labeling will cost $2.5B a year, ag department says

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 the trade-off is worth the price.

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

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

The new label requirements will kick in Sept. 30, after years of political wrangling. They will 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 could influence retail purchases during food scares, such as the current salmonella outbreak, which has sickened more than 1,300 U.S. citizens 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., told the Agriculture Department during public comments.

Labeling will impose new administrative burdens on business, with consumers ultimately shouldering the cost.

Also, consumers could miss labeling when they matter most.

Recent salmonella cases, for instance, struck diners eating salsa at small Mexican restaurants in the Southwest. The label law exempts restaurants and salad bars.

The Agriculture Department reported Friday that the startup 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 Friday. "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."