US TRADE UPDATE
On November 19th, 2007, the United States
Department of Agriculture (USDA)’s Rule #2 became
effective – opening the US border to older Canadian
cattle and beef.
Under this rule, any live animals – breeding or for
slaughter – born on or after March 1st, 1999 are eligible
to be exported to the United States as well as beef
products of any age. Cattle must be identified with an
ear tag and unless they are direct for slaughter, have to
have some form of permanent identification such as a
tattoo or a brand. Blood and blood products, casings
and parts of the small intestine are also eligible for
export, subject to certain conditions. There is no
longer a “not pregnant” requirement for live exports.
The Canadian Cattlemen's Association (CCA) worked
actively with the Canadian Food Inspection Agency
(CFIA) to prepare for the rule and to determine producer’s
requirements under it.
There is still opposition to Rule #2. The Ranchers-
Cattlemen Action Legal Fund (R-CALF) and other
opposing groups filed for a preliminary injunction
against the rule. CCA is taking every measure to fight
these legal challenges. However, approximately 9,200
head of older cattle were exported to the United States
in three weeks and the longer the rule stays in effect,
the more optimistic we are that it will remain in place.
On November 26th, R-CALF’s deadline to file for an
appeal to the US Supreme Court, regarding Rule #1,
passed. This means that R-CALF can no longer get a
permanent injunction against the rule to allow cattle
under-30-months of age (UTM) to enter the United States.
At the beginning of November 2007, the USDA
announced it would be conducting increased testing of
Canadian meat and poultry products for E.coli 0157:H7,
listeria monocytogenes and salmonella. However, on
November 28th, it resumed normal testing levels after
the period of increased testing did not reveal any problems
with Canadian meat products and an audit by the
USDA of Canadian plants concluded that Canadian
meat is produced safely. Normal levels of testing
resumed for listeria monocytogenes and salmonella in
ready-to-eat products and testing for E.coli is at the same
level as other countries.
INDUSTRY FACES FINANCIAL CRISIS
Factors such as high grain prices, a weak US dollar,
and increased regulatory, fuel and labour costs have
resulted in a financial crisis for an industry that hasn’t
fully recovered from the drought in Western Canada
and the BSE crisis.
CCA developed several short-term recommendations to
help ease this situation and has presented these
to the federal government on numerous occasions.
The goal is two-fold: to get an immediate cash infusion to
the industry so that it can survive and to address the
suite of business risk management programs which are not
meeting the needs of most producers.
In particular, CCA requested a special advance based on
each producer’s ending 2006 cattle inventory, as listed
on their Canadian Agricultural Income Stabilization
(CAIS) supplementary form. It also recommended that
the federal Advance Payments Program (APP) be decoupled
from a producers’ reference margin. Over the
past several years, a series of disasters, both natural and
due to BSE, have caused reference margins to decline,
which is leaving CAIS largely ineffective. As well, they
are linked to the APP so producers are finding it difficult
to access these funds. It also recommended eliminating
the viability test and caps of any kind.
On December 19th, Ministers of Agriculture from federal,
provincial and territorial governments announced that
there would be support programs available to cattle and
hog producers. The APP was changed so that even producers
who have a negative reference margin can borrow
up to 50% of the value of their animals. However, all
other support falls under the current suite of business risk
management programs and is therefore not adequate to
meet industry’s needs. CCA will continue to press for
changes to these programs and is encouraging producers
to do the same.
CANADA RECEIVES CONTROLLED RISK RATING FROM OIE
In May, the World Organisation for Animal Health
(OIE) officially categorized Canada as a controlled risk
country for Bovine Spongiform Encephalopathy (BSE).
Canada was one of six countries (including the United
States, Switzerland, Taipei-China, Chile and Brazil) to
receive this positive rating.
The OIE’s science-based categorization system provides
the framework for fair and standardized international trade
based on the safeguards that trading partners have
The OIE has three categories of risk: negligible,
controlled and undetermined. Controlled risk means the
country has implemented safeguards to effectively control
BSE according to the OIE international guidelines.
This status clearly recognizes the effectiveness of Canada’s
interlocking, multi-layered safeguards and acknowledges
the work done by all levels of government, the cattle
industry, veterinarians, and producers to effectively
manage and eradicate BSE in Canada, and shows the
rest of the world that Canada is a safe trading partner
of quality beef.
CCA is encouraging Canadian government officials to
utilize the new OIE designation as an opportunity to
renew expanded market access for Canadian beef and
cattle exports. Since Canada received the rating,
Taiwan lifted its four-year ban on Canadian
boneless beef from UTM cattle.
REGULATORY ENHANCEMENTS TO FEED BAN
On July 12th, 2007, the enhanced feed ban became
effective meaning that livestock feed, pet food and
can no longer include Specified Risk Materials
(SRMs) from cattle as an ingredient or input. It had been
prohibited to feed SRMs to cattle and other ruminants
since 1997, but the new rule expanded the prohibition
to hogs, chickens and all other animals, including pets.
This enhanced feed ban imposed many additional
operating costs on packers and abattoirs that produce
the SRMs and the renderers that process the SRMs.
Traditionally, cattle waste material containing SRMs
was rendered into meat and bone meal (MBM). Prior
to the enhanced feed ban, this MBM was worth about
$200 to $220 per tonne; however, the new regulations
have made this material nearly worthless. Partly due to
the added costs for new infrastructure as well as the
loss of revenue from MBM, a few plants have had to
reduce their processing and lay off employees. CCA is
concerned that the higher costs associated with the
feed ban will have a negative effect on the industry,
relative to its competitors. These costs could result in
more Canadian cattle going to the United States for
processing, after significant investments have been
made by industry and governments to increase
capacity in Canada since 2003.
CCA and the Canadian Meat Council’s request that the
federal government create a $50 million transition fund
for up to two years to help offset some of these costs has
not been accepted to date. CCA is continuing to press
for this and is looking at other options to reduce costs.
WTO AGRICULTURAL NEGOTIATIONS
After being suspended for nearly a year, the World
Trade Organization (WTO) negotiations resumed after
the Chairman of the negotiations, Crawford Falconer,
released a text outlining the possible parameters of an
agreement for the WTO negotiations. These negotiations
present Canada with an important opportunity to address
issues such as high tariffs and global subsidies that
production and prices.
There seems to be a commitment to reach an agreement
and it appears that all countries are prepared to move
a little with the expectation that other countries will do
the same. This is generating a positive atmosphere, and
although complex work remains to be done, it is clear
that momentum is building.
Canadian agricultural exports generally face some of By
Brooke Hunter, CCIA Communications Coordinator
the highest tariffs remaining in existence. Currently, the
average world tariff on agriculture is 60%, distorting
the international market by $US 29 billion annually,
and meat is the most “protected” commodity in the
world with an average tariff of 80%. In comparison,
the average industrial tariff is 4%.
BLUETONGUE-RELATED IMPORT REQUIREMENTS ELIMINATED
CCA is pleased that the government of Canada implemented
new import regulations so that US cattle can
now enter Canada without any bluetongue-related
As one of its top priorities for a number of years, CCA
commissioned and funded vector research on bluetongue
to better understand the risk involved with this
disease. After careful analysis of this research, it was
determined that the risks are negligible for a number of
reasons, namely that the capacity to spread the disease
is extremely limited in the Canadian environment.
Bluetongue also does not pose a risk to human health.
The new regulations will use a permit-based system for
most ruminant animals imported from the US. This system
will enable the Canadian Food Inspection Agency
greater flexibility to modify import requirements and to
be responsive to changes in animal health situations
and international standards in a timely manner through
adjustments in import conditions.
CCA COMMITTEE REVISIONS
Two committee revisions were made during CCA’s
annual general meeting in March 2007. The Beef
Quality and Grading committee was replaced by a new
committee called the Value Chain and Competitiveness
committee. This standing committee will continue to
address quality and grading issues, but its mandate will
be expanded to better identify areas for improvements that
could increase the value for Canadian cattle and beef. This
may include determining ways to improve communication
throughout the value chain and identifying how our
industry can improve Canada’s reputation as a leader
in animal health and food safety.
The Environment and Animal Care committee was
separated into two committees: the Environment
committee and the Animal Care committee. Animal
care continues to be a growing issue. As international
standards are developed through the OIE, it is important
that the Canadian industry stay closely involved in these
processes. To better address these issues, a separate
was formed to focus solely on animal care issues.