April 16, 2004

Canada To Build More Beef Plants In Mad Cow Aftermath

Canada should build more beef packing plants to lower its dependence on live cattle exports to the United States, a Senate committee said on Thursday.
 
A report from the committee, which is examining Canada's first home-grown case of mad cow disease, said the change would leave farmers less exposed during trade bans like the ones that followed the case of the disease.
 
"The beef industry we developed in Canada is very vulnerable, and is far too dependent on the will of our main trading partner," the report said.
 
Before mad cow disease shut down Canadian beef trade last May, Canada produced about 1.2 million tonnes of beef annually, exporting the equivalent of 400,000 tonnes in the form of live cattle to the United States, according to industry statistics.
 
The U.S. Department of Agriculture is reviewing rules on restarting trade but has not said whether or when borders will open.
 
Joyce Fairbairn, a Liberal senator from southern Alberta's cattle country who helped draft the report, said there is room for new players in the Canadian packing industry.
 
"We have to build in a different capacity and a more extended capacity to be able to deal with these things when they happen," Fairbairn told Reuters.
 
She said new packers could gear production toward market niches, and noted that groups in Alberta, Ontario and Atlantic provinces are already working on new plants.
 
Beef exporters agree that more Canadian processing capacity would help reduce future risks to trade.
 
"Live cattle are politically the most sensitive as well as the most difficult from a scientific perspective to deal with," Ted Haney, president of the Canada Beef Export Federation, said in an interview.
 
He said Canadian processors were currently able to handle about 3.5 million animals a year, but Canada could be self-sufficient if it developed room for another one million head through expansions, several smaller new plants, or a new, world-scale plant.
 
That would require up to C$250 million ($187 million) in investments, as well as training up to 3,000 new workers and finding markets for 400,000 tonnes of beef, and could be possible by 2010, he said.
 
But Haney said governments should stay away from direct investments and instead help out with infrastructure, training, and competitive taxes.