April 16, 2004

Report: Canada Beef Industry Too Reliant On Live Exports

The federal government must invest in Canada's ability to process its own meat if it wants to prevent a future case of mad-cow disease from wreaking havoc with the economy, a new senate committee report recommends.
 
"We believe that there is going to be another case of BSE," said Donald Oliver, chairman of the Standing Senate Committee on Agriculture and Forestry, which produced the report.
 
"We have got to take public policy steps now by legislation and rules and regulations to make sure the impact is never again as bad as it has been for this one BSE cow," he said.
 
The report also calls on Canada and its North American trading partners to harmonize their health and sanitation standards for livestock and meat, and set up a permanent agricultural secretariat who would use the standards to regulate trade flow scientifically.
 
A single case of bovine spongiform encephalopathy (BSE) detected in an Alberta beef cow last May crippled Canada's beef industry - worth about $7-billion in cash receipts one year earlier - because of the industry's heavy reliance on exports of live cattle, almost exclusively to the United States, the report says.
 
About 40 per cent of Canada's exports of beef and beef products in 2002 were composed of live cattle, because of a lack of infrastructure to process cattle at home. Eighty per cent of Canada's capacity for slaughtering heifers and steers is concentrated in only two packing plants in Alberta.
 
If Canada wants an industry that is less vulnerable to the will of other countries it must reduce its dependence on live cattle exports and rely on its own processing capabilities, the report says.
 
The report's findings are based on two months of submissions made to the committee by stakeholders, including meat producers, cattle farmers, retails and agriculture experts in the government.
 
The report calls on Ottawa to funnel some of the venture capital funding announced in the budget into developing a long-term vision with the industry for developing further processing facilities.
 
The shutdown of international borders to all cattle and beef following the mad-cow case last May resulted in a drastic oversupply of cows and calves at home that caused market prices to plummet.
 
In July, 2003, the price for slaughter cattle in Alberta was about 35 per cent of price before the U.S. border closed. Market receipts for cattle and calves in the third quarter of 2003 tumbled to less than $500-million - down 73 per cent from the $1.8-billion recorded in the third quarter of 2002.
 
The United States, which accounts for more nearly all of Canada's exports of live cattle and more than 70 per cent of beef products, announced in August a partial re-opening of its borders - one that excluded live cattle - and the border remains closed to live cattle exports today.
 
The overall vulnerability of the industry is tied to the export of live animals, which pose more complex health problems than meat, present a potential risk to other animals and have a limited shelf life and daily carrying costs, the report says.
 
As a result, interest increasing producer-owned slaughtering capacity is on the rise across the country.
 
The family-owned enterprise Sunterra Farms, for example, has founded Rancher's Beef Ltd.
 
Ownership is open to anyone who wants to invest in the co-operative, which has already received commitments from 50 producers in Alberta, British Columbia and Saskatchewan.
 
The facility will comprise a processing plant with the capacity to slaughter 250,000 heads of cattle per year, along with feedlot operations with links to cow-calf farmers.
 
Ranchers will develop and market its own branded beef products by providing a supply chain that offers consumers complete traceability, from the young animal to the final meat product.
 
It will be controlled by producers, who will share in the chain's profits.
 
The report suggests that the government provide funding for such initiatives from the $270-million announced for venture capital funding in last month's budget.
 
Still, there will continue to be exports of live animals, and trade will have to be grounded in rules and science, the report says.
 
"Given the integrated nature of the cattle industry in North America, it must be recognized that the Canada/U.S. border is an arbitrary line that has little effect on the safety of beef consumed on the continent," it says.
 
The report recommends that safeguards in every aspect of the cattle industry be consistent on both sides of the continent's borders, and a consistent protocol be followed to contain disease when it arises, so that markets could continue to function.