July 23, 2012

 

Canada to ensure cattle producers obtain best price locally, internationally

 

 

Ensuring that producers get the best possible price for their beef products and live cattle at home and abroad is one of the priorities of the Canadian Cattlemen's Association (CCA), said CCA president Martin Unrau.

 

"The strategy of CCA is to obtain the highest price for every piece of an animal; it doesn't matter to what country it goes. The importance of being able to trade with as many different countries as possible is what is ultimately important to gain that highest value," Unrau told a town hall meeting in Chesley on Wednesday (July 18). It's one of a handful of meetings being held across the country to bring producers up to date on key issues affecting the industry.

 

Unrau said negotiations on a comprehensive economic trade agreement (CETA) with the EU -- the biggest deal since the North American Free Trade Agreement was launched in 1994 with Canada, the US and Mexico -- are crucial to the future growth of the beef industry.

 

"The importance of this deal is that we are going to be able to move beef into the EU unrestricted and to be able do it in an economically profitable way for Canadian producers . . . We meet with our government negotiators regularly (and) the agriculture negotiators from the Canada/EU trade negotiations. Even two weeks ago we met with them again to ensure that they were on the right page with what we had to have as a beef industry to support this deal," he said.

 

Overall the Canadian beef and cattle industry is healthy with US$33 billion in sales. Domestic consumption of beef is down slightly due partially to high prices but Unrau expects that to improve in the near future with plans to market beef in a more positive way.

 

"I think it's important to note that domestically produced beef is produced in a very safe and healthy environment. Beef is good for you. Things of that nature would help us to move forward in moving consumption back up," he said.

 

Unrau is optimistic that two recent World Trade Organisation rulings in favour of Canada's appeal of the US government's mandatory country of origin labelling (COOL) will remove a key barrier to increased sales of Canadian beef and other commodities in the US.

 

The 2002 American Farm Bill requires retailers to inform consumers the country of origin of certain agricultural commodities. More than 60% of Canada's beef and cattle production is now exported and over 80% of those exports go to the US. Canada appealed the legislation, calling it prejudicial to Canadian products. The WTO ruled in favour of Canada last November. The US appealed that ruling. That decision came down just a couple of weeks ago on June 29 and Canada was again successful.

 

"Yes we got what we wanted. The ruling was that discrimination against Canadian cattle had taken place in the US which is contrary to the NAFTA agreement," said Unrau, who is unsure if the Americans will abide by the ruling.

 

If they don't he says there are plans to impose sanctions on Canada's biggest trading partner.

 

"We know there is an election coming up in the US and this is not a top priority for them at this time. We're going to watch this for some time to ensure that it's done in a proper and accurate manner. If things don't fall out in a way that we feel is beneficial for us and the WTO ruling isn't adhered to, there will be retaliation on that. But we don't want to talk about retaliation at this time. We want to resolve this without that," Unrau said.

 

The CCA continues to press the federal government for a national price stability programme for beef producers that would ensure them a guaranteed price when they sell their animals to market, similar to policy in place in Alberta which appears to be working well.

 

"I believe in June there were some contracts where they were paying out as much as US$100 per animal, which is positive. The volatility in the marketplace is what we're trying to avoid with this programme. It is said to be actuarially sound in Alberta. This is what we're asking for," Unrau said.

 

Unrau said the biggest challenges today for prospective farmers continue to be raising enough capital to get into the cattle business.

 

"(The cost of) feeder cattle are high; the cow-calf pairs are high, breeding stock is high. All around we're seeing enormous costs. One of biggest challenges for a young cattleman or any farmer of any type is the capital cost. It's a decision that has to be made by everyone wanting to get into the industry but that is a tough one," Unrau said.

 

John Masswohl, CCA's director of government and international relations, told about 100 producers at Wednesday's (July 18) meeting that the current drought, said to be affecting 55% of US agricultural lands -- the worst since 1956 -- is expected to have positive and negative effects on Canadian grain, hay and cattle sales.

 

"It's going to take a lot of feed grains and a lot of grass out of the North American feed market. There may be opportunities for people in Canada who have grain or grass (hay) to sell at very favourable prices in the US, but I would think, come this fall, we'll probably see a lot of US feeder cattle coming to western Canada," said Masswohl, a former Canadian trade officer in Washington.

 

For the most part weather conditions in western Canada are much more favourable than here in Ontario which will encourage some expansion of the beef industry in the west.

 

"I think in the longer term (the drought) is going to continue to prevent the expansion of the North American cattle herd. We're going to start to see some smaller expansion in western Canada. We're either going to stay flat here in Ontario, in the east, or contract a little more, but I don't think the US is at all thinking of expansion," said Masswohl, who predicts those conditions could extend higher beef prices into the future. "So I think there are both positives and negatives of this situation," he said.