December 16, 2005

 

Canada's livestock production cost to rise with US corn import duties

 

 

The Canada Border Services Agency's decision to impose duties on US grain corn entering Canada will result in huge costs for Canada's hog and cattle producers, according to a statement from the Animal Industry Corn Users Thursday.

 

"The duties imposed December 15 amount to C$1.90 per bushel or about 75 percent of the price at Chatham, Ontario last week, resulting in a cost of up to C$100 per head of cattle in corn-feeding regions such as Ontario," said Ian McKillop of the Canadian Cattlemen's Association (CCA).

 

Clare Schlegel, President of the Canadian Pork Council (CPC), meanwhile, said "the duty will add up to C$20 to the cost of feeding each hog".

 

Livestock and meat exports by Canadian hog and beef producers total about C$8 billion a year.

 

"We are working with Agriculture and Agri-Food Minister Andy Mitchell and International Trade Minister Jim Peterson to improve our access to important markets like Japan, Korea and the EU and we have been urging the government to deal with US grain subsidies through the multilateral WTO process," Schlegel said. "There is little point in using our Canadian trade laws to deal with US subsidies; Canada is simply too small a market for US corn to force a policy change."

 

With the new duty on US corn imports, Canada will be less competitive because the feed costs will be higher than in the US, he added, noting that US producers will be able to outbid Canadian outlets for weanling pigs and feeder cattle.

 

Schlegel said increased livestock exports to the US will draw attention that could result in further trade challenges.

 

The BSE crisis has encouraged the beef industry to expand processing capacity in Canada, the release said. The threat of US duties on live hogs last year has similarly encouraged more pork processing in Canada. The new duty on US corn imports will also discourage the feeding and processing of animals in Canada, thus undermining the livestock industry's recovery efforts, the release said.

 

The representatives of the CCA and the CPC said they had been working with the corn producers to explore alternatives to import duties that would address their grievances, including improved safety net programs. However, recently announced new government money failed to turn off the complaint.

 

Together with the Animal Nutrition Association of Canada, CCA and CPC have formed a coalition known as Animal Industry Corn Users. Its objective is to defend its industries' mutual interests before the CBSA and the Canadian International Trade Tribunal (CITT).

 

"The CITT will issue a final injury decision in mid-April," Schlegel said. "We are confident we can demonstrate there is no causal connection between grain corn imports and US subsidies on the one hand, and the injury claimed by the corn growers on the other."

 

The Canadian industries were also working with the government to explore the use of drawback and remission programmes to safeguard their domestic and export interests, the release said.