June 4, 2009

The prospect of being able to export to the high-value EU market could prompt Canadian cattle producers to shift to hormone-free raising methods, while the grain sector is also looking at the European market eagerly.

 

The Canadian beef industry has taken hits in recent years from low prices and prohibitive US food labelling laws. Still, a potential trade agreement with the EU will be powerful enough to transform the industry, according to John Masswohl, director of government and international relations for the Canadian Cattlemen's Association.

 

If access to the rich European market is secured, Canadian beef farmers could justify paying the 20- to 30-percent higher costs of raising hormone-free cattle that is acceptable to the EU, said Masswohl.

 

Beef processors would also consider building slaughter plants dedicated to hormone-free cattle if they are assured of demand, he said.

 

But to make it all happen, negotiators would have to overcome a two-decade-long standoff on North American beef and differences in meat-packing standards on the two continents.

 

Hormone treatments are widely used in raising North American cattle to speed up growth and reduce feed costs, but the EU has banned beef from hormone-treated cattle due to health concerns. However, Brussels and Washington has recently come to an agreement; the EU will compensate the US by allowing it to export 20,000 hormone-free tonnes of beef per year for the next three years tariff-free.

 

Canada, hoping for similar access as compensation, is carrying out negotiations with the EU separately from free-trade talks, of which the first round is expected in autumn. 

 

Europe consumes eight million tonnes of beef per year but produces only 7.5 million, but it also represents a high-income market that exporters covet.

 

If Canada could ship 500,000 to 600,000 tonnes of beef to Europe, it would create demand for at least two million head of cattle and put the industry into aggressive expansion mode, Masswohl said.

 

The grain sector is also looking at the possible trade deal excitedly. Canadian milling wheat with the highest protein content is currently under no tariff or quota, but restrictions apply against medium- and lower-quality wheat.

 

Easing the restrictions would give Canadian farmers a huge advantage, especially organic farmers, said Janelle Whitley, trade policy analyst for the Canadian Wheat Board.

 

Canada exported two million tonnes of spring wheat and durum to the EU in 2006-07.

 

Free trade will create a more stable and transparent for Canadian growers, Whitley said.

 

The EU could also become a key market of Canadian pork, especially hams that Canada produces in surplus, said Jacques Pomerleau, executive director of Canada Pork International, the industry's marketing promotion agency.

 

But free-trade talks on pork would need to address the EU's bureaucratic quota system, tariffs varying within the quota from EUR100 (US$142) and EUR400 (US$567) per tonne and the strict approval process for foreign packing plants, Pomerleau.

 

Currently, only one processing plant in Canada has EU approval.