September 13, 2004

Canada Offers New Aid For Ailing Beef Industry

Canada announced C$488 million in new aid on Friday to help the beef industry recover from a ban on live cattle shipments. The ban was imposed by the United States after the discovery of a case of mad cow disease last year.

Agriculture Minister Andy Mitchell said the assistance package will help ease dependency on trade with the United States, the top buyer of Canadian cattle and beef, even though the government's aim is full resumption of U.S. live cattle trade.

"What we are seeking to do with today's announcement is to reposition the beef industry so that it can return to profitability with or without a border opening," Mitchell said.

The federal government will spend C$66.2 million on a "loan loss reserve" fund so that farmers and others seeking to expand and build slaughter plants can more easily attract financing from lenders, Mitchell said.

It will also give almost C$385 million to farmers in cash advances and feed programs so that farmers can voluntarily hold back cattle from the market to better match supply to capacity, Mitchell said.

Canadian farmers have struggled with low prices for a growing surplus of cattle since the country's first home-grown case of bovine spongiform encephalopathy, or mad cow disease, was found in Alberta in May 2003.

While trade for some cuts of beef with the United States and Mexico resumed a year ago, Canada does not have enough slaughter plants to handle all the cattle it produces.

The government also opened the door to organizing a cull of older, unproductive animals from herds, but no details were available.

Since the case of mad cow disease, older livestock have become worthless because their meat cannot be exported.

($1=$1.29 Canadian)