Canadian Simmental Association - Canadian Cattlemen's Assoc. Reports

February, 2006

Canadian Cattlemen’s Association Monthly Report
By Cindy McCreath, CCA Communications Manager

Happy New Year

The Directors and staff of the Canadian Cattlemen’s Association wish you a happy and prosperous 2006.

Election 2006

The Canadian Cattlemen’s Association has sent a letter to each of the major political parties to provide the parties with the opportunity to comment on a number of issues facing the Canadian beef cattle industry.

The letter has been posted on the CCA website at http://www.cattle.ca/newsroom/NewsCurrent/2006%20election.htm Responses will be posted as they are received.

Japan Market Re-Opens

Canadian Cattlemen’s Association (CCA) President Stan Eby commended the Government of Japan on its decision to re-open its border to beef from Canada and from the U.S. Japan was Canada’s third largest market for beef prior to the market closing in 2003 following diagnosis of BSE in Canada. In 2002 Canada exported just over $81 million certain products that are difficult to sell in Canada. Selling these products into Japan helped increase the value of Canadian cattle.

“I’d like to express the appreciation of Canadian cattle producers to Canada’s team of negotiators that has worked hard to regain access to the Japanese market,” says Eby. “I would also like to acknowledge those who were serving on the Canadian Cattlemen’s Association Board at the time Canada’s cattle identification system was conceived. The Canadian Cattle Identification Agency had the foresight to build a system that is flexible enough to meet the industry’s changing needs. When the system was launched in 2001 we did not envision that we would need to be able to verify when our animals are born, but when the situation arose, we already had a system in place.

“Canada’s age verification system may prove to be a big advantage for Canada in the Japanese market. I urge all cattle producers to register their animals’ birth dates. I look forward to Canada’s aggressive re-entry into the Japanese beef market.”

World Trade Organization

While there was no major breakthrough at the World Trade Organization (WTO) negotiations, Canadian Cattlemen’s Association (CCA) representatives who attended on behalf of Canadian beef producers say modest progress was achieved. Progress includes establishing a timetable for tariff reduction formulas and domestic support reduction formulas, and agreement to eliminate all export subsidies by 2013.

CCA Director of Government and International Relations John Masswohl believes the beef industry has a key role to play in WTO negotiations. Masswohl says it was important to have beef, pork, grain and oilseed representation at the WTO talks to explain the importance of exports to these sectors. “There are other agriculture interests in Canada that are not export oriented. Their main interest is to prevent the Canadian negotiators from achieving an ambitious result.”

A photo of Canada’s beef industry representatives in Hong Kong is available at http://www.cattle.ca/media/pictures/photos.htm

Corn Duties

Members of the Animal Industry Corn Users Coalition are concerned with the decision to impose provisional duties on imports of U.S. grain corn. The duties imposed December 15 amount to $1.90 CDN ($1.65 US) and will add a feeding cost of up to $100 CDN per head of cattle finished in corn-feeding regions such as Ontario. The Animal Industry Corn Users Coalition is comprised of the Canadian Cattlemen’s Association, Canadian Pork Council, and Animal Nutrition Association of Canada.

The duty on corn imports means Canada’s feed costs will be higher than those in the U.S. and Canadian cattle feeders will be less competitive. U.S. cattle feeders will be able to outbid Canadian cattle feeders for cattle and increased livestock exports to the U.S. could draw further trade challenges. The BSE crisis encouraged processing capacity expansion in Canada. The duty will discourage the feeding and processing of animals in Canada and will undermine the livestock industry’s recovery efforts.

The Coalition is exploring with government the use of drawback and remission programs to safeguard their domestic and export interests. The Canadian International Trade Tribunal will issue a final injury decision in April.

Cattle Market Year-End Review

“We’re ending 2005 in much better shape than we came into the year,” says Anne Dunford, Canfax senior market analyst. “We’ve seen prices, especially for under 30 month cattle, significantly better than we’ve seen for two-and-a-half years.”

Average fed steer and heifer prices for 2005 will be $85.50 per hundredweight. That’s an increase of $10 compared to the start of the year. Prices as year’s end were in the range of $100 per hundredweight. Feeder cattle prices jumped 25 percent during the year.

The number of cattle being processed in Canada increased two percent in 2005 to 4.1 million head of cattle. Total beef exports for the year will reach 480,000 tonnes, an increase of five percent over 2004. Canadian beef exports to the U.S. will be at or slightly above the 2002 figure of 380,000 tonnes.

“We’re continuing to see very strong demand from U.S. cattle feeders for Canadian feeder cattle. Exports are above the five year norm prior to BSE,” adds Dunford. Canfax figures show between 15,000 to 20,000 head of finished cattle and 9,000 to 10,000 head of feeder cattle are being exported weekly.

Beef Information Centre

The Beef Information Centre (BIC), a division of the Canadian Cattlemen’s Association, has received the 2005 Pinnacle Award for Supplier of the Year from Foodservice and Hospitality Magazine. The award recognized BIC’s efforts in response to the BSE crisis and its outstanding contribution to the foodservice and hospitality industry.

BIC was instrumental in keeping the foodservice industry informed about the implications of the BSE situation. Through phone calls, newsletters and ongoing industry updates BIC assured their industry partners that Canadian beef was safe and offered information that foodservice operators could pass along to their customers. BIC also provided materials to restaurants across Canada enhancing their positive message around support for the beef industry. As a result, consumer confidence remained strong.

BIC worked directly with foodservice representatives to keep Canadian beef on their menus, and in light of the supply situation this meant providing information on new beef cuts that may not have been previously utilized. As a result restaurants tweaked their menus to include secondary cuts. New menu items as well as commitment from restaurants to continue to use Canadian beef benefited beef producers across the country.

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December 2005

Canadian Cattlemen’s Association Monthly Report
By Cindy McCreath, CCA Communications Manager

USDA Second Rule

Work is now underway to encourage the United States Department of Agriculture (USDA) to move forward as quickly as possible with its second rule to permit importation of a wider list of products, including over 30 month cattle going direct to slaughter and beef from over 30 month cattle. The rule will likely also include breeding cattle born after a certain date to be defined by USDA. The Canadian Cattlemen’s Association (CCA) recognizes the importance of the U.S. market to seedstock producers and is working to have access for breeding and milking cattle included in the next rule. While it’s clear that enactment of a second rule will not be an overnight process, no one can be certain exactly how long it will take. CCA is actively lobbying to move the process along as quickly as possible.

World Trade Organization

A new global agreement on agricultural trade will be forged at the World Trade Organization (WTO) Ministerial Meeting in December, and the Canadian Cattlemen’s Association (CCA) will be there representing Canada’s beef cattle producers. Negotiations involve 148 countries and will be held December 13 to 18 in Hong Kong.

WTO agreements are negotiated once every 15 years and this is a critical negotiation for Canada’s beef cattle industry. For beef exports to fully recover and continue to grow, Canada must achieve more market access and fair market access. For Canadian agriculture to excel, Canada must see support programs in other countries lowered, new markets established, and fairer trade market access.

Verified Beef Production Gains Momentum

The Verified Beef Production Program is gaining momentum across Canada with 2,500 producers now having taken the training component of the program. The voluntary, producer-led program was introduced in 2003.

The goal of the program is to build on the beef industry’s excellent food safety record to continually reinforce consumer confidence. Producers are required to take a half day training workshop. Benefits to producers include improved use of inputs and increased buyer confidence. Some new processing plants have indicated that participation in the program may be a requirement as they develop new niche markets.

Terry Grajczyk, national manager of the Verified Beef Production program, says producers who take the training may have been doing all the right things but are made more aware of the risks at farm level and how to manage them. “It just tweaks an understanding of better practices,” she says. For more information Grajczyk can be reached at 306-737-2290.

Canadian Pork and Beef Processors Seeking Positive Outcome, Reduction of Tariffs at WTO Negotiations

Canada’s pork and beef processors say they’re ready to compete in international markets, and they’re looking to Canada’s negotiators at the World Trade Organization (WTO) to ensure they get the opportunity. Meat is one of the most protected commodities in the world with one of the highest average tariffs. Canadian pork and beef processors want to see a reduction of tariffs across agricultural sectors both within Canada and abroad when countries attempt to reach a WTO agreement in Hong Kong next month.

“Market access is critical for a small plant such as ours,” says Dave Price, Chairman of Sunterra Group, a pork, lamb and beef processor. “The Canadian pork, beef, and processing sectors are competing in international markets and showing that we can succeed, but we need assurance of market access. We’re not looking for special protections, we’re simply asking for a fair market environment in which to compete so that we may grow our business and our contribution to the Canadian economy. We need Canada’s WTO negotiators to be at the table in Hong Kong negotiating hard for tariff reductions.”

Greg Whalley is President of Britco Pork and a Director of the Canadian Meat Council. The Canadian Meat Council represents Canadian federally inspected meat processors. Whalley says while exports are a small percentage of his sales, his company and others like it are dependent on the export market nonetheless. “If the major Canadian pork processors lose access to export markets they will force more of their pork into the domestic market. That means fewer sales for smaller companies like ours, and possibly a loss of domestic processing capacity for Canadian hog producers.”

Whalley adds that he is interested in growing his export business which would allow him to increase hog purchases. He is also looking to Canadian negotiators to help negotiate a WTO agreement that reduces tariffs and secures market access for Canadian products.

In 2004 Canada exported $2.6 Billion worth of pork and $1.9 Billion worth of beef and veal into international markets. Canada exported pork to over 100 countries in 2004 with the top markets being the United States and Japan, followed by Australia, South Korea, Mexico, China, Russian and Taiwan. Canadian beef and veal was exported to over 65 countries in 2004 with top markets being the United States and Mexico followed by Macau, Hong Kong and Philippines.

The Canadian Meat Council and Sunterra Group are members of the Canadian Agri-Food Trade Alliance (CAFTA). CAFTA represents agricultural sectors united in their dependence on trade and in their need for a liberalized international trading environment. For more information about CAFTA visit www.cafta.org.