The new year is always a good time for a fresh start and trying new beginnings. In the beef industry, this fresh approach came in the form of the National Beef Strategy. Officially unveiled on January 7, the National Beef Strategy is a collaborative effort by Canada’s national and provincial beef sector organizations. The strategy calls for a transformative change in how industry meets the challenges and opportunities that lie ahead with the goal to benefit all sectors of the industry. In other words, the National Beef Strategy is all about a new way of doing business.
The strategy is about how organizations can work together to best position the beef industry for greater profitability, growth and continued production of a high-quality beef product of choice in the world. This approach is especially important now as the record prices sustained in 2014 have given way to a new price environment going forward. Further, many of the factors which have brought prices to these levels continue to look supportive for the markets for the next one to three years. Improving economic conditions in the U.S., and a potentially weaker Canadian dollar are certainly positive moving forward. Projected lower beef production in North America, flat global production, and growing demand are all very positive for Canadian cattle producers.
- More ‘CCA Reports’ with Dave Solverson: COOL needs the right fix
As mentioned in my previous column, the Canadian Cattlemen’s Association (CCA) hit the road in January to attend the State Agriculture and Rural Legislators (SARL) and American Farm Bureau Federation (AFBF) meetings. The CCA made sure these organizations understand that Canada is serious about imposing tariffs on a wide variety of U.S. agriculture and processed products if the discrimination against our livestock caused by U.S. mandatory country-of-origin labelling (COOL) is not eliminated. In terms of resolving COOL, the CCA feels that the simplest solution (and one that the most people seem to agree on) is to repeal COOL for beef and pork. Ultimately, the provisions of the legislation that necessitate imported livestock to be segregated need to be eliminated. We reiterated that it is our sincere hope that the U.S. will act soon to prevent Canada from moving to the next phase of retaliation.
The threat of retaliation is clearly a concern for many U.S. legislators. At the SARL meeting, which was held from January 3-5 in Clearwater, Florida, Canada’s ambassador to the U.S., Gary Doer, indicated that Canada’s preference has always been to resolve the COOL issue through negotiation but since that has not been possible, Canada has no alternative left but to retaliate. Ambassador Doer assured the audience that the decision to retaliate if necessary has been considered widely in the Government of Canada and has the backing of Prime Minister Stephen Harper and will be followed through upon if Congress does not eliminate the need for imported cattle to be segregated in the U.S.
Following the ambassador’s remarks, many of the state legislators asked CCA vice-president Dan Darling what it was about COOL that has Canada so upset and how it could be fixed. Darling observed that many legislators have had only a vague idea about COOL and have neither supported nor opposed it, but now in the face of potential retaliatory tariffs want to know more about it. This was the intention of publishing the retaliation list early.
The CCA took the opportunity to explain that since COOL was implemented, our live cattle exports have been significantly reduced, with the most severe impact on finished fed cattle. The cattle exported are significantly discounted to compensate for the handling costs for the U.S. feedlots and packers that must segregate them to ensure they label beef in accordance with the COOL legislation. Moreover, since USDA changed the COOL rules in 2013, the cost impact has increased to about $100 per head. With cattle producers experiencing these discounts, many have exited the industry and expansion has not occurred.
Despite this negative impact to Canada, there has been little interest in the U.S. in correcting the situation, which is why Canada has sought a resolution through the World Trade Organization (WTO). WTO dispute settlement panels have ruled three times that COOL violates the WTO Agreements.
Instead of addressing these rulings, Congress and the USDA have appealed them to delay resolution and the only action they have taken is to make the situation worse. The CCA expects that by this coming summer either the U.S. will have to comply or Canada will implement retaliatory tariffs on U.S. exports to our market.
At the American Farm Bureau Federation (AFBF) annual convention in San Diego, the CCA ensured that America’s farmers and ranchers are aware of what is at stake and actively sought their assistance in bringing the COOL legislation into conformity with the WTO. AFBF’s position is that it supports COOL but feels it needs to be WTO compliant. I participated in a press conference to discuss Canada-U.S. cattle issues. COOL was a hot topic and we had excellent interest and questions from media.
My take-away from these meetings is that there is momentum to get a legislative fix for COOL. CCA will continue its lobbying efforts until a resolution that genuinely eliminates the discrimination is achieved.
Dave Solverson is president of the Canadian Cattlemen’s Association