As our Oct. 23 issue of Canadian Cattlemen arrives in your mailbox the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union will have been in force for about a month.
Not much has happened since it came into force on September 21, at least as far as the beef industry is concerned, but that’s not surprising. Exporting Canadian beef to Europe has to be viewed as the epitome of the long game… very long.
Canada was immediately granted a duty-free quota of 9,300 tonnes of fresh beef and 2,500 tonnes of frozen for the remainder of 2017. On January 1 our quota jumps to 14,400 tonnes of fresh and 5,000 tonnes of frozen, and it steps up each year from there until it tops out at 35,000 tonnes fresh and 15,000 frozen in 2022.
According to the material put out by Ottawa, this agreement can potentially increase our agri-food exports by $1.5 billion per year, with a $600 million boost in beef sales, $400 million in pork and $100 million more for grains and oilseeds.
That’s the long view. The short view is very little of this quota will be filled by Canadian producers or Canadian companies over the next couple of years, perhaps longer.
In 2016 Canadians marketed 156 tonnes of beef to France for $1.68 million. It was our largest European customer by volume that year. The Netherlands bought another 136 tonnes for $2.64 million, and that was pretty much it for our shipments to the EU in 2016. So you can see that we have a ways to go before we meet those predictions or worry about overfilling our quota.
While CETA has given us unprecedented access to one of the richest markets in the world, it will almost certainly remain tantalizingly out of reach until a dependable supply chain is established and filled with EU-certified steers and heifers. And that will take some time. Just how long is something for the future and enterprising producers and packers to sort out.
The challenges of servicing the European market are well documented.
First, it won’t accept hormone-treated beef and that is never going to change. The Canadian government officially recognized that fact earlier this month when it ended its decade-long dispute with the EU and withdrew its complaint from the World Trade Organization, giving up any right to retaliate against this policy.
In actual fact, that issue was buried some years ago. According to John Masswohl, the Canadian Cattlemen’s Association (CCA) director of government and international relations, the cattle industry signed off on this change back in 2009 in exchange for added duty-free tariff rate quota that was added to a similar quota agreed to by the U.S. and shared amongst all beef-producing countries.
During the CETA negotiations the EU agreed to add Canada’s portion of the shared quota to a new quota that can only be used to import Canadian beef. Now that the CETA has been implemented and the new quota is operational, Canada simply recognized that prior agreement and withdraw its complaint.
The other major hurdle is the EU’s refusal to recognize the safety of the carcass washes North American packers use in conjunction with steam pasteurization and hazard management to control bacteria in their plants.
The industry is sponsoring research to prove the safety of these washes, and the results will be added to applications to have this technology recognized by various European health and safety officials. The prediction is that it will take at least two years to complete this work. As to when the European officials will respond, we have no way of knowing.
If these predictions are accurate, the CCA is hopeful that larger plants may start purchasing EU-eligible cattle by later 2019 or early 2020. One hopeful note along this line is that the JBS plant in Brooks was added to the EU list of eligible establishments to slaughter and process beef in August of this year; Cargill’s High River plant was scheduled to be approved this month.
Previously only the Bouvry plant in Fort Macleod and Premier Meats in Lacombe were on the approved list of federally inspected plants, although a recent CCA release suggested smaller regional packers are also looking at this market.
The only thing missing now is the cattle. That too is not unexpected. There are a lot of rules to raising beef for the EU market. To be eligible the cattle must be enrolled with the CFIA and certified by a veterinarian selected by CFIA from birth to feedlot and into the approved plant. In other words, calves born and enrolled this coming spring wouldn’t be market ready until 2020.
The details for this program are too involved for this space but can be found on the CCA website.
At one time this would have seemed too much of a gamble to bank on, but today, with a growing number of cattle being raised under select regimens for integrated supply chains, it doesn’t seem that far-fetched. Like most things, it will depend on the money.
But you can see what I mean by the long view.