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CCA Reports – for Dec. 7, 2009

Brad Wildeman is president of the Canadian Cattlemen’s Association

In my past few articles, I’ve been talking a lot about Canada’s beef and cattle industry competitiveness and the number of challenges we face that ultimately lower our competitive advantage. Left unchecked, feedlots and packing plants will diminish, greater numbers of cattle will be fed and slaughtered in the United States and increasing quantities of beef will be imported into Canada.

As one tool to enhance our competitiveness, the CCA believes that a promptly implemented plan to offset the cost of disposing specified risk materials (SRMs), as required by the enhanced feed ban, is needed. This government offset would only be a transitional measure until remedies are implemented to restore industry competitiveness.

In early November, along with colleagues from the dairy, processing, and rendering industries, I presented the CCA’s perspective on the regulations surrounding the removal of SRMs to the Standing Committee on Agriculture.

Because we compete in a North American cattle and beef market, it is not sustainable for the Canadian industry to incur these costs while the U.S. does not. We have already experienced plants going bankrupt or being closed because of their inability to compete with U.S. packers.

While we have created an extremely effective set of BSE eradication policies, they will be of little benefit to either the Canadian industry or Canadian consumers if Canadian beef is either not available, or priced out of the domestic market.

Unfortunately, the costs are highest in our smallest federal and provincially inspected plants, resulting in a number of closures or decisions not to process over-30-month (OTM) cattle. These operations are very important to the local rural economy and offer a nearby outlet to sell animals that cannot stand the rigours of long distance transport to market.

Over time, Canadian and U.S. regulatory officials must harmonize policies and costs in North America. Several positive actions, both from a trade and regulatory perspective, could be taken to lessen the variance. We are working with officials to improve the economics but we are talking about years before substantial reform can happen. It is obvious to us that while the policy track works toward restoring the competitive balance, immediate financial assistance is vital.

Given the differences in marketing and processing under-30-month (UTM) vs. OTM cattle, we believe different approaches are required for these two cattle populations. For UTM, we are working with government officials to identify an appropriate vehicle for providing the relief needed.

What are we asking for to deal with the OTM cattle population?

We have requested the Government of Canada to immediately create an OTM Cattle SRM Disposal Compensation Program whereby payment of $31.70 per head is given to abattoirs for every OTM animal slaughtered in Canada — whether it’s a federally or provincially inspected facility. Providing payment to the packers will provide incentive for them to bid higher to keep the cattle in Canada. Cattle producers will then benefit from both the payment and by sustaining slaughter capacity in Canada. With an estimated annual OTM slaughter of 750,000 head, the program would cost approximately $24 million per year.

The primary objective of any assistance must be to maintain OTM slaughter capacity in Canada. If we fail to achieve this objective, we will lose thousands of jobs throughout the nation, and Canadian beef and dairy cattle producers will be at the mercy of any disruptive U.S. trade rules that may be introduced in the future. All the excellent work we, in collaboration with the government, are doing to re-establish market access for Canadian beef will be wasted if we lose the capacity to slaughter our own cattle in Canada. And we are already seeing that as there’s been reduced OTM slaughter in Canada, and dramatically increasing beef imports in 2009.

It was also requested that this OTM Cattle SRM Disposal Compensation Program remain in effect until the SRM removal and disposal policies of Canada and the U.S. can be harmonized.

To read the full letter requesting the creation of the OTM Cattle SRM Disposal Compensation Program put forward by the CCA, Dairy Farmers of Canada, Canadian Federation of Agriculture and Quebec Beef Producers Federation, visit the CCA’s website at www.cattle.ca.

Stay tuned for details as the progress continues.

Other Actions

This OTM Cattle SRM Disposal Compensation Program is only one of the critical actions required to return profitability and confidence back into Canada’s beef and cattle industry. Further actions include the continued advocacy work for the necessary changes to AgriStability programs to make them effective for our industry. Another is the development of a national cattle price and basis insurance program for Canadian producers to allow them to better manage risk, with the same support from governments that they have shown to the crop insurance program for grain producers.

These, along with our international advocacy efforts to reopen markets for our products, can return our industry to the vibrancy it once enjoyed. But it requires action, not more discussion to achieve this.

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