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CCA REPORTS – for Sep. 12, 2011

Over the summer I ve had the opportunity to meet with a number of producers both informally and at meetings like our CCA semi-annual and convention. Optimism among producers regarding the cattle industry is at the highest it s been in some time. There are several factors influencing the favourable position the industry finds itself in: new market access agreements, growing global demand for beef and tighter North American cattle supplies.

Perhaps one of the biggest signs of change has to do with the performance of beef and live cattle prices during late July and August as the U.S. debt ceiling deliberations and subsequent downgrade by Standard &Poor s ratings agency were taking place.

Despite the financial turmoil and market uncertainty, beef and live cattle prices have stayed remarkably resilient. In Canada, prices are being supported by tight supplies with slaughter down 12 per cent year to date. As a smaller feeder crop comes forward, competition by feedlots for placements is strong, supporting prices at levels not seen since early 2002.

U.S. demand for beef has strengthened from the lows seen in the second quarter of 2010 and are now back at 2009 levels. The U.S. market is being supported by export opportunities and growth. Supplies are projected to be steady with year-ago levels through first-quarter 2012 as cattle are being placed early because of drought bringing cattle off grass.

At the same time, market access continues to improve. Exports are of vital importance to the Canadian cattle industry and every new market access agreement presents new opportunities for producers. Finding the highest-value customer for each cut and product from every animal that we produce is essential to maximizing returns for producers.

The Canada-Colombia Free Trade Agreement (FTA) came into effect on August 15. The Colombia- Canada FTA will provide duty-free access for up to 5,250 tonnes per year of Canadian beef and offal. Canadian beef exports to Colombia annually could exceed $20 million under the agreement.

In early August, I joined Prime Minister Stephen Harper and International Trade Minister Ed Fast in Bogota, Colombia, to mark the start of the Canada-Colombia FTA. We met with Colombian President Manuel Santos, and he relayed to me his enthusiasm for strengthening Colombia s trade relationship with the Canadian beef and cattle industry. While Colombians are pleased to have immediate duty-free access to our high-quality beef, they are also very interested in our world-class livestock and genetics.

I want to thank the Prime Minister for placing such a high importance on specific market access opportunities for Canadian beef and cattle. I was once again able to share with the Prime Minister our dependency on competitive market access, and I can tell you that he is very supportive of that priority.

The Government of Canada also announced negotiations to modernize the Canada-Costa Rica FTA to improve Canadian beef access. A 15 per cent tariff on Canadian beef is currently in effect.

Canadian producers of live breeding cattle, goats and sheep now have market access to the Vietnamese market for the first time since 2003. The Vietnamese market is worth up to $50 million.

Progress continues on the Korea file and I m optimistic that we will be exporting beef there by the end of the year. In late June, Canada announced it had reached a science-based technical agreement with South Korea as a step toward restoring market access for Canadian beef. The breakthrough agreement represents $30 million by 2015 for Canadian beef producers.

We continue to follow Korea s progress regarding the procedural steps that must be completed in the technical agreement before Canadian exports of UTM beef can flow. If it appears Korea is not proceeding in good faith, we will advise our government to request that the WTO case be reinstated.

With South Korea working to resolve market access issues, finalizing the Canada-Korea Free Trade Agreement has become a high priority for the CCA.

Technical negotiations with China based on the agreement signed by Prime Minister Harper and Chinese President Hu continue. Beef trade experts believe China could become a very valuable market in the years to come.

These market access breakthroughs are attributable to the hard work of Agriculture and Agri- Food Minister Gerry Ritz and International Trade Minister Fast. Minister Ritz is to be congratulated for his tireless efforts to improve market access for Canadian beef. His hard work has paved the way for the many market access opportunities that have come to fruition, including the Canada- Colombia FTA.

On the WTO front, the final World Trade Organization report on Canada s country-of-origin labeling (COOL) case was issued to the parties on July 29th. It remains confidential until it is translated and circulated to the WTO membership this fall. Our advocacy work in Washington, D.C. around COOL continues on a number of fronts along with discussions around possible remedies and solutions.

It has been a busy and productive summer. I am encouraged by the positive developments in our industry and the optimism held by many producers. The market is showing resiliency in the face of external market factors, demonstrating the strong fundamentals that exist. I look forward to the new opportunities that lay ahead for this industry and remain optimistic about our future as Canadian cattle producers.


TravisToews ispresidentof theCanadian Cattlemen s Association

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