On several fronts 2012 will be a very good year for the beef industry. Prices are currently high enough to put a smile on even the most cautious face and some of the shackles on our trade with the U.S. and the rest of the world are showing signs of weakening.
On the supply side it looks like it will be another few years before we see any appreciable increase in the North American herd, despite the record-high prices south of the border. Overall supplies will remain tight for the foreseeable future and that should keep the pressure on the price side of the equation. It all depends on demand and that s one area that needs some shoring up.
Per capita consumption of beef continues to slip in small increments year by year, so the demand index bounces up or down depending on the price people are willing to pay for their beef. In 2010 it slumped by more than four per cent from the year before. This is where we will look to the newly formed Canada Beef Inc. to hold the line now that its six-month transition period wraps up this month.
I don t know if it is fair to say we will turn a corner on the trade front in 2012 but it certainly should be an exciting year.
The WTO has now made it official. U.S. COOL legislation is in violation of the trade agreements signed by the U.S. Specifically, says the panel, the U.S. fails the test because it treats imported livestock less favourably than similar domestic livestock; and it does not even provide the consumer information on the origin of a meat product that it claims as justification for the harm it causes Canadian producers.
As you might expect the reaction has been mixed. Every organization and government in Canada is delighted and see this decision as a clear win.
In the U.S. the National Cattlemen s Beef Association and the Texas Cattle Feeders Association agree with the panel ruling and have advised the U.S. government not to appeal the ruling but to get on with fixing the law so it will comply with WTO rules. That s not unexpected. Both groups opposed COOL from the beginning.
With equal certainty, R-CALF USA came out screaming about the injustice of it all, claiming U.S. sovereignty is being usurped by foreigners. In a press release, R-CALF noted the panel was made up of diplomats from Pakistan the country that harboured Osama bin Laden Switzerland, and a former WTO employee, and called on the U.S. to withdraw from the WTO. The U.S. Cattlemen s Association took a similar, although less reactionary position.
The U.S. Trade Representative s (USTR) office was a little cagier, stating it had to review the ruling carefully before responding. Mind you, it s known since May that the case would go against the U.S., but to be fair it has had quit a few other issues on their plate this year. The U.S. has until mid-January to appeal the ruling.
You have to wonder what grounds they would come up with to reverse an unanimous decision by a duly appointed dispute panel. The USTR s opening position is that it is pleased to see the panel affirmed the U.S. s right to require country-of- origin labelling on meat. We will have to wait and see if they are willing to do it in a way that complies with international trade agreements.
It s ironic that just a few days earlier U.S. Trade Representative Ron Kirk had listed the trading standards the U.S. would be looking for from Canada to gain its support for membership into the Trans-Pacific Partnership (TPP). His list included stronger protection of intellectual property rights, additional opportunities for U.S. goods, services, and investment, and the elimination of various non-tariff barriers.
If I was a betting man I would lay my money on the U.S. appealing the ruling if for no other reason than to drag it out until after the U. S elections in November. We ll know more in 2012.
The new year could also be the year we finally see some progress in Korea. Now that South Korea has ratified its free trade agreement with the U.S. it is time that Canada to raise the profile on these negotiations.
Japan is also showing signs of raising its import restrictions from 20 to 30 months of age on beef. This may only be another feint by Japanese officials but the fact President Obama mentioned beef imports in his talks with Japan s Prime Minister about its entry into the TTP is a positive sign.
The one sure change in 2012 is the elimination of the Canadian Wheat Board s monopoly on western grains. So, anything is possible in this magical year.
There s a lot to look forward to and we at Cattlemen would like to get started by wishing you and yours a very Merry Christmas and a profitable New Year.