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News Roundup – for Dec. 12, 2011

POLITICS

MANITOBA BEEF PRODUCERS SET AGENDA

Manitoba Beef Producers (MBP) delegates debated some 30 resolutions at their annual meeting in November, held in conjunction with the Manitoba Beef Expo at Brandon. Many of the resolutions revolved around what newly elected president Ray Armbruster refers to as the competitiveness of the province s beef industry.

I welcome the challenge and opportunity to lead the MBP and take this responsibility very seriously because I care deeply about the industry. I ve been involved in raising my own cattle since I was 12 years old, so am fully committed myself, and have a stake in the future with our daughter and son-in-law and our son now involved in the operation. So I look at these things through their eyes, too, he says. The Armbruster family runs a 200-head commercial cow-calf operation with purebred Shorthorn and Angus cattle near Rossburn in the Birdtail Valley, bordering Riding Mountain National Park.

In his sixth year as a director, Armbruster has been a Manitoba representative to the Canadian Cattlemen s Association for the past three years and currently serves as its representative on the board of the Canadian Forage and Grasslands Association.

Though their ranch sustained some water damage this spring it wasn t to the degree experienced by many producers who made Herculean efforts to move their cattle to safety under horrid conditions. It was only when flooded land started to reappear after a couple of months under water that producers began to realize the full extent of the damage. Fences and forage were destroyed and debris strewn across once-productive hay fields and pastures. In some areas, the cattle won t be coming home this winter.

Early on the province announced a forage shortfall program to help producers move cattle and forage, however the funds have been slow in coming. Armbruster says MBP will be vigilant in monitoring the progress of those payments.

One resolution calling for MBP to lobby the province for a zero-till program, including equipment to assist in rehabilitation of damaged land, received unanimous approval. Many beef producers don t have field equipment so it isn t feasible for them to go out and make these large purchases, says Armbruster. Some conservation districts already provide equipment, setting a precedent for one way to deliver such a program.

It will be quite some time before things return to normal for producers in the Lake Manitoba area affected by the Portage Diversion, and the Shoal Lakes watershed where consecutive wet years have turned three smaller lakes into one big one. Some producers were receptive to taking a provincial buyout for their flooded properties, but others want their land and roads back and a strategy for moving forward.

A resolution supported the construction of a drain to bring the Shoal Lakes down to a manageable level was supported by producers but the association also plans to lobby for flooded land purchased by the province to be designated as agricultural Crown land rather than set aside as a natural reserve or for recreational use.

The producers also adopted a new policy manual that allows the MBP to work with government in developing a comprehensive, long-term water strategy for Manitoba.

Cattle dealer bankruptcy was another fresh issue on the minds of delegates after several producers lost money when a dealer declared bankruptcy earlier in the year. We are looking for some security and protection for payment. We would like the government to have more oversight and performance on licensing and bonding livestock dealers to ensure they are in good standing before a situation deteriorates, says Armbruster. The meeting also directed the board of directors to investigate the feasibility of an insurance program patterned after the one in Alberta.

A resolution to lobby for the elimination of the Manitoba Cattle Enhancement Council (MCEC) checkoff was carried after much discussion. The MCEC was created by the province to expand federally inspected packing plant capacity in Manitoba, however, a business plan for a proposed beef plant recently failed after Ottawa diverted promised funds into a hog plant instead. Producers are definitely saying that after paying into it for five years, they want to see something for it. MBP will move cautiously in dealing with this complicated issue and is willing to have further discussion, Armbruster says.

The province s four-year mustering fee to cover the cost of rounding up cattle to be tested for tuberculosis in the Riding Mountain Eradication Area (RMEA) ended this year. The delegates directed their organization to ask the provincial and federal governments to reinstate the fee and each contribute $6.50 per head along with $1 per head from MBP to cover producers full cost of getting these cattle together for testing.

Armbruster knows first-hand about the stress of mandatory testing every two to five years on cattle and producers, while dealing with the risk of a quarantine, or losing their livestock hanging over their head. A mustering fee only helps to soften the blow, but it s only a tiny part of it, he explains. Producers have done their part, but haven t had much support and we have lost a lot of producers from the area over this.

The RMEA was established to eradicate tuberculosis from wildlife and domestic livestock in the eradication area and MBP feels that the province is not meeting its obligation as far as testing wild animals to establish the level of risk and a plan to eradicate it. This is an issue that needs leadership, direction and support from the provincial and federal governments, he says.

An emerging animal health issue for Manitoba producers is the rising incidence of deer liver flukes affecting cattle in the past two years. Producers have reported heavy losses, likely due to wet springs and summers, which are compatible with the life cycle of this parasite. Since no effective treatment is available for this parasite in Canada, MBP is looking for compensation for losses due to deer liver flukes.

Emergency drug release is another ongoing issue, and one that affects the competitiveness of all Canadian producers. U.S. producers have access to drugs not approved in Canada. The national Veterinary Drug Directorate has made good progress in clearing the four-year backlog of drug applications and is working to harmonize regulations, but the fact remains that in emergency situations producers need product now, not yesterday.

Competitiveness of the beef industry relative to other agricultural sectors is also very important in my mind, Armbruster says. Producers who must compete for acres and cattle will be on the losing edge without a level playing field interms of programs compatible with other sectors. Toward that end, resolutions were carried in support of seeking compensation for wildlife damage to standing forages, adding annual ryegrass to the list of insurable forages, excluding two or more consecutive disaster years for insurance coverage and productivity indexes, and a tax deferral on all types of livestock to the next fiscal year.

Among the other resolutions discussed were traceability (tag retention and ensuring Manitoba s premises identification system is compatible with the Canadian Livestock Tracking System are issues), full production-cost compensation for livestock killed by predators, gopher control, payment to producers for ecological goods and services, and increasing measures to control invasive plant species.

TRADE

WTO RULES AGAINST U.S. COOL

An international body has ruled the United States law requiring mandatory country-of-origin labels on beef, pork and produce vio
late its commitments to global trade rules.

The ruling released last month by a panel of the World Trade Organization s Dispute Settlement Body (DSB), is seen as a clear win for Canada, which has fought the law through diplomatic and WTO channels for years before and after it was imposed.

The law, dubbed COOL, was conceived in Washington s 2002 Farm Bill but didn t come into force until September 2008. It orders U.S. retailers to notify their customers, by way of labelling, about the sources of foods such as beef, veal, pork, lamb, goat, fish, fruits, vegetables, peanuts, pecans and macadamia nuts.

Both Canada and Mexico have long contended that COOL violates international trade laws, restricts market access and is a technical trade barrier. Canada in late 2008 formally challenged COOL at the WTO, which convened this DSB panel on the case in November 2009.

Canadian livestock groups add that the law has forced unnecessary costs on U.S. meat processors, who currently must either segregate Canadian animals and meat for labelling purposes, or limit their imports from Canada.

Inconsistent

The DSB panel classifies COOL as a technical regulation under the WTO s Agreement on Technical Barriers to Trade (TBT) and ruled the label law inconsistent with the United States WTO obligations.

Specifically, the DSB said, COOL breaks the TBT Agreement by according less-favourable treatment to imported Canadian cattle and hogs than to like domestic products.

The panel went on to say COOL which the U.S. government has previously touted as a way of educating and informing U.S. consumers does not fulfil its legitimate objective of providing consumers with information on origin and also breaches the TBT Agreement in that respect.

The TBT Agreement was set up following the Tokyo Round of GATT negotiations in 1979, with the goal of preventing governments from imposing non-tariff trade barriers dressed up as technical regulations and standards.

Unreasonable

Apart from the TBT violations, the DSB panel also condemned an open letter sent to U.S. food processors by U.S. President Barack Obama s agriculture secretary Tom Vilsack in February 2009.

Vilsack in the letter had urged processors to apply stricter and broader labelling practices, or else he would review the COOL law s language with an eye on tightening restrictions even further.

The DSB ruled the suggestions for voluntary action in Vilsack s letter went beyond certain obligations under the COOL measure, and that the letter therefore constitutes unreasonable administration of the COOL measure under Washington s obligations to the 1994 GATT (General Agreement on Tariffs and Trade).

Vilsack s letter, when released, was seen as a blow to Canada, which had previously gone so far as to put its December 2008 WTO challenge of COOL on hold.

Until his letter s release, it had appeared that the previous interpretation of the COOL rule, near the end of the administration of then-president George W. Bush, wouldn t seriously hinder imports from Canada.

U.S. Eyes Options

The U.S. will now be required to bring COOL into conformity with its WTO obligations, the Canadian government said. However, Ottawa warned, if Washington decides to file an appeal at the DSB, it could delay the outcome.

The U.S. Trade Representative s office suggested as much in its initial reaction to the DSB decision.

We are pleased that the panel affirmed the right of the United States to require country-of-origin labelling for meat products, Andrea Mead, press secretary for the USTR, said in a statement.

Although the (DSB) panel disagreed with the specifics of how the U.S. designed those requirements, we remain committed to providing consumers with accurate and relevant information with respect to the origin of meat products that they buy at the retail level, she wrote.

In that regard we are considering all options, including appealing the panel s decision.

The Canadian Cattlemen s Association noted in a separate release that Washington, in theory, could also just ignore the DSB panel s decision. Doing so, however, could eventually put Canada in a position to apply retaliatory options, such as new or higher tariffs on imports from the U.S.

All that said, we hope the U.S. will decide that complying with the WTO ruling will be in its best interest, the CCA said.

In its talks with U.S. lawmakers, the CCA said, we do not ask for the outright repeal of COOL, but seek only those regulatory and statutory changes necessary to eliminate the discrimination that COOL has imposed.

Clear Win

Federal Ag Minister Gerry Ritz called the DSB ruling a clear win for our industry& This day has been a long time coming but, by working closely with our cattlemen and pork producers, we have paved the way for a stronger and more profitable livestock industry.

CORRECTION

There was an error in an item titled Tax Tips, pg. 42, November, 2011 issue. The article suggests livestock producers may defer livestock sales through a public auction market to a subsequent taxation year. In fact, this cannot be done. We apologize for any confusion this has caused our readers.

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