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News Roundup – for Sep. 12, 2011

RESEARCH

FINDING OTHER USES FOR SRM

Research at the University of Alberta has led to the discovery of a process to convert specified risk material (SRM) into heavy-duty plastics for industrial uses. In August, David Bressler, an associate professor of bioengineering and fermentation with the department of agricultural, food and nutritional sciences, and Philip Choi, a professor from the chemicals and materials engineering, filed for patent on the new thermal plastic-making process.

Bressler says since 2004 his team had been working with renderers to find uses for other animal proteins. In collaboration with industry, governments and other researchers, they refocussed their efforts in 2007 to look at plastics with support from Prionet, the Alberta Prion Research Institute and the Alberta Livestock and Meat Agency.

There are many different plastics for many different uses currently made from non-renewable petrochemicals, he explains. The goal of the research was to develop a plastic from cattle byproducts that would meet the specifi cations of the auto industry. Since the auto industry has the most stringent requirements, the plastic could then be made suitable for other uses by altering its flexibility.

By filing for the patent, we have demonstrated that the process works. Now, we are still working to develop recipes for different flexibility properties, he says. It remains to be seen whether a new company will be formed to commercialize the process, or if one of the industry partners that have been involved in the project will step up to take ownership.

The University of Alberta is the only post-secondary facility approved by the Canadian Food Inspection Agency (CFIA) to conduct this type of research involving the use of SRM.

The CFIA guidelines for disposal of SRM allow for it to be permanently contained by burial, or destroyed by incineration, thermal (high temperature) hydrolysis, or caustic (chemical) hydrolysis, Bressler explains. Approximately 5,000 metric tonnes of SRM goes into landfills each week because it is the least-expensive method of disposal, however, that land can never again be used for agricultural purposes and the practice has created a huge expense while eliminating an important source of revenue for the beef industry.

The new plastic-making process relies on either thermal or caustic hydrolysis to meet the CFIA s requirements for SRM disposal. In its development, we have conducted testing to make sure that there is nothing left of the original material, Bressler states. Therefore, there are no special requirements for the disposal of the plastic products once they reach the end of their lifespan.

The research team hopes that the discovery will divert the valuable protein in SRM from landfills and recapture some of the value lost to the beef industry with the introduction of the enhanced feed ban.

On other fronts the Calgary-based company, BioRefinex Canada, is developing a biorefinery in Lacombe that will use thermal hydrolysis to turn 55,000 tonnes of SRM waste per year into use-able organic fertilizer or biogas.

Then there is the $10 million the Government of Canada recently loaned Cargill Meat Solutions to purchase and install equipment to utilize SRM and compost material to produce energy in the form of steam and electricity for Cargill s High River facility rather than ship it to a landfill.

Once operational, the equipment will provide 80 per cent of the plant s energy needs, reducing fossil fuel requirements. This includes capturing methane off of the waste treatment plant and converting it to energy.

That project is slated for completion in May 2012 at a total cost of $36 million.

The federal enhanced feed ban also increased deadstock disposal costs for cattle producers which is the subject of another research project at the Lethbridge Research Station to see if composting carcasses effectively breaks down BSE prions.

These researchers have successfully identified and characterized a new bacterial species that effectively breaks down keratin and appears to be an important proteolytic microbe during composting. Information on the fate of prions during composting has been a regulatory impediment to the adoption of composting as a method of SRM disposal. This team has developed a method to measure prions in compost and has shown that up to 40 per cent of scrapie prions (which are more resistant than the BSE prion) were degraded during a single large scale composting cycle.

The first summary of this research should be published this fall.

MARKETING

ECONOMISTS BUOYANT ABOUT BEEF OUTLOOK

A positive outlook for the future in a global climate of political, economic and consumer unrest was what the over 300 attendees at ILC Beef 2011 wanted to hear, and with some cautions, they got their wish. Government, industry and consumer outlooks point to opportunities for growth, but new approaches from production to marketing are required across the board.

Canadian Cattlemen s Association (CCA) vice-president Martin Unrau opened the Congress saying the industry focus must be on opening doors to new Asian markets.

Glen Hodgson, senior vice-president and chief eonomist for The Conference Board of Canada, also identified the Asia Pacifimarket as the future. We are in unchartered territory and need to redouble our efforts to make gains. The world economy has been recovering since 09, it just doesn t feel that way due to economic shocks, consumer fears, heavy debt burden and media coverage, he said.

The U.S. economic crisis, the EU s financial instability, and Japan s natural disaster, which took six per cent of GDP out of their second quarter and revealed the fragility of the global supply chain undermined global market confidence and potential growth.

Countries like Canada, whose federal deficit will go down, are in a much better position to experience growth in the coming years, if new markets are secured, added Hodgson.

In analyzing the North and South American economies, Hodgson said that while Canada s growth is real and U.S. growth is artificial, the growth in South America, particularly Brazil, is extraordinary.

Producers were advised to plan for a strong Canadian dollar, reduced production expenditures and rising labour costs and shortages.

We are forecasting a very strong real business investment growth in technology, to cope with a tight labour market, said Hodgson, adding flexibility, innovative solutions and developing new markets were needed to achieve sustainable growth.

Jean-Philippe Gervais, senior economist at Farm Credit Canada, added that with much of the beef industry s exporting success tied to new markets in Asia, Canada s beef industry must adapt to capture some of this growth.

With 97 per cent of the world s future population growth coming from less advanced countries, like China, India and Africa, food demands will grow and the beef industry can benefit, said Gervais. But, the regions that will grow the most are also the most closed (due to tariffs).

Despite the positive outlook, Gervais allowed that the international market is a complex one and volatility would remain an issue.

The EU, Canada s second-largest trading partner, is also showing some market potential, and The Canada-EU Comprehensive Economic and Trade Agreement is a priority for the Canadian government.

Gilles Gauthier, chief agriculture negotiator for Agriculture and Agri-Food Canada, said the focus was on increasing the current EU imports of beef products to more than the current $2.2 billion, and getting a foot in the door for the substantial opportunity their five per cent import opening offers.

For meats, the EU is essentially a closed market due to current trade barriers, said Gauthier, who wants to see Canada in the top 10 suppliers, along with South America, the U.S. and Africa.

Underlying many of the global trade issues is the continuing lack of agreement on technical protocols.

To get into the EU, Canadian cattle production protocols must change, said Mark Klassen, CCA director of technical services.

We hope to have this resolved in two years time, said Klassen, a key factor in the successful expansion into developing markets, including China and Russia.

In addition to political, export and production challenges, the beef industry is also facing consumer-driven concerns ranging from the mild to the militant.

The beef industry has to pay much more attention to what consumers say they want and can afford to buy, said American agri-business consultant Bill Hemming, referring to the hamburger society.

Commenting on a 2010 consumer meat study, Theresa Dietrich, principal, People Talking Market Research Services, Toronto, reported price, origin and humane practices were the top-three concerns, with 35 per cent of Canadian consumers caring a lot about buying Canadian beef.

From an opportunity perspective, the beef industry should take advantage of this consumer expectation, said Dietrich.

We need to go online and into social media, as well as our traditional promotions, added Dietrich, who sees much of future consumer communication taking place on the Internet.

The one-size fits all retail channel won t work, said Jeff Doucette of Sales is Not Simple in Calgary. We need to focus on driving consumer demand through non-price promotions.

He recommended making the meat section come alive through innovative merchandizing, taking a lesson from the growing popularity of farmers markets, and paying attention to consumer interest in organics and food safety.

MARKETING

VIETNAM OPENS TO CANADIAN CATTLE

In what the Canadian government calls a milestone decision, Vietnam became the first Asian market since 2003 to accept live Canadian breeding cattle, sheep and goats in August. It s a market worth about $50 million a year.

The Vietnamese industry has expressed strong interest in live cattle from Canada as well as live sheep and goats, the government said.

Vietnam was one of many export markets to close its ports to Canadian beef and cattle in 2003 following Canada s confirmation of its first domestic case of BSE in an Alberta cow.

Hanoi consistently indicated it would take a phased approach to resume Canada s access to the Vietnamese market, first on beef, then on cattle. All Canadian beef from animals of all ages was granted full access in July last year.

Canada also has access to Vietnam for beef offal (heart, liver, and kidney); bovine semen and embryos; ovine (sheep) semen and embryos; and caprine (goat) semen and embryos.

The agreement also gave the go-ahead to a co-operative project announced last October between the Canadian Livestock Genetics Association (CLGA) and Vietnam s National Institute of Animal Sciences on livestock genetics improvement for sheep and goats in Vietnam.

Canada also opened talks to expand its 2002 free trade agreement with Costa Rica last month.

Among other things the talks aim to broaden the market access for more products such as Canadian beef that was excluded from the original trade pact and later banned by Costa Rica following confirmation of BSE in 2003.

Costa Rica fully reopened its ports to Canada s beef in February this year, but its 15 per cent tariff on imports of Canadian beef remained in effect.

The potential to export Canadian beef to Costa Rica may be small& but it is unacceptable to have beef remain excluded entirely from any agreement, Canadian Cattlemen s Association foreign trade chair and MacGregor, Man., producer Martin Unrau said in a separate release. We want this omission to be corrected.

The value of Canada s pre-BSE beef exports to Costa Rica in 2002 totalled $235,000.

POLICY

FORAGE AND PASTURE INSURANCE TASK FORCE

Agriculture and Agri-Food Canada (AAFC) and the administrators dealing with forage and pasture insurance want to change the present focus on these programs, according to a recent report by Fred Hays, the policy analyst of the Alberta Beef Producers.

Up to now Canadian producers have been offered a series of programs to help back poor production, usually related to weather. However, producer uptake of these programs has been poor. In the event of excessive drought or flooding the government usually comes up with some fallback that is not part of the insurance stream called AgriRecovery, which is funded 60:40 by federal and provincial government contributions.

AgriRecovery was not designed as a Business Risk Management (BRM) program but a process for federal and provincial governments to follow in considering ad hoc payments for extraordinary devastating events.

A recent government industry meeting took place in Winnipeg to form a task force to look into why producers weren t making use of these insurance programs for forages, rather than relying on AgriRecovery and other ad hoc supports.

In Alberta, for example, the uptake for hay and pasture insurance is only seven per cent for hay and 33 per cent for pasture. In B.C. only about 15 per cent of forage acres are insured and the level of coverage is about the same in in Saskatchewan, Manitoba and Ontario.

As Hays points out, From a producer s point of view, the indemnity payout compared with the premium cost is less for forages than crops. This then becomes a business decision to produce crops, if possible, or continue to produce livestock as a diversification strategy with lesser insurance support.

Apparently, forage insurance just isn t seen in the same light as crop insurance.

Low pasture and forage production can be managed by bringing in replacement feed (at a cost), or selling part of the cow herd. In the feedlot it may mean feeding alternative products or reducing placements for a while.

Another possible reason for poor forage insurance uptake was problems with cashflow in the sector. Even with the federal government providing an average of 35 per cent of the premiums, and the provincial government s about 27 per cent, the producer s contribution of 39 to 40 per cent was still considered too high by some. Writing that premium cheque for $20,000 to $30,000 a year was a hard thing to do and AgriRecovery as an option was still considered a poor solution.

So when it comes to any backstop support for forage and pasture the government and much of the industry want to see something other than Agri-Recovery, writes Hays. The direction is to have producers cover more of their own risk through well-designed insurance programs, including reason- able indemnity premium ratios, and to use AgriRecovery as true disaster support. And maybe those who sign up for some of the insurance programs would be the ones to qualify for Agri-Recovery anyway.

PROGRAMS

ONTARIO BOOSTS FEEDER LOANS

The province of Ontario will boost its limit as the guarantor for the Feeder Cattle Loan Guarantee Program to $130 million from $80 million to allow more farmers, including new farmers, to get loans to buy feeder cattle.

Eligible new farmers will be able to borrow up to $50,000 while established farmers can apply for a $250,000 from one of the province s 19 feeder cattle co-operatives. Only producers with paid-up membership in a co-op can apply for a loan to buy up to four groups of cattle.

The co-operative facilitates the payment, supplies feeder program ear tags, handles the paperwork for the loans and insures the cattle.

Members are not required to make payments for a year, or until the cattle are sold. Financing is available up to 100 per cent of the purchase price.

Currently the program has loans out to about 800 producers. The Ontario Cattlemen s Association (OCA) has more details on its website at www.cattle.guelph.on.ca.

FORAGE

SEPTEMBER IS THE TIME TO SWATH GRAZE TRITICALE

An Alberta Agriculture specialist says swath grazing in mid-dough stage can increase yield, energy and overall quality.

The trick is to get the crop into the ground early and then swathing grazing it in early September in the mid dough stage, says Bill Chapman, a crop business development specialist with Alberta Agriculture in Barrhead. By seeding triticale early and swathing in September, you can get higher production yields from a combination of the grain and the forage. And, with a crop like triticale, you get less deterioration for feed quality in the slighter wetter conditions of the fall.

We ve done some trials where we ve seen between 175 and 211 grazing days per acre with swath grazing, and it actually reduced cost per acre. We re down to 75 cents per cow per day in a 183-day situation.

Swath grazing triticale also complements perennial forage acres as grazing can start during the busy harvest period while most producers still have grain to harvest.

Another big advantage of triticale is very low fusarium levels, says Chapman. In any of the screening trials we can still find traces of fusarium, but triticale definitely seems to have better resistance than many other crops.

CORRECTION

There were a couple of errors in our listing of the sales at the Ontario Stockyards Inc., Cookstown, Ontario, in last month s Stock Buyer s Guide. We reported they would sell yearlings on Thurs., Dec. 9 at 11 a.m. It is, of course, Thurs. Dec. 8 when the sale will be held.

As well, the annual Simcoe Dufferin and Leeds Grenville County sale will not be held this year, but cattle that normally go into that sale are being consigned to sales Nov. 15 and 29 at Cookstown.

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