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Is COOL dead yet?

Prime Cuts with Steve Kay, from the January 2016 issue of Canadian Cattlemen

Maybe I’m asking too much. But all I wanted for Christmas was an end to the COOL saga. I’m sure you did as well. Hopefully COOL has already been killed and consigned to the dustbin of ghastly blunders by the time you read this. But at time of writing on December 10, I was not betting on it, given the fact that congressional twist-and-turn politics were still at play.

Following the World Trade Organization’s December 7 announcement of the tariffs amounts for Canada and Mexico, the quickest way to avoid the tariffs would have been for the U.S. Congress to include a repeal of the beef and pork parts of COOL in a $1.1 trillion omnibus spending bill it was considering. Many people after the WTO announcement had urged the U.S. Senate to repeal these parts of COOL. But the Senate said it was unable to put forward a stand-alone bill to repeal COOL until after January 1.

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The quicker option therefore was to attach a COOL measure to the spending bill and for Congress to pass that bill. No one knew if a measure would be attached when I wrote this, although it was said the odds were high. A vote on the bill was due December 11. But Congress then delayed the vote by five days by passing a continuing resolution to fund the federal government. Then followed talk that there might be a further extension. When and if a vote was finally taken, both chambers of Congress would have had to pass or reject the spending bill on an up-or-down vote.

A down vote of course would have thrown COOL repeal back into the hands of the Senate. COOL might therefore still be alive as you read this. The next question is whether Canada and Mexico will have begun to impose retaliatory tariffs. They were expected to do so 14 days after the WTO announcement. The potential impact of such tariffs is enormous. At worst, they could halt all U.S. beef and pork exports to Canada and Mexico.

  • More ‘Prime Cuts’ with Steve Kay: Volatility plagued beef, live cattle markets

Impact began even before the WTO announced the tariff amounts. Some Canadian meat buyers stopped ordering U.S. red meat ahead because it might be subject to tariffs. Imposition of tariffs was a severe market negative as soon as the WTO made its announcement. Feeder cattle, live cattle and hog futures contracts all closed down sharply that day. December was the most affected live cattle contract, closing down 265 points. This came after the contract had lost a startling 758 points the week before.

Imposition of tariffs and potential trade and market disruption could not come at a worse time for U.S. cattle feeders and hog producers. The first group is suffering losses of US$300 per head or more as part of their worst-ever year of losses. Hog producers are also losing money. Tariffs would exacerbate losses in both sectors. U.S. producers must therefore wonder if they are cursed, that COOL is the nightmare that continues even when one thinks it is over.

When COOL finally is dead and buried, the U.S. meat and livestock industry should use it as a case study about the intersection of prairie populism and politics and, above all, leadership. The key question will be: How did the industry allow a small group of out-of-touch, steeped-in-the-past cattle producers persuade enough lawmakers to support a far-fetched, deeply flawed program like COOL? My initial response to this question is that industry leaders underestimated support for COOL and got badly out-manoeuvred. They must not allow this to happen again on any spurious action that threatens the industry.

About the author

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A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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