Lower prices, lower demand: Canadian livestock producers encounter COOL realities

Sunday, January 11, 2009

© Copyright AgMedia Inc

by SUSAN MANN

The JBS Packerland plant in Pennsylvania no longer accepts Canadian cattle on Mondays. One of its customers doesn’t want Canadian beef so the company ensures that customer gets their beef on Mondays, says Ontario-based agent Merle Shantz.

Shantz, who looks after the contracts for JBS for Ontario and the Maritimes, says they were going to the U.S. with 50 loads a week with 34 head in each load. Now they’re going with 30 loads a week.

This is just one example of how the United States’ mandatory Country-of-Origin Labeling (COOL) law affects Canadian producers.

The law, implemented on Sept. 30, 2008 requires beef, pork and some other products sold in U.S. stores to identify the country where the animal was born. This means U.S. ranchers and meat packers must handle Canadian cattle and hogs separately from U.S. ones. To cut costs, many American meat packing companies are refusing to accept Canadian animals. Others discount Canadian animals and some, like JBS, limit their processing to certain days.

The Canadian Cattlemen’s Association has said the effect of lower prices for Canadian cattle, increased transportation costs and fewer processing days means the industry here is losing $400 million annually.

Last year, the Canadian Pork Council estimated COOL to cost the country’s hog farmers’ $500,000 a week in losses. Canadian Pork Council president Jurgen Preugschas says U.S. plants accepting Canadian market hogs are discounting them between $5 and $9 per hog.

Canada used to export about 10 million live hogs to the U.S. annually. Six to seven million were weanlings and three to four million were market hogs. Now that some U.S. plants aren’t accepting Canadian market hogs, those animals are staying here. But Canada doesn’t have the killing capacity “so that pressures everything and it drops the price on all the hogs,” Preugschas says.

He hopes Canada’s complaint to the World Trade Organization about COOL can be resolved before America’s new president is sworn in Jan. 20.

Canada requested consultations with the United States on Dec. 1, 2008 as part of the World Trade Organization (WTO) agreement on the U.S. COOL law. Mexico made a similar request to the WTO on Dec. 18, 2008.

Preugschas says when a new government comes in “basically everything is on hold for a few months until they get up to speed on everything.”

Mexico’s request for consultations strengthens Canada’s case because it shows another country is being affected by the new law, he says.

“There is movement” in ongoing talks between Canadian and U.S. governments on the issue. Preugschas couldn’t say what provisions are being made. “I’m encouraged that the discussions are happening.”

Michael O’Shaughnessy, spokesman for Canada’s department of Foreign Affairs and International Trade, notes in a written statement that Canada has objected to COOL since its inception.

International Trade Minister Stockwell Day and Agriculture Minister Gerry Ritz have personally outlined Canada’s concerns to U.S. Trade Representative Susan Schwab, he says.

Preugschas says the Pork Council has argued all along that the law is illegal and should be stuck down. But that could take years and in the meantime the law would severely damage Canadian farmers.

He says an immediate solution would be for the United States to implement less onerous regulations than the ones in place now. BF