by BETTER FARMING STAFF
Cattle producers are already beginning to feel the effects of revised Country of Origin Labelling regulations, one of the bill’s many components, says John Masswohl, director of international relations for the Canadian Cattlemen’s Association.
Ironically, it may be expressed in an increase of cattle going into U.S. feedlots until July 15, he says. That’s the deadline the country is using to allow beef from cattle born elsewhere but finished in the United States to qualify for a U.S. beef label.
New label categories mean lower prices
The new regulations, which will be implemented by Oct. 1, call for the creation of three label categories for meats sold at the retail level: a U.S. label for products coming from animals born, raised and slaughtered in the United States, a multiple countries of origin for those born in other countries but finished in the United States; and a third to identify those born, raised and fed elsewhere but imported for slaughter.
It’s the middle category that is likely to have the greatest impact on the Canadian beef industry, Masswohl says, because of the pressures it’s anticipated to place on U.S. feedlots. In a typical Nebraska feedlot, he says by way of example, cattle from Canada, Mexico and the United States are fed together. Masswohl fears that the new law will force segregation.
If it does, it will mean operators will incur higher costs when feeding Canadian cattle. In turn, they will either want to pay less for the animals in order to recoup the costs or just not buy them at all.
“Ultimately, it means lower prices,” paid for Canadian cattle, he says.
Strategy to market processed beef underway
Masswohl was somewhat more optimistic about the prospects of processed Canadian beef being shipped to the United States.
While the new labelling laws apply to products sold in retail outlets they don’t apply to the food service industry, he noted. The Beef Information Centre is working on strategies to take advantage of this loophole. The Centre is also looking at ways to market Canadian beef within the new retail realities, he adds.
But ultimately, these are “coping strategies,” Masswohl admits, calling them inferior to the fully integrated market Canadian producers enjoyed in the past.
Moreover, Masswohl acknowledged that Canada’s beef processing industry is undergoing its own hard times and may find it difficult to meet the challenge of competing in the U.S. market. He blamed the tough new federal requirements concerning the handling of materials that pose a risk to the spread of BSE, and the rise in value of the Canadian dollar which affects operating costs and labour availability.
Federal agriculture minister Gerry Ritz has warned his counterparts in the United States that the Canadian government plans to challenge the new labelling laws at the World Trade Organization and under the North American Free Trade Agreement. But such actions will probably involve a “several year” process, Masswohl says.
In the meantime, while the law has been written, the technical details of how the program will work is still not clear. “We know what the law says; now how is the USDA (United States Department of Agriculture) going to interpret it?” he asks.
Bill’s impact on crop production
How - or if - the bill will affect Canadian crop production is also unclear, says Al Mussell, a research associate with the George Morris Centre in Guelph.
Existing programs that offer price protection for commodities such as corn and soybeans when market prices are low are returned in the 2008 bill. But Mussell doubts these direct payment and counter cyclical programs have much of an impact at a time of record-high prices for corn, wheat and soybeans. He also notes no adjustments have been made to address rising input costs.
Nevertheless, the programs have been authorized to 2012 and are uncapped. “If this situation changes and lots of people sign up and you have some combination of a price decline or a yield hit, this thing will start to pay out.”
Added into the bill is a new program called average crop revenue election – ACRE for short. Unlike the direct payment program, which uses historic average yields to calculate payments, the ACRE program uses current state level yield averages to calculate protection. The new program could be “very valuable” for corn and soybean crops in some areas, Mussell says. Moreover, the program could be enough to encourage people to continue growing certain crops even if the market changes, he notes.
Mussell also suggests Canadian take note of the inclusion of specialty – or horticultural – crops as a permitted rotation crop for those covered by the counter cyclical program. It’s not the only effort at including horticulture under the Bill, he says, noting for the first time, horticulture gets its own entire section. BF
US Farm Bill
Support for specialty crop producers
Commodity programs
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