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CAN Beef eye on US market

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Feb 11, 2005
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South East Kansas
CAN Beef eye on US market

Canadian cattle sector hopes for full trade with U.S., new markets


The Canadian Press

Jan 1, 2006

EDMONTON (CP) - The future of Andrew and Lyndsay Peden's cattle farm will depend not so much on their hard work next year as it will on politicians and trade officials in far-flung places like Washington, Geneva and Hong Kong.

Like other beef producers across Canada, the Pedens were jubilant in July when the U.S. reopened its border to young cattle after a two-year ban brought on by fear of mad cow disease.

The renewed trade has put more money in their pockets and made life a little easier on the family farm near Minburn, east of Edmonton.

As the Pedens look ahead to 2006, they hope the U.S. will finally reopen its border to older cattle - and that Canada will crack new international markets for beef. But those hopes rest in foreign hands.

"It's frustrating," says Lyndsay Peden, noting that half the couple's cattle are over 30 months old and therefore remain under the American ban.

"Nothing ever gets resolved quickly when there is politics. It doesn't matter how hard we work. We don't have that final say. And there is nothing we can do about it."

When the Canada-U.S. border reopened to younger cattle, many people believed the mad cow crisis, which has cost Canada's cattle industry more than $7 billion, was finally over.

But there's still a distance to go.

Canada has a surplus of about 900,000 older-cull cattle that can't be shipped to the U.S. because of lingering concerns that they may harbour a risk of bovine spongiform encephalopathy, or BSE.

Until the U.S. Department of Agriculture (USDA) publishes regulations that would allow imports of such animals to resume, many of the older cows and bulls will linger on Canadian farms and feedlots, costing producers hundreds of millions of dollars in lost revenue.

Canada's beef and dairy cattle breeding industry also remains shut out of American markets since BSE was discovered in an Alberta cow in May 2003. The ban on exporting breeding stock has cost those producers more than $200 million per year.

Rick MacRonald, executive director of the Canadian Livestock Genetics Association, said the border must reopen quickly so the devastated industry can rebuild.

"Ninety per cent of people who were in the (dairy) heifer-rearing business are gone," MacRonald said from Guelph, Ont. "There is no reason the U.S. border couldn't open in 2006. All we are up against is bureaucratic inertia."

There are some hopeful signs there could be progress toward fully restoring the beef trade with the U.S. in the year to come.

The USDA has indicated it will publish a proposed rule, probably this spring, that would govern the reopening of the border to older cattle and breeding stock. Once that rule is published, American producers, including protectionist groups such as R-CALF that have fought against reopening the border, will be given months to respond or challenge the move.

That means the border could be fully reopened to all Canadian beef by the end of 2006, said Dennis Laycraft, executive director of the Canadian Cattlemen's Association.

"Our best guess, if all goes well, it would either be last quarter 2006 or first quarter 2007. We will press them to move faster than that," he said from Calgary.

Restoring trade with the U.S., Canada's biggest beef market, is only one issue for an industry that has gone through a painful and costly transformation thanks to BSE.

After years of shipping most live Canadian cattle to U.S. beef plants, producers and governments have worked hard to retool the industry to slaughter more beef on this side of the border.

Part of that strategy includes pushing hard to establish and expand markets for high-quality, grain-fed beef in Asia and Europe.

This month, World Trade Organization officials will hold key meetings in Hong Kong that are expected to pave the way for an international agreement in 2006 that could affect Canadian producers for years to come.

The looming deal follows years of complex talks involving 148 countries.

"This is definitely a critical year. It is going to set the rules that will govern trade for the next decade or more," said Patty Townshend, executive director of the Canadian Agri-Food Trade Alliance (CAFTA). "What we need to do is make sure that we are not relying on just one country like the U.S."

The challenge is to persuade countries to lower their tariffs on beef imports that can run as high as 50 per cent, since beef markets are among the most highly protected in the world. CAFTA estimates reducing tariffs in Japan and Korea alone would be worth more than $200 million annually for Canada's beef industry.

So while reopening the U.S. border to younger cattle is a huge first step, 2006 is shaping up to be a key year toward restoring the beef industry to prime shape.

"This is finishing the job," Laycraft said. "We are going to be a different industry when we're done this."

Here are some facts about Canada's beef industry as the sector continues to recover from the mad-cow disease scare:

- Number of Canadian cattle exported to the United States since Washington reopened the border to animals under 30 months of age in July: 440,105 (as of Dec. 3)

- Approximate number of Canadian cull cattle over 30 months of age that remain banned from the U.S.: 914,000.

- Value of Canadian beef exports to the U.S. in 2004: $1.6 billion. To the rest of the world combined: $334 million.

- Amount of beef Canadians purchased per capita in 2004: about 23.4 kilograms, down slightly from 2003, but up slightly from 2002 before a case of BSE was discovered on an Alberta farm.

- Amount Canada's beef sector projects it will have produced in beef and veal in 2005: 1.57 million metric tonnes, compared to 1.46 million tonnes in 2004.

- Canadian cattle and calves farm cash receipts in 2004: $5.1 billion, compared to $7.7 billion in pre-BSE 2002.

Sources: CanFax, Statistics Canada

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