Presentation on theme: "1 BSE and the Alberta Beef Industry Presentation to Canada/US Transportation Border Working Group Calgary, Alberta October 20, 2004 Nithi Govindasamy,"— Presentation transcript:
1 BSE and the Alberta Beef Industry Presentation to Canada/US Transportation Border Working Group Calgary, Alberta October 20, 2004 Nithi Govindasamy, P.Ag. Policy Secretariat Alberta Agriculture, Food and Rural Development
2 Outline Size and Economic Importance of Cattle and Beef Industries Impacts of BSE and border closures Contingency Planning Policy Responses The Future
3 Agri-Food Trade with the US C$ Millions Exports19992000200120022003 Alberta2,5662,7793,2883,0352,030 Canada13,43514,42716,85717,65715,763 Imports Canada10,16010,98512,26713,16912,600 Total Canada/US Bilateral Trade: $28.36 Billion (2003) (Largest Bilateral Agricultural Trade Relationship in the world)
5 North American Cattle Numbers Jan 2004Jan 2003change Canada – total 14.7 mil13.5 mil+1.2 mil US - total94.9 mil96.1 mil-1.2 mil NA total109.6 mil No change
6 Canada What is the 2004 imbalance? Supply –3.6 million fed cattle –820,000 non fed animals –4.42 million total marketings 2004 kill projections –3.31 million fed cattle 290,000 head carryover (8%) –500,000 non-fed cattle 320,000 head surplus (40%) For cull animals, capacity has been reduced because of inability to kill OTM and UTM in the same plant. Has helped fed capacity.
7 SIZE OF INDUSTRY (2002) Cattle and calves in Alberta: 5.2 million head (Canada: 13.4 million head) (39%). Cattle slaughtered in Alberta: 2.34 million head. Federally inspected: 2.34 million head. In 2003 cattle slaughter in Alberta was about 2.08 million head – down 11% from 2002.
8 Size of Industry (cont’d) Provincially inspected: 30,724 head (less than 1.5% of total). Alberta feeds over 2.4 million cattle with total beef production of over 800,000 tonnes.
9 Size of Industry (cont’d) Alberta’s beef production: –13% sold in Alberta; –15% to Quebec; –30% to other Provinces; –32% to US; –9% to other countries. 71% of all Canadian cattle fed 68% of total Canadian slaughter
10 Size of Industry (cont’d) Farm cash receipts (FCR) in Alberta: $8.23 billion (includes program payments). Cattle and calves accounted for $3.89 billion or 47.3% of total FCR. Largest single agricultural sector. Meat packing is Alberta’s second largest manufacturing industry.
11 Size of Industry (cont’d) Value of Alberta’s cattle and beef exports to all countries: $2.27 billion. Value of Alberta’s cattle and beef exports to US: $1.93 billion (85%). Alberta shipped over half a million cattle to the US.
12 Canada/US C$ Millions Cattle19992000200120022003 Exports 1,0681,1271,6551,821596 Imports 1582652387738 Beef Exports 1,4541,5121,7701,8091,241 Imports 335336347350352 Total Exports 2,5222,6393,4253,6301,835 Total Imports 493631585427390
13 Alberta Trade in Cattle and Beef C$ Millions (Exports to the US) Exports19992000200120022003 Cattle461510712634196 Beef1,0741,1151,2181,298909 Total1,5351,6252,0301,9321,105
14 US Beef Exports in 2002 Top 5 Markets (C$ Millions) Japan1,531(34%) Mexico1,038 South Korea999 Canada361 Russia90 % of Total90% Total All Countries4,466
15 Canada Beef Exports in 2002 Top 5 Markets (C$ Million) United States1,809(82.5%) Mexico199 Japan81 South Korea50 Taiwan20 % of Total98.5% Total All Countries2,192
16 Economic Impacts BSE incident reduced 2003 cattle and beef export revenue by about $1 billion for Alberta and $2 billion for Canada. Declines in farm cash receipts estimated at $1.38 billion in Alberta ($2.1 billion for Canada). Receipts for cattle alone declined by $1.32 billion in Alberta and $2.52 billion in Canada. Average income loss estimated at $20,000 per farm family.
17 Economic Impacts (cont’d) Estimated loss in equity to the cow calf sector: $3 billion Estimated decline of $ 5.7 billion in total output for Canadian economy,$ 1 billion decline in labour income and loss of 75,000 jobs. Normal 7 to 8 cent per lb. spread for fed cattle has averaged 34 cents per lb. under the US price since January, 2004
18 Source: Alberta Agriculture, Food and Rural Development, Strategic Information Services
20 Contingency and Industry Adjustment Strategies (CCA) Increased slaughter of Canadian cattle with a high priority to increase Canadian processing capacity. Development of a delayed marketing strategy. Alternative tax strategies. Cash advances, loan guarantees and debt restructuring.
21 Contingency and Industry (cont’d) Increased Canadian beef usage and export market diversification. Increased surveillance and slaughter of cattle born prior to the 1997 feed ban. Continued pursuit of all avenues to restore live cattle export trade.
22 Surveillance 6,400 cattle tested up to early October, 2004 (all negative). Target: 8,000 (2004) 30,000 (2005 and beyond)
23 Access to the US August 8 th, 2003 US – announcement of partial re-opening of border: boneless beef UTM; liver; tallow. August 15 th, 2003 – product list amended to include trimmings; plant segregations allowed (UTM/OTM). Sept. 4 th, 2003 – first shipments begin. Nov 4 th, 2003 – rulemaking process begins.
24 Access to the US (cont’d) December 23 rd, 2003 – discovery of US BSE. Jan. 5 th, 2004 – first comment period for Rule ends. Jan. 5 th to March 6 th, 2004 – Rule making suspended. March 7 th, 2004 – comment period re-opened for one month. Includes consideration for OTM meat. April 7 th, 2004 – comment period ends.
25 Access to the US (cont’d) April 19 th, 2004 – USDA amends product entry list to include bone-in beef, ground beef, processed beef products. April 21 st, 2004 – RCALF court challenge. May 6 th, 2004 – injunction granted. Product list amended (August 15 th list now in operation).
26 Canadian Policy Responses Ruminant to ruminant feed ban in effect since 1997. Removal of SRMs from food chain. Enhanced surveillance. Changes to feed ban (removal of SRMs from feed) -- scope and implementation to be determined.
27 Canadian Policy Responses (cont’d) Measured, consistent with known available science. Need to be in harmony with US policy changes. Trade considerations have been the main driver. Not necessarily irrational.
28 Canadian Policy Responses (cont’d) Somewhat haphazard due to uncertainty of US actions. Support programs exceed $1.5 billion. Supplementary import permits restricted.
29 International Panel Recommendations to US Recognized integrated nature of NA industry. Case of BSE in US cannot be considered in isolation. North American BSE Task Force – consistent and scientifically valid policy development and implementation.
30 International Panel (cont’d) Limitations of NA cattle Identification System. Recommended SRM removal from food and feed chain. Significant enhancement of surveillance. Testing of all cattle for human consumption unjustified in terms of protecting human and animal health.
31 International Panel (cont’d) US should demonstrate leadership in trade matters by adopting trade policies in accordance with international standards and discontinuing irrational trade barriers.
32 Conclusions One incident of BSE in Canada was sufficient to close all borders and create havoc in the industry. Importance of maintaining and enhancing close relationship with the US highlighted. Close integration and interdependence of NA cattle and beef industries.
33 Conclusions (cont’d) Export dependency of Canadian industry. Urgent need to review, revise OIE guidelines to make them more practical and take into account trade realities while adequately safeguarding human and animal health.
34 Conclusions (cont’d) Guidelines need to become rules with compliance mechanisms. NA harmonization of policies and regulations. Strong public and government support for industry.
35 Conclusions (cont’d) Canada and US should move quickly to complete and implement remaining policy measures necessary to eradicate disease and reassure consumers and trading partners. Additional policy measures, however, must be guided by sound science and should not be an overreaction to closed markets.
36 Conclusions (cont’d) Need for coherent, coordinated science- based policy undertakings. Canada needs to continue applying pressure to re-open US market and other offshore markets. To the extent possible, issue needs to be depoliticized.
37 Conclusions (cont’d) Rational trade policies, based on science, not on politics or protectionism. Need for multilaterally accepted international rules of management and trade so as to avert problems experienced with BSE.