PUBLISHED BY MANITOBA BEEF PRODUCERS
FEBRUARY 2016
Cattle producers finally rid of COOL RON FRIESEN After seven years and billions of dollars in financial losses to Canadian livestock producers, the longstanding legal battle over the US country-of-origin meat-labeling rule is finally over. An omnibus spending bill which included scrapping (COOL) cleared the US Congress on December 18 and was signed into law by President Barack Obama. The bill’s passage came shortly after a World Trade Organization arbitration panel gave Canada and Mexico permission to slap retaliatory tariffs on selected US traded products because of COOL. The WTO had repeatedly ruled COOL violated international trade rules. Its latest decision cleared the way for Canada to impose duties worth $1.055 billion annually on US imports. Mexico was allowed $228 million. The rule adopted in 2008 required American retailers to label food according to its country of origin. The WTO ruled several times the measure discriminated unfairly against imported beef and
pork. Although COOL is no longer in effect, it remains on the books for now. However, the US Department of Agriculture says it will not enforce the rule, pending its removal. The move to repeal COOL by Congress, which usually does not react well to losing international trade cases, surprised some observers. But not John Masswohl. “I know there’s plenty of people who thought it would never happen. But I was not one of them. I believed we could get it done,” said Masswohl, director of government and international relations for the Canadian Cattlemen’s Association. The WTO actually gave Canada and Mexico much less in retaliatory tariffs than the two countries had originally requested. Canada had asked for $3.068 billion and Mexico had requested $713 million. But Masswohl said the final figure was still large enough to make US legislators repeal the rule, since the list of targeted imports was long and included sen-
sitive products in exporting states. “Nobody wanted to find out whether their product was going to be part of the billion,” he said. It’s been a long haul for the COOL dispute, which Canadian cattle and hog producers say caused severe damage to their industries. The rule required US packers and feedlots to segregate imported animals, increasing their costs. As a result, buyers either paid less for imported livestock or declined to buy them at all. CCA calculates COOL cost cattle producers $639 million a year in lost sales and depressed prices. Annual losses to the pork sector were pegged at $500 million. That was before USDA changed the rule in 2013 to make it even tougher and losses more severe. In addition, the financial cost to producers includes legal fees and advocacy efforts. CCA says its legal fees over the years totalled nearly $4 million. Masswohl admitted producers will never recover the money COOL has cost them over the years. But now that it is gone, they
can plan for the future. The immediate question is how much COOL’s elimination will improve livestock market prices in Canada. Melinda German, Manitoba Beef Producers’ general manager, suggested cattle producers in this province might have to wait a while. “We’re a cow-calf province and it may not have a direct significant impact on the cow-calf producer right away,” German said during a telephone news conference. “Longer term, I think it provides increased stability to our markets, particularly here in Manitoba. I think it’s going to be very positive for our feeder/feedlot folks. We should see increased stability as more markets open up to us. We are an export country and Manitoba relies very heavily on exports to the US That’s going to be significant to us.” Masswohl agreed Manitoba producers might not see a difference until they start selling calves. But he said others could notice an improvement fairly soon because US plants are running below capacity. Getting rid of COOL could encourage US buyers
to compete for imported cattle. “Take COOL away and you get these buyers down there, they’re going to want the cattle,” Masswohl said. “What is it going to take to get the cattle at Company A instead of Company B or Company C? You’ve got to think that the bids are going to affect the scenario. “The question is, will Canadian buyers of cattle also respond to that and be competitive? I think we are going to see a very positive price impact.” Masswohl said eliminating COOL will smooth Canada’s trade relations with the US and help both countries concentrate on the European market. Canada has negotiated a Comprehensive Economic and Trade Agreement (CETA) with the EU but it has yet to be ratified. But Masswohl warned the US had better not try to bring back COOL in a different form or Canada can still implement the tariffs it chose not to impose. “If they do something else that replicates the COOL effect, we are authorized to put those tariffs on and they will come on quickly.”
2016 Market Outlook Page 7
Reimer working to build a strong association Page 9
Environmental hoofprint of Canada’s Beef industry BEEF CATTLE RESEARCH COUNCIL water erosion, and builds up soil organic matter (also known as carbon sequestration). Better feed conversion efficiencies are accompanied by reductions in methane and manure production. While the beef industry was pursuing business-focused improvements in productivity and efficiency, a lot of farm kids moved to town, and raised their families in urban settings that rarely (if ever) come in contact with agriculture. This knowledge gap about how beef is produced has provided opportunities for the beef industry’s opponents to undermine our environmental reputation. Our industry is particularly maligned for producing greenhouse gases linked to climate change. Practically every living organism produces green-
house gases, even plants, but cattle produce more than other livestock because rumen bacteria produce methane as they digest feed. Additional greenhouse gases come from manure (methane and nitrous oxide) and fossil fuel use (carbon dioxide). However, like the industry’s “water footprint” the greenhouse gas impact of the beef industry is often vastly overstated. In 2010, the United Nation’s Food and Agriculture Organization (FAO) released a report called “Livestock’s Long Shadow” which stated that livestock produce more greenhouse gas emissions than transportation, leading to headlines suggesting that burgers are worse for the planet than SUV’s. It was significantly flawed because it counted all of
the emissions involved in raising beef (e.g. emissions from cultivation and production of feed crops, grain drying, transport of feed, cattle and beef, etc.), but only the tailpipe emissions of vehicles (but not the emissions involved in extracting and refining the oil, steel, rubber, vehicle manufacturing, etc.). While beef producers took issue with that report for being unfair to our industry, anti-livestock activists also criticized that report for being too easy on meat. A more balanced FAO report named “Tackling Climate Change Through Livestock” came out in 2013. This less publicized report found that producing a kilogram of beef in Latin America, India or China generates twice the methane as in North America, Europe Page 3 ➢ Producing
Impact of transportation on cattle Page 10
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Over the years, Canada’s beef industry has invested a lot of time and resources in, and reaped considerable economic benefits from improvements in productivity and efficiency. With higher forage and feed crop yields, less land needs to be bought, leased or rented to produce the same number of calves or the same amount of beef. Similarly, improved feed conversions mean that less forage is needed to winter the cow herd or less feed grain is needed to grow a pound of beef. These improvements in productivity and efficiency have also produced environmental benefits. To produce high yields, forages need an extensive root system that promotes healthy soil, healthy soil microbes, improves structure, reduces soil losses due to wind and