Canada Markets

A coalition of eight groups announced July 9 they will challenge the USDA's mandatory Country-of-origin labeling (COOL) rule by means of a lawsuit. Included in this group are the Canadian Cattlemen's Association and the Canadian Pork Council. The other six groups include United States beef and pork industry interests, as well as four groups associated with the meat industry.

The financial impact of this legislation has been significant to Canadian livestock producers and stands to get worse with the USDA's proposed amendments to COOL. Combined with the additional pressure of high feed costs during this past year, the industry has faced an up-hill battle.

The Canadian Pork Council states that their industry's loss since 2008, from lost exports alone, is $500 million annually. The live trade of animals is affected, as well as the movement of pork. The movement of live animals to the U.S. is down 41% since 2008. The losses calculated don't include the lower prices received in the feeder pig market, nor do they include additional losses with USDA's amendments imposed upon COOL announced in May.

The Canadian Cattlemen's Association website states that COOL has cost the industry $640 million per year since 2008. The USDA's change in COOL regulations, designed to meet World Trade Organization obligations, are estimated to increase losses to beef producers from the current $25 to $40/head up to $90 to $100/head in the future.

The attached chart shows the January 1 inventory for hogs and cattle on beef operations in Canada. While numbers for both have leveled in recent years, they remain well below past years. The Jan. 1 hog inventory for 2013 remains 14% below 2005 levels while beef cattle numbers have slipped 19% since 2005. It may be difficult to imagine any industry expansion until this issue is resolved.

While not the focus of attention in the suit, this issue filters down to the grain producer. Millions of tonnes of domestic consumption may be lost because of this issue, while grain transactions may be at greater risk due to the poor health of the industry. In the 2004/05 crop year, the combined Animal feed, waste and dockage, a residual balance in Statistics Canada's tables, totals 12.790 mmt for wheat and barley combined, while the 2011/12 data shows this number at 10.312 mmt, a 2.5 mmt reduction.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(ES)

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