Why free North American trade is good for the beef industry and Canada

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Since the inception of the North American Free Trade Agreement (NAFTA), in 1994, the beef industries of Canada, U.S. and Mexico have essentially been operating in one single, North American market. In fact, the beef industry is a good example of how the original design and intent behind NAFTA has been successfully accomplished.

In this integrated market, processed beef (fresh, chilled and frozen), as well as live cattle, move across the border relatively unimpeded and entirely tariff-free. The U.S. is Canada’s largest export customer for beef, and Canada’s single largest import supplier.

Did you know?
In 2016, Canada exported 270,00 metric tonnes of beef (75 per cent of our total beef exports) to the U.S. In the same year, 63 per cent of Canada’s beef imports (186,000 metric tonnes) came from the U.S. That same year, Canada also exported 765,395 head of live cattle, primarily to the U.S. The U.S. exported 30,291 head of live cattle to Canada.

 

Why an integrated market benefits beef producers on both sides of the border

Free and open trade between Canada and the U.S. has had two significant benefits.

First, the trade in live cattle and beef products ensure that both countries have a source of supply to meet the demand within their own domestic markets. A steady, and sufficient supply of cattle is critical to the efficient operation of feedlots and beef-packing plants.

Second, the vigorous and dynamic trade in live cattle and beef products has injected a healthy dose of competition into the beef industry on both sides of the border. This has resulted in a more efficient, productive industry that is highly competitive in the global beef market. For example, beef from Canada and the U.S. is proving attractive in the Asia Pacific marketplace, despite the geographical advantages of competitive beef exporters such as Australia and New Zealand. This is because of our ability to compete on quality and price.

The way forward for the integrated market.

Cattle producers on both sides of the border are well aware of the benefits of free and open trade. The National Cattle Feeders’ Association (NCFA) has been working with counterparts in the U.S., such as the Texas Cattle Feeders’ Association (TCFA), the National Cattlemen’s Beef Association (NCBA), and the North American Meat Institute (NAMI) to address any issues that could be an impediment to the continuation of NAFTA.

One such issue concerns the maintenance of a regulatory regime that provides essential safeguards for animal health and disease prevention without imposing unnecessary economic costs or barriers to trade. The right regulatory balance is crucial.

In an upcoming blog post we will write about a set of reforms to Canadian Food Inspection Agency (CFIA) regulations that will make importing and exporting live cattle easier, less time consuming, and less costly – helping to remove impediments to trade, smooth the border, and speed the pace of commerce. Stay tuned.

How 5 freedoms help ensure excellence in animal care

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A lot of progress has been made since Alberta’s livestock producers banded together 25 years ago to promote excellence in animal care.

Commodity organizations, including the Alberta Cattle Feeders’ Association, founded Alberta Farm Animal Care (AFAC) in 1993 to ensure that all producers have access to the resources and information they need to provide a comfortable, low-stress environment for their animals.

“We are a non-profit, multi-species animal welfare organization,” said Kristen Hall, marketing and membership manager at AFAC. “We were formed by the livestock industry, for the livestock industry, to be a collective voice for animal welfare within the province.”

The notion of animal care is based on the five freedoms:

  1. Freedom from hunger and thirst
  2. Freedom from discomfort
  3. Freedom from pain, injury and disease
  4. Freedom from fear and distress
  5. Freedom to express their normal behaviours

 

Some of the free resources AFAC provides for livestock producers include guidelines, videos, codes of practice and factsheets.

On Sept. 7 and 8, AFAC is partnering with the Foothills Forage and Grazing Association to host a Stockmanship Clinic. The two-day course will be taught by Dylan Biggs, cattle handling expert and specialist in low-stress animal care.

“We find people are very keen to learn,” said Kristen. “Even though they might have been caring for animals their whole lives and they’re already doing a good job, for the most part they’re still willing to take the opportunity to learn more.”

As well as providing resources for livestock producers, AFAC also advocates for the industry. “We do a lot of public education, at events such as the Calgary Stampede and Aggie Days,” said Kristen. “We also do classroom sessions in schools, teaching students how food animals are raised.”

Each year, AFAC hosts a Livestock Care Conference. The next one is scheduled for March 20 and 21, 2019, in Olds, AB.

You can read about some of the other programs that promote animal care and welfare, including the Feedlot Animal Care Assessment Tool, in ‘Animal care is a top priority for Alberta’s cattle feeders.’

5 priorities for cattle feeders in 2019 

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Canada’s cattle feeders are urging politicians to consider the needs of beef producers in their platforms for the 2019 federal election. 

Agriculture and Agri-Food is a $100-billion industry that employs more than two million Canadians. The government has identified the sector as one of a few with the potential to spur economic growth.

Canada is in a prime position to benefit from increasing global demand for agricultural products, but the industry requires government support in removing constraints and barriers to growth. 

The National Cattle Feeders’ Association (NCFA) cites five urgent challenges:

Rural infrastructure

Most agricultural operations are in rural municipalities with a limited tax base to provide infrastructure. With little federal funding, some municipalities have implemented counterproductive measures, such as the livestock head tax in Lethbridge County. This is eroding the competitiveness of cattle feeding in southern Alberta.

It is crucial that the federal government identifies critical infrastructure investments in rural communities and dedicates financial resources to make them happen.

Labour shortage

A chronic labour shortage of about 60,000 workers is costing primary agriculture producers about $1.5 billion in unrealized farm cash receipts each year. 

Farmers have been forced to turn to the Temporary Foreign Worker Program to fill positions that cannot be filled by Canadians, but the process is expensive, time-consuming and complicated. 

The program’s processes need to be streamlined and clear a pathway set for permanent residency for temporary foreign workers.

Regulatory barriers

The industry is ever-evolving with new technologies and industry developments. But when regulations don’t keep pace, it hinders our ability to compete in the global marketplace.

In 2016, NCFA released a detailed study entitled The Competitiveness of the Canadian Cattle Feeding Sector: Regulatory and Policy Issues(PDF)

, Costs and Opportunities. It highlighted six areas – enhanced traceability, export regulation and impediments, veterinary drug harmonization, inspection practices, transportation and labour – where reforms could generate an additional $495 million in revenue across the beef value chain.

International market access

Canada exports 45 per cent of its beef production, and those exports are primarily to the U.S. To grow, the industry needs to expand into other markets, including the Asia-Pacific region and Europe.

Agreements such as the North American Free Trade Agreement (NAFTA), the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Canada-EU Comprehensive and Economic Trade Agreement (CETA) should be a government priority. They will have a tremendous impact on our ability to trade effectively with these regions.

Consumer education and trust

Government and industry need to work together to ensure consumers are able to make informed choices when it comes to their food, whether the issue is environmental impact, health, or production methods.

Public education should be a pillar of any new national food policy, and Canada Food Guide revisions should reflect the most recent scientific, medical and nutritional research.

In an earlier blog post, we featured John Weekes, an independent business advisor who has worked with NCFA on international trade issues. You can learn more about his work in Meet the international trade expert who is helping support the beef industry abroad.

How funding for the New Era Beef Industry will benefit all beef producers

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This fall, Alberta’s beef producers will vote in a province-wide plebiscite on the industry’s checkoff program. The issue at hand is whether the refundable payment should become non-refundable.

Why the checkoff is currently refundable

The beef industry checkoff has been around since 1969 as a levy paid to the Alberta Cattle Commission (later to become Alberta Beef Producers, ABP). Funds from the levy were used for industry research and marketing, but it was somewhat contentious from the start. In 2009, the Alberta government passed a bill making the checkoff payment refundable – meaning that producers were able to apply for full reimbursement.  

Why a change to the non-refundable checkoff makes sense

Despite these early challenges, ACFA believes the associations and organizations representing different sectors of the beef industry production chain must join together and work for the benefit of the entire industry.

In 2017, the Alberta Cattle Feeders’ Association and ABP reached an agreement founded on their shared belief in collaboration and mutual support between different beef production sectors. The New Era Beef Industry (NEBI) is the result of that agreement, and it heralds a return to a mandatory beef cattle checkoff, with revenues to be shared by ABP, ACFA and a new Alberta Beef Industry Development Fund (ABIDF).

The ABIDF will provide project funding for market development, research, education, consumer advocacy and industry collaboration, for a stronger, more profitable beef industry. The fund will be governed by a council comprised of three representatives selected by ABP and three selected by ACFA. The six council members will select a chair who is not a member of the board or of either organization.

ABIDF will help compensate for the loss of the Alberta Meat and Livestock Agency, which provided funds for industry development until it was shut down by the government in 2016.

Under the New Era Beef Industry, the total checkoff payment will be $2 per head of cattle. It will be distributed like this:

  • 5 cents to the remitters of the checkoff 
  • $1.30 to ABP 
  • 25 cents to ACFA 
  • 40 cents to the Alberta Beef Industry Development Fund (ABIDF)

If the plebiscite in the fall results in a vote for the refundable checkoff, ABP will continue to collect the mandatory checkoff, and producers can still request a full refund if they wish. If the plebiscite results in a vote for NEBI, it will provide a unique opportunity for crucial industry research and development.

The checkoff was just one of the issues that new ACFA board chair, Ryan Kasko flagged as important to cattle feeders this year. You can read about the other issues in ‘Finances are among cattle feeders’ top issues’. 

How protectionist policies for dairy and poultry could harm Canada’s beef producers 

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As NAFTA negotiations continue, Canada’s 60,000 beef producers are anxious to see a continuation of free and open trade within North America. Mexico and the U.S. currently import 80 per cent of our beef, and any impediment to that trade would severely impact the industry.

Ironically, North American trade for our beef is in jeopardy due to a Canadian protectionist policy involving a different sector. Supply management agreements protecting dairy and poultry producers are a source of serious contention in the negotiations.

What is supply management?

Supply management is a system whereby production quotas and import restrictions in the form of tariffs limit the availability of dairy, poultry and eggs. This helps keep prices at an artificially inflated level. 

Critics of the system argue that the system eliminates competition and raises prices for the consumer.

“The two planks of the system are quotas (producers need to purchase a licence to produce these commodities) and tariffs (taxes for incoming imports),” said Casey Vander Ploeg, vice-president of the Alberta Cattle Feeders’ Association (ACFA). “Both planks are needed to make the system work.” 

Why beef producers could be negatively impacted by dairy and poultry supply management

President Trump’s complaint with the supply management system is that it negatively impacts the ability of U.S. dairy, poultry and egg producers to export to Canada. To date, this has been a serious stumbling block in the negotiations, and officials are insisting that Canada dismantle the system.

Many of Canada’s beef producers are concerned that the supply management system protects a sector representing only seven per cent of our agricultural output, while putting the majority of Canadian agricultural exports at risk.

The role of the federal government in building agri-trade

The federal government has set a goal of reaching $75 billion in agriculture exports by 2025. “To achieve that goal, government needs to help us make our agriculture and agri-food products as competitive as possible within the international marketplace,” said Casey. “It’s important that supply management does not impede our ability to access those markets.”  

For a full explanation of why NAFTA matters to Canada’s beef producers, read ‘Cattle feeders head to Ottawa to support NAFTA negotiations’.