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Revised NAFTA agreement a relief to Canada’s beef producers

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Image Credit: KCL Cattle Company Ltd.

After more than a year of negotiations, Canada, the U.S. and Mexico have reached an agreement on NAFTA. The new, proposed agreement is called the U.S.-Mexico-Canada Trade Agreement (USMCA).

The agreement is good news for Canadian beef producers, as it preserves the duty-free trade in live cattle and beef, which has benefited all three partners under NAFTA. The existing rules of origin and the mechanisms for fair dispute settlement also remain intact.

Brian Innes, president of the Canadian Agri-Food Trade Alliance (CAFTA) issued a statement on the new agreement: “We welcome an agreement to renew NAFTA. Free and fair trade has made our agri-food exporters globally competitive. We’re very pleased that free and fair trade of North American agri-food products will continue.”

The U.S. is Canada’s largest trade partner for beef and live cattle, and the new agreement ensures that will continue. “USMCA gives the Canadian beef industry critically important ongoing access to our largest markets: U.S. and Mexico,” said Bryan Walton, ACFA’s president and CEO. “This is an integrated industry here in Canada and free trade in North America benefits producers in all three countries.”

Why diversification still matters

The uncertainty over NAFTA has been trying for Canada’s beef producers, and it has highlighted the need for Canada to expand its global reach and forge new trading partnerships.

Trade with Asia recently received a boost with the signing of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Speedy ratification of this deal is of the essence for Canadian producers to ensure Canada is on the ground floor when it comes to securing lower tariffs with other partners. 

Europe is another market that provides export opportunities to Canadian beef producers. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is designed to encourage free trade between Canada and Europe, although Canada doesn’t currently fill its quota for beef exports because there are not enough Canadian packing plants qualified to send beef to Europe.

“The most important thing that we got out of reaching this USMCA agreement is we’ve removed most of the cloud of uncertainty that was hanging over the Canadian economy and discouraging investors from moving forward,” said John Weekes, former chief negotiator for NAFTA.

The pursuit of an ambitious international trade agenda is one of the key tenets of Canada’s National Beef Strategy, which is designed to ensure that Canada’s beef producers are positioned to weather challenges and take advantage of opportunities. You can read more about that in ‘4 reasons the National Beef Strategy is important to Canada’.

How regulatory changes could help trade with the U.S.

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This week, we’re exploring recent changes to federal regulations that will help ease the trade in live cattle between Canada and the United States. It’s a follow-up to an earlier post in which we explained why trade with the U.S. is so important to Canada’s beef producers.

The governments of both Canada and the U.S. have strict regulations under which cattle can be imported into their respective countries.

One particular concern is to identify where an animal was born in the event of a disease outbreak. The required inspections, paperwork and documentation can be onerous. 

The Restricted Feeder Cattle Program

The Restricted Feeder Cattle Program was implemented to simplify keeping track of feeder cattle imported from the U.S. to a feedlot in Canada and then directly to the processor. The program allows importation without test requirements on a year-round basis but with proper identification and certification. 

The movement of these feeder cattle must be direct to a feedlot registered with the program, and from there, direct to processing. Because these cattle will not be going anywhere else, it makes them much simpler to trace back, so it was possible to relax the regulations.

Why there was a need for change

Typically, more feeder cattle and finished cattle are shipped from Canada to the U.S. than in the other direction.   But in 2017, market conditions changed, and between 150,000 and 200,000 head of feeder cattle were imported into Canada from the U.S. 

The National Cattle Feeders’ Association (NCFA) recognized that changes to the Restricted Feeder Cattle Program could make the process easier and less costly for Canadian feedlot owners, and the Canadian Food Inspection Agency (CFIA) accepted NCFA’s suggestions. 

A summary of the changes

Recent changes to the Restricted Feeder Cattle Program have focused on the following areas:

1. Identification – including the information to be included on RFID tags.

2. Vehicle sealing – making allowance for rest stops for cattle en route.

3. Documentation for importation and border requirements – including allowances for shipments contained in multiple trucks.

4. Inspection at destination, approved feedlot – which can, in some cases, be completed electronically, based on a reading of the RFID tags.

For feedlot owners who are importing large numbers of feeder cattle, these changes will have a  significant impact on their costs, and their ability to justify the import of cattle from the U.S.

Maintaining a regulatory regime that protects people and animals, while simultaneously facilitating free and open trade, will promote a continued, mutually beneficial relationship. That’s why livestock producers will be watching negotiations to update the North American Free Trade Agreement closely.

You can read more about this in the post, Why free North American trade is good for the beef industry and Canada.

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.

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 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’.

Ottawa meetings bring cattle feeder issues to government’s attention

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Each year, at its February board meeting, the National Cattle Feeders’ Association (NCFA) creates an Ottawa Engagement Strategy. This strategy provides a framework for four separate meetings in March, May, September, and November with federal decision makers, including MPs, ministers, parliamentary secretaries, staff, and house committees.

The strategy allows NCFA representatives to advocate for cattle feeders across Canada on major issues such as trade, regulations, labour, and infrastructure.

During the 2018 March and May meetings, the NCFA met with Patty Hajdu, Minister of Employment, Workforce Development and Labour, and with Lawrence MacAulay, Minister of Agriculture and Agri-Food, as well as more than 50 MPs and government officials.

The issues explained

The major opportunities and challenges that form the focus of this year’s meetings include the following:

Opportunities for growth

Barriers to growth

  • Consumer education and trust – To get the government engaged in consumer education, helping ensure, through the Canadian Food Policy, that consumer choice is “informed”, based on facts and science.
  • Labour shortages – To ensure that Canada’s agricultural producers and meat processors have access to the labour they need.
  • Rural infrastructure – To facilitate infrastructure development so that agriculture ties into broader provincial, regional, and national networks.
  • Regulatory barriers – To continue updating regulations so they reflect the day-to-day realities of beef production and keep pace with technological changes and ongoing innovations.

Progress made during the consultations

In early May, Rodger Cuzner, parliamentary secretary for labour, chaired a day-long roundtable on labour needs in agriculture and agri-food. It was announced that the government will no longer require separate Labour Market Impact Assessments (LMIAs) for worker transfers or replacement workers. This removes one of the many Temporary Foreign Worker Program (TFWP) complexities.

Bureaucrats administering the TFWP are currently holding consultations with agriculture across Canada, with meetings in Ottawa, Calgary, Saskatoon, Winnipeg and other cities. Key issues with the program will be raised during the meetings.

As more meetings are held later this year, we will continue to provide updates.

Finances are among Cattle Feeders’ top issues

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Ryan Kasko, ACFA’s new board chair, talks in this blog about priority issues for the upcoming year.

Non-refundable checkoff

ACFA is working on a plan to collaborate with Alberta Beef Producers to build a new path forward that would include an Alberta Beef Industry Development Fund, Ryan said.

“We will be asking producers to vote in a plebiscite this fall to return to a non-refundable checkoff,” he said. “The money generated will be used to finance marketing activities, research and other projects that will benefit the Alberta beef industry.”

Ryan said the Alberta Livestock and Meat Agency (ALMA) used to provide $20 million for industry research and marketing initiatives. The funding has been eliminated, so it is hoped the checkoff proceeds will at least partly offset the lost funds. “We’re hoping to work with the government to show the value this investment is providing, and to hopefully get more government funding,” he said.

Farm safety

The association is also heavily invested in making sure its members understand recent changes to the Alberta Labour Code. “We’re offering a feedlot safety program to ACFA voting members so that feedlots can get up to speed on farm safety, specifically in reference to those changes,” Ryan said.

Trade

NAFTA is at the top of cattle feeders’ minds. “Although we’re not directly involved in negotiations, we work alongside the National Cattle Feeders’ Association and the Canadian Cattlemen’s Association to support them in their efforts to make sure the beef industry remains part of NAFTA.”

Looking for a new CEO

Bryan Walton, ACFA’s president and CEO, will retire this fall, and a search for a replacement has started.

“We will be sad to see Bryan go,” said Ryan. “He’ll be a hard person to replace. But at the same time, any change provides an opportunity for new ideas, and we’re looking forward to that process.”

You can learn more about Ryan and his work as a cattle feeder in an earlier Meet the team post.

6 issues cattle feeders will discuss at the Alberta Beef Industry Conference

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Beef producers from all over Alberta will convene in Red Deer next week for the Alberta Beef Industry Conference.

This annual event is a chance for industry members to find out what’s new and network with others in the industry. As the event approaches, here’s a look at some of the pressing issues ACFA has been following, and that industry members will likely discuss.

#1 The Canadian Agricultural Partnership (CAP)

The government has allocated $3 billion to invest, over the course of five years, in five areas: innovation and research; environmental sustainability; risk management; product and market development and diversification; and public trust. ACFA will look at devising projects and programs to advance the cattle feeding industry, which could attract funding under CAP.

#2 Labour

The Federal Department of Employment and Social Development Canada (ESDC) is currently reviewing the Temporary Foreign Worker Program. This program is a life-saver for cattle feeders when they are unable to find workers from within the Canadian workforce. Past government reviews have accepted ACFA recommendations but there is still room for improvement.  ACFA will continue to be engaged in this file.

#3 Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)

Last month the government announced it will sign onto the new CPTPP trade agreement. This is good news for the beef industry and should result in reduced tariffs in a number of export markets, especially Japan. ACFA will continue communicating with government to stress the importance of the agreement for Canada’s beef industry until it is fully approved and ratified by Parliament.

#4 Other trade issues

NAFTA and trade with China are two other pressing trade issues of great importance to cattle feeders. In June 2016, the U.S. secured approval from China for greater access to that market. Canadian producers need the same access. A new pilot program to export fresh and chilled Canadian beef to China is expected in 2018, but ACFA will continue to press for the same access given to the U.S.

#5 Competitiveness

About 10 years ago, ACFA commissioned a study to assess the competitiveness of cattle feeding in Alberta. The industry’s ability to compete effectively in the international market will continue to be a priority and there will be discussions about whether it is time to update this study.

#6 Industry governance and financing

The mandatory levy on beef sales, known as the check-off, is used to fund research and marketing activities on behalf of the entire industry. ACFA and the Alberta Beef Producers (ABP) have come together to devise a new governance and funding model for the provincial beef industry, and its use of check-off dollars. A plebiscite may be required later in 2018 for a final decision.

As well as conversation and networking, the conference also features a full program of speakers, including former Prime Minister Stephen Harper.

For anyone interested in Alberta’s beef industry, its challenges and opportunities, this is a must-attend event.

Excellent reasons to attend this year’s Alberta Beef Industry Conference

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On Feb 21-28, members of Alberta’s beef producing industry and their suppliers will gather at the Sheraton Red Deer Hotel, along with journalists, politicians and others interested in beef and the people who bring it to our tables.

The 15th annual Alberta Beef Industry Conference is a chance to find out what’s new, learn about the industry’s achievements and challenges, and make connections.

As always, the conference is packed with a great lineup of speakers. Here are a few highlights:

Andrew Ramlo: This strategic management consultant specializes in helping organizations develop strategies to address industry challenges and opportunities. He will be sharing his insights into everything from the changing consumption patterns of domestic and export markets, to issues of production and labour force trends.

Mark Sheridan: The president of Hester Creek Estate Winery will speak about the evolution of B.C.’s wine industry and the value the Vintners Quality Alliance has brought to wine producers in British Columbia.

John Weekes: As a senior adviser with Bennett Jones, John has worked with the National Cattle Feeders’ Association on many trade files, providing business and strategic advice. He will comment on NAFTA, Canada’s trade agreement with the United States and Mexico; the EU and the implementation of the Comprehensive Economic and Trade Agreement (CETA); efforts to bring the Trans-Pacific Partnership (TPP) into force without the U.S.; and trade relations with China and India.

Bruce Cameron: This veteran pollster will explore the challenges our democracy faces in a world where truth is relative. Using timely examples, he will show how integrating new social media metrics with established polling techniques offers a way to reduce margins of error and restore truth in politics.

The conference promises to be packed with great information. To learn more about these and other speakers, visit the conference program page.

Pressing cattle feeder issues discussed with politicians during Ottawa trip

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Parliamentary Secretary for Trade, General Andrew Leslie addressing attendees at a townhall sponsored by University of Alberta and Global Affairs Canada.
Photo Credit: Casey Vander Ploeg

Last month, representatives of the Alberta Cattle Feeders’ Association headed to Ottawa to participate in a series of meetings between the National Cattle Feeders’ Association (NCFA) and Canadian politicians.

The meetings provided an opportunity to put the issues and challenges facing Canada’s cattle feeders in front of key members of government. The critical issues discussed included:

    • Labour: Changes are needed to the Temporary Foreign Worker Program (TFWP), so cattle feeders and beef processors can access desperately needed workers.  Employers are currently forced to endure a lengthy and convoluted process rife with red tape and changing requirements, which takes many months to complete.
    • Infrastructure: Significant funding is needed to upgrade rural infrastructure, particularly roads and bridges. Current investment is heavily swayed to urban areas, but it is the rural areas where much of the economic activity occurs, including mining, agriculture, oil and gas, and transportation.
    • NAFTA: A successful outcome to the negotiations is needed to encourage and facilitate international trade. 
    • TPP: Now called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) – even though the U.S. has now left the partnership, it is important for our industry that Canada signs on and keeps the negotiated market provisions as they were before. 
    • EU trade: EU approval of Canadian food safety practices will enable us to start filling our tariff-free quota under the agreement. 
    • China: Canada needs the same access to China as the U.S. successfully achieved in June 2017. Following a recent agriculture trade mission to China by Agriculture Minister Lawrence MacAulay, bone-in beef will hopefully start moving soon and a pilot project will be created to export Canadian fresh-chilled beef.  While not the same access afforded to U.S. beef, it is a step in the right direction.

NCFA board meeting

During the same trip, an NCFA board meeting was held. Several influential officials attended to discuss pressing issues:

To learn more about other ways that ACFA advocates for Alberta’s cattle feeders, visit our Advocacy Page.