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

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

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 

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.

Ottawa meetings bring cattle feeder issues to government’s attention

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.

Foot-and-mouth disease strategy crucial for Canada and cattle feeders

Foot-and-mouth disease (FMD) is a highly contagious virus that can affect cattle, sheep and swine. When an outbreak hits any livestock producer’s operation, the results can be devastating, with the potential for entire herds, or even an industry, to be decimated.

The Alberta Cattle Feeders’ Association (ACFA), is concerned that Canada is not sufficiently prepared for an outbreak. This needs to be addressed by both the Canadian government and our own industry.

“The Alberta Cattle Feeders’ Association and the National Cattle Feeders’ Association (NCFA) are continuing to elevate the importance of readiness for a foot and mouth disease outbreak in Canada,” said Bryan Walton, ACFA’s president and CEO. “One crucial aspect is access to a vaccine, and a policy around vaccination for FMD in Canada.”

In March 2018, a delegation of government and industry representatives, including Bryan Walton and Ryan Thompson, visited Boehringer Ingelheim (BI) in Lyon, France, to learn more about its production capabilities for an FMD vaccine.

“FMD is a serious issue, so it was good to have an industry-government delegation in Lyon, to see the facility and talk about the path forward,” said Ryan Thompson, NCFA board chair. “We all need to work together to make sure our members are able to have a strategy to deal with an outbreak.”

Some background

The North American FMD Vaccine Bank is a resource jointly administered by commissioners from Canada, the U.S., and Mexico. However, the U.S. is seeking government funding to create a ‘US only’ vaccine bank because, in today’s intensive livestock industry, they see it as the only way to ensure their producers have access to the required number of vaccines, regardless of strain. There is concern that with their own private resource, their support for the North American bank will diminish.

If Canada does not take similar measures it puts the entire beef industry at risk.

Boehringer Ingelheim has the technology to produce sufficient quantities of an effective, DIVA-compliant (Differentiating Infected from Vaccinated Animals) FMD vaccine – potentially within five days of receiving the request.

Next steps

“The meeting has triggered strong interest among both industry and government leaders, in looking at the greater use of vaccination strategies in Canada’s livestock industry, in the event of an FMD outbreak,” said Bryan. “Greater use of vaccination would require several other strategies to be fully and effectively implemented by industry — like an immediate ‘voluntary cease movement’ – also referred to as a 48 or 72-hour standstill – and use of packing plants to slaughter for disposal rather than consumption.”

Vaccination would greatly reduce the need for a ‘stamping out’ strategy, involving mass depopulation and disposal. That would be difficult, if not impossible, to implement in larger operations, and is increasingly considered unacceptable by the general public.

“A very pertinent question for Canada relates to how we re-gain FMD-free status after the deployment of the vaccine,” continued Bryan. “It is most likely that the process of regaining FMD free status in Canada or North America, as recognized by the World Organization for Animal Health, OIE, would take a year or more from the incidence of an outbreak. This will depend in part on whether the control measures involve ‘stamping out’, which would enable faster recognition, or vaccination, which would result in a longer time for recognition. It is important to note that once OIE recognition of FMD-free status is obtained, it would take longer still to re-establish market share.”

Industry members and government have set up a meeting for April 20, 2018, to begin discussion of a ‘made in Canada’ FMD vaccination strategy, taking into account what that would require from both industry and government.

FMD is just one of ACFA’s initiatives aimed at helping beef producers raise healthy animals in a low-stress environment. You can learn about other actions being taken in ‘Animal health initiatives from Alberta’s cattle feeders’.

Pressing cattle feeder issues discussed with politicians during Ottawa trip

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.

Meet the international trade expert who is helping support the Canadian beef industry abroad

John Weekes, an independent business advisor who has worked with the National Cattle Feeders’ Association (NCFA) on trade issues, is the subject of this week’s Meet the Team series profile.

John is an expert in international trade policy and a senior business advisor at Bennett Jones in Ottawa. He has been a huge asset to NCFA in developing a strategic approach to negotiating with government and stakeholders.

Supporting Canadian cattle feeders in Ottawa

During his career, John has been chief negotiator for the North American Free Trade Agreement (NAFTA), Canada’s ambassador to the World Trade Organization (WTO), chair of the WTO General Council, and ambassador to the General Agreement on Tariffs and Trade (GATT) during the Uruguay Round of GATT negotiations. His insider’s perspective on governments’ approach to trade matters has been invaluable to NCFA.

Trade files he has worked on include:

Country-of-Origin Labelling (COOL)

In 2002, the U.S. introduced a regulation requiring all beef (and some other agriculture products) to have a label stating where it was from. To be labeled as U.S.-sourced, the animal had to be born, raised and processed in that country. Processing plants in the U.S. were required to keep Canadian born and raised animals separate from those born and raised in the U.S., a requirement that was costly to adhere to. As a result, Canadian exports to the U.S. suffered, and some U.S. plants were forced to close. Many jobs were lost on both sides of the border, and COOL cost the Canadian beef industry billions of dollars. 

Canada appealed to the WTO in 2008 and, in December 2015, won. The U.S. Congress repealed COOL to avoid $1 billion in retaliatory tariffs authorized in the WTO ruling. 

As Canada’s former ambassador to the WTO, John was uniquely positioned to provide advice through the complex web of WTO tribunals and the excruciatingly long appeals process. John worked with NCFA and others on this, including advising federal government officials. His contacts within the U.S. were also helpful in getting NCFA’s messages through in Washington, and he helped us communicate with Canadian importers who might have been harmed if Canada retaliated against U.S. imports into Canada.

Canada-E.U. Comprehensive Economic and Trade Agreement (CETA)

This free trade deal between Canada and the EU came into effect on September 21, 2017. It will allow Canada to ship 65,000 metric tonnes of beef into the EU, without duty or tariffs. This could be worth hundreds of millions of dollars to Canada’s beef industry. John did a great job monitoring developments, needs and the political climate within the EU, and is continuing to contribute while the details are being finalized.   

Trans-Pacific Partnership (TPP) 

Canada was not part of the group that began this trade negotiation, but NCFA urged the Canadian government to become part of the TPP process, which it did. John offered advice on what Canada should secure in this negotiation. Now that the U.S. has chosen not to ratify the deal, John will lend his expertise to a new round of negotiations with other TPP partners, if talks go ahead.

North American Free Trade Agreement (NAFTA) 

As Canada’s former Chief Negotiator for NAFTA, John has an unrivaled understanding of the ins and outs of the agreement, and his opinions are sought by industry and government during the current and ongoing negotiations with NAFTA.

Why international trade matters

Canadian beef is renowned worldwide for its great taste and high quality. A healthy export industry contributes to a healthy Canadian economy. Expertise such as John’s is vital to NCFA in securing the conditions our beef producers need to develop profitable relationships with customers across the globe.

You can read more about international trade issues in ‘Canadian beef trade with China takes a serious blow’, ‘Cattle feeders head to Ottawa to support NAFTA negotiations’, ‘Feeding the world: why the agri-food industry must be an economic priority’ and ‘How people in 58 countries enjoy Canadian beef’.

Why new federal tax changes will hurt Canadian agriculture

Farmers and other small business owners across the country are worried that planned changes to the Income Tax Act pose a direct threat to the viability and profitability of their operations.

Why small businesses are concerned

Federal Finance Minister Bill Morneau announced the plan to update the act on July 18. The planned changes, however, will subject small businesses to higher taxes and eliminate many of the exemptions that make it possible for them to operate and build their businesses.

As with all small business owners, farmers take on tremendous risks and are subjected to much more income and financial volatility than a typical salaried taxpayer. The risk assumed by the small business owner is not always met with a matching reward.

Small businesses account for 30 per cent of Canada’s GDP. A tax structure that helps them weather financial downturns and survive challenges makes sound sense for individuals and for the Canadian economy.

How the changes will affect farmers

There are four changes – two proposed and two scheduled for introduction. Because agriculture is a unique industry and families are typically so heavily involved in operations, farmers stand to be particularly harmed by the changes.

Income splitting: Starting Jan. 1, 2018, income splitting with relatives is subject to new restrictions and a “reasonableness” test. Even though children often do a significant amount of farm work, the rules will make it harder for them to be paid via a dividend, leaving less cash in the farmer’s pocket, and making it harder to fund their business in a capital-intensive industry.

Lifetime capital gains exemption (LCGE): Starting Jan. 1, 2018, rules regarding this exemption will penalize children under 18, eliminate eligibility for capital gains from a family trust, and introduce a “reasonable” test that will be difficult to follow.

Holding of passive investments: Increases to corporate tax will leave less cash in the farmer’s pocket to fund future business operations and capital investments.

Transferring the business to the next generation: The proposed changes will make it more profitable for farmers to sell their business to a third party than to the next generation.

NCFA Submission to Minister Morneau

Like all agricultural operations, cattle feeders are worried about the impact these changes will have on their operations, on their families, and on their long-term prospects for profitability.

On Oct. 2, The National Cattle Feeders’ Association (NCFA) highlighted the negative impacts in a submission to Morneau and the Department of Finance. The changes will leave farmers under undue financial stress, the submission argued, limiting their ability to expand their operations and making it even more difficult to transition farming operations to the next generation. It strongly urged the minister to reconsider the proposed changes and amendments.

You can learn about another taxation issue in Why Lethbridge County cattle feeders could be leaving via new roads.

Dr. Joyce Van Donkersgoed wins award for contributions to cattle care

Joyce Van Donkersgoed is a valued member of the cattle feeding sector who we’ve written about in previous posts on this blog. Her contributions to animal care and welfare make hers a familiar name among industry members.

We were delighted to see Joyce recognized at the 50th annual conference of the American Association of Bovine Practitioners on Sept. 14, 2017, in Omaha, Nebraska.

The Metacam® 20 Bovine Welfare Award is given each year to recognize the achievements of an individual in advancing the welfare of animals via leadership, public service, education, research/product development, and/or advocacy. It is awarded to a doctor of veterinary medicine or animal scientist working in Canada, or a faculty member or a graduate student of a Canadian university. The recipient is someone whose work significantly improves bovine welfare in cattle production and research systems, or improves scientific methods of measuring bovine welfare.

Joyce is the owner of Alberta Beef Health Solutions in Picture Butte, Alberta, providing emergency, herd health and production services as well as research and regulatory services. She was also instrumental in the development of the Feedlot Animal Care Assessment Program (pdf) which we wrote about inNew assessment tool to audit feedlot animal care’.

Of her research work, Joyce said: “You can’t manage what you don’t measure, which includes animal welfare, and we must continually strive to improve. Beef veterinarians have a key ethical and moral responsibility to ensure animal welfare whilst balancing the needs of their clients. It isn’t always simple or easy to do, but persistence does pay off over time if you don’t give up and are doing the right thing for the animals, which is ultimately best for the client.”

Joyce donated the $2,000 award to the National Cattle Feeders’ Association (NCFA) Welfare Committee.

You can read more about Joyce and her achievements in ‘Feedlot people: meet a cattle feedlot veterinarian’.

Meeting with MPs helps foster understanding of cattle feeders’ issues

One of the primary mandates for both ACFA and NCFA is to act as an information source for government policy makers, and to build champions for Canadian agriculture and agri-food. 

Every year, when Parliament breaks for the summer, we get the opportunity to reconnect with MPs as they return to their constituencies. On Aug. 22, NFCA’s Bryan Walton, president and CEO, and Casey Vander Ploeg, vice-president, met with MPs and feedlot operators to discuss a number of pressing issues facing cattle feeders.

Who attended the meeting

The meeting was attended by Rachel Harder, MP for Lethbridge, Glen Motz, MP for Medicine Hat-Cardston-Warner and John Barlow, MP for Foothills.

In addition to Bryan and Casey, the ACFA’s members were represented by feedlot operators James Bekkering, Leighton Kolk, Rick Paskal, Cody Schooten, Shane Schooten and Larry Sears.

Important industry issues to watch for

Meetings such as this provide an opportunity for a semi-formal conversation about the issues and concerns of cattle feeders. This gives their representatives in Parliament the information they need for informed and balanced decision making. Some of the issues discussed at the meeting included:

1) Trade. Always a top priority, the agenda included updates on the following trade issues:

    • Trade with China. John Barlow provided a report on a recent Governor General’s Mission to China, which he attended. In addition, a recent agreement to expand U.S. exports to China has left Canada behind, and the need for the federal government to secure the same access for Canada was discussed.
    • NAFTA, and its importance to the cattle feeding industry.
    • Trans-Pacific Partnership, which needs to be altered and rebooted since the U.S. has pulled out.

2) Labour, and the chronic agriculture labour shortage both in Alberta and throughout Canada.

3) Rural Infrastructure.

4) Transportation Regulations.

5) Canada Food Guide.

As with any such meetings, we are confident this meeting provided government officials with a better understanding of the issues facing Alberta’s cattle feeders, and how to support them as they continue to feed Canadians and contribute to the economy.

You can read more about the cattle feeders’ top issues in ‘5 feedlot issues to watch for in 2017’.