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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.

Canadian beef trade with China takes a serious blow

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Recent trade developments between China and the U.S. have some Canadian beef producers seriously worried.

Their concern stems from the disparity between the types of product China will now accept from the U.S. and those accepted from Canada:

    • Currently, Canadian producers are only allowed to ship boneless, Under Thirty Months (UTM) frozen beef and only from individual processing plants that have been audited and approved by Chinese officials and certified for export to China by the Canadian Food Inspection Agency.
    • China’s trade deal with the U.S. allows American producers to ship boneless beef, bone-in beef, chilled beef, and certain offals from any federally-inspected and approved processor.

Canadian beef producers already suffering the impacts

Producers and industry associations have written letters to Agriculture Minister MacAulay, as well as trade officials, to inform them of the impacts this has on the Canadian beef market. Producers are trading directly into China and have met all the requirements necessary for sale of beef into China – and this is a tremendous opportunity that may fail without similar access to that achieved by the U.S.

Some Canadian producers are selling their product under the branded ‘Farm Gate to Chinese Plate’ program, and have a custom processing contract with a large processing plant here in Alberta. These producers have invested substantial time and capital over the past four years to build a strong relationship with their Chinese partners. In 2016, 10,000 head of Canadian cattle were exported to China. Producers were looking forward to increasing that to 15,000 head in 2017, but their Chinese customers have informed them they may change the order, and want it for a lower price.

Canadian producers are selling product into China for high-end retail and restaurants, but they can only ship frozen, boneless product. The fact that the U.S. is now allowed to ship fresh or chilled bone-in beef puts Canadian producers at a distinct disadvantage in this marketplace. This may end trade with the Chinese for Canadian beef producers as a result.

Canadian trade with China

To date, China has expanded its acceptance of Canadian product in stages, where additional product lines are allowed access over time. For instance, China agreed to accept Canadian bone-in beef back in September 2016, but the agreement has not yet been finalized, so currently, no bone-in product is being shipped. However, the recent agreement with the U.S. shows that China can work on opening many beef product lines at the same time. The hope is that Canadian negotiators can secure the same treatment for Canada.

Canadian beef producers have expressed concerns over the fact that their industry depends on global trade – they need to be competitive for the growth and sustainability of their industry. China is a market where producers need the Canadian government to step up its efforts to gain access similar to that achieved by the U.S.

Learn more about Canada’s beef trade with China from Agriculture and Agri-Food Canada.