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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.

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.

Cattle feeders head to Ottawa to support NAFTA negotiations

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Canada’s beef producers are anxious to preserve the North American Free Trade Agreement (NAFTA) because it is a great example of how free trade should work. U.S. President Donald Trump, however, has threatened to pull his country out of the pact.

What NAFTA has meant to the Canadian beef industry

NAFTA’s tri-lateral market access — without tariffs or quotas for either beef or live cattle — has resulted in healthy trade between Canada, the U.S. and Mexico.

According to the Canadian Cattlemen’s Association, in 2016, Canada exported 270,000 tonnes of beef and 764,000 head of live cattle to the U.S., valued at more than $3 billion ($1.7 billion was beef and $1.4 billion live cattle). A further 16,000 tonnes of Canadian beef valued at $109 million went to Mexico, making that country Canada’s fourth largest beef export market.

In fact, almost 72 per cent of Canada’s beef exports go to the U.S., and six per cent to Mexico. Almost 59 per cent of our beef imports come from the U.S.

Beef industry submission to federal governments supports NAFTA

In May 2017, the National Cattle Feeders Association (NCFA) joined with other Canadian beef industry groups in a submission to the governments of Canada, U.S. and Mexico, stressing that NAFTA works well for beef and the relevant provisions should not be changed. The arrangement has produced an integrated North American beef industry that benefits the three countries, and has allowed Canada to build an industry that is also more competitive internationally.   

While the NAFTA talks could lead to a fine-tuning of some details – such as the elimination or reform of certain border regulations and export impediments, and the aligning and harmonizing of veterinary drug approvals – we believe it’s important for Canada’s beef producers, and the Canadian economy, to preserve this agreement.

How Canada’s beef industry is represented at the negotiation table

Agriculture and Agri-Food Canada has a trade division that provides advice to the chief NAFTA negotiator. The trade team has received input and advice from industry representatives, and has held briefings for industry stakeholders prior to each round of the NAFTA talks. NCFA is planning to be at the upcoming briefings for the second round that will be held in Ottawa on September 23-27. 

How Canada’s beef industry could be negatively impacted by changes to NAFTA

Any changes that would restrict the free flow of live cattle and boxed beef across the borders to the U.S. and Mexico could have a profound effect on Canada’s beef producers. Another concern is any reimplementation of Country of Origin Labelling (COOL), which has been historically damaging to the beef industry.

You can read the full submission to the governments of Canada, U.S. and Mexico  here.