Canadian Cattle Group’s Head
Offers Views On Trade Issues

By David Bowser

DENVER — While there is increasing unrest along the U.S.-Canadian border concerning trade issues, the head of the Canadian Cattlemen's Association indicates he would rather spend resources on solving disputes than fighting them in court.

Ben Thorlakson, a Canadian cattle feeder and president of the Canadian Cattleman's Association, told National Cattlemen's Beef Association representatives and officials from five state cattlemen's associations here that CCA was attending the Beef Summit with expectations that progress could be made on issues that concerned both nations.

He said the meeting could provide direction for the two governments on agricultural trade matters for upcoming multilateral trade negotiations.

"We are committed to free trade," Thorlakson said.

"We also believe in free trade, very strongly," agreed Clark Willingham, president of the National Cattlemen's Beef Association, which hosted the meeting. "However, we also believe in fair trade, and we believe we got the short end of that stick."

Willingham admitted that NCBA and CCA have not been successful in getting their governments to give them the leeway to trade as they would like.

"We still need to move forward from our perspective to try to get fairer trade," Willingham said.

It will be 10 years in January since Canada and the United States signed a free trade agreement.

"It is inevitable that changes should occur and frustrations develop," Thorlakson said. "For our integrated markets to function as efficiently as possible, there must be as much harmonization of standards and access requirements as possible. We expect that we can readily agree that our respective procedures and standards need to be based on sound science which conform to international protocols."

He said it is important to establish an understanding of what issues exist, concur on facts as much as possible, agree to further information exchange, and develop procedures to move forward.

The United States and Canadian beef industries are virtually identical in nature, with Canada’s being one-tenth the size of the U.S. industry. There are differences due to the climate, but the basic production systems are the same, he said.

One of the issues impacting Canadian and U.S. cattlemen is an erosion of demand for beef in North America and loss of market share.

"It's true in Canada," he said. "It's true in the United States. It's a challenge we must address."

There's been a decrease of 18 percent in demand from 1991 to 1997, Thorlakson said. Increased competitive meats and non-meat alternatives are also problems cattlemen in both countries face.

"Pork production is increasing dramatically in both countries in anticipation of increased global demand," he said. "That expected demand is being dramatically impacted by the global currency situation."

A global currency crisis has significantly reduced credit, and reduced beef sales to numerous countries has resulted in increased North American beef supplies. It may be two to five years before some of these economies begin to

recover.

In addition, increased carcass weights this year in response to lower feeding costs and lower feeder prices have added the equivalent of 110,000 head in Canada and in the U.S. the equivalent of 1.4 million cattle.

"We've all been struggling with these issues," he said.

These problems have resulted in various issues between the two countries, particularly from states in the northern and western U.S.

"We have some issues as well," he said. "You are aware of our concerns about disease. We would be very willing to discuss the whole issue of veterinary pharmaceutics."

Thorlakson said his organization will defend its industry in trade issues that they feel are worthwhile.

However, "it will be costly to both industries and will drain resources that could be used far more productively," Thorlakson said.

An issue that keeps coming up is the Canadian feed grain policy.

"It is a common perception that we are receiving indirect benefits as the result of policies and practices of the Canadian Wheat Board," Thorlakson said. "Due to litigation that we're presently dealing with, we cannot go into great detail about this; however, we have irrefutable information and it's a matter of public record that for the past year western Canadian feed grain prices at Lethbridge have been higher than U.S. wheat and barley prices in

Montana. It is anticipated that in this calendar year, we will import 100,000 tons of barley from Montana."

He said he's been feeding cattle for 28 years and has yet to buy a bushel through the Canadian Wheat Board.

"They're not a factor in the feed barley market in Alberta, nor in Canada," Thorlakson said.

The CCA has a policy favoring a continental market for feed grain.

"We want feed barley to trade in the open market between our two countries outside the jurisdiction of the Canadian Wheat Board," Thorlakson said.

He said the CCA is prepared to work with the NCBA to pursue such an objective.

Concerning animal health requirements, a subject that took up almost half of the four-hour summit, Thorlakson said the main issue is the difference in the two countries' reportable disease list, specifically testing requirements for bluetongue and anaplasmosis.

"The other element is the regulatory changes required to move ahead with regionalization and zoning," Thorlakson said. "We have spoken to our senior officials in the ministry about making changes to our regulations to

accommodate regionalization and zoning. Advancing this matter into the bi-national discussions that are underway would be very useful in accelerating this process."

The issue of changing the Canadian reportable disease list is one the Canadian cattle industry must deal with, he said. CCA worries that the consequence of removing bluetongue from their reportable list is that they

may lose their international disease-free status with resulting loss of sales of breeding cattle to Europe, the Middle East and parts of Asia.

Discussions will take place about both bluetongue and anaplasmosis in December at a national animal health conference, Thorlakson said.

"On the positive, we were able to make significant changes to the Northwest Protocol," he said. "We had hoped the program would have been provided for improved access this past winter. Unfortunately, the department established

such onerous requirements for such fine detail that it proved too costly and too cumbersome to use. Canadian cattlemen initiated and paid for a review in December to help lead to eventual changes. We were as frustrated as you over the delay."

Since the changes in August, more than 18 feedlots are designated to receive cattle under the protocol and a significant number of feeder cattle have been purchased, he said.

"We would certainly like to get more states actively involved in this protocol and part of this process, so we could have access to this market," Thorlakson said.

Thorlakson also signaled a change in the Canadians' market information availability stance.

"We participated in a meeting on Oct. 14 of this year in Ottawa where NCBA was represented," he said. "Information sharing on trade and inventory numbers were discussed and methods to assure a timely exchange were agreed upon."

The Canadians have experimented twice with cattle on feed reports.

"Not a significant number of the feeders thought that the information gained was that worthwhile," Thorlakson said. "Some of our major feeders have said that they would not cooperate. This past week, I personally approached two or three of these individuals."

He said the major feeders he talked to agreed to cooperate and provide the needed figures for a cattle on feed report.

"We will be able to provide a cattle on feed report as early as Jan. 1," Thorlakson said. "The reason we didn't do it in the past is that we were paying for it. Unlike in the U.S., our statistical work is paid for by the cattle industry. It's like any other business decision you make. You pay the money. You try it. If you like it, you go ahead. We didn't feel it was serving a useful purpose. Now, there's a lot more attention focused on it, and I think we can rise above the critical threshold that is required to generate the good information. We will make a commitment to proceed on that."

On another point of contention, however, Thorlakson remains adamant.

"We remain convinced that border re-inspections of beef production from federally inspected plants in either Canada or the U.S. is not only an unnecessary procedure and costly, but also leads to additional handling, and reduced temperature control, both of which can negatively affect food safety," he said. "We believe there must be reasonable ways to recognize plants that have met stringent HACCP procedures and federal meat inspection requirements

and could establish a classification that could exempt them from further inspection requirements."

He also declined to change the Canadians' past stand on grading.

"We understand there is growing sentiment in the U.S. that wants to eliminate the grading of imported carcasses and slaughter cattle," Thorlakson said. "We believe a move in this direction would be regressive. We believe it would negatively affect both markets. We feel we should be looking at all and any options that would optimize the value of our products and get the highest net return in North American markets."

Thorlakson said he would like to see progress in greater harmonization of quality standards and cooperation on technology to improve products and price discovery systems.

"In our view, grading technology such as the computer-driven system now installed in the Fort Morgan plant should take us in a new direction," Thorlakson said. "We remain fully prepared to cooperate on these technologies."

An area where Thorlakson said the two counties should work closely is in opening other markets, particularly the European Union.

"We have worked closely in our respective efforts to overturn the ban on beef from cattle grown with approved growth promotants," he said. "We shared in the first level of success when the WTO (World Trade Organization) panel ruled that the ban did not conform to their international trade obligations."

But he warns that there are still numerous barriers to any significant volume of product entering the EU.

"We need to work closely to open this potentially enormous market for our products," he said. "In the WTO 1999 negotiations, we would like to see continued progress in market liberalization."