Canadian cattle producers are bracing themselves for another trade dispute with the United States.
The U.S. Department of Agriculture has proposed an end to grading imported beef, lamb and veal carcasses.
“It’s against the spirit of free trade. It’s not going to do them any good. It’s going to backfire on them,” said Neil Jahnke, foreign trade chair with the Canadian Cattlemen’s Association.
“Why do they have to keep raising these non-tariff trade barriers?”
In 1999, Canada shipped about 20,000 beef carcasses worth $40.4 million, said Ted Haney of the Beef Export Federation. The total value of beef exports to the U.S. in 1999 was $1.32 billion. Adding live cattle exports brings a total trade of $2.6 billion.
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In addition, Canadian carcasses were shipped to the U.S. for the certified Angus beef program, which pays a premium for high grade beef. If those carcasses are not graded, the certified program is the loser, said Jahnke.
Canadian live cattle shipped to the United States will still receive USDA grades at the slaughterhouse.
The National Cattlemen’s Beef Association meets in Denver Aug. 2-4. The Canadians plan to discuss this issue than.
The new proposal is one of many that American producer groups like the NCBA have suggested to protect domestic markets. They have long argued the USDA grade is a quality trademark and should only be applied to American-grown cattle.
One year ago, the Americans successfully applied for a countervail duty on live cattle shipments from Canada, saying the imports harmed local market prices. Canada ultimately won the case and the duty ended last fall.
U.S. ranchers also lobbied for and lost on a bill to provide country-of-origin labeling.
Larry Campbell of the Canadian Meat Council, an umbrella organization for packers and processors, said this is a political issue in an election year. The council wants the grading of imported carcasses to continue.
Ungraded carcasses arriving at American food processors are classified as “no roll.” Without a grade, each carcass would lose $45-$50. However, 95 percent of Canadian beef exported to the U.S. is boxed beef and already carries a Canadian grade. It is not re-graded by the USDA.
“Once you get it into the box you don’t suffer the same price devaluation that you do when you ship beef carcasses,” said Campbell.
This decision will push more beef into boxes to avoid losing value.
For example, a box of AAA beef can be sold to the U.S. as Canada Choice. This is similar to American grading terminology of Prime, Choice, Select and Standard.
The American cattlemen’s association argues that giving imported carcasses a U.S. grade is a violation of the Agricultural Marketing Act. The law requires that “meat of all eligible species shall be graded only in the establishment where the animal was slaughtered or initially chilled.”
The NCBA claims that by placing a USDA grade on a carcass, it gives a misleading impression that the products are of American origin.
