Cattle exports to the United States are expected to be down until producers figure out the finer points of its country-of-origin-labelling law.
“I suspect the volumes will be back, but I think there will be a permanent price impact, and we don’t know to what extent that will be,” said John Masswohl of the Canadian Cattlemen’s Association.
“A lot of people are laying low and are letting others be the guinea pigs.”
Canfax reports fed cattle exports are down 14 percent so far this year compared to 2007, but that is partly because of the narrowing of the cash-to cash basis between Alberta and Nebraska to $9, which means more cattle were processed in Canada.
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However, Rob Leslie of Canfax said the basis will widen as costs increase in U.S. plants because of sorting and labelling.
“No one has established what the costs will be,” he said.
The American Meat Institute, which represents processors, has estimated that implementation costs will be $3.9 billion, which is higher than the U.S. Department of Agriculture’s estimate of $2. 5 billion.
As well, the department does not have a budget for enforcement, which is estimated to cost $9.6 million. Instead, it is extracting about $1 million from other areas of its budget to offer industry training.
Added to the debate is the uncertain policy of the next presidential administration. Masswohl said the law could be further strengthened if Democratic candidate Barrack Obama becomes U.S. president.
“The benches from which he would pull his ag secretary and ag advisers would probably include people of the likes of Tom Daschle and guys who are wildly in favour of COOL.”
The rule is fodder for trade challenge, and at a recent election debate agriculture minister Gerry Ritz said Canada would launch a lawsuit.
“I would be very concerned how these provisions would be interpreted and re-interpreted under the new administration,” Masswohl said.
“It is extremely important that we get the trade panel initiated and get the wheels turning.”
During a Sept. 30 news conference, U.S. agriculture undersecretary Bruce Knight and Lloyd Day, administrator of the USDA’s Agricultural Marketing Service, explained the rule, whose 60 day comment period ended Sept. 30. About 200 public comments were received, which will be evaluated for the final rule expected next year.
They said the law applies to retailers handling red meat, fresh and frozen fruit and vegetables with sales of at least $230,000. This exempts smaller fish and butcher markets, for example. It also exempts food service, including those within retail establishments.
Processed food items are not included, which is food subjected to cooking, curing, smoking or restructuring.
The law includes four broad categories for origin declarations:
- “Product of the United States” covers animals born, bred and slaughtered in the U.S.
- Country of mixed origin covers feeder calves that might come from Canada or Mexico. It would be labelled as “Product of U.S. and Canada”, “Product of U.S. and Mexico,” and in some cases, product of all three.
- Slaughter animals would be mainly Canadian cows and fat cattle coming in for slaughter. These would be labelled “Product of Canada and the U.S.”
- Meat of foreign origin would be labelled “Product of Canada” or “Product of Mexico.”
