THE BSE crisis and the threat of country-of-origin labelling in the United States have highlighted the problems of Canada’s inadequate slaughter capacity. The packing sector, while growing, has not kept pace with livestock herd expansion. The result is that about seven million hogs and 1.5 million cattle were shipped to the U.S. for feeding and slaughter last year.
These exports are vulnerable to border closures and a target for American trade protectionists. As Canada struggles back from the bovine spongiform encephalopathy crisis, it is important to note that the first trucks to resume crossing into the U.S. were not cattle liners but refrigeration trucks carrying beef.
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Live animals were left behind because of the perceived threat to the health of the importing country’s herd.
It’s possible the U.S. will resume imports of young, live cattle this spring, but the problem of what to do with older, cull cattle will be around for some time.
Where can they be slaughtered? Until the BSE export ban, most went to American packers.
Another looming trade issue arguing in favour of more Canadian packing is country-of-origin labelling, or COOL. Luckily, it appears American legislators will delay implementing mandatory COOL for two years. This will give our livestock and meat industries time to prepare and make the best of a challenging situation.
Live animal exports are most likely to be hurt by COOL. The cost of tracing, documenting and labelling Canadian animals will discourage American feeders and packers from buying them.
On the other hand, Canadian pork or beef going to the U.S. will require a simple “produced in Canada” label.
In general, protectionist farmers tend to pay less attention to imported processed food on store shelves than to live animals lining up at the slaughter house. Reducing live exports will mollify U.S. farmer opinion that tends to have such strong influence with American politicians.
More packing capacity would also help the prairie economy. The U.S. Bureau of Economic Analysis calculates that hog slaughter has a multiplier effect of more than 3.5, meaning that for $1 spent another $3.50 is generated in the economy. Every job in meat packing generates almost two associated jobs.
There are many good arguments for increased packer capacity in Canada but it isn’t happening fast enough.
The undervalued Canadian dollar has, until recently, put packers here at a disadvantage when buying animals to slaughter, but the dollar is stronger now.
It would be prudent for Canada’s livestock sector to review the situation and see if there are other impediments, perhaps related to government regulation, labour supply and markets.
From there, a united strategy should be developed to address the problems and encourage more domestic slaughter and processing.
