BEEF RESCUE PLAN

Ottawa plan will move beef into Canadian Marketplace

Terry Meagher

In a rare piece of co-operation, Canadian cattlemen and the federal government have designed a program to remove bottle necks and get Canadian beef moving before the border with the U.S. opens.

The emergency relief program hasn’t come a minute too soon. Two days after the June 18 announcement the Alberta market tanked, with cattle selling for as low as 50 cents per pound and ranchers losing $700 per head.

The cornerstone of the initiative is a $640-million disaster relief program for producers shared 60-40 among the federal and provincial governments. Its objective is to keep the feedlot industry financially viable, but sheep producers will also benefit.

Roughly 900,000 cattle are slaughtered in Canada between June and September. However, fed cattle sales have dropped from 60,000 head per week to under 30,000 head after one cow in Alberta was diagnosed with Mad Cow disease. The new program would raise the number of animals slaughtered weekly to 50,000 and continue after the border is open, until the surplus disappears.

The compensation to producers is based on the price of U.S. beef and uses a sliding scale. For example, if the U.S reference price is $1.05 per pound, and the salebarn price is 90 cents, the government subsidy will bring the price to within one cent of the U.S. price. But if the sale price is only 50 cents, then the best the producer can hope for is 0.89 cents per pound.

"The system is designed to encourage the producer to get the best price for his cattle," John Newman said. Newman is a member of the executive of the Ontario Cattlemen’s Association (OCA) and took part in the Ottawa negotiations.

Originally, the federal government offered cattlemen a tax exemption, and said the Net Income Stabilization Account would handle the crisis. But the program does not have enough money in it. When an Alberta rancher opened the books at the Ottawa meeting, Minister of Agriculture Lyle Vanclief changed his mind, Newman said. There was no way those measures would have saved the industry, he said.

After Mexico and the Asian countries closed their borders to beef, the market for cheaper cuts disappeared and the storage space at the slaughterplants filled to overflowing. With too few cattle being slaughtered, Canada was unable to fill the prime cut market. At abattoirs in New York State, cull cattle prices since the mad cow scare have increased by 15 cents per pound.

The program also calls for the elimination of supplementary permits for importing beef beyond our commitment to the World Trade Organization of 76,000 tonnes. Export countries like Australia and New Zealand have shifted to the more lucrative U.S. market, but that has been more than offset by a new exporter, Nicaragua.