BSE Media Clippings - August 2004
Cattle
Ranchers Need a Special Brand of Help
David Kilgour, Globe and Mail, August 20, 2004
It's
hard for urban Canadians to grasp the devastation felt by tens of thousands of
families who work in our national beef industry since bovine spongiform
encephalopathy was discovered in an Alberta cow, and the United States closed
the border to Canadian beef more than a year ago. One good window on the
worsening post-BSE crisis is the decision by large Canadian feedlot operators to
sue the U.S. government. On Aug. 12, seven Alberta feedlot owners, led by Rick
Paskal, spokesperson for the group Canadian Cattlemen for Fair Trade, filed a
$150-million class-action suit against the U.S. administration under Chapter 11
of the North American free-trade agreement. They hope their lawsuit, which could
cost more than $3-million, will win them much needed compensation, and, more
importantly, pressure the U.S. government into reopening the border.
These
farmers alone claim damages in the $100-million range; they hope that many
others from all industry sectors, including the numerous cow-calf operators,
will soon join them, raising the claim to more than $1-billion.
The
civil-action suit states that the 1989 trade pact established a continentwide
and fully integrated beef industry. Up until May 20, 2003, there were seven
competing beef processors, both small and large, within driving distance in the
Prairies, creating a competitive and thus hospitable market for farmers to sell
their cattle. But after the BSE outbreak, the number of packers for meat exports
effectively dropped to two -- because only Cargill Foods and Lakeside Packers,
both U.S.-owned packing companies and industry giants, are licensed by the U.S.
government to export boneless meat from animals under 30 months of age.
These
two plants also received, together, nearly $42-million from emergency financial
assistance provided by the Alberta and federal governments.
We
need action now, as the financial burden continues to grow on the backs of
entire farming communities. A restaurant owner near Lethbridge told me last week
that his sales have dropped by almost a third since the border closed. A
Saskatchewan rancher said that steers that sold for $1,300 each before the
crisis began last year are now fetching only $850.
Prairie
grain producers are also drastically affected by the crisis, as an estimated
one-third of their crops formerly went to feed cattle.
In
reality, Canada and the United States have complementary practices with respect
to BSE; the U.S. Secretary of Agriculture, Ann Veneman, has noted that there is
"no reason to believe that there is any food safety risk with Canadian
beef." Despite scientific evidence, Washington keeps the border closed,
presumably for economic or political reasons.
One
initiative that could help our beleaguered beef industry is to increase domestic
processing. Almost four million Canadian cattle were processed in U.S. plants
between 1999 and 2003 -- cattle that could have been processed by, and thus
generated a higher revenue for, Canadian-owned processing plants. Potential
investors worry that when the border finally reopens new processing plants might
collapse, but it can be argued that even if the border reopens, it would be in
the industry's best interest to increase the level of processing in Canada. Any
new plant seeking a federal or provincial loan guarantee should have a business
plan demonstrating its viability even with the border open.
Another
initiative would be to bring in mandatory BSE testing for exported meat. In
Canada and other countries with large beef herds, chances are good that another
BSE-positive animal is going to be discovered.
To
counter the risk that international markets may again close their doors to
Canadian meat, Canada should implement compulsory BSE tests on meat bound for
export markets, if only to regain the confidence of major beef importers,
including Japan and Korea.
Our
beef industry would also benefit from a temporary floor price for processors.
When the U.S. border closed to live cattle, our beef farmers lost access to the
roughly 40 American packing plants that bought their cattle. What this means is
that Lakeside and Cargill now dominate the market on the pricing of the animals
they purchase in the Prairies and British Columbia.
Until
the border reopens and competition is restored, the two plants should be
required under provincial jurisdiction to pay a reasonable price to independent
feedlot operators, presumably based on the index price set on Chicago's
mercantile exchange.
Many
Western farmers are desperate. It's time to implement these initiatives and get
the cattle industry back on its feet.
As
a Ponoka farmer told me last week, "This is an emergency call.
.
. . Farmers are getting more disillusioned every day . . . we have a wealth of
knowledge and know-how that needs to be passed down to the next generation that
is going to feed the world, and yet there is no one to stand up and do the job.
. . . When we all go broke from trying, or die from broken hearts and broken
spirits, all Canada will be the losers."
David
Kilgour is the Liberal member of Parliament for Edmonton-Beaumont.
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Cattlemen
Sue The U.S. Group Says It's Time to Get Tough With Americans
Ajay Bhardwaj, Edmonton Sun, August 13, 2004
A small group of angry Canadian cattlemen - struggling to
survive since the United States border closed to their product - is now suing
the U.S. government for $149 million in a bid to reopen the border.
The Canadian Cattlemen for Fair Trade yesterday filed with the
U.S. State Department five notices of intent to submit claims worth $149 million
under Chapter 11 of the North American Free Trade Agreement.
The cattlemen say the American government owes them for
keeping the 49th Parallel closed to Canadian cattle after a single case of mad
cow disease was found in Canada in May, 2003.
"We feel we have a very good case," said feedlot
owner Rick Paskal of Picture Butte, 535 km south of Edmonton. "First and
foremost, we're trying to get this border open. And then we can talk about the
damages.
"The Americans kept telling us that the border closure
was a temporary measure. We are well into another year and nobody knows when the
border will re-open, if ever."
Lawyers are to speak to between 80 and 90 more cattlemen to
get them to join what is the first class-action lawsuit ever filed under NAFTA,
said international trade lawyer Todd Weiler.
He agreed the Canadians have a good case, given the Americans
closed the border but continued to allow American farmers to own five million
cows from Canada.
"They don't treat them different and they don't treat the
people who own them different, they only treat the people in Canada differently
- obviously one group is getting better treatment than the other," he said.
Edmonton Liberal MP David Kilgour said it's about time
Canadians got tough with their American neighbours.
"These people have suffered enormous losses," said
Kilgour. "They've been playing hardball with us and we've now got to play
hardball with them. This is part of playing hardball ... part of the suit is to
get the border open."
While U.S. officials have declared Canadian beef safe since
last May, the border remains closed to live cattle.
The effect of the single case of mad cow disease has ravaged
Canada's beef industry and hurt rural communities that depend on it. Some
estimates say producers have lost up to $2 billion.
Kilgour to introduce
private member's bill
(Cattle-Ownership-Ban) Twelfth NewsWatch
- August 9, 2004
Liberal
M-P David Kilgour is joining with farm groups in calling for a ban on the right
of major meat packers to own cattle.
They're
accusing the packers of using their cattle to manipulate prices, by slaughtering
their own animals when prices are higher and buying cattle when prices are low.
The Edmonton M-P says if he can't persuade the Liberal
minority government to bring in a ban he'll introduce a private member's bill.
(12)
Call for ban on
Meat Packers owning cattle
Edmonton
Journal, August 8, 2004
EDMONTON
(CP) _ Some farm groups and a Liberal MP want major meat packers outlawed from
owning cattle, a controversial practice many say helps packers manipulate
prices.
Proponents
of the idea accuse the meat plants of using their cattle supply to control what
they pay to ranchers, by slaughtering packer-owned animals when prices are high,
and buying and killing rancher-owned cattle when prices dip again.
Edmonton-Beaumont
MP David Kilgour, taking his cue from some U.S. laws, says he will press for a
federal ban on packers' ownership of cattle.
``That's
part of the law in the United States now and it's something that we clearly need
as part of the law in Canada,'' Kilgour said in an interview.
``The
market is not going to work if the packer can decide whether to buy his cattle
today, or someone else's, as a way to control prices.''
The
slaughterhouses argue they need to own some cattle to ensure they have animals
to fill their kill lines when ranchers choose not to sell to them.
Cargill
spokesman Rob Meijer said slow weeks force plant layoffs and sluggish
recoveries, as happened shortly after the May 2003 mad cow discovery.
``If
our High River plant isn't running efficiently, it starts to cost us money, and
that affects the whole industry,'' Meijer said.
The
financial turmoil wrought by the mad cow crisis has led many ranchers to fume
that packers' profits have skyrocketed while producers have struggled. But
another source of complaint has been that two major Alberta packing plants own
about one in seven cattle that are fattened for slaughter.
In
2003, Alberta meat packers directly owned 13.4 per cent of all feedlot cattle,
either on its own feedlots or on custom feedlots, according to industry analyst
firm CanFax.
In
2002, packer-owned fat cattle accounted for nearly 18 per cent of the provincial
total.
Farm
groups are split on whether to support an ownership ban. The Alberta Cattle
Feeders Association is considering making a demand that packers own no more that
10 per cent of the province's fat cattle, but wants to discuss it with the
slaughterhouse firms first. Ron Axelson, the association's general manager, said
he doesn't want to alienate his group from the packers, whom members rely on for
their livelihoods.
Even
the left-leaning, pro-control National Farmers Union believes a two-per-cent
ownership cap is sufficient, acknowledging that some packer-owned supply is
beneficial.
Kilgour
said he will first work in the Commons agriculture committee to get his Liberal
minority government to adopt changes to federal competition laws. If that fails,
he plans to table a private member's bill.
In
addition to drawing allegations of price manipulation, cattle ownership by meat
processors also allowed dominant players Cargill and Lakeside to get about $45
million of the $400 million in Alberta mad cow compensation funds.
Alberta
Agriculture cut off the packers from smaller relief programs once it realized
the firms were not suffering because of the crisis, said assistant deputy
minister John Knapp.
Ownership
limits have existed in Nebraska, Iowa and South Dakota. The most recent and
harshest of these laws was South Dakota's, which banned anybody but family farms
from owning cattle for purposes other than immediate slaughter. The law stemmed
from a 1998 citizen's initiative, or referendum, but was ruled unconstitutional
last year.
David
Aiken, a Nebraska-based expert in agricultural law, said it was struck down
largely because it explicitly barred Tyson Foods Inc. from setting up shop in
the state. Tyson is the parent company of Lakeside Packers in Alberta, Canada's
largest slaughterhouse.
Efforts
to pass a U.S. federal ban on cattle ownership have stalled for years.
Lakeside
and Cargill have reduced their own cattle supplies since the crisis began,
because the closure of the U.S. market has forced feedlots to sell only to the
two Canadian plants.
Alberta
Beef Producers, like the provincial government, argues that packer ownership of
cattle is a significant investment in the industry, and its absence would create
a large vacuum in the market. (Edmonton Journal)
Ottawa must
share blame for botched bailout, MP says
James Baxter, with files from Jason Markusoff, Edmonton
Journal, August 5,2004
EDMONTON - Ottawa must accept some blame for foisting a
bailout package on the cattle industry that cost hundreds of millions of dollars
and helped meat packers reap unexpected profits, Liberal MP David Kilgour says.
Kilgour said it is clear from witnesses who have appeared
before the Commons agriculture committee and from the report issued Tuesday by
Alberta Auditor General Fred Dunn that the federal government crafted a bailout
program that severely depressed cattle prices and allowed the packers to buy
livestock at bargain-basement prices.
The $250-million program, designed to help an industry
trampled by mad cow disease, saw Ottawa contribute 60 per cent of the dollars
with the Alberta government picking up 40 per cent.
"I don't think anybody would concede that the provincial
and federal programs were properly designed to avoid exactly the kind of problem
that happened," said Kilgour, the MP for Edmonton-Beaumont.
Jean Chretien's Liberal government tried to design a program
that would work for ranchers across the country, Kilgour said, but failed to
recognize beef farming in Alberta is a much bigger and more structured industry.
In his much-anticipated report, Dunn revealed the net earnings
of Alberta's three largest meat packers jumped 281 per cent in the aftermath of
the discovery of a lone case of mad cow in May 2003, but he absolved the Klein
government of any wrongdoing.
He said that in the panic and confusion, the
federal-provincial bailout package helped keep the industry viable, but cost
"too much."
Dunn maintained that the three main meat packers -- Cargill
Ltd., Lakeside Packers, a division of Tyson Foods, and Canadian-owned XL Foods
Inc. -- had done nothing wrong when they took advantage of a collapse in the
price of cattle, coupled with overwhelming demand, to reap windfall profits.
Dunn pointed to three critical flaws in the bailout program: A
preset cap on compensation, a deadline for filing compensation claims and the
fact that the animal needed to be slaughtered before compensation would be paid.
He said this provided a significant incentive to ranchers and feedlots to dump
cattle onto the market regardless of the price. The resulting glut is what
caused prices to dip nearly 60 per cent.
The federal government had to place conditions on the program,
said Gilles Lavoie, director-general of Agriculture Canada's marketing services
branch. "It's not normal for any government to develop a program without a
budget, without a deadline for application, without an end date, and without
being transparent about these facts," Lavoie said.
Lavoie acknowledged the program might have triggered the
cattle prices to drop, but said keeping the beef industry solvent was a greater
concern.
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