GOVERNMENT ANNOUNCES STRATEGY TO REPOSITION
CANADA'S LIVESTOCK INDUSTRY
CALGARY, September 10, 2004 - The Government of Canada today announced a strategy to assist Canada's livestock industry in repositioning itself to ensure its long-term viability. The strategy has been developed in close consultation with the provinces, territories, the Canadian Cattlemen's Association, and other industry groups. Once consultations are complete, a federal investment of up to $488 million will be made into the industry.
The strategy includes continuing efforts to reopen the US border, taking steps to increasing ruminant slaughter in Canada, introducing measures to sustain the cattle industry until capacity comes online and expanding access to export markets for both livestock and beef products. Please see attached backgrounder for further information.
"Since May 2003, the situation facing Canada's livestock industry has become urgent and the Government of Canada is providing innovative ways for producers to manage in these difficult times," said Agriculture and Agri-Food Minister Andy Mitchell. "While we will continue our efforts to reopen the US border, this strategy will facilitate industry's efforts to ensure its competitiveness over the long-term."
Governments will take steps to facilitate the building of slaughter capacity in Canada. Plans are already underway to expand capacity, and in order to accelerate this process a number of measures are being implemented.
Measures to sustain the industry until domestic capacity is in line with production levels are also being introduced. Cash flow and liquidity issues will be addressed through a special accelerated cash advance provision under the Canadian Agricultural Income Stabilization (CAIS) program. This component will provide assistance for breeding cows and other specified ruminants. In addition, in order to help manage the current oversupply of cattle, set-aside programs will be introduced for fed and feeder animals.
Canada will build upon previously announced initiatives to further strengthen the scientific capacity and regulatory framework to ensure the health of the Canadian herd and the safety of beef products. These additional measures include implementation of a reimbursement program to increase access to animals targeted for BSE testing and will ensure Canada has a world-leading tracking and tracing system for livestock.
"Canada's animal health and food safety systems are among the best in the world and there is no scientific basis for the continued border closures," said Minister Mitchell. "Governments and industry have worked closely together to develop this strategy and ongoing cooperation will be key to its success. Through these concerted efforts, I am confident that we will regain and expand our international markets. As the measures are implemented, we will continue to work with industry to ensure their effectiveness and make adjustments if and as necessary."
"The CCA applauds the Minister, his officials, and their provincial counterparts for their timely efforts to approve this comprehensive package. It is the successful culmination of extensive consultation with industry," said Stan Eby, President of the Canadian Cattlemen's Association. This demonstrates a significant commitment to a comprehensive long term plan consistent with the new industry strategy approved and put forth by the CCA in August. The industry and government will continue to work closely to ensure its successful implementation."
The measures contained in this strategy will benefit more than just the cattle industry. For example, other ruminants would be eligible for increased slaughter capacity and CAIS advances. Dairy producers would also be eligible for compensation under the CAIS program for declines as a result of the impact of BSE. If required, additional measures would be considered to address specific needs of specific sectors.
Governments, the Canadian Cattlemen's Association and other industry groups are continuing to work together to finalize the administrative details of the specific initiatives in the strategy.
All elements of the strategy are important for addressing the challenges facing the industry, but the need for specific measures will vary from region to region. The strategy contains a number of elements, some of which are funded solely by the federal governments, some by the provinces and some in which governments have agreed to act together.
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For more information, media may contact:
Elizabeth Whiting
Press Secretary
Minister Mitchell's Office
Ottawa (613) 759-1761
Media Relations
Agriculture and Agri-Food Canada
Ottawa (613) 759-7972
BACKGROUNDER
REPOSITIONING CANADA'S CATTLE AND BEEF INDUSTRY
Since May 2003 and the detection of BSE, the closure of international markets has had a significant impact on Canada's export-oriented beef and cattle industry as well as the other industry sectors. Following consultations with the provinces, territories, Canadian Cattlemen's Association and other parts of the Canadian industry, a national strategy has been developed aimed at repositioning the Canadian cattle to enhance value-added processing and to reduce reliance on live animal exports to the U.S.
All elements of the strategy are important for dealing with this issue on a national level, but the need for specific measures will vary from region to region. As a result, details around the measures and the level of provincial funding are still being finalized but federal funding for the strategy, which includes the elements below, will total $488 million.
Sustaining the industry until capacity is increased; and
Increasing international market share for Canadian beef
1. Reopening the U.S. border
The North American cattle industry has been highly integrated and the ongoing border closure is having significant impacts on both sides of the border. While efforts to reposition the industry will proceed, Canada will continue its intensive efforts to press the United States to implement its proposed final rule to resume Canada-U.S. trade in live animals and other products.
2. Facilitating increases in ruminant slaughter capacity ($66.2 M in federal funding)
Though industry has begun to build new capacity aggressively, it will take time before it can reach self-sufficiency. To facilitate these efforts and to allow industry to capitalize on markets currently open, governments will undertake the actions listed below. As export markets expand, the increased capacity will provide greater value-added opportunities for the industry and will reduce its reliance on live animal exports.
The federal government will establish a Loan Loss Reserve to increase lenders' willingness to support projects to increase ruminant slaughter capacity, including expansion and construction of small and medium-sized facilities.
The Canadian Food Inspection Agency will streamline processes for establishment reviews and the approval of new plants under the Meat Inspection Act.
The CFIA will be provided with incremental ongoing resources for increased inspection activities related to the planned long-term increase in slaughter rates.
Governments will examine existing regulatory processes to identify opportunities for streamlining in order to allow expansion or construction of facilities to begin sooner.
3. Sustaining the industry until capacity is increased ($384.7 M in federal funding)
The third part of the strategy provides transition measures to producers while increased slaughter capacity comes on line. This part of the strategy is composed of four elements:
A. Measures to address cash-flow and liquidity issues faced by producers
To help address cash-flow and liquidity issues faced by producers, the national CAIS program will provide additional simplified advances . This would provide producers with additional cash payment of a set amount for each breeding cow and other specified ruminant in their inventory. CAIS advances based on estimates of full year claims are also available. For more information, producers are encouraged to call the administration toll free at 1-866-367-8506. Producers in Alberta, Ontario, Quebec and Prince Edward Island should contact their program administration to confirm program deadlines.
The Transitional Industry Support Program also helps address income issues faced by producers. Final payments under (TISP) will be made to producers before the end of October, 2004. The program includes two components: a direct payment to producers of cattle and other eligible ruminants based on the number of livestock owned as of December 23, 2003 and a general payment to all producers based on eligible net sales under the previous Net Income Stabilization Account (NISA) program.
Cattle Set-Aside Programs
Set-aside programs for fed and feeder cattle will be implemented to help maintain cattle prices at a viable level until additional slaughter capacity comes on line. Implementing these programs in regions where needed is anticipated to provide a national benefit to producers and the country. Advisory and management committees will work to maintain the delicate balance between prices, slaughter rates and additional risk factors for the duration of the programs. Governments will amend the programs as required to ensure they meet the programs' objectives.
B. Fed Cattle
To manage the supply of animals going to packers and feedlots, fed cattle set-asides will delay the marketings of some animals. A fed cattle set-aside will relieve pressure on feedlots while additional capacity is developed.
The fed cattle set-aside would use a reverse auction mechanism with a bid price (i.e., producers would submit bids for the price of the per day assistance for feed and other factors that they would be willing to accept to enrol some of their animals into the program). Run nationally, producers would be free to enrol cattle with no restriction on the number of eligible animals permitted. There will be no allocation by province.
Governments and industry are now working to finalize administrative details and develop an application process. The number of animals to be enrolled in a fed cattle set-aside will be determined by a management committee, consisting of federal and provincial government members, as well as industry participants. Subsequent intakes and releases of animals would be arranged as required. The program would end on the earlier of January 1, 2006, the opening of the U.S. border, or when sufficient capacity has come on line to balance the domestic supply of animals for slaughter. Governments and industry will meet to review the program and future needs before September 2005.
The federal government will offer the program nationally, and provinces will assess whether there is a need for their participation in the program.
C. Feeder Cattle Set-Aside
While a fed cattle set-aside program will help manage immediate pressures on feedlots, a feeder cattle set-aside program will assist industry in managing the supply of fed cattle over the next 1-2 years, as slaughter capacity increases.
Under the feeder set-aside program, producers will sign-up for a per head payment of $200 on a percentage of their inventory, with a limited number of eligible animals permitted per province or territory. A management committee, similar to that for the fed cattle set-aside, will determine the number of animals entered, the provincial allocation, and the ongoing monitoring of the effectiveness of the program. The program would be based on a set date, and payments would be made to those who owned the animals on that date. Governments and industry are now working to finalize administrative details and develop an application process.
The federal government will offer the program nationally, and provinces will assess whether there is a need for their participation in the program.
D. Managing Older Animals
In provinces and territories where governments together determine a need for an outlet for older cows and bulls which are past their normal productive life, and would normally have been culled from the herd before now, a percentage of animals may be removed from the herd.
This would relieve pressure on producers, including dairy producers, whose aging animals have little or no commercial value and have no access to slaughter. The action would bridge the transition until new slaughter capacity comes online, at which time access to slaughter for older cows and normal herd management practices should resume. Animals would be humanely euthanized, some of which would be suitable for inclusion in Canada's national BSE surveillance program. The need for this initiative varies greatly across Canada, and it may not be necessary in all provinces and territories.
4. Expanding export markets ($37.1 M in federal funding)
The fourth part of the strategy is to continue strengthening Canada's scientific and regulatory base and to effectively communicate these initiatives as part of a concerted effort to expand international market share for beef products and genetics, as well as furthering our efforts to enhance our national surveillance program:
Governments have agreed that further strengthening Canada's tracking and tracing system would provide significant reassurance to foreign governments as well as furthering our animal health goals. The Government of Canada provided funds to develop an enhanced system in January 2004. The federal government is committing additional funding for further enhancements, on a cost-shared basis with industry. The goal is to ensure that Canada has in place a world-leading tracking and tracing system for livestock.
As surveillance is a key part of Canada's ability to confirm its very low prevalence of BSE within the domestic herd, federal, provincial and territorial governments are reiterating their commitment to meeting Canada's national surveillance goals. As one tool, the CFIA is introducing a reimbursement program to partially offset costs associated with identification, transport and handling of suitable surveillance samples.
CFIA will create new geographic technical expert positions to focus on key foreign markets in order to build stronger relationships with its regulatory counterparts in targeted countries. Markets outside of North America have provided significant value for cattle, beef and genetics.
The CFIA will accelerate and complete a review of its BSE import policy to ensure that it is consistent with the risk-based approach Canada is promoting in its efforts to open markets to Canadian products.
CFIA will provide increased technical and regulatory capacity related to the recognition of Canada's regulatory systems, to clearly demonstrate the high standards of animal and public health in place, and to perform foreign country assessments.
Canada is committed to a long-term strategy for strengthening research for BSE and other Transmissible Spongiform Encephalopathies. To that end, funding of $5 million per year for seven years was announced in the Budget of February 2004 to support the creation of a network of centres of excellence.
Governments will continue to move forward quickly to require the removal of specified risk material from all animal feeds, both in domestic and international contexts.
Governments will continue to support the international market development efforts of the beef and other ruminant industries as they seek to restore and expand export markets.
