Beef: Different grading systems and higher slaughtering costs hurt Canadian exports

Monday, April 5, 2010

It's not just the higher Canadian dollar that is taking a toll on beef exports to the United States. The CFIA will have to re-examine the rules, say industry reps, to level the playing field

by DON STONEMAN

Trade in beef with the United States has changed and it isn't likely to improve unless there are strategic changes, says Ontario Cattlemen's Association director Doug Kaufman of Woodstock.

"The beef business . . . is built on a 65-to-70 cent dollar," he says. "There are a lot of problems. The Canadian dollar is the biggest one. You can't do much about that one."

But there are other issues as well.

One is grading of Canadian beef going into the United States. Canadian grades are supposed to be a match for American grades, but grocers don't see that. "The packers will all tell you they can't get the same price for their beef down there as they (the Americans) can for 'Choice.'"

Canada adopted U.S. marbling standards in 1996, matching Canadian Triple A to the U.S. Department of Agriculture's (USDA's) Prime, Double A to Choice and Single A to Select. The changes didn't boost sales.

"The USDA (stamp) is basically a brand in that country," Kaufman says. "Our biggest chance of getting in there is to go in with a branded product."

Ontario Corn-Fed Beef has such a toehold in the United States. The brand's first American customer is Stauffers, based in Kissel Hill, Pa. "For our American customers, the attraction is not so much about the name on the brand, but what the brand is about," says a report by Ontario Cattle Feeders Association executive director Jim Clark.

"There's keen in interest in our feeding programs and food safety protocols." But the exchange rate on the Canadian dollar limits sales, Clark allows.

Yet another issue is the difference in the costs of slaughtering cattle between Canada and the United States. Specified risk materials (SRMs) are the parts of cattle most likely to be contaminated with BSE prions and likely to spread the disease to other livestock. They include brains, tonsils, eyes, spinal cords and some intestinal parts.

SRMs were banned from cattle feed, starting in 1997. Canada passed a regulation that limited the use of SRMs from older cattle beginning in July 2007 and banned them from all other livestock feed, pet foods and fertilizers.

The rules are supposed to prevent the spread of TSE diseases.

The United States has less rigorous regulations and can slaughter Canadian cattle more cheaply than packing plants in Canada can. American packers can pay more for older cattle than can Canadian packers because the same segregation rules don't apply.
The Canadian Food Inspection Agency (CFIA) said the new rules would open markets in the Orient, "which hasn't happened," Kaufman says.

Last fall, Canada asked the World Trade Organization to set up a Dispute Settlement Panel to gain access to Korean markets. Canada has been able to get some beef into Hong Kong, but China has remained closed to Canadian beef. Both countries are a source of frustration for the export-minded packer organization, the Canadian Beef Export Federation, which considers Japan, South Korea, Taiwan, China, Hong Kong and Mexico as key export markets for Canadian beef.

"I think the CFIA is going to have to re-address the rules" pertaining to cattle over 30 months old, Kaufman says, so that Canadian packers can compete with the Americans.
"I think personally we need to harmonize more with the United States." BF