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From: TSS (216-119-134-159.ipset14.wt.net)
Subject: CANADA LIVESTOCK AND PRODUCTS ANNUAL 2004 (BSE) GAIN REPORT CA4063
Date: September 24, 2004 at 10:48 am PST
-------- Original Message --------
Subject: CANADA LIVESTOCK AND PRODUCTS ANNUAL 2004 (BSE) GAIN REPORT CA4063
Date: Fri, 24 Sep 2004 12:16:50 -0500
From: "Terry S. Singeltary Sr."
Reply-To: Bovine Spongiform Encephalopathy
To: BSE-L@UNI-KARLSRUHE.DE
##################### Bovine Spongiform Encephalopathy #####################
Required Report - public distribution
Date: 9/1/2004
GAIN Report Number: CA4063
CA4063
Canada
Livestock and Products
Annual
2004
Approved by:
Gary C. Groves
U.S. Embassy
Prepared by:
George Myles
Report Highlights:
Canada’s cattle industry is formulating a made-in-Canada strategy to
deal with a large
surplus of cattle related to the U.S. border closure to Canadian live
cattle exports following
the discovery of BSE in an Alberta beef cow in May 2003. Canadian fed
cattle prices are
down 30-35% from their pre-BSE levels and prices for some classes of
non-fed slaughter
cattle are at distress levels. Since the R-Calf injunction of April
2004, hope that the U.S.
border would soon be open has turned to despair among many industry
participants.
Includes PSD Changes: Yes
Includes Trade Matrix: No
Annual Report
Ottawa [CA1]
[CA]
USDA Foreign Agricultural Service
GAIN Report
Global Agriculture Information Network
Template Version 2.09
GAIN Report - CA4063 Page 2 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Table of Contents
Executive
Summary.............................................................................................3
Section I. Cattle and Beef
...................................................................................4
Current
Situation:................................................................................................
4
Key Features of A Strategic
Plan:............................................................................
4
Increasing Slaughter
Capacity................................................................................
4
Cattle Inventory
..................................................................................................5
Beef....................................................................................................................6
Consumption.......................................................................................................7
Prices
.................................................................................................................7
Trade..................................................................................................................8
Policy
.................................................................................................................8
Section II. Hogs and Pork
...................................................................................9
Hog
Inventory.....................................................................................................
9
Pork
Production.................................................................................................
10
Consumption
....................................................................................................
10
Consumption
....................................................................................................
11
Live Hog Exports
...............................................................................................
11
Hog
Prices........................................................................................................
12
Pork
Trade........................................................................................................
13
Policy..............................................................................................................
13
GAIN Report - CA4063 Page 3 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Executive Summary
· Canada’s cattle industry faces significant challenges as it attempts
to cope with a
rising cattle inventory brought on by the loss of access to U.S. cattle
markets
following its May 2003 BSE incident.
· Since the R-Calf injunction in April 2004, hope that the U.S. border
would soon be
open has turned to despair among many Canadian industry participants.
· The Canadian cattle industry is formulating a made-in-Canada strategy
to deal with a
surplus of cattle. Proposals in the home -grown solution include
increasing slaughter
capacity, increasing cow slaughter and the processing of manufacturing
type beef, and
capturing more of the domestic market by displacing imported product
both from
offshore and from the United States.
· Canada’s Agriculture Minister, Andy Mitchell supports the
made-in-Canada solutions.
He believes the Canadian cattle industry needs to reposition itself to
lessen its
reliance on live cattle exports to the United States.
· Canadian live hog exports to the United States in the first half of
2004 ran 33% above
the level for the same period a year ago. However, the year-to-year rate
of increase
is expected to ease somewhat during the last half of 2004 because the
highest rate of
exports last year occurred during the July to December period. Still,
total live hog
exports to the U.S. in 2004 could exceed 8.5 million head.
· On August 17, 2004 the United States Department of Commerce (DOC)
preliminarily
ruled that Canada’s subsidies for its hog industry are too small to
justify the
imposition of U.S. countervailing duties on hogs coming from Canada. The
DOC’s
preliminary determination in the anti-dumping case is scheduled for
October 15,
2004.
· Canada sold half of its pork production into international markets in
2003 via record
exports of 975,000 metric tons, a 13% increase over the year earlier
level. When the
pork equivalent of its live hog exports is included, Canada exports
about two-thirds of
its total pork production.
GAIN Report - CA4063 Page 4 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Section I. Cattle and Beef
Current Situation:
Canada’s cattle industry faces significant challenge as it attempts to
cope with a rising cattle
inventory and the loss of access to U.S. cattle markets. The GOC and the
cattle industry are
anxiously awaiting a USDA proposed rule that would amend U.S.
regulations to add Canada
to a category of regions that present minimal risk of introducing BSE
into the United States
that would permit the importation of live Canadian cattle.
In the three years preceding the discovery of Canada’s first case of BSE
in May 2003, Canada
exported an average of 1.3 million head annually of predominantly
slaughter cattle into the
U.S. market, a level often representing as much as a third of its
slaughter-type animals.
Canadian fed cattle prices are down 30-35% from their pre-BSE levels and
some classes of
non-fed slaughter cattle prices are at distress levels.
Since the R-Calf injunction of April 2004, hope that the U.S. border
would soon be open has
turned to despair among many industry participants. As a result, the
Canadian cattle
industry is formulating a made in Canada strategy to deal with a surplus
of cattle. Canada’s
Agriculture Minister, Andy Mitchell supports the made-in-Canada
solutions, including
increased slaughter capacity, matching supply of animals to capacity
available and increasing
access to foreign markets. He believes the Canadian cattle industry
needs to reposition itself
to lessen its reliance on live cattle exports.
Key Features of A Strategic Plan:
The Canadian Cattlemen’s Association (CCA) is exploring contingency
plans to address a
cattle inventory backlog and insufficient domestic slaughter capacity.
At the CCA’s annual
convention held in mid-August 2004, the association revealed it is
considering a set aside
style program with the support of the provinces and the federal
government whereby fed
cattle would be set aside on a holding ration and enrolled in a type of
regulated marketing
schedule to enable cattle to be slaughtered prior to 30 months of age.
The plan may include
government assistance funds to offset feed costs during a holding
period. The CCA is
hopeful that a plan will be forthcoming in the next few weeks. The
industry has additional
longer-term goals to increase slaughter capacity particularly for cull
animals and to increase
its market share of the domestic market by displacing imported product.
Increasing Slaughter Capacity
According to industry sources, existing slaughter capacity (federal and
provincial) in Canada
is currently about 79,000 head per week. Through expansion to existing
facilities, plant
conversion, and new investment, the industry is targeting to have
capacity increase to
86,000 by spring 2005 and to 98,000 by 2006. The medium term solution
includes
recapturing the ability to process non-fed slaughter cattle that
previously were exported live
to plants in the United States. A major part of this strategy is to
process for consumption a
much greater share of Canadian domestic needs for manufacturing type
beef that in recent
years has been dominated by imported product. In fact, past GOC policies
that encouraged
the importation of manufacturing beef led, in part, to the decline in
number of non-fed
slaughter facilities that are so desperately needed under present
circumstances. Since BSE,
the GOC has responded by not issuing supplementary import permits for
beef beyond
Canada’s non-NAFTA tariff rate quota.
GAIN Report - CA4063 Page 5 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Cattle Inventory
The loss of access to the U.S. cattle market to the Canadian cattle
industry since May 2003
has resulted in a backlog of cattle in Canada. On July 1, 2004 there
were about 1.0 million
head more cattle in Canada than would have been expected under a more
normal situation.
Given falling demand and prices for non-fed cattle, the 2004 calf crop
will be the largest on
record.
Country Canada
Commodity Animal Numbers, Cattle (1000 HEAD)
2003 Revised 2004 Estimate 2005 Forecast
USDA Official [Old] Post Estimate [New] USDA Official [Old] Post
Estimate [New] USDA Official [Old] Post Estimate [New]
Market Year Begin 01/2003 01/2004 01/2005
Total Cattle Beg. Stks 13488 13488 14660 14660 15750 15660
Dairy Cows Beg. Stks 1065 1065 1077 1077 0 1080
Beef Cows Beg. Stocks 4752 4752 5021 5021 0 5030
Production (Calf Crop) 5773 5792 5800 5900 0 5950
Intra EC Imports 0 0 0 0 0 0
Total Imports 75 60 5 40 0 30
TOTAL Imports 75 60 5 40 0 30
TOTAL SUPPLY 19336 19340 20465 20600 15750 21640
Intra EC Exports 0 0 0 0 0 0
Total Exports 510 510 0 0 0 0
TOTAL Exports 510 510 0 0 0 0
Cow Slaughter 350 350 450 385 0 500
Calf Slaughter 330 350 360 400 0 450
Other Slaughter 2735 2838 3190 3515 0 3950
Total Slaughter 3415 3538 4000 4300 0 4900
Loss 751 632 715 640 0 640
Ending Inventories 14660 14660 15750 15660 0 16100
TOTAL DISTRIBUTION 19336 19340 20465 20600 0 21640
GAIN Report - CA4063 Page 6 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Beef
Canadian beef production during 2004 is on track to post double-digit
gains as the industry
attempts to process the additional cattle that under normal trade
patterns would be exported
to the U.S. for slaughter. For 2005, post forecasts an additional
substantial production gain
given the incentive to slaughter cattle in advance of 30 months of age
(i.e., BSE dentition
criteria) and the large 2004 calf crop.
Country Canada
Commodity Meat, Beef and Veal (1000 MT CWE)(1000 HEAD)
2003 Revised 2004 Estimate 2005 Forecast
USDA Official [Old] Post Estimate [New] USDA Official [Old] Post
Estimate [New] USDA Official [Old] Post Estimate [New]
Market Year Begin 01/2003 01/2004 01/2005
Slaughter (Reference) 3415 3538 4000 4300 0 4900
Beginning Stocks 24 34 36 48 26 35
Production 1135 1190 1325 1425 0 1575
Intra EC Imports 0 0 0 0 0 0
Total Imports 274 273 230 85 0 80
TOTAL Imports 274 273 230 85 0 80
TOTAL SUPPLY 1433 1497 1591 1558 26 1690
Intra EC Exports 0 0 0 0 0 0
Total Exports 384 385 565 450 0 540
TOTAL Exports 384 385 565 450 0 540
Human Dom. Consumption 1013 1064 1000 1073 0 1100
Other Use, Losses 0 0 0 0 0 0
TOTAL Dom. Consumption 1013 1064 1000 1073 0 1100
Ending Stocks 36 48 26 35 0 50
TOTAL DISTRIBUTION 1433 1497 1591 1558 0 1690
GAIN Report - CA4063 Page 7 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Consumption
Fortunately for Canada’s cattle industry, Canadian beef consumption rose
sharply following
the BSE crisis and the loss of international markets. According to
Statistics Canada, retail
ground beef prices fell an average of 24% between May 2003 and September
that year.
Even though retail prices for higher-valued beef cuts remained strong,
Canadians responded
with higher demand for beef at the expense of other meats. On balance,
Canadian beef
consumption rose about 5% during 2003 according to the Statistics Canada
data.
Prices
Canada: Slaughter Steer Prices
Monthly Weighted Averages; Alberta
Units: C$/hundredweight
2002 2003 2004
January 105.08 114.17 82.36
February 107.10 115.13 80.03
March 109.62 110.29 85.81
April 98.19 108.55 84.25
May 94.77 106.31 80.03
June 90.73 65.44 71.73
July 90.11 37.80
August 92.43 39.02
September 94.57 73.09
October 97.23 79.07
November 101.69 80.45
December 105.05 82.06
Annual Aver. 98.88 84.28
Source: StatCan
GAIN Report - CA4063 Page 8 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Trade
Imports: Canadian beef imports fell dramatically in the first half of
2004 reflecting in part,
the additional supplies of domestic beef and the GOC policy to restrict
supplementary import
permits for non-NAFTA beef. Also, there was some development time
surrounding the U.S.
Beef Export Verification Program administered by the Agricultural
Marketing Service of USDA
to ensure that U.S. beef exports to Canada meet Canadian BSE import
requirements.
In the January to June period of 2004, total Canadian beef imports ran
70% below the level
for the same period a year ago. All major suppliers to Canada’s beef
market noted
significant reductions in their sales to Canada.
Exports: Canadian beef exports suffered sharply in 2003 following the
single case of BSE
discovered in Alberta in May 2003. However, since the U.S. action on
August 8, 2003 to
permit imports of certain Canadian boneless beef and beef products,
Canadian beef exports
to the United States have recovered almost to their pre-BSE levels and
beef exports to
Mexico have advanced strongly beyond their pre-BSE levels. Prospects for
2005 beef exports
generally rest on U.S. and Mexican markets although Macau and the
Philippines are
accepting Canadian beef.
Policy
The GOC continues to lobby USDA at every opportunity in its attempt to
secure the reopening
pf the U.S. border to Canadian live cattle. Last week, Agriculture
Minister Mitchell
met with U.S. Secretary of Agriculture Ann Veneman to discuss the border
situation.
Canada’s BSE policies including those related to the removal of
Specified Risk Materials
(SRM), feed bans, surveillance and imports are detailed on the following
Canadian Food
Inspection Agency Inspection webpage:
http://www.inspection.gc.ca/english/anima/heasan/disemala/bseesb/bseesbindexe.shtml
GAIN Report - CA4063 Page 9 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Section II. Hogs and Pork
Hog Inventory
The Canadian pig herd reached 14.8 million on July 1, 2004 a 1.4%
increase over the year
earlier level. The breeding herd was 2.6% higher than a year ago and
1.1% higher than the
April 1 survey. Recent stronger prices for market hogs and record
exports of live hogs to the
United States are expected to result in continued breeding herd
expansion during 2005. Post
forecasts that the hog inventory will exceed 15.0 million head by mid-2005.
On August 17, 2004 the United States Department of Commerce (DOC)
preliminarily ruled
that Canada’s subsidies for its hog industry are too small to justify
the imposition of U.S.
countervailing duties on hogs coming from Canada. The DOC’s preliminary
determination in
the anti-dumping case is scheduled for October 15, 2004. In March, the
DOC initiated the
two separate investigations against live swine from Canada based on a
petition by the U.S.
hog industry.
Country Canada
Commodity Animal Numbers, Swine (1000 HEAD)
2003 Revised 2004 Estimate 2005 Forecast
USDA Official [Old] Post Estimate [New] USDA Official [Old] Post
Estimate [New] USDA Official [Old] Post Estimate [New]
Market Year Begin 01/2003 01/2004 01/2005
TOTAL Beginning Stocks 14672 14672 14608 14623 14700 14900
Sow Beginning Stocks 1537 1527 1586 1578 0 1600
Production (Pig Crop) 31309 31414 32000 33000 0 33400
Intra EC Imports 0 0 0 0 0 0
Total Imports 4 4 6 6 0 5
TOTAL Imports 4 4 6 6 0 5
TOTAL SUPPLY 45985 46090 46614 47629 14700 48305
Intra EC Exports 0 0 0 0 0 0
Total Exports 7442 7443 7800 8600 0 8800
TOTAL Exports 7442 7443 7800 8600 0 8800
Sow Slaughter 0 0 0 0 0 0
OTHER SLAUGHTER 22600 22464 22700 22600 0 22900
Total Slaughter 22600 22464 22700 22600 0 22900
Loss 1335 1560 1414 1529 0 1605
Ending Inventories 14608 14623 14700 14900 0 15000
TOTAL DISTRIBUTION 45985 46090 46614 47629 0 48305
GAIN Report - CA4063 Page 10 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Pork Production
Canadian pork production during 2004 is estimated at 1.9 million metric
tons, the eighth
successive year of record production. An additional moderate pork
production gain of about
1.8% is forecast for 2005. As its live hog exports to the United States
increase, Canada’s
pork production increase potential is reduced. When live hog exports and
pork exports are
combined, Canada exports about two-thirds of its total pork production.
Country Canada
Commodity Meat, Swine (1000 MT CWE)(1000 HEAD)
2003 Revised 2004 Estimate 2005 Forecast
USDA Official [Old] Post Estimate [New] USDA Official [Old] Post
Estimate [New] USDA Official [Old] Post Estimate [New]
Market Year Begin 01/2003 01/2004 01/2005
Slaughter (Reference) 22600 22464 22700 22600 0 22900
Beginning Stocks 54 54 40 48 40 44
Production 1895 1882 1905 1900 0 1935
Intra EC Imports 0 0 0 0 0 0
Total Imports 91 91 100 100 0 100
TOTAL Imports 91 91 100 100 0 100
TOTAL SUPPLY 2040 2027 2045 2048 40 2079
Intra EC Exports 0 0 0 0 0 0
Total Exports 974 975 1050 960 0 980
TOTAL Exports 974 975 1050 960 0 980
Human Dom. Consumption 836 810 780 848 0 859
Other Use, Losses 190 194 175 196 0 200
TOTAL Dom. Consumption 1026 1004 955 1044 0 1059
Ending Stocks 40 48 40 44 0 40
TOTAL DISTRIBUTION 2040 2027 2045 2048 0 2079
GAIN Report - CA4063 Page 11 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Consumption
Pork consumption suffered one of its worst performances in recent memory
during 2003
falling almost 10% from the 2002 level. The market disruption caused by
Canada’s BSE
crisis and increased competition from other meats in relation to popular
low carbohydrate
diets resulted in weak pork disappearance.
Live Hog Exports
After reaching a record 7.4 million head in 2003, Canadian live hog
exports (virtually all to
the U.S.) are on pace to exceed that level during 2004. Through the
first six months of
2004, live hog exports to the U.S. reached 4.2 million head, one-third
greater than the 2003
pace for the same period. However, post predicts the year-to-year rate
of increase will ease
somewhat during the last half of 2004 because the highest rate of
exports in 2003 occurred
during the July to December period. On balance, post forecasts total hog
exports to the U.S.
during 2004 to fall within the 8.5- 8.7 million head range. For 2005,
expectations of a
higher hog inventory and uncertainty surrounding the timing of Canadian
hog slaughter
capacity expansion and of the level of Canadian pork exports, Canadian
live hog exports
could approach the 9.0 million head level.
Canada: Live Swine Exports to the U.S., Calendar Year, by type
HS= 0103
Units: Thousand Head Jan-June Jan-June
%
TYPE HS Code 2001 2002 2003 2003 2004 change
Slaughter 103.92 2,152 1,966 2,458 888 1,390 56.53%
Feeder 103.91 3,169 3,757 4,971 2,301 2,847 23.73%
Purebred 103.1 21 15 9 2 2 0.00%
TOTALS 5,342 5,738 7,438 3,191 4,239 32.84%
Source: World Trade Atlas
GAIN Report - CA4063 Page 12 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Hog Prices
In early 2004, Canadian hog market prices returned to levels not seen
since mid-2001.
Attractive for finished hogs in the domestic market combined with brisk
demand for Canadian
feeder pigs in U.S. Midwest markets can be expected to boost
profitability prospects for
Canadian hog growers and encourage additional breeding herd expansion.
Canada: Slaughter Hog Prices; Ontario & Manitoba
Units: $C/kilogram; index 100 dressed
ONTARIO MANITOBA
2001 2002 2003 2004 2001 2002 2003 2004
January 1.38 1.50 1.23 1.15 1.41 1.53 1.33 1.24
February 1.51 1.67 1.39 1.43 1.48 1.63 1.41 1.45
March 1.81 1.56 1.36 1.58 1.76 1.54 1.39 1.57
April 1.86 1.34 1.35 1.57 1.83 1.38 1.37 1.59
May 1.95 1.34 1.44 1.89 1.95 1.38 1.53 1.87
June 2.05 1.41 1.62 1.96 1.98 1.44 1.62 1.92
July 2.04 1.58 1.55 1.98 1.56 1.59
August 2.01 1.49 1.43 1.96 1.51 1.55
September 1.76 1.09 1.33 1.81 1.15 1.45
October 1.60 1.23 1.24 1.64 1.31 1.38
November 1.47 1.16 1.09 1.48 1.23 1.26
December 1.36 1.25 1.12 1.38 1.28 1.26
Average 1.73 1.38 1.34 1.72 1.41 1.43
Source: StatCan & AgCan
GAIN Report - CA4063 Page 13 of 13
UNCLASSIFIED USDA Foreign Agricultural Service
Pork Trade
Imports: On the strength of increased imports from the United States,
Canadian pork
imports during 2004 are expected to advance at least 10% above the year
earlier level and
reach 100,000 metric tons carcass weight equivalent. U.S. pork accounted
for almost all
Canadian pork imports in the first half of 2004 that was comprised of a
wide range of fresh
and chilled cuts and processed pork items. The outlook for 2005 Canadian
imports is for no
change.
Exports: Canada’s pork packing industry sold half of its throughput into
international
markets in 2003 via record exports of 975,000 metric tons or a 13%
increase over the year
earlier level. The top five markets for Canadian pork and their share of
total in 2003 were
the U.S. (56%), Japan (22%), Australia (4%), Mexico (4%), and Taiwan (2%).
Predictions that Canada would export more than 1.0 million metric tons
of pork during 2004
may not be realized. In the first six months of the current year, total
Canadian pork exports
ran 2.3% below their level for the same period last year. Increased pork
exports to both
Japan and Mexico in the January to June period of 2004 failed to offset
an almost 10% yearto-
year decline in Canadian pork exports to the United States. On balance,
total pork
exports could slip 1.5%-2.0% to about 960,000 metric tons (carcass
weight equivalent) from
the 2003 level.
Policy
Trade Actions
The United States Department of Commerce (DOC) preliminarily ruled on
August 17, 2004
that Canada’s subsidies for its hog industry are too small to justify
the imposition of U.S.
tariffs on hogs coming from Canada. In March, the DOC initiated two
separate investigations
against live swine from Canada based on a petition from the National
Pork Producers Council.
One investigation focuses on whether Canadian live swine are subsidized
(the countervail
case) while the second investigation alleges that Canadian live swine
are sold into the U.S. at
below fair value (the anti-dumping case). The DOC’s preliminary
determination in the antidumping
case is scheduled for October 15, 2004. The final determinations in both the
countervail and the anti-dumping investigations have been aligned and
are currently
scheduled for December 28, 2004.
VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
U.S. Embassy homepage.
To view the website, log onto http://www.usembassycanada.gov; click on
Embassy Ottawa offices, then
Foreign Agricultural Service. The FAS/Ottawa office can be reached via e
-mail at: agottawa@usda.gov http://www.fas.usda.gov/gainfiles/200409/146107419.pdfTSS ################# BSE-L-subscribe-request@uni-karlsruhe.de #################
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