April 15, 2009 / 5:08 PM / 9 years ago

U.S. label law blocking Canada livestock

WINNIPEG, Manitoba (Reuters) - Canada’s farmers have seen a dramatic decrease in the numbers of hogs and cattle sold into the United States since American mandatory food labeling rules took effect, amplifying calls for Canada to launch a WTO complaint against the U.S.

Hog farmers have shipped 41 per cent or 1.2 million fewer hogs to the U.S. this year through March 28, compared with the same period a year earlier, according to the U.S. Agriculture Department.

U.S. cattle imports from Canada have dropped by one-quarter during the same period, amounting to about 120,000 fewer head of cattle crossing the border.

“It’s been immediate and it’s been severe,” said Juergen Preugschas, president of the Canadian Pork Council and a hog farmer in the western province of Alberta.

Interim mandatory country-of-origin labeling (COOL) rules came into effect September 30. Canada filed a WTO complaint against what it termed protectionist rules, but in January suspended it after the U.S. revised the final version.

The Canadian industry renewed its concerns after U.S. Agriculture Secretary Tom Vilsack wrote to meat packers in February suggesting he may toughen the law if they don’t voluntarily adopt higher standards, such as labeling in which country each stage of production took place. The final version of the law took effect March 16.

Canada traditionally exports C$4 billion (US$3.3 billion) a year of livestock to the U.S.

U.S. packers are now wary of importing other countries’ meat because of the cost of segregating animals and for fear that retailers will be less likely to buy meat not raised in the U.S., said Kevin Grier, senior analyst at the George Morris Center in Guelph, Ontario.

“I‘m surprised at how radical a reduction in hog exports there has been,” Grier said.

The recession hasn’t helped exports into the U.S., but the trend of slipping Canadian sales goes as far back as last spring. U.S. packers were already anticipating the costs of new labeling rules, Preugschas said, and most either cut off or reduced imports of Canadian animals.

Farmers are now left to search for Canadian feedlot space for cattle not ready for slaughter or domestic packers willing to buy.

“In some cases, guys have just plain gone out of business,” Preugschas said.

That’s ironically one of the few bullish indicators for livestock farmers. As more of them liquidate their herds, lower numbers will support prices, said Tony Saretsky, who owns a large cattle exporting business near Ponoka, Alberta.

The volumes of hogs raised to slaughter weight in Canada before entering the U.S. have dropped about 60 percent, said Grier.

Overall cattle exports don’t appear to be affected as much as pork because shipments of non-fed cattle -- the older, lower-priced cows ground into hamburger and processed beef -- continue to be in high demand, said Rob Leslie, senior analyst at Canfax. Exports of feeder and slaughter-ready cattle that generate higher prices have dropped 41 and 31 percent respectively, he said.

The labeling rules aren’t just hurting Canadian farmers. Saretsky has seen his sales of Canadian cattle into the U.S. shrink in half from 50,000 head per year to a pace of about 25,000 head annually since COOL took effect.

“It’s very prejudicial and I‘m certain it breaks every trade agreement the U.S. has ever signed,” Saretsky said. “This business with COOL has had an extremely negative effect on Canada.”

The government should revive its WTO complaint, said Ted Haney, president of the Canada Beef Export Federation. A prolonged loss of access to the U.S. would pressure prices, causing farmers to further slash their herds and threatening the supply to Canadian packers, he said.

Canada Agriculture Minister Gerry Ritz said in an email to Reuters that the government is gathering quantifiable information on COOL’s impact and building a case to defend Canadian farmers.

“We continue to make our bottom-line message clear to our American neighbors: we will always stand up for Canadian producers and make sure they’re treated fairly under the WTO,” Ritz said.

The government should have seen enough by now to warrant WTO action, said Wayne Easter, agriculture critic with the Opposition Liberal party. “(The government) need to be very very aggressive. The damage is increasingly excessive.”

($1=1.21 Canadian)

Editing by John Picinich

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