Not much chatter on hear these days about the hosin we are all getting on our cull cows etc. Has everyone become satisfied, or even happy with a 40 cent fat cow from time to time? The following article was in last weeks Globe and Mail -
Some interesting stuff brewing up for the fall ABP meetings. As soon as I'm unleased I'll post Cam's lengthy call for our Dear Hugh Lynch Staunton's resignation.
Happy reading everyone -----
Bum Steer
Mad Cow disease, which has gutted the Canadian beef business, is the product of a mysterious, brain-eating protein. It's also the product of government policy
ANDREW NIKIFORUK
From Friday's Globe and Mail
Like every one of Canada's 90,000 cattle producers, Cam Ostercamp can remember what he was doing on the industry's 9/11. The date was May 20, 2003. "It was one damned hot afternoon," recalls Ostercamp. He was preparing his tractor for spring seeding when a radio newscast hit him with a wallop: Canada had its first case of homegrown mad cow disease, a.k.a. bovine spongiform encephalopathy (BSE). "Oh Christ," he thought. "Here we go."
Ostercamp had a herd of 200 Angus cows on his Blackie, Alberta, farm, a stretch of classically flat prairie with a stand of poplars shading his bungalow. The seasoned cattleman knew enough about the trade politics of BSE for his gut to twist. In its earlier eruptions abroad, the strange brain-wasting disease had been a disaster for the beef business, pummelling European and Japanese markets, lowering consumption and rupturing international trade. True to the pattern, the discovery of a sick Canadian cow promptly produced bans on Canadian beef by more than 30 countries, including the United States. But on the radio, an official from the Canadian Cattlemen's Association—representing Ostercamp's professional brethren—promised that things would be sorted out in a couple of weeks, and then exports would resume. It was only one cow, after all.
Ostercamp wasn't reassured. He knew how dependent the Canadian beef industry was on exports—especially to the U.S. He figured he was about to lose tens of thousands of dollars in income. "I knew the industry would be screwed, blued and tattooed."
His prediction wasn't far off base. Three years and seven mad cows later, the cattle industry, which supplies Canadian farmers with their single greatest source of cash, is still staggering from BSE—what the Canadian Animal Health Coalition calls "the greatest threat and shock the Canadian agricultural industry has ever experienced." To date, depressed beef prices have scalped ordinary producers to the tune of $7 billion. Although the U.S., Canada's No. 1 beef importer, recently opened its borders to young cattle after a two-year ban, it still doesn't accept purebred stock or animals over 30 months of age.
A range of market forces and government policies—variously in the health, agriculture and economic envelopes—created the modern beef industry. But unlike every other beef-producing country dogged by mad cows, Canada has yet to make "a clear change in how we do business," says Ostercamp. He believes the industry is now more vulnerable than ever, but in denial. The continuing appearance of infected cows has made the nation's beef bureaucrats not proactive but defensive, he says—"as nervous as a bunch of long-tailed cats in a room full of rocking chairs."
Canada's beef industry—which is mainly a Prairie, and above all, an Albertan business—has changed radically in the past 30 years. Prior to the 1980s, the industry operated the way most urban steak-eaters probably imagine it still is operating. "It was cow-calf operators and cowboys on the range, with a couple of large feedlots," says Jerry Bouma, a long-time industry analyst based in Edmonton. Individual farmers raised young animals in pastures and then sent them off to feedlots that finished—fattened up—the yearlings on barley and corn. A handful of largely Canadian-owned packers (Burns, Canada Packers and Swift Canadian) then slaughtered the beef for the national grocery market in large urban plants located close to railroad terminals.
The industry also had an invisible side: rendering. For every pound of meat taken off a cow, there is another pound of offal, fat and bone. Since the 1860s, when a German chemist discovered that boiled-down animal carcasses could be transformed into powdery high-protein animal feed, the production of meat and bone meal (MBM) and other livestock byproducts has been a major enterprise around the globe. Packing plants in Canada quickly learned they could make a good dollar from leftover offal, hides, tongues and the rest. Renderers boiled down cattle carcasses (and dead pets and roadkill) into marketable fats, gelatin and MBM. Independent feed mills mixed and matched corn and barley, along with fish meal, feathers and MBM, to create custom feeds for livestock. The industry referred to this industrial cannibalism as a vital form of recycling that kept landfills from overflowing with animal parts.
Canada's beef industry, valued at about $500 million a year in the 1980s, was self-sufficient: There were virtually no imports, and exports rarely amounted to more than 15% of production. The Canadian industry could point to fewer incidences of diseases—tuberculosis, bluetongue and the like—than its American counterpart. When Ostercamp, the son of farmers, went into farming himself in 1986, he had no idea the old style of raising beef was actually on its way out. "I was naive," he says.
A variety of factors conspired to begin the transformation of the industry in the 1980s. One was a decline in domestic beef consumption: From an annual per-person peak of 24 kilograms in 1976, beef-eating began a long slide to the current level of 14.6 kilograms. That trend helped put "For Sale" signs on Canadian meatpacking plants: Between 1985 and 2005, 21 simply closed their doors. Meanwhile, in 1988, Canada signed the Free Trade Agreement with the U.S., ushering in an era that opened the border wide for live cattle, boxed beef and other bovine products from all over the world. Before steak-eaters knew it, one in three pounds of beef consumed in Canada came from abroad—as far away as Australia. The flow went both ways. "Domestic production," a 2004 parliamentary report on BSE noted, "would no longer be strictly geared to domestic consumption."
An enterprising group of Dutch immigrants also brought novel skills to the industry. In southern Alberta, the immigrants turned the feedlot business into an efficient form of factory farming on a massive scale. In this new system, calves spent less time on pasture and more time crammed together in giant feedlots, eating formulated feeds that—cows' vegetarianism notwithstanding—sometimes contained bits of horses, pigs and other cows.
Inexpensive feed was a necessary input for farming on this scale. Helpfully, grain-based feed became cheaper in Canada after Ottawa's elimination of the Crow rate subsidy for grain exports. Thus a flood of cheap grain was available for rearing livestock. This made Canada attractive for expansion-minded American packing companies, as did the low Canadian dollar. In 1989, fast-growing Cargill Inc.—today the largest privately owned company in the United States—built a slaughterhouse in High River, south of Calgary. To encourage value-added processing and job creation, the Alberta government chipped in $4 million for Cargill's waste-water treatment plant.
In 1994, Iowa Beef Producers, another innovative cost-cutting U.S. packer, bought out Lakeside Farm Industries in Brooks, Alberta. The Alberta government gave IBP $16 million to help Lakeside become "the largest slaughter and beef processing plant in Canada."
Both Cargill and IBP quickly injected a lot of American know-how into the business: high-speed "disassembly" lines, double shifts and, eventually, cheap immigrant workers from as far away as Somalia—a sign of how far labour had retreated in an industry where unions were once a force to be reckoned with. Unable to match these efficiencies, more Canadian packing plants closed. In 2001, Tyson Foods, the world's largest meat processor, bought out IBP, its Lakeside plant included. By the time BSE arrived on the scene, Cargill and Tyson, together with a smaller Canadian firm, XL Beef, accounted for 95% of the cattle slaughtered each week in the Prairie provinces: 51,500 head.
Cargill's and Tyson's consolidation fever spread to the entire beef industry. As operations merged, the number of cow-calf producers dropped by nearly half, from a high of 160,000 in the 1970s to 90,000 by 2001. Feedlot players also got bigger and fewer: Just 20 feedlots, the size of small cities, accounted for more than 50% of the fattened cattle in Alberta by 2003. The number of renderers dropped, and 11 multinationals (including Cargill, Tyson and Australian-based Ridley) scooped up control of 70% of the livestock feed industry. "It was like having Wal-Mart come to town," says Barry Glotman, president of Vancouver renderer West Coast Reduction. Finally, the business of selling steaks and hamburgers to Canadians reached new levels of concentration: By 2002, five major retailers controlled 67% of the market.
All of this consolidation ably served the Alberta government's goal of doubling cattle exports to U.S. markets. Canada, a nation with only 2% of the world's cattle, became the globe's third-largest beef exporter. A country that once shipped fewer than 200,000 animals to U.S. packers and feedlots in a year now supplied a stampede of 1.6 million animals a year.
By the end of the 1990s, Canada's beef industry had become so integrated with the U.S. market, it was hard to tell the two apart. While Canada delivered tonnes of boxed beef and multitudes of live animals, the U.S. shipped up nearly half a million animals every year for fattening in Canadian feedlots. Also, half of the MBM used in cattle feed came from U.S. feed mills.
Shipping so much across borders was a risk, of course—this is how, throughout history and increasingly as international trade has burgeoned, diseases have spread. "It all happened so fast and so easily that we intellectualized the risks but didn't internalize what they could be," says Bouma. The use of cannibal food in particular was a time bomb: According to an unpublished report for Health Canada, before the BSE outbreak, Canadian dairy cattle were eating as much as 400 grams of rendered cattle a day, while feedlot cattle often consumed between 100 and 400 grams a day. Yet, as the system became more vulnerable, Alberta dismantled its disease surveillance program and shut testing laboratories. For their part, federal authorities did not scale up the animal health infrastructure to match the industry's trade growth and export value.
Beef's new shape—concentrated, continentalized and export-oriented—left many producers, including Ostercamp, uneasy. Approximately 70% of beef production was now exported, the vast majority to the south. The U.S., which consumed 90% of its beef domestically, didn't have that kind of exposure. Moreover, the U.S. added value to imported live Canadian cattle by processing them into boxed beef to be shipped to Asia. Beef had become a proverbial hewing-and-drawing Canadian industry: We produced the raw product and left the more profitable business of processing to others.
Even before BSE reared its head, Ostercamp calculated that the net return on the average beef cow had dropped by nearly $100 a head in a decade. To compensate for shrinking profit margins caused by the supply glut, producers raised even more cattle. "What successful business responds to profit losses by producing more?" asks Ostercamp. According to Statistics Canada, the national cattle herd grew by 4% annually between 1996 and 2001, when it reached a record 15.6 million. During the same time, individual producers increased their average herd sizes from 105 to 127. "We had to produce more animals in order to generate the same revenue as 10 years previous, all the while accepting escalating operating costs," says Ostercamp.
As the transformation of the Canadian beef industry was consummated, BSE started to go global. The disease first appeared in the U.K. in the 1980s, creating political and trade chaos. Caused by a mysterious, durable protein clump called a prion, BSE is just one of several emerging brain-eating diseases that can afflict mammals. Young calves typically ingest the agent in rations of MBM. Amounts as small as one milligram of nerve tissue can be infectious. Depending on the amount of prions taken in, the disease usually takes four to five years to incubate before it perforates a cow's brain. According to a recent British study, one diseased cow, once rendered into cattle food, can theoretically infect another 45,000 cows.
Cattle cannibalism, driven by feed subsidies and an aggressive export strategy, created an epidemic in the U.K. that sent an estimated 1.6 million infected cows to the dinner table. Since then, approximately 180 people in the U.K. and continental Europe have died of variant Creutzfeldt-Jakob disease, a human form of mad cow. By 1988, scientists had established that the best way to stop the spread of BSE was to ban the feeding of rendered ruminants (the whole family of cud chewers, including sheep) to cattle and other animals. But before most countries took up the solution, the U.K.'s rendering industry dumped thousands of tonnes of contaminated MBM around the world—without any warning labels.
In 1997, industry analyst Jerry Bouma recognized that the prion genie was out of the bottle. Under international trade rules, the discovery of BSE in a country's cattle population would trigger the closure of its export markets for seven years. So Bouma knew that one mad cow would have catastrophic consequences for Canada's new beef-export industry. In a report written for the Alberta government on sustainable growth for the agrifood industry, he concluded that the "growing dependence of Alberta livestock markets on exports to the U.S.A." made the province extremely vulnerable to a BSE outbreak. Bouma argued "that it is not a case of if such an event will occur, it is when it will occur."
Bouma had no idea how dead-on his assessment was. After BSE appeared in an imported purebred cow in Alberta in 1993, Agriculture Canada ordered a report by the Animal Plant and Food Risk Analysis Network. The report noted that "the probability of entry of BSE-infected cattle" via 183 cows imported from the U.K. between 1982 and 1989 was "very high." It warned of the threat of homegrown BSE cases—trade embargoes would not be far behind. None of this information was ever presented to producers; the report wasn't released. "Canada's BSE crisis of 2003 was a disaster waiting to happen," says William Leiss, a pre-eminent risk analyst at the University of Ottawa who has written extensively about BSE.
Meanwhile, the Canadian Cattlemen's Association took the position that North America was well protected against BSE. In a 2001 news release, the CCA gave its proof: Canada had halted imports from the U.K. in 1989; it had banned the use of cattle bits in cattle feed in 1997, with a 100% compliance rate; and it had continuously monitored the national herd for BSE. (In Canada, virtually all testing is done on farms, not at packers.)
The CCA, however, neglected a few details. It failed to mention the lingering legacy of U.K. imports; likewise that the feed ban was only partial—some animal parts could still be used. As for the claim that there had been 100% compliance with the ban on cattle bits in feed, the federal government's own count put the compliance rate at only 65% as of 2000. Finally, the CCA did not acknowledge that Canada's rate of BSE surveillance testing was (in company with its U.S. trading partner) among the lowest in the world. In 2002, 3,377 animals were tested out of 3.6 million slaughtered—a rate of less than 0.001%.
Canada's new federal food watchdog, the Canadian Food Inspection Agency, took the same sanguine view of BSE as the cattlemen's group. Cobbled together with staff from four different departments in 1997, CFIA was given a contradictory mandate to protect food safety and "facilitate trade in all areas." The following year, Canada's Auditor-General said the new agency was understaffed and didn't have the resources to do its job. Yet in 2001, Penny Greenwood, a senior CFIA veterinarian, flatly told reporters that "Europe has the disease. We do not." Carl Block, chair of the animal health committee of the CCA, similarly declared that "The circumstances that led to BSE in Great Britain do not exist here."
In reality, the federal government merely kept reports on the risk of a BSE catastrophe in Canada under wraps. In 2000, Health Canada commissioned two toxicologists to produce a lengthy paper, "Risk Assessment of Transmissible Spongiform Encephalopathies in Canada." The meticulously detailed study concluded that "BSE could be incubating in Canadian cows and other livestock…and variant CJD could be incubating in the Canadian population…" It noted that Canada's feed ban still allowed cattle blood and fat to be fed to cattle and was largely voluntary. That same year, scientists with the European Union also concluded that "the rendering industry is apparently not able to ensure a significant reduction of incoming BSE-infectivity." Officials at CFIA and the CCA called the report "unfounded."
In early 2003, researchers with the CFIA published an assessment of risk factors related to BSE in a journal put out by the World Organization for Animal Health. Using a set of complicated mathematical models, the scientists calculated that 545 cattle from BSE-infected countries had entered Canada; that between three and 24 infected animals had been rendered and had entered the animal feed chain; that dairy cattle alone consumed 37,500 tonnes of MBM a year; and that "more MBM was consumed than was produced each year in Canada." The report concluded that the likelihood of BSE taking root in Canada was negligible, but if the disease did get established, "the consequences would be extreme."
Canada's first homegrown mad cow appeared in 2003: an Angus, between six and eight years of age, owned by a former catfish farmer from Mississippi who had settled in northern Alberta. A CCA press release called the discovery an "isolated incident" and added that Canadian beef was "safe to eat yesterday, it is safe to eat today and it will continue to be safe to eat tomorrow." Premier Ralph Klein dismissed the problem as "one stinking cow." But the trade fallout was immediate. Thirty-three countries, including the United States, closed their borders. Falling prices erased nearly $3 billion worth of equity overnight. Ostercamp's breeding heifers, which had sold for $1,500 in the fall of 2002, now fetched only half that. Cull cows, females that can't raise calves any more, fell from $850 to $150.
Several weeks into the crisis, Charlie Gracey, a cattle consultant who served as the CCA's executive vice-president from 1982 to 1990, called on the cattle industry to set up an expert scientific committee to wade through the complicated and ever- changing science on BSE. "We never did do that," says Gracey.
Ostercamp waited for industry leaders to take the bull by the horns and call for more BSE testing and independent slaughterhouse capacity. Ostercamp thought these changes would give farmers a way to opt out of the industrial food chain and offer the market value-added—that is, individually BSE-tested —beef. But industry leaders preferred to talk about the "harmonization of markets." In other words, the Canadian industry wouldn't push for standards or policies that differed from that of their key trading partner. Politicians and industry leaders alike adopted a two-sentence mantra: Canada's BSE polices are all "science-based." And the border is bound to be open soon.
Six months later, the border remained closed. At that point, Ostercamp says, that he just "got pissed off by the mismanagement." After the discovery of another Canadian-born mad cow (in Washington state), he posted a fiery essay on the internet. In "Behind the veil of science: How mishandling the BSE crisis could lead to the downfall of the Canadian beef industry," Ostercamp argued that the real problem wasn't BSE but the industry's glaring dependence on "Uncle Sam" and U.S.-owned packing plants. "We live in the shadow of the giant—when they shoot, we dance." He decried a lack of vision: Instead of fast-tracking mandatory BSE testing and seeding independent slaughterhouses, the government initiated another in a series of costly compensation programs for cattlemen.
The essay struck a chord among prairie producers. Ostercamp appeared on radio shows and fielded scores of phone calls in his kitchen. With the help of two neighbours, Doug Fraser and Grant Hirsche, and his own sister, Myrna Herringer, he started the Beef Initiative Group. "It took on a life of its own," recalls Herringer, who became BIG's administrator. "I was a stay-at-home mom one day and the next thing I knew I was travelling down the road with these cowboys."
Throughout 2004, Ostercamp took his message to Swift Current, Lethbridge, High River, Prince Albert and beyond—more than 24 communities in total. In Moose Jaw, 800 producers showed up for Ostercamp's talk. Many spoke of their debts and frustration with tears in their eyes. "Let BSE be the catalyst for change," said Ostercamp. At each meeting, he gauged the popularity of his message with a simple questionnaire. Out of approximately 1,600 respondents, 96% supported more BSE testing; 99% favoured greater market diversity; 99% supported more Canadian-owned packing plants; and 96% supported a check-off or levy on all future cattle sales to finance a producer-owned packing plant.
Ostercamp's proposal never envisioned the dismantling of Cargill or Tyson. All he wanted, he says, was fair competition. "Imagine the kind of real competition that could be realized ringside [at cattle auctions] if producers in Canada retained ownership of even 5% or 10% of each year's production and marketed them through their own slaughter plant or brokerage firm," he says. Such a share, Ostercamp argued, would force Cargill and Tyson to bid higher on the remaining cows, giving producers a decent price for their product.
In April, 2004, the standing Senate committee on agriculture and forestry confirmed the conclusions of Ostercamp's essay. "The closure of the U.S. border taught us a key lesson: The beef industry we developed in Canada is very vulnerable," it concluded. The report added that the first homegrown case of the disease illuminated two critical weaknesses: "huge dependence on cattle export and the concentration of its packing sector."
While the beef boys gave Ostercamp the cold shoulder, he found an ally in Yoshikazu Takeuchi, the then Edmonton-based consul general of Japan—a country that had weathered its own mad-cow crisis and that provided an important market for Canadian beef, taking 2% of production. The Japanese diplomat openly embraced BIG's ideas. Takeuchi even told Ostercamp that a growth market existed for Canadian-raised beef in Japan, provided the suppliers understood that food safety was paramount. In other words, rigorously BSE-tested beef wouldn't have any trouble finding Japanese buyers. The two men corresponded for more than a year: "Takeuchi cottoned onto us like a cocklebur," says Ostercamp.
Ostercamp thought the Canadian industry could learn a lot from Japan's response to its BSE crisis, which began with several cases in 2001. After a period of political turmoil and outright lying, the Japanese government admitted it had not protected its food supply. Politicians lost their jobs, a government veterinarian committed suicide and beef sales dropped by 50%. In response, the government instituted a complete feed ban, as well as 100% testing for all slaughtered beef. Since then, the screening system has rooted out two dozen mad cows, and the industry is thriving again. But Alberta Premier Ralph Klein dismissed Japan's system as "ridiculous" and "stupid."
Takeuchi also showed Ostercamp that oligopolies don't rule all the world's meat markets. The slaughter industry in Japan, which processes 1.3 million animals a year, boasts a diverse ownership. Out of a total of 220 plants in 2004, municipalities owned 100, producer associations 46 and private firms the remainder.
As Ostercamp waged his 2004 campaign, three scientists with Health Canada—Shiv Chopra, Gérard Lambert and Margaret Haydon—warned Ottawa that Canada's partial BSE feed ban was inadequate. The continued production of MBM from cattle for chicken and pigs simply ensured that prions could cross-contaminate feed mills and continue to recycle through the animal feed system. "The bottom line is that we should have banned all this material for animals at the beginning," says Haydon, who expects an increasing volume of BSE cases and "a smoldering human health problem too." Haydon and her colleagues, the most outspoken federal employees on the BSE risk, were fired by the government in July, 2004, even as CFIA considered reinforcing its feed ban. A case of wrongful dismissal is before the courts.
By the summer of 2004, Ostercamp and many other producers had concluded that U.S. packers were, in Ostercamp's words, "raping the industry." With the U.S. border closed, producers had a million animals with no market. Cargill and Tyson bought cattle at depressed prices, yet sold boxed beef at premium prices to retailers. After Brian Mason, an Alberta New Democrat MLA, released a confidential report by the Alberta Beef Industry Council showing that packer margins were up by 200%, the public uproar forced a reluctant Alberta government to ask its Auditor-General to investigate.
Three months later, Auditor-General Fred Dunn reported that the province's three principal packing firms (Cargill, Tyson and XL Foods) "benefited significantly from the impact of BSE on the price and slaughter volumes of cattle." The disaster boosted their average profits by an incredible 281% and, by virtue of the packers' own herds, even netted them at least $45 million in payments from a taxpayer-funded BSE recovery program. Says Ostercamp: "Isn't it ironic that two foreign packers operating on Canadian soil, taking captive beef from Canadian producers, selling it into their American market at a 50% to 70% markup, should also qualify to collect a subsidy cheque of somewhere between $40 and $100 million?" (It's not known how much the packers earned this way because they refused requests from federal auditors to open their books.) The Alberta auditor also noted that the government was totally unprepared for "how it might deal with the related impacts of an animal health disaster such as BSE...Alberta was not prepared in related areas such as trade, economic impact in the integrated beef industry, relations with other governments or recovery programs."
In the fall of 2004, BIG had nearly 1,000 members and a website as combative as Ostercamp's rhetoric. The group decided to take its key idea—a mandatory levy on each cow sale to help pay for a producer-owned slaughterhouse—to the annual meeting of the Alberta Beef Producers. Ostercamp was given a few minutes to explain the idea. Among the speakers responding was Darcy Davis, vice-president of ABP. "That sounds like a socialist idea from the province next door. We sure as hell don't need it here," he said. The idea was voted down. ABP also refused to support a feasibility study on a producer-owned plant.
BIG, however, had now attracted enough attention and clout—some 30 producer groups across the prairies were considering small packing plants with full BSE testing—that doors started to open in Ottawa. Ostercamp and several BIG supporters, including Charlie Gracey, met parliamentary secretary for agriculture Wayne Easter and CFIA's head veterinarian, Brian Evans.
And in February, 2005, Ostercamp landed a face-to-face with Agriculture Minister Andy Mitchell. The cattleman explained his case. Mitchell listened impassively and asked few questions. "We all knew then that it was going to go nowhere," recalls Myrna Herringer. "They tried to pacify us and hoped we'd go away," adds BIG member Doug Fraser, summarizing his experience in both Ottawa and Edmonton. The political will to put another boat in the water didn't exist.
The failure of Ostercamp's message—that domestic competition can revitalize Canada's beef industry by adding value at home—baffles the dean of Canada's cattle industry, Charlie Gracey. "Ostercamp had the balls to stand up when others just grumbled," says Gracey. "But industry basically brushed him off. And that surprised me. There hasn't been open critical debate about what solutions should be considered."
Analyst Jerry Bouma acknowledges that Ostercamp's basic analysis is sound. "But there is really no Canadian industry. We are now part of a North American industry. The two industries are Siamese twins. To change it requires major surgery and the dismantling of two major high-volume U.S. packing plants that Canadian politicians strongly supported. And that's a zero-sum game."
The mad cows keep coming. In the first half of 2006 alone, the Canadian Food Inpection Agency found five cases in British Columbia, Alberta and Manitoba. The Manitoba cow proved to be an atypical case, suggesting that more than just the U.K. strain of BSE has infiltrated the national herd of 16 million animals. Brian Evans of CFIA concedes that "we will find more cases," and that the industry is little more than "50% down the road" of its BSE crisis. Like many cattle producers, Ostercamp doesn't find that statement very reassuring. "That means I'm just 50% broke and have another 50% to lose."
The leaders of the cattle industry have trouble even mentioning Ostercamp's name. Canadian Cattlemen's Association president Hugh Lynch-Staunton refused an interview for this story. Arno Doerksen, chairman of the Canada Beef Export Federation, says that "it's no surprise that some people came up with all kinds of solutions." He didn't think producer-owned plants were a model to "feel good about" and added that only "strong business plans will survive." As for revamping BSE testing, "given where we are at, the industry has opted not to address that option." He praised the CFIA and conceded that more mad cows is "within the realm of what would be expected."
In the spring of 2005, John Tyson, the CEO of Tyson Foods, visited Brooks to announce the expansion of its plant's killing capacity. While producers struggled to acquire money for feasibility studies and business plans, Tyson increased its slaughter capacity from 3,800 cattle per day to 4,700.
Of the nearly 30 different producer-backed proposals mounted since 2004, barely a handful have opened shop. Most couldn't find funding or were unable to overcome challenges posed by CFIA, which is geared to big operations. After more than two years of wrangling, the Peace Country Tender Beef Coop in northern Alberta secured $4.5 million worth of funding (none of it from the province or Ottawa) for a 100-head-a-day operation. Political hostility to the plant was direct. One Alberta Tory MLA told chairman Neil Peacock that co-ops aren't a Conservative way of doing business. According to a co-op member, the MLA went on to say, "It is the duty of every cow-calf producer to get two or three jobs off the farm if they have to to continue providing cheap meat to the American companies." Peacock says the co-op will do its own BSE testing.
Saskatchewan is further ahead on this front. Before BSE came to Canada, more than 200 producers in the province banded together to launch a $20-million project including packing and processing plants. The Natural Valley Farms operation was focused on value-added products for export. "BSE just helped us along," says general manager Eric Kasko. He adds that the crisis "has taught the cattle industry not to put all of our eggs in one basket," and that it ought to have smaller-scale packers and direct-from-farmer sales to give customers actual faces to relate to. Manitoba took a page from BIG's book this year and implemented a $2-per-head levy to help build "Manitoba-owned" slaughter capacity.
But over all, BSE has left the industry more concentrated than ever. Cargill acquired Better Beef in Ontario last year. Now, with Tyson, it controls two-thirds of the national slaughter-ready beef market. "Not even the United States is that concentrated," says Charlie Gracey. But the Canadian Cattlemen's Association saluted the takeover: "This is good news, it shows Cargill's faith in the Canadian industry," it said on its website. The Competition Bureau, which reports to Industry Canada, approved the latest step in the concentration of the industry.
Last September, at the annual meeting of the Canada Beef Export Federation in Calgary, Ostercamp finally recognized the daunting nature of his mission. Established in 1989 to diversify export markets, the CBEF gets 29% of its funding from cattle producers, and the rest from government. When Jeff Cline, a senior Cargill executive who works in Wichita, Kansas, accepted the nomination for vice-chairman of the organization, Ostercamp stood up and protested, saying, "This will serve as a nice message to Americans, but what kind of message does it send to Canadian producers?" Cline was elected by acclamation.
Since then, Ostercamp has resigned himself to the conclusion that "the Canadian cattle industry at the family-farm level is adrift." He suspects that his ideas are a few years ahead of their time and that "this horse may race another day and win." Like many dissident producers, Ostercamp is now focusing entirely on making a living, "instead of making noise." He has started to sell parcels of land, a commodity that fetches premium prices thanks to the farm's proximity to booming Calgary.
And he now directly sells about 40 animals a year to Calgary consumers. He has the animals slaughtered at a local shop that ages them for 21 days. "Customers say it's better than Safeway." Every sale puts $1,400 in his hand—nearly $300 more than what the big packers would offer at the auction mart. "That's a microcosm of what the entire industry should be doing."
His opinion of the Canadian Food Inspection Agency remains grim: "It has been absolutely malfeasant in living up to its mandate. CFIA takes its directions from the U.S. Department of Agriculture and the American packers." Ostercamp is not the only critic of the agency. Canada's Auditor-General, Sheila Fraser, reported in 2004 that CFIA "does not report adequately, in a fair and reliable manner." And a $20-billion class-action suit by 100,000 producers against the federal government and feed manufacturer Ridley Inc. for gross negligence is now slowly working its way through provincial courts. The suit contends that the government knowingly allowed U.K.-imported cattle to contaminate the feed system and that Ridley should have stopped using MBM in Canadian cattle feed in 1996, when its parent company banned the practice in Australia. Ridley has denied the allegations and insists it complied with all applicable laws.
At CFIA, head veterinarian Evans says BSE has taught him that "science determines what is safe, but other factors determine what is acceptable." He notes that Canada has recovered its trade markets much faster than other countries with BSE. He acknowledges that U.S. and Canadian BSE policies are similar, but says he has never taken orders from his counterpart, Ron DeHaven, at the United States Department of Agriculture. "Industry is not our client," he says. "The public is our client." Recent cases of BSE in cattle born after the feed ban don't indicate a "system failure or overt non-compliance," he says, but a cross-contamination problem. "BSE doesn't disappear overnight."
Mike Mullins, assistant vice-president of public affairs for Cargill in Washington, DC, says CFIA has done a great job. He says the agency's handling of BSE "has only expanded the government's credibility." Concludes Mullins: "We think there is a bright future in the Canadian cattle industry and remain committed to it." Both Cargill and Tyson oppose BSE testing at packing plants as redundant exercises given that the most infectious materials, heads and spines, have been removed by that stage in the process.
Ostercamp points out that every country that experienced the first wave of the BSE crisis immediately restructured its food or agricultural ministries to clearly separate trade promotion from food safety, but Canada remains wedded to an agency with a dual mandate. Ostercamp argues that the CCA's and CFIA's opposition to market-driven BSE testing is "a ball and chain on the Canadian industry." Evans retorts that CFIA, unlike the U.S. Department of Agriculture, will allow independent BSE testing, provided plants have sound business and logistical plans.
Although the federal government proposed a more comprehensive ban in 2004, it didn't release any details until the summer of this year. The revised feed ban forbids cattle brain, eyes and spinal cord from entering animal food, pet food and fertilizers. Yet the ban still remains a shadow of European standards: It only applies to cattle 30 months of age or older and still doesn't require industry to process potentially infectious materials on dedicated feed lines. And it is still legal to export MBM. "I'm very concerned," says Neil Cashman of research network PrioNet Canada. He now calls BSE "an emergency in slow motion." The young age of recent BSE cases clearly shows "there were loopholes in the feed ban." In the U.S., the protectionist Ranchers-Cattlemen Action Legal Fund is now making the same case to U.S. politicians, hoping to close the border.
Back at his farm in Blackie, Ostercamp hedges his bets. In addition to selling off some of his land, he continues to run a small auto-body repair shop on his property. While combining a rye field in late August, he hears the news of another mad cow in Alberta, and sighs. "The hangover," he says, "always lasts twice as long as the party."
Some interesting stuff brewing up for the fall ABP meetings. As soon as I'm unleased I'll post Cam's lengthy call for our Dear Hugh Lynch Staunton's resignation.
Happy reading everyone -----
Bum Steer
Mad Cow disease, which has gutted the Canadian beef business, is the product of a mysterious, brain-eating protein. It's also the product of government policy
ANDREW NIKIFORUK
From Friday's Globe and Mail
Like every one of Canada's 90,000 cattle producers, Cam Ostercamp can remember what he was doing on the industry's 9/11. The date was May 20, 2003. "It was one damned hot afternoon," recalls Ostercamp. He was preparing his tractor for spring seeding when a radio newscast hit him with a wallop: Canada had its first case of homegrown mad cow disease, a.k.a. bovine spongiform encephalopathy (BSE). "Oh Christ," he thought. "Here we go."
Ostercamp had a herd of 200 Angus cows on his Blackie, Alberta, farm, a stretch of classically flat prairie with a stand of poplars shading his bungalow. The seasoned cattleman knew enough about the trade politics of BSE for his gut to twist. In its earlier eruptions abroad, the strange brain-wasting disease had been a disaster for the beef business, pummelling European and Japanese markets, lowering consumption and rupturing international trade. True to the pattern, the discovery of a sick Canadian cow promptly produced bans on Canadian beef by more than 30 countries, including the United States. But on the radio, an official from the Canadian Cattlemen's Association—representing Ostercamp's professional brethren—promised that things would be sorted out in a couple of weeks, and then exports would resume. It was only one cow, after all.
Ostercamp wasn't reassured. He knew how dependent the Canadian beef industry was on exports—especially to the U.S. He figured he was about to lose tens of thousands of dollars in income. "I knew the industry would be screwed, blued and tattooed."
His prediction wasn't far off base. Three years and seven mad cows later, the cattle industry, which supplies Canadian farmers with their single greatest source of cash, is still staggering from BSE—what the Canadian Animal Health Coalition calls "the greatest threat and shock the Canadian agricultural industry has ever experienced." To date, depressed beef prices have scalped ordinary producers to the tune of $7 billion. Although the U.S., Canada's No. 1 beef importer, recently opened its borders to young cattle after a two-year ban, it still doesn't accept purebred stock or animals over 30 months of age.
A range of market forces and government policies—variously in the health, agriculture and economic envelopes—created the modern beef industry. But unlike every other beef-producing country dogged by mad cows, Canada has yet to make "a clear change in how we do business," says Ostercamp. He believes the industry is now more vulnerable than ever, but in denial. The continuing appearance of infected cows has made the nation's beef bureaucrats not proactive but defensive, he says—"as nervous as a bunch of long-tailed cats in a room full of rocking chairs."
Canada's beef industry—which is mainly a Prairie, and above all, an Albertan business—has changed radically in the past 30 years. Prior to the 1980s, the industry operated the way most urban steak-eaters probably imagine it still is operating. "It was cow-calf operators and cowboys on the range, with a couple of large feedlots," says Jerry Bouma, a long-time industry analyst based in Edmonton. Individual farmers raised young animals in pastures and then sent them off to feedlots that finished—fattened up—the yearlings on barley and corn. A handful of largely Canadian-owned packers (Burns, Canada Packers and Swift Canadian) then slaughtered the beef for the national grocery market in large urban plants located close to railroad terminals.
The industry also had an invisible side: rendering. For every pound of meat taken off a cow, there is another pound of offal, fat and bone. Since the 1860s, when a German chemist discovered that boiled-down animal carcasses could be transformed into powdery high-protein animal feed, the production of meat and bone meal (MBM) and other livestock byproducts has been a major enterprise around the globe. Packing plants in Canada quickly learned they could make a good dollar from leftover offal, hides, tongues and the rest. Renderers boiled down cattle carcasses (and dead pets and roadkill) into marketable fats, gelatin and MBM. Independent feed mills mixed and matched corn and barley, along with fish meal, feathers and MBM, to create custom feeds for livestock. The industry referred to this industrial cannibalism as a vital form of recycling that kept landfills from overflowing with animal parts.
Canada's beef industry, valued at about $500 million a year in the 1980s, was self-sufficient: There were virtually no imports, and exports rarely amounted to more than 15% of production. The Canadian industry could point to fewer incidences of diseases—tuberculosis, bluetongue and the like—than its American counterpart. When Ostercamp, the son of farmers, went into farming himself in 1986, he had no idea the old style of raising beef was actually on its way out. "I was naive," he says.
A variety of factors conspired to begin the transformation of the industry in the 1980s. One was a decline in domestic beef consumption: From an annual per-person peak of 24 kilograms in 1976, beef-eating began a long slide to the current level of 14.6 kilograms. That trend helped put "For Sale" signs on Canadian meatpacking plants: Between 1985 and 2005, 21 simply closed their doors. Meanwhile, in 1988, Canada signed the Free Trade Agreement with the U.S., ushering in an era that opened the border wide for live cattle, boxed beef and other bovine products from all over the world. Before steak-eaters knew it, one in three pounds of beef consumed in Canada came from abroad—as far away as Australia. The flow went both ways. "Domestic production," a 2004 parliamentary report on BSE noted, "would no longer be strictly geared to domestic consumption."
An enterprising group of Dutch immigrants also brought novel skills to the industry. In southern Alberta, the immigrants turned the feedlot business into an efficient form of factory farming on a massive scale. In this new system, calves spent less time on pasture and more time crammed together in giant feedlots, eating formulated feeds that—cows' vegetarianism notwithstanding—sometimes contained bits of horses, pigs and other cows.
Inexpensive feed was a necessary input for farming on this scale. Helpfully, grain-based feed became cheaper in Canada after Ottawa's elimination of the Crow rate subsidy for grain exports. Thus a flood of cheap grain was available for rearing livestock. This made Canada attractive for expansion-minded American packing companies, as did the low Canadian dollar. In 1989, fast-growing Cargill Inc.—today the largest privately owned company in the United States—built a slaughterhouse in High River, south of Calgary. To encourage value-added processing and job creation, the Alberta government chipped in $4 million for Cargill's waste-water treatment plant.
In 1994, Iowa Beef Producers, another innovative cost-cutting U.S. packer, bought out Lakeside Farm Industries in Brooks, Alberta. The Alberta government gave IBP $16 million to help Lakeside become "the largest slaughter and beef processing plant in Canada."
Both Cargill and IBP quickly injected a lot of American know-how into the business: high-speed "disassembly" lines, double shifts and, eventually, cheap immigrant workers from as far away as Somalia—a sign of how far labour had retreated in an industry where unions were once a force to be reckoned with. Unable to match these efficiencies, more Canadian packing plants closed. In 2001, Tyson Foods, the world's largest meat processor, bought out IBP, its Lakeside plant included. By the time BSE arrived on the scene, Cargill and Tyson, together with a smaller Canadian firm, XL Beef, accounted for 95% of the cattle slaughtered each week in the Prairie provinces: 51,500 head.
Cargill's and Tyson's consolidation fever spread to the entire beef industry. As operations merged, the number of cow-calf producers dropped by nearly half, from a high of 160,000 in the 1970s to 90,000 by 2001. Feedlot players also got bigger and fewer: Just 20 feedlots, the size of small cities, accounted for more than 50% of the fattened cattle in Alberta by 2003. The number of renderers dropped, and 11 multinationals (including Cargill, Tyson and Australian-based Ridley) scooped up control of 70% of the livestock feed industry. "It was like having Wal-Mart come to town," says Barry Glotman, president of Vancouver renderer West Coast Reduction. Finally, the business of selling steaks and hamburgers to Canadians reached new levels of concentration: By 2002, five major retailers controlled 67% of the market.
All of this consolidation ably served the Alberta government's goal of doubling cattle exports to U.S. markets. Canada, a nation with only 2% of the world's cattle, became the globe's third-largest beef exporter. A country that once shipped fewer than 200,000 animals to U.S. packers and feedlots in a year now supplied a stampede of 1.6 million animals a year.
By the end of the 1990s, Canada's beef industry had become so integrated with the U.S. market, it was hard to tell the two apart. While Canada delivered tonnes of boxed beef and multitudes of live animals, the U.S. shipped up nearly half a million animals every year for fattening in Canadian feedlots. Also, half of the MBM used in cattle feed came from U.S. feed mills.
Shipping so much across borders was a risk, of course—this is how, throughout history and increasingly as international trade has burgeoned, diseases have spread. "It all happened so fast and so easily that we intellectualized the risks but didn't internalize what they could be," says Bouma. The use of cannibal food in particular was a time bomb: According to an unpublished report for Health Canada, before the BSE outbreak, Canadian dairy cattle were eating as much as 400 grams of rendered cattle a day, while feedlot cattle often consumed between 100 and 400 grams a day. Yet, as the system became more vulnerable, Alberta dismantled its disease surveillance program and shut testing laboratories. For their part, federal authorities did not scale up the animal health infrastructure to match the industry's trade growth and export value.
Beef's new shape—concentrated, continentalized and export-oriented—left many producers, including Ostercamp, uneasy. Approximately 70% of beef production was now exported, the vast majority to the south. The U.S., which consumed 90% of its beef domestically, didn't have that kind of exposure. Moreover, the U.S. added value to imported live Canadian cattle by processing them into boxed beef to be shipped to Asia. Beef had become a proverbial hewing-and-drawing Canadian industry: We produced the raw product and left the more profitable business of processing to others.
Even before BSE reared its head, Ostercamp calculated that the net return on the average beef cow had dropped by nearly $100 a head in a decade. To compensate for shrinking profit margins caused by the supply glut, producers raised even more cattle. "What successful business responds to profit losses by producing more?" asks Ostercamp. According to Statistics Canada, the national cattle herd grew by 4% annually between 1996 and 2001, when it reached a record 15.6 million. During the same time, individual producers increased their average herd sizes from 105 to 127. "We had to produce more animals in order to generate the same revenue as 10 years previous, all the while accepting escalating operating costs," says Ostercamp.
As the transformation of the Canadian beef industry was consummated, BSE started to go global. The disease first appeared in the U.K. in the 1980s, creating political and trade chaos. Caused by a mysterious, durable protein clump called a prion, BSE is just one of several emerging brain-eating diseases that can afflict mammals. Young calves typically ingest the agent in rations of MBM. Amounts as small as one milligram of nerve tissue can be infectious. Depending on the amount of prions taken in, the disease usually takes four to five years to incubate before it perforates a cow's brain. According to a recent British study, one diseased cow, once rendered into cattle food, can theoretically infect another 45,000 cows.
Cattle cannibalism, driven by feed subsidies and an aggressive export strategy, created an epidemic in the U.K. that sent an estimated 1.6 million infected cows to the dinner table. Since then, approximately 180 people in the U.K. and continental Europe have died of variant Creutzfeldt-Jakob disease, a human form of mad cow. By 1988, scientists had established that the best way to stop the spread of BSE was to ban the feeding of rendered ruminants (the whole family of cud chewers, including sheep) to cattle and other animals. But before most countries took up the solution, the U.K.'s rendering industry dumped thousands of tonnes of contaminated MBM around the world—without any warning labels.
In 1997, industry analyst Jerry Bouma recognized that the prion genie was out of the bottle. Under international trade rules, the discovery of BSE in a country's cattle population would trigger the closure of its export markets for seven years. So Bouma knew that one mad cow would have catastrophic consequences for Canada's new beef-export industry. In a report written for the Alberta government on sustainable growth for the agrifood industry, he concluded that the "growing dependence of Alberta livestock markets on exports to the U.S.A." made the province extremely vulnerable to a BSE outbreak. Bouma argued "that it is not a case of if such an event will occur, it is when it will occur."
Bouma had no idea how dead-on his assessment was. After BSE appeared in an imported purebred cow in Alberta in 1993, Agriculture Canada ordered a report by the Animal Plant and Food Risk Analysis Network. The report noted that "the probability of entry of BSE-infected cattle" via 183 cows imported from the U.K. between 1982 and 1989 was "very high." It warned of the threat of homegrown BSE cases—trade embargoes would not be far behind. None of this information was ever presented to producers; the report wasn't released. "Canada's BSE crisis of 2003 was a disaster waiting to happen," says William Leiss, a pre-eminent risk analyst at the University of Ottawa who has written extensively about BSE.
Meanwhile, the Canadian Cattlemen's Association took the position that North America was well protected against BSE. In a 2001 news release, the CCA gave its proof: Canada had halted imports from the U.K. in 1989; it had banned the use of cattle bits in cattle feed in 1997, with a 100% compliance rate; and it had continuously monitored the national herd for BSE. (In Canada, virtually all testing is done on farms, not at packers.)
The CCA, however, neglected a few details. It failed to mention the lingering legacy of U.K. imports; likewise that the feed ban was only partial—some animal parts could still be used. As for the claim that there had been 100% compliance with the ban on cattle bits in feed, the federal government's own count put the compliance rate at only 65% as of 2000. Finally, the CCA did not acknowledge that Canada's rate of BSE surveillance testing was (in company with its U.S. trading partner) among the lowest in the world. In 2002, 3,377 animals were tested out of 3.6 million slaughtered—a rate of less than 0.001%.
Canada's new federal food watchdog, the Canadian Food Inspection Agency, took the same sanguine view of BSE as the cattlemen's group. Cobbled together with staff from four different departments in 1997, CFIA was given a contradictory mandate to protect food safety and "facilitate trade in all areas." The following year, Canada's Auditor-General said the new agency was understaffed and didn't have the resources to do its job. Yet in 2001, Penny Greenwood, a senior CFIA veterinarian, flatly told reporters that "Europe has the disease. We do not." Carl Block, chair of the animal health committee of the CCA, similarly declared that "The circumstances that led to BSE in Great Britain do not exist here."
In reality, the federal government merely kept reports on the risk of a BSE catastrophe in Canada under wraps. In 2000, Health Canada commissioned two toxicologists to produce a lengthy paper, "Risk Assessment of Transmissible Spongiform Encephalopathies in Canada." The meticulously detailed study concluded that "BSE could be incubating in Canadian cows and other livestock…and variant CJD could be incubating in the Canadian population…" It noted that Canada's feed ban still allowed cattle blood and fat to be fed to cattle and was largely voluntary. That same year, scientists with the European Union also concluded that "the rendering industry is apparently not able to ensure a significant reduction of incoming BSE-infectivity." Officials at CFIA and the CCA called the report "unfounded."
In early 2003, researchers with the CFIA published an assessment of risk factors related to BSE in a journal put out by the World Organization for Animal Health. Using a set of complicated mathematical models, the scientists calculated that 545 cattle from BSE-infected countries had entered Canada; that between three and 24 infected animals had been rendered and had entered the animal feed chain; that dairy cattle alone consumed 37,500 tonnes of MBM a year; and that "more MBM was consumed than was produced each year in Canada." The report concluded that the likelihood of BSE taking root in Canada was negligible, but if the disease did get established, "the consequences would be extreme."
Canada's first homegrown mad cow appeared in 2003: an Angus, between six and eight years of age, owned by a former catfish farmer from Mississippi who had settled in northern Alberta. A CCA press release called the discovery an "isolated incident" and added that Canadian beef was "safe to eat yesterday, it is safe to eat today and it will continue to be safe to eat tomorrow." Premier Ralph Klein dismissed the problem as "one stinking cow." But the trade fallout was immediate. Thirty-three countries, including the United States, closed their borders. Falling prices erased nearly $3 billion worth of equity overnight. Ostercamp's breeding heifers, which had sold for $1,500 in the fall of 2002, now fetched only half that. Cull cows, females that can't raise calves any more, fell from $850 to $150.
Several weeks into the crisis, Charlie Gracey, a cattle consultant who served as the CCA's executive vice-president from 1982 to 1990, called on the cattle industry to set up an expert scientific committee to wade through the complicated and ever- changing science on BSE. "We never did do that," says Gracey.
Ostercamp waited for industry leaders to take the bull by the horns and call for more BSE testing and independent slaughterhouse capacity. Ostercamp thought these changes would give farmers a way to opt out of the industrial food chain and offer the market value-added—that is, individually BSE-tested —beef. But industry leaders preferred to talk about the "harmonization of markets." In other words, the Canadian industry wouldn't push for standards or policies that differed from that of their key trading partner. Politicians and industry leaders alike adopted a two-sentence mantra: Canada's BSE polices are all "science-based." And the border is bound to be open soon.
Six months later, the border remained closed. At that point, Ostercamp says, that he just "got pissed off by the mismanagement." After the discovery of another Canadian-born mad cow (in Washington state), he posted a fiery essay on the internet. In "Behind the veil of science: How mishandling the BSE crisis could lead to the downfall of the Canadian beef industry," Ostercamp argued that the real problem wasn't BSE but the industry's glaring dependence on "Uncle Sam" and U.S.-owned packing plants. "We live in the shadow of the giant—when they shoot, we dance." He decried a lack of vision: Instead of fast-tracking mandatory BSE testing and seeding independent slaughterhouses, the government initiated another in a series of costly compensation programs for cattlemen.
The essay struck a chord among prairie producers. Ostercamp appeared on radio shows and fielded scores of phone calls in his kitchen. With the help of two neighbours, Doug Fraser and Grant Hirsche, and his own sister, Myrna Herringer, he started the Beef Initiative Group. "It took on a life of its own," recalls Herringer, who became BIG's administrator. "I was a stay-at-home mom one day and the next thing I knew I was travelling down the road with these cowboys."
Throughout 2004, Ostercamp took his message to Swift Current, Lethbridge, High River, Prince Albert and beyond—more than 24 communities in total. In Moose Jaw, 800 producers showed up for Ostercamp's talk. Many spoke of their debts and frustration with tears in their eyes. "Let BSE be the catalyst for change," said Ostercamp. At each meeting, he gauged the popularity of his message with a simple questionnaire. Out of approximately 1,600 respondents, 96% supported more BSE testing; 99% favoured greater market diversity; 99% supported more Canadian-owned packing plants; and 96% supported a check-off or levy on all future cattle sales to finance a producer-owned packing plant.
Ostercamp's proposal never envisioned the dismantling of Cargill or Tyson. All he wanted, he says, was fair competition. "Imagine the kind of real competition that could be realized ringside [at cattle auctions] if producers in Canada retained ownership of even 5% or 10% of each year's production and marketed them through their own slaughter plant or brokerage firm," he says. Such a share, Ostercamp argued, would force Cargill and Tyson to bid higher on the remaining cows, giving producers a decent price for their product.
In April, 2004, the standing Senate committee on agriculture and forestry confirmed the conclusions of Ostercamp's essay. "The closure of the U.S. border taught us a key lesson: The beef industry we developed in Canada is very vulnerable," it concluded. The report added that the first homegrown case of the disease illuminated two critical weaknesses: "huge dependence on cattle export and the concentration of its packing sector."
While the beef boys gave Ostercamp the cold shoulder, he found an ally in Yoshikazu Takeuchi, the then Edmonton-based consul general of Japan—a country that had weathered its own mad-cow crisis and that provided an important market for Canadian beef, taking 2% of production. The Japanese diplomat openly embraced BIG's ideas. Takeuchi even told Ostercamp that a growth market existed for Canadian-raised beef in Japan, provided the suppliers understood that food safety was paramount. In other words, rigorously BSE-tested beef wouldn't have any trouble finding Japanese buyers. The two men corresponded for more than a year: "Takeuchi cottoned onto us like a cocklebur," says Ostercamp.
Ostercamp thought the Canadian industry could learn a lot from Japan's response to its BSE crisis, which began with several cases in 2001. After a period of political turmoil and outright lying, the Japanese government admitted it had not protected its food supply. Politicians lost their jobs, a government veterinarian committed suicide and beef sales dropped by 50%. In response, the government instituted a complete feed ban, as well as 100% testing for all slaughtered beef. Since then, the screening system has rooted out two dozen mad cows, and the industry is thriving again. But Alberta Premier Ralph Klein dismissed Japan's system as "ridiculous" and "stupid."
Takeuchi also showed Ostercamp that oligopolies don't rule all the world's meat markets. The slaughter industry in Japan, which processes 1.3 million animals a year, boasts a diverse ownership. Out of a total of 220 plants in 2004, municipalities owned 100, producer associations 46 and private firms the remainder.
As Ostercamp waged his 2004 campaign, three scientists with Health Canada—Shiv Chopra, Gérard Lambert and Margaret Haydon—warned Ottawa that Canada's partial BSE feed ban was inadequate. The continued production of MBM from cattle for chicken and pigs simply ensured that prions could cross-contaminate feed mills and continue to recycle through the animal feed system. "The bottom line is that we should have banned all this material for animals at the beginning," says Haydon, who expects an increasing volume of BSE cases and "a smoldering human health problem too." Haydon and her colleagues, the most outspoken federal employees on the BSE risk, were fired by the government in July, 2004, even as CFIA considered reinforcing its feed ban. A case of wrongful dismissal is before the courts.
By the summer of 2004, Ostercamp and many other producers had concluded that U.S. packers were, in Ostercamp's words, "raping the industry." With the U.S. border closed, producers had a million animals with no market. Cargill and Tyson bought cattle at depressed prices, yet sold boxed beef at premium prices to retailers. After Brian Mason, an Alberta New Democrat MLA, released a confidential report by the Alberta Beef Industry Council showing that packer margins were up by 200%, the public uproar forced a reluctant Alberta government to ask its Auditor-General to investigate.
Three months later, Auditor-General Fred Dunn reported that the province's three principal packing firms (Cargill, Tyson and XL Foods) "benefited significantly from the impact of BSE on the price and slaughter volumes of cattle." The disaster boosted their average profits by an incredible 281% and, by virtue of the packers' own herds, even netted them at least $45 million in payments from a taxpayer-funded BSE recovery program. Says Ostercamp: "Isn't it ironic that two foreign packers operating on Canadian soil, taking captive beef from Canadian producers, selling it into their American market at a 50% to 70% markup, should also qualify to collect a subsidy cheque of somewhere between $40 and $100 million?" (It's not known how much the packers earned this way because they refused requests from federal auditors to open their books.) The Alberta auditor also noted that the government was totally unprepared for "how it might deal with the related impacts of an animal health disaster such as BSE...Alberta was not prepared in related areas such as trade, economic impact in the integrated beef industry, relations with other governments or recovery programs."
In the fall of 2004, BIG had nearly 1,000 members and a website as combative as Ostercamp's rhetoric. The group decided to take its key idea—a mandatory levy on each cow sale to help pay for a producer-owned slaughterhouse—to the annual meeting of the Alberta Beef Producers. Ostercamp was given a few minutes to explain the idea. Among the speakers responding was Darcy Davis, vice-president of ABP. "That sounds like a socialist idea from the province next door. We sure as hell don't need it here," he said. The idea was voted down. ABP also refused to support a feasibility study on a producer-owned plant.
BIG, however, had now attracted enough attention and clout—some 30 producer groups across the prairies were considering small packing plants with full BSE testing—that doors started to open in Ottawa. Ostercamp and several BIG supporters, including Charlie Gracey, met parliamentary secretary for agriculture Wayne Easter and CFIA's head veterinarian, Brian Evans.
And in February, 2005, Ostercamp landed a face-to-face with Agriculture Minister Andy Mitchell. The cattleman explained his case. Mitchell listened impassively and asked few questions. "We all knew then that it was going to go nowhere," recalls Myrna Herringer. "They tried to pacify us and hoped we'd go away," adds BIG member Doug Fraser, summarizing his experience in both Ottawa and Edmonton. The political will to put another boat in the water didn't exist.
The failure of Ostercamp's message—that domestic competition can revitalize Canada's beef industry by adding value at home—baffles the dean of Canada's cattle industry, Charlie Gracey. "Ostercamp had the balls to stand up when others just grumbled," says Gracey. "But industry basically brushed him off. And that surprised me. There hasn't been open critical debate about what solutions should be considered."
Analyst Jerry Bouma acknowledges that Ostercamp's basic analysis is sound. "But there is really no Canadian industry. We are now part of a North American industry. The two industries are Siamese twins. To change it requires major surgery and the dismantling of two major high-volume U.S. packing plants that Canadian politicians strongly supported. And that's a zero-sum game."
The mad cows keep coming. In the first half of 2006 alone, the Canadian Food Inpection Agency found five cases in British Columbia, Alberta and Manitoba. The Manitoba cow proved to be an atypical case, suggesting that more than just the U.K. strain of BSE has infiltrated the national herd of 16 million animals. Brian Evans of CFIA concedes that "we will find more cases," and that the industry is little more than "50% down the road" of its BSE crisis. Like many cattle producers, Ostercamp doesn't find that statement very reassuring. "That means I'm just 50% broke and have another 50% to lose."
The leaders of the cattle industry have trouble even mentioning Ostercamp's name. Canadian Cattlemen's Association president Hugh Lynch-Staunton refused an interview for this story. Arno Doerksen, chairman of the Canada Beef Export Federation, says that "it's no surprise that some people came up with all kinds of solutions." He didn't think producer-owned plants were a model to "feel good about" and added that only "strong business plans will survive." As for revamping BSE testing, "given where we are at, the industry has opted not to address that option." He praised the CFIA and conceded that more mad cows is "within the realm of what would be expected."
In the spring of 2005, John Tyson, the CEO of Tyson Foods, visited Brooks to announce the expansion of its plant's killing capacity. While producers struggled to acquire money for feasibility studies and business plans, Tyson increased its slaughter capacity from 3,800 cattle per day to 4,700.
Of the nearly 30 different producer-backed proposals mounted since 2004, barely a handful have opened shop. Most couldn't find funding or were unable to overcome challenges posed by CFIA, which is geared to big operations. After more than two years of wrangling, the Peace Country Tender Beef Coop in northern Alberta secured $4.5 million worth of funding (none of it from the province or Ottawa) for a 100-head-a-day operation. Political hostility to the plant was direct. One Alberta Tory MLA told chairman Neil Peacock that co-ops aren't a Conservative way of doing business. According to a co-op member, the MLA went on to say, "It is the duty of every cow-calf producer to get two or three jobs off the farm if they have to to continue providing cheap meat to the American companies." Peacock says the co-op will do its own BSE testing.
Saskatchewan is further ahead on this front. Before BSE came to Canada, more than 200 producers in the province banded together to launch a $20-million project including packing and processing plants. The Natural Valley Farms operation was focused on value-added products for export. "BSE just helped us along," says general manager Eric Kasko. He adds that the crisis "has taught the cattle industry not to put all of our eggs in one basket," and that it ought to have smaller-scale packers and direct-from-farmer sales to give customers actual faces to relate to. Manitoba took a page from BIG's book this year and implemented a $2-per-head levy to help build "Manitoba-owned" slaughter capacity.
But over all, BSE has left the industry more concentrated than ever. Cargill acquired Better Beef in Ontario last year. Now, with Tyson, it controls two-thirds of the national slaughter-ready beef market. "Not even the United States is that concentrated," says Charlie Gracey. But the Canadian Cattlemen's Association saluted the takeover: "This is good news, it shows Cargill's faith in the Canadian industry," it said on its website. The Competition Bureau, which reports to Industry Canada, approved the latest step in the concentration of the industry.
Last September, at the annual meeting of the Canada Beef Export Federation in Calgary, Ostercamp finally recognized the daunting nature of his mission. Established in 1989 to diversify export markets, the CBEF gets 29% of its funding from cattle producers, and the rest from government. When Jeff Cline, a senior Cargill executive who works in Wichita, Kansas, accepted the nomination for vice-chairman of the organization, Ostercamp stood up and protested, saying, "This will serve as a nice message to Americans, but what kind of message does it send to Canadian producers?" Cline was elected by acclamation.
Since then, Ostercamp has resigned himself to the conclusion that "the Canadian cattle industry at the family-farm level is adrift." He suspects that his ideas are a few years ahead of their time and that "this horse may race another day and win." Like many dissident producers, Ostercamp is now focusing entirely on making a living, "instead of making noise." He has started to sell parcels of land, a commodity that fetches premium prices thanks to the farm's proximity to booming Calgary.
And he now directly sells about 40 animals a year to Calgary consumers. He has the animals slaughtered at a local shop that ages them for 21 days. "Customers say it's better than Safeway." Every sale puts $1,400 in his hand—nearly $300 more than what the big packers would offer at the auction mart. "That's a microcosm of what the entire industry should be doing."
His opinion of the Canadian Food Inspection Agency remains grim: "It has been absolutely malfeasant in living up to its mandate. CFIA takes its directions from the U.S. Department of Agriculture and the American packers." Ostercamp is not the only critic of the agency. Canada's Auditor-General, Sheila Fraser, reported in 2004 that CFIA "does not report adequately, in a fair and reliable manner." And a $20-billion class-action suit by 100,000 producers against the federal government and feed manufacturer Ridley Inc. for gross negligence is now slowly working its way through provincial courts. The suit contends that the government knowingly allowed U.K.-imported cattle to contaminate the feed system and that Ridley should have stopped using MBM in Canadian cattle feed in 1996, when its parent company banned the practice in Australia. Ridley has denied the allegations and insists it complied with all applicable laws.
At CFIA, head veterinarian Evans says BSE has taught him that "science determines what is safe, but other factors determine what is acceptable." He notes that Canada has recovered its trade markets much faster than other countries with BSE. He acknowledges that U.S. and Canadian BSE policies are similar, but says he has never taken orders from his counterpart, Ron DeHaven, at the United States Department of Agriculture. "Industry is not our client," he says. "The public is our client." Recent cases of BSE in cattle born after the feed ban don't indicate a "system failure or overt non-compliance," he says, but a cross-contamination problem. "BSE doesn't disappear overnight."
Mike Mullins, assistant vice-president of public affairs for Cargill in Washington, DC, says CFIA has done a great job. He says the agency's handling of BSE "has only expanded the government's credibility." Concludes Mullins: "We think there is a bright future in the Canadian cattle industry and remain committed to it." Both Cargill and Tyson oppose BSE testing at packing plants as redundant exercises given that the most infectious materials, heads and spines, have been removed by that stage in the process.
Ostercamp points out that every country that experienced the first wave of the BSE crisis immediately restructured its food or agricultural ministries to clearly separate trade promotion from food safety, but Canada remains wedded to an agency with a dual mandate. Ostercamp argues that the CCA's and CFIA's opposition to market-driven BSE testing is "a ball and chain on the Canadian industry." Evans retorts that CFIA, unlike the U.S. Department of Agriculture, will allow independent BSE testing, provided plants have sound business and logistical plans.
Although the federal government proposed a more comprehensive ban in 2004, it didn't release any details until the summer of this year. The revised feed ban forbids cattle brain, eyes and spinal cord from entering animal food, pet food and fertilizers. Yet the ban still remains a shadow of European standards: It only applies to cattle 30 months of age or older and still doesn't require industry to process potentially infectious materials on dedicated feed lines. And it is still legal to export MBM. "I'm very concerned," says Neil Cashman of research network PrioNet Canada. He now calls BSE "an emergency in slow motion." The young age of recent BSE cases clearly shows "there were loopholes in the feed ban." In the U.S., the protectionist Ranchers-Cattlemen Action Legal Fund is now making the same case to U.S. politicians, hoping to close the border.
Back at his farm in Blackie, Ostercamp hedges his bets. In addition to selling off some of his land, he continues to run a small auto-body repair shop on his property. While combining a rye field in late August, he hears the news of another mad cow in Alberta, and sighs. "The hangover," he says, "always lasts twice as long as the party."
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