New approach at ABP

[Willowcreek]

Simply Canadian--["Second point, our friends from down south can stir the pot all they like and we have a choice to consider the source. My thoughts are simple, if I work for Safeway I sure don't go to IGA for industry information or strategies."]
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Yep- but I like these folks and hate to see them grow stagnant where they are...I told them before what was going to happen with the border- including the fact Congress blocked the reopening on OTM's...I also was right in my advice that the feelings of the US people was changing and that many of the old fogies in Congress would be gone....

Altho we haven't even seen the proposed rule yet for allowing in OTM's, I can tell you there will be a battle--since their is no "new" science to justify any change and the new Congress is much more anti "unfair trade" and pro "health concious" than the old one was...If Johanns and USDA keep pushing this "Final Rule" they will get knocked on their butts again just like so many of the Bush Administrations corporate influenced decisions are beginning to....Either in Congress or the Courts....

I see NO chance of live OTM's coming south- and little chance of OTM UNTESTED beef coming south...And since the USDA does not want tested beef in the US, to create a precedent- they will oppose that..

So my thoughts are that Canada's best chance will be to TEST ALL and go for the Japanese and Asian market...

And that would be fine with me- knowing that NO OTM SRM's could be coming into the US to possibly contaminate our feed, and further endanger our US cattle herd- and knowing that next year Congress will implement the M-COOL law....

[SimplyCanadian]

Willow - good for you and you sure hit the nail on the head! As an export country it is our responsibility to always encourage new markets and establish the specifications in our system to meet the standards.
The beef boys up here already found out how hard it was on them when they didn't have the US market (but keep in mind many Canadians forget fast, the Liberal Government still being a contender to run our country is testament to that) Even if we had a system that allowed us to establish inter-provincial trade in our own country would help. But until the children come together and play nice in the world market I do believe we will follow many of the want to be industry spokes people that seem to care more about the polotics than the "Good Business Practices" that will help the industry work better.

[rkaiser]

SimplyCanadian - I gotta warn you about slapping Old WillowCreek on the back. Sometimes it shakes up his head a bit and we don't need any more of that. He has this recurring dream that the USA does not have BSE and that somehow they are more trustworthy than Canada when it come to handling this 21st century plague. Careful on the Old boy, he may have dreams about Liberal governments in the USA holding back globalisation or something if you keep patting his ego.

As far as your advice to stay away from government, well taken, except that the government has seen fit to involve itself in this BSE testing issue on behalf of the holders of the pillow. In fact the issue has once again been silenced by those under one of those big pillows as our resolutions at the ABP AGM were squashed again today. This time my resolution only "asked" for the government to "ask" if any country would take BSE tested product and still the vote was a mind numbing "no". And right afterward the parade of election hopefuls vowed to fight to find and open new markets for Canadian Beef. Mind numbing is hardly the word.

Congratulations to Dr. Theisen and the gang of scientific experts at ABP who did a good job of placing fear in the minds of the delegates and making their opinions sound like facts. Our captive market will continue, and the margin operating feeders and packers are safe from anything that may cause change for the time being. Once again the primary producer is left holding the bag, and the delegates that we elected and took our resolutions forward to at the fall producer meetings let us all down. The process is incredible when resolutions are passed unanimously at numerous meetings and then squashed at the AGM. Representation of who folks???????

[blackjack]

...randy it sounds like you were there...where do the cow-calf guys go into hiding at when these votes are taken...is there a intimidation factor when voting or is it in private...i do wonder why they feel the need to look after the feedlots and the packers ...maybe they're all swath grazing expertise now and are making piles of dough to share...

[rkaiser]

Cam, Doug, and I sat at the back, so it was easy to see the raised hands. Some abstained but to tell the truth blackjack, I think most that voted against the resolution were somehow convinced that it could be troublesome????

For example -this statement lifted off the "BSE backgrounder" says one thing to me but obviously something else to others.

"Consumer confidence in beef remains high in Canada. Quarterly polling by Ipsos Reid consistently finds that 88% of Canadian consumers give beef a safety rating of 5 or greater on a scale of 1 to 10." Is 88% of the population giving an approval rating of 5 or more out of 10 a good thing? I say we could very well up these numbers if Canadian consumers ever asked for testing.

There was a fair bit of concern over loosing Canadian consumer confidence. In other words - you cow calf guys just shut up and eat the losses for this BSEconomics. More of the old sound science BS as well blackjack. What a bunch of crap. The OTM/UTM rules have nothing to do with science and a lot to do with unproven statistics. Besides - what the hell do they think we want to test the bovines with - a stick in the eye procedure.

Every argument that the opposing speakers had was easily delt with but time was not on the side of the BSE testing backers. It is an intimidating circus as well blackjack with confidence exhuming from the old boys club, and naivety on the part of many.

[rkaiser]

Sorry for ranting - but I'd like to make a couple more points on the consumer confidence issue - just for some of those closet agriville readers who we know are out there.

Beef Information Center brags of how we have to thank the Canadian consumer for helping get rid of OTM beef in volumes, and in fact 20% more OTM beef in the last year. Wow. What an accomplishment. I wonder how the Canadian consumer would feel if he/she were more informed about how this producer funded group is not helping the Canadian producer with their efforts, but instead the multinational packers who are riding the OTM gravy train on the backs of those producers. Sure we want to keep that consumer eating beef - maybe even more if tested in my book - but how about some transparency. How about some honesty about sending our best product to the USA while feeding our own the second best.

The fear about losing consumer confidence is as unfounded as any other speculation brought out in today's meeting, but it obviously was enough to convince those sitting on the fence, or those who don't like Cam Ostercamp's forward, and sometimes offensive approach to vote against "asking for testing potential".

[blackjack]

...well for the life me i cannot understand how come they drive age verification down our throats and that it will open markets...but deny anyone that could maybe open new markets through testing...it must truly be frustrating for yourself and the bigc boys watching the shananigans that are taking place ...i can imagine how the guy from acme was exhilarated that johanns will open the border this next year for the otm's...then what...a pile more red tape...

[InAHurry]

rkaiser
I counted 24 question marks in the article you lead off this thread with. I'm from a bordering province but ABP's resolutions, decisions, etc., in essence, effect all Canadian producers.

There were some thought provoking statements and questions in that article. Many of these questions can't be answered unless quite a few more are asked and answered.

I don't intend to speak for everyone or anyone but I feel there are to many unknowns at this point to give a definite yes or a definite no to testing. Be it, OTM only or all; UTM and OTM. If we were to test OTM, would the voluntary suddenly become mandatory (UTM included) by our importing customers?

My thought process is stalled because those questions remain unanswered. Can you provide the answers to those questions Randy? I don't mean to limit this to just Randy - anyone that has answers or opinions, please comment.

One last thing - what happened with the OTM grading discussion/resolution?

[rkaiser]

InAHurry - The grading resolutions were all passed. Might be a little tough though when Cargill and Tyson say say to hell with providing part of our cheque to the producer and drop back from 70% line production down to 60%. Don't get me wrong, I brought one of the resolutions forward myself, and feel strong about an attempt to pay the producer, however this will be an interesting process to say the least.

As far as answering you questions IAH - I guess you are right about the 24 in the ABP backgrounder. I would like to start by saying that the question raised today only talked of asking potential customers IF they would accept BSE tested product. Couldn't even get that through, let alone ask any of the other 24 questions.

INAHurry asks"Be it, OTM only or all; UTM and OTM. If we were to test OTM, would the voluntary suddenly become mandatory (UTM included) by our importing customers?"

The focus of Beef Initiative Group has always been the OTM cattle. Would voluntary become mandatory? - who knows - but truly who cares. It would cost far less than the losses being forced on the Canadian cow/calf producer.If you read the WTO rules supposedly in place according to Peter Kuperis in the early part of the document, you will see that countries are only allowed to ask for rules similar to what they have in place. Of course - everything about BSEconomics is dependent on changing rules, in most cases, and particularly in the US/Canada model; changes to suit the multinational packers.

We feel that Japan's rules fit our need to export OTM beef, and were told again today by a potential exporter that if he could only test the tongues of OTM cattle, he could pay the testing bill, and make a tidy profit. Canada does not need to export a hell of a pile of product to stop the captive supply enjoyed by the packers in Canada. One importing country like Japan could more than eat all the product we need to accomplish this task.

[rkaiser]

Sorry for the long posts folks but here is a reponse from a member of the Western Stock Growers to the ABP BSE testing backgrounder.

I know you're In A Hurry, InAHurry, but it might be worth your time to read. I am sorry that his response could not be in color or something, but I'm sure you'll figure out his points.

Testing and Market Access

Regaining access to foreign markets involves government level negotiations on regulations and import protocols. Industry in both the exporting and importing countries can add input to the process but in the end governments regulate imports and the final decisions on import regulations will rest with the importing country government and the conclusion of successful negotiations with the exporting country’s government.
According to Foreign Affairs and International Trade Canada, no nation has requested that Canada test for BSE as a pre-condition of gaining access. Has Canada offered any nation testing to regain access?
The World Organization for Animal Health (OIE) does not recommend testing as a market access condition or as a food safety measure (http://www.oie.int/eng/normes/mcode/en_chapitre_2.3.13.htm).
According to Peter Kuperis, Senior Trade Policy Analyst with AAFRD, under World Trade Organization (WTO) rules, imported and domestically produced “like products” must receive the same treatment. Given this requirement, a nation would risk breaking WTO rules if it required testing of imported beef from only one BSE-affected country. If the importing country has found BSE in its domestic herd, it would also need to test its own beef before imposing testing on imported beef. Japan’s current import regulations comply with these general WTO rules. These general rules also imply that Japan will either need to change its domestic policy or else restrict imports of O20M beef to non BSE affected countries and to BSE affected countries who test as per Japanese domestic requirements.
Nations may have one regulation for all imported beef or they may have different regulations for different countries according to their disease status. According to Peter Kuperis, an offer by Canada to allow voluntary testing would be difficult for an importing country to respond to. Under what conditions will it allow entry of this voluntarily tested Canadian beef?
South Korea is a good example. South Korea currently bans all imports of all types of beef from Canada. If Canada requested access for OTM beef from plants doing voluntary BSE testing how should South Korea respond? In order to allow such beef in, the ban on all imports from Canada must be lifted or changed. Should Korea only lift it for tested OTM beef, in essence imposing testing on all Canadian OTM exports to South Korea? How would South Korea justify imposing testing on Canada but not on other BSE affected trading partners? Or should South Korea impose testing on OTM beef from all BSE affected countries? Should it lift the ban on all Canadian OTM beef? Do we really think we will be the only BSE affected country to offer testing for market access in the long run? Are we the only country offering age verification or traceback capabilities? No.
Proponents of voluntary testing point out that until the question is asked no one really knows how importing country authorities will respond.
Using testing as a “bargaining chip” in market access would be a substantial change from Canada’s approach of relying on international scientific consensus and World Organization for Animal Health (OIE) guidelines to establish import protocols. That would be similar to the deviation from international scientific consensus in agreeing to the under 20 month rule as opposed to 30 months.
Canada has agreed to protocols for exporting hormone free beef to the European Union (EU) even though the WTO has ruled that the EU’s ban on beef from hormone treated cattle violates international trade rules.
The Canadian Food Inspection Agency (CFIA) does not have an official policy regarding voluntary testing. According to Darcy Undseth, Veterinary Program Specialist-BSE, of the CFIA, developing a policy on voluntary testing would involve Agriculture and Agri-Food Canada, Health Canada and Provincial governments. The CFIA has discussed testing with the Beef Value Chain Roundtable (a beef industry/Federal Government advisory group) but no consensus has been developed, except for the use of testing in the event of a catastrophic market loss. How does the round table define catastrophic loss? Is it a catastrophic loss for the industry as a whole? What if one sector of the industry must bear the entire loss? Should that sector then be the ones defining catastrophic loss? What if one sector’s loss is another sector’s gain and both sectors are represented, albeit unevenly, on the round table?

Questions

If Canada agrees to voluntary testing for one country will other nations demand it? And will it be less or more cost effective than some of the existing trade requirements that have been imposed by those countries post-BSE?
Would offering voluntary testing as a way to improve or expand market access set a new and costly standard (e.g. Canadian beef must be tested while U.S. beef is not)? Perhaps, but to date Cdn consumers continue to purchase Cdn OTM beef in spite of the fact that almost all other nations refuse to purchase it.
Would allowing voluntary testing affect progress on the rule to allow OTM beef and cattle into the U.S.? What other factors may affect progress on this rule? R-CALF, Democrat control of House and Senate? What does the rule say?
How will test results from voluntary plant testing be used in our BSE surveillance program? Apply them in the appropriate OIE risk category – i.e. healthy, no nervous signs
Who would announce a positive result from a testing plant? Who will certify the accuracy and reliability of plant tests? I would suggest that the plants be required to contact CFIA in the event of non-conclusive or positive rapid tests, and that CFIA then do confirmatory testing. CFIA currently certifies the accuracy and reliability of dentition assessments even though they don’t directly do the dentition assessments. A similar situation could be established for BSE tests.
Would allowing voluntary testing raise interest among importers and consumers in some markets and increase pressure on their governments to open to Canadian beef? It already has raised interest (executive Director of Japan Meat Traders Association). Next step is probably for Canadian gov’t to introduce the subject in negotiations with those countries most likely to require testing and at that point consumers and importers may be able to exert influence.

Voluntary Testing as a Market Strategy

Any discussion of a marketing strategy will be speculative since no one can know for certain how consumers or markets will react until the strategy is tried. There are, however, some facts about testing that can help this discussion.

According to Tony Martinez, President of Rancher’s Beef, the cost to test for BSE would be approximately $20-$25 per head based on 800 tests per day. This estimate covers all costs for the test strips, staff and the container lab needed to conduct the tests. This estimate does not include possible segregation and tracking costs that may result from any CFIA testing protocol.
Rancher’s Beef has expressed interest in voluntary testing and is prepared to pursue it as a marketing strategy. Rancher’s Beef did not have success in persuading governments (which governments?)to allow voluntary testing. Rancher’s Beef is still interested in testing as a business opportunity but is not prepared to further pursue the issue with (which) governments at this time.
Rancher’s Beef sees voluntary testing of non-age verified animals as a way to add value to the product and offset the increased inspection costs associated with SRM removal.
Rancher’s Beef has strong indications form Japanese import companies that they would buy tested Canadian beef it was available but the Japanese government has not made a formal request for testing to any exporting country.
Japanese industry association officials have indicated to the Canada Beef Export Federation that Canada is not reliably supplying beef from under 20 month animals and that the beef from these animals does not have the marbling required by Japanese consumers. These same Japanese industry association officials also indicated that voluntary BSE testing of over 21 month animals (and animals whose age can not be verified) would qualify a much larger number of carcasses for the Japanese market and would increase the saleability/value of this product in Japan. A similar message was delivered in August 2006 by the Executive Director of the Japan Meat Traders' Association at an industry meeting in Alberta.
Other products have developed niche markets using health or certification attributes that are not required by government (e.g. organic food, natural beef) and are not based on international scientific consensus or OIE guidelines.
Foreign Affairs and International Trade Canada is not aware of any country that has used voluntary testing as a market access or product differentiation strategy. Being the first country to do so may offer a competitive advantage.
Prior to 2003, most of Canada’s OTM beef was exported to the United States. According to Statistics Canada, 90% of Canadian beef exports in 2002 went to the U.S. This is likely to be the case again if and when the U.S. opens to OTM beef and cattle (depending on the conditions attached to such opening). (http://www.statcan.ca/english/research/11-621-MIE/11-621-MIE2003005.htm).
It is reasonable to assume that Australian 85 % lean beef would be the main competitor/substitute for BSE-tested Canadian beef (OTM) in many offshore markets. Since May 2003, the price of Australian lean beef in Canada has ranged from $1.37/lb to $1.56/lb. The current price is $1.45/lb which is similar to the current 85% lean Canadian product price (Source; CanFax). Of course the Australian price of 85% lean is the same in Canada as the price of Canadian 85% lean in Canada. Canada’s OTM (i.e.85%lean) is locked in Canada and the supply of live animals exceeds the capacity of the market to absorb it. Thus we are operating at reduced culling rates post BSE. It is the domestic price that is limiting imports. What is the price of Australian 85% lean in Japan, and is there sufficient margin between that and Canada’s domestic price to cover basis and testing costs?
Canada has developed an animal identification system that will allow it to use age verification and other product tracking capabilities to differentiate its beef. The same identification system could be assumed to be a prerequisite for any country entertaining thoughts of testing for market access

Questions?

How much extra value would voluntary testing add to OTM beef? This needs to be investigated.
Would the number of plants currently interested in voluntary testing slaughter enough cattle to affect general price levels? The fat cattle set aside program demonstrated the importance of having an additional bidder in the system – even on limited numbers of cattle.
Japan appears to be the only market being considered for voluntary testing. Is this market lucrative enough to justify the potential risks of testing? This needs to be investigated.

If voluntary BSE testing is a successful strategy how easily can our competitors adopt it? As mentioned above they would probably require a national ID system first.

Voluntary Testing and Public Perception

Consumer confidence in beef remains high in Canada. Quarterly polling by Ipsos Reid consistently finds that 88% of Canadian consumers give beef a safety rating of 5 or greater on a scale of 1 to 10.
Government and industry have consistently stated that Canada’s BSE safeguards (SRM removal, feed ban, surveillance) result in a safe product for consumers. These conditions will continue to exist even in the presence of voluntary testing.
The only countries that have used extensive BSE testing, outside of a surveillance program, are the EU and Japan. In both cases authorities stated that the testing was done to restore lost consumer confidence. Japan has stopped requiring mandatory testing of slaughter animals under 20 months of age. Either we are dealing with a trade dispute, or we are dealing with a loss of consumer confidence in key markets. It is possible that we are dealing with a trade dispute where the excuse used is consumer confidence. In either of the latter two cases we should address the consumer confidence issue. Ion the first case we should bring action under NAFTA / WTO.

Questions

How would Canadians react to hearing that plants are testing for export markets but aren’t required to test for the domestic market? Canadian consumers can read daily about the exclusion of OTM and O20M beef from certain international markets yet according to BIC they have increased their consumption of OTM beef. Why would this be different?
Will plants testing for export markets also advertise and sell tested beef domestically? How would this affect the domestic market? It is possible that it could expand the domestic market.
Would testing only certain cattle (e.g. OTM) create the impression that beef from this particular class of cattle is less safe? Or that non-tested OTM is less safe? The differentiation between OTM and UTM has been public knowledge since about July 2003 when the US reopened to boneless UTM. Again, according to BIC OTM consumption has increased since that time (in Canada).
How will major domestic UTM beef buyers react? Predictably – they will handle whatever gives them the most net profit.