Canadian producers watch U.S. farm bill as new meat labelling rules kick in

Cattle and hog producers already struggling because of meat labelling rules in the United States are bracing for the prospect of more financial pain.

The latest version of the U.S. country-of-origin labelling (COOL) policy is to come into effect Saturday with requirements that producers say will put more of a squeeze on Canadians who export livestock.

They worry that if the U.S. government doesn’t shelve or soften the rules — and soon — prices will fall, which could force more producers out of business.

“We need COOL to be gone and we need it to be gone sooner than later,” said Rick Bergmann, a hog farmer near Steinbach, Man. “It has really stripped away any meat on the bone that we had as far as assets.”

The new rules require meat products to be labelled to show where the animal was born, raised and slaughtered. U.S. companies won’t be allowed to package together meat from animals of different countries.

The policy was approved by the U.S. Department of Agriculture in May, but put on hold for six months.

Some U.S. companies have said they can’t afford to sort, label and store meat from Canada differently than meat from domestic animals.

The Canadian Pork Council said the first version of the policy introduced in 2008 ravaged the hog industry and cost producers more than $1.9 billion as American firms stopped buying older, slaughter-ready pigs from Canada.

Martin Rice, the council’s executive director, said the latest version will prompt some U.S. companies to stop buying baby pigs from Canada.

“This new COOL rule will further lessen the number of producers who can sell into the United States,” said Rice.

“It would appear that we are going to lose, or we have already perhaps lost, another three or four U.S. plants that formerly were buying some Canadian-born animals and no longer will do so.”

Beef producers are already feeling the sting of the new labelling rules.

Last month, Tyson Foods Inc., one of the largest buyers of Canadian cattle in the U.S., said it would stop buying from feedlots north of the border because of the higher cost of complying with the regulations.

John Masswohl of the Canadian Cattlemen’s Association said there’s hope the U.S. may amend the policy in a farm bill that is before lawmakers in Washington, D.C.

“A lot of people are really holding their breath and hoping that maybe in this U.S. farm bill there will be some kind of a fix here in the next couple of weeks,” Masswohl said.

“If it doesn’t, I think that there is a lot of infrastructure on the U.S. side of the industry that is going to go out of business.”

Masswohl said that could lead to a chain-reaction in the beef industry.

If U.S. plants that slaughter Canadian cattle close, then U.S. feedlots that supply those plants could close, which would mean Canadian producers would have fewer places to sell their animals.

That would mean less competition and lower prices.

Federal Agriculture Minister Gerry Ritz has been arguing that the labelling policy hurts producers and meat processors on both sides of the border.

On Thursday, Ritz met with members of the U.S. Congress and U.S. Secretary of Agriculture Tom Vilsack in Washington.

Ritz said there is growing support for Canada’s position in the U.S. capital, but the chances of fixing COOL in the American farm bill will be difficult.

“That is a 50-50 proposition at best. There are major problems here trying to get anything through Congress at this level,” Ritz said.

“We welcome the ability to make our case to growing numbers of senators and representatives on all sides of the political spectrum here, but at the end of the day the system here is deadlocked on so many issues — as to whether or not there is a chance for it to move forward, it is anybody’s guess.”

Last June, Ritz announced that Canada would challenge the labelling policy at the World Trade Organization and seek permission to retaliate against the U.S. with trade sanctions worth $1.1 billion.

But it is a slow process.

Ottawa has submitted written arguments to the trade organization. There is an oral hearing set for February. A preliminary decision is expected by spring. A final decision isn’t expected until late next year or early 2015.

Ritz was adamant Thursday that Canada will strike back if it needs to.

“Canada will not let politeness stand in the way of achieving our goal to end COOL once and for all,” he said.

“If there is no fix to COOL in the farm bill, then we stand ready to take retaliatory actions. We have our list of potential targeted products, and it includes incoming American beef and pork.”

In the meantime, producers and groups such as the Canadian Cattlemen’s Association are watching political developments in Washington closely.

“Either we are in for some good news of a fix by the end of this calendar year or some companies in the States are going to make these decisions about their packing plants,” Masswohl said.

“If we don’t get that good news … by the end of the year, that first quarter of 2014 you are going to see some negative decisions being made.”