Voluntary Report - public distribution

**Date:** 3/4/2005

**GAIN Report Number:** CA5015

CA5015

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 9**

**2005**

**Approved by:**

![](media/image1.wmf)Gary Groves

U.S. Embassy

**Prepared by:**

Christina Patterson and George Myles

**Report Highlights:**

\* U.S. Judge Grants Temporary Injunction on Canadian Cattle Rule \*
Cattle Rule Delay Could Mean More Financial Assistance \* Canadian
Reaction to Cattle Rule Injunction \* Feed Ban Review Released \* Sale
of Timberland Hits a Snag \* Fewer Acres of Corn Forecast in Ontario \*
Could the End of the Softwood Lumber Dispute be in Sight? \* Pine Beetle
has Lumber Industry Adapting

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Ottawa \[CA1\]

\[CA\]

This Week in Canadian Agriculture is a weekly review of Canadian
agricultural industry developments of interest to the U.S. agricultural
community. The issues summarized in this report cover a wide range of
subject matter obtained from Canadian press reports, government press
releases, and host country agricultural officials and representatives.

*Disclaimer*: Any press report summaries in this report are included to
bring U.S. readership closer to the pulse of Canadian developments in
agriculture. In no way do the views and opinions of these sources
reflect USDA's, the U.S. Embassy's, or any other U.S. Government
agency's point of view or official policy.

**U.S. JUDGE GRANTS TEMPORARY INJUNCTION ON CANADIAN CATTLE RULE:** On
March 2, 2005 a judge in the U.S. District Court For The District Of
Montana Billings Division granted a preliminary injunction preventing
the implementation of the U.S. minimal-risk rule that would have allowed
a resumption of U.S. imports of live cattle from Canada. The industry
group R-CALF United Stockgrowers of America had asked District Court
Judge Richard Cebull for an injunction preventing the USDA from easing
import restrictions, slated to go into effect Monday March 7, 2005.
Secretary Johanns expressed his disappointment but said that USDA
remains confident that the requirements of the minimal-risk rule, in
combination with the animal and public health measures already in place
in the United States and Canada, provide the utmost protection to both
U.S. consumers and livestock. He said that the ruling is not a
reflection on the substance of the minimal-risk rule, but rather a
procedural delay while the judge considers the merits of the case. In a
related development, by a 52-46 margin, the U.S. Senate approved a
resolution to strike down the USDA rule, which could result in further
procedural delays depending on the outcome of the litigation.

**CATTLE RULE DELAY COULD MEAN MORE FINANCIAL ASSISTANCE:** According to
a national news report, Canada's Finance Minister Ralph Goodale
reportedly said the government of Canada is weighing the need for
increasing the emergency funding for the cattle industry in the wake of
the U.S. Federal Court temporary injunction on the USDA rule that would
have allowed resumption of trade in live cattle with Canada. To date,
federal and provincial governments have announced program funding in the
neighborhood of C\$1.5 billion (\$1.2 billion) to help offset the
financial losses associated with the discovery of BSE in Canada in May
2003 and the subsequent loss or reduction of U.S. and international
markets for Canadian cattle and beef and other ruminants.

**CANADIAN REACTION TO CATTLE RULE INJUNCTION**:

**Canadian Agriculture Minister Andy Mitchell:** Mitchell told reporters
after the decision was announced that he was disappointed but said his
government would continue to fight on behalf of cattle producers. He
said that Canada and the United States have the same BSE risk status,
and have similar safeguards in place to protect human health, food
safety and animal health. The interests of consumers and producers on
both sides of the border would be served by reintegrating our ruminant
and meat markets to the fullest extent possible based on science. The
science indicates that the border should be reopened. In addition, he
said that he appreciates assurances from USDA that it will continue to
work to ensure that science-based decision-making prevails.

**The Canadian Cattlemen's Association:** The Canadian Cattlemen's
Association stated that it remains convinced of the merits of the United
States Department of Agriculture (USDA) rule to re-open the border to
live cattle and an expanded list of beef products and that today's
decision in the R-CALF vs. USDA law suit is a temporary setback.

**An Alberta Feedlot owner:** In a national television interview,
Lethbridge Alberta feedlot operator Rick Paskal said that the setback
comes at the behest of a relatively small lobby group (R-Calf), but
believes the judge (Cebull) heard only their side. \"He had made his
mind up that this border wasn\'t going to open \-- well before the
courtroom drama. He\'s a friend of the people of Montana, he\'s a friend
of R-CALF and a friend of the livestock industry in Montana, so this
deal was done a long time ago."

**FEED BAN REVIEW RELEASED:** This week, the Canadian Food Inspection
Agency (CFIA) released its report on the effectiveness of Canada's 1997
feed ban. The review found that compliance with the feed ban's
requirements at rendering facilities and feed mills was high. On
average, 95% of feed mills and 93% of renderers inspected over the past
three years were either fully compliant or reported only minor
non-compliance issues, such as documentation requirements. Canada's
current feed ban prohibits feeding most mammalian proteins to ruminant
animals, such as cattle, sheep and goats. A regulatory proposal was
published in December 2004 to prohibit the use of specified risk
material (SRM) in animal feeds, including pet food and in fertilizers.
The comment period ended about ten days ago. A recent USDA review of
Canadian feed controls also concluded that Canada's feed ban has
significantly reduced the potential spread of BSE through the animal
feed system. For more information, visit the CFIA webpage at
www.inspection.gc.ca or see the USDA press release of Feb 25, 2005
entitled the Technical Assessment of the Implementation of the Canadian
Feed Ban at www.usda.gov

**SALE OF TIMBERLAND HITS A SNAG**: As previously reported in TWICA
CA5006, lumber giant Weyerhaeuser Co. has been negotiating to sell seven
lumber manufacturing plants and 260,000 hectares of private timberland
to Brascan Corp for roughly \$1.2 billion (CDN). A recent development
may block the sale. The Hupacasath First Nation is going to court to
prevent the sale of 70,300 hectares of the private land included in the
package deal. The first nation group wants to stop the sale until the
B.C. Supreme Court renders a decision on a dispute between the
Hupacasath and the provincial government. The dispute between the
government and the first nation group revolves around the provincial
government's decision to lift restrictions that would require
Weyerhaeuser to consult with the first nation before the lands are
developed.

**FEWER ACRES OF CORN FORECAST IN ONTARIO**: According to a recent poll
of seed company representatives, seed sales to date are indicating that
corn acreage in Ontario will be down in 2005. The indication is that
corn will be replaced by increased planting of soybeans. Ontario corn
producers faced a trying year in 2004, which saw delays in planting due
to a wet spring, poor prices and lack of storage space for the corn
crop, which did better than expected. End users of Ontario corn brought
in large quantities of U.S. corn to fill what they perceived as a corn
shortage. This, combined with the larger than expected crop and the
large feed wheat supplies on the Prairies helped drive the price of corn
down. The forecast for 2005 expects producers growing corn for feed to
maintain their acreage, but cash crop is expected to swing towards
soybeans. The reduction in corn acreage will result in lower production,
providing an opportunity for increased corn imports from the U.S., as
production of ethanol and demand for corn in the province is set to
increase.

**COULD THE END OF THE SOFTWOOD LUMBER DISPUTE BE IN SIGHT?**: According
to the Canadian Press, the federal government is floating the outline of
a proposed five-year deal to settle the ongoing and contentious softwood
lumber dispute between Canada and the United States. As previously
reported in TWICA CA5010, part of the proposal would include the
imposition of a export tax by the government of Canada on most lumber
headed to U.S. markets in return for Washington canceling the softwood
lumber duties, which have been in place since May 2002. The tax would be
lifted once the U.S. Department of Commerce is satisfied that the
provinces have implemented changes to their forestry policies to make
them more market-based. The proposal also requires the U.S. to refund
more than \$4 billion that has been collected in countervailing and
anti-dumping duties, plus interest. In addition, the U.S. Department of
Commerce would have to agree to not implement future anti-dumping or
countervailing duty investigations and pledge to block American lumber
producers from doing so. The proposal also includes a dispute-resolution
mechanism for which there would be no appeal. Finally, the proposed
agreement would be renewable. The proposal came as a result of
discussions between federal and provincial officials. The federal
government has repeatedly stated that it was taking a two-pronged
approach to settling the ongoing dispute, seeking a negotiated
settlement, while awaiting the results of the NAFTA and WTO litigations.
Most recently the Canadian government has added a third approach,
retaliation on a range of U.S. imports, with authority from the WTO. The
proposed agreement does not mean the government of Canada is planning on
abandoning the other two approaches to settling the dispute.

**PINE BEETLE HAS LUMBER INDUSTRY ADAPTING**: According to the *Globe
and Mail,* B.C.'s lumber industry is finding ways to adapt and profit
from the devastation caused by the pine beetle. The massive infestation
by the beetle is forcing the province to loosen harvesting restrictions
so millions of trees can be processed before they lose their commercial
value. Companies like Canfor Corp. (see TWICA CA5009) and West Fraser
Timber Co. Ltd., are investing hundreds of millions of dollars to expand
the capacity of their sawmills to process the wood damaged by the
beetle. In helping to deal with the infestation, new timber harvesting
licenses will soon be offered to applicants willing to manufacturer
commodities that would not be subject to U.S. duties. For example,
Ainsworth Lumber Co. Ltd., is a rumored bidder for licenses that would
enable it to manufacture oriented strandboard. Others are looking at
taking advantage of the blue stained beetle-infested wood by selling
furniture under the Denim Pine brand. Some of the beetle wood is
expected to produce biomass for use as a source of energy. Despite the
positive spin-offs and economic boom that is occurring as a result of
the pine beetle infestation, the long-term future of the lumber area hit
hardest by the infestation is not positive. In about 15 years the timber
supply is expected to be dramatically reduced, as up to 80 percent of
the mature Lodgepole pine trees in B.C. are expected to die as a result
of the infestation. This could reduce the timber supply in central B.C.
by up to 40 percent. But until that time, the lumber industry will take
full advantage of the economic boom the beetle has created.

# Find FAS on the World Wide Web: 

Visit our headquarters' home page at
[http://www.fas.usda.gov](http://www.fas.usda.gov/) for a complete
listing of FAS' worldwide agricultural reporting.

# 

# Recent Reports from FAS/Ottawa: 

+----------------+---------------------------------------+------------+
| Report Number  | Title of Report                       | Date       |
+----------------+---------------------------------------+------------+
| ## CA5013      | This Week in Canadian Agriculture,    | 2/25/2005  |
|                | Issue 8                               |            |
+----------------+---------------------------------------+------------+
| ## CA5011      | This Week in Canadian Agriculture,    | 2/18/2005  |
|                | Issue 7                               |            |
+----------------+---------------------------------------+------------+
| ## CA5009      | This Week in Canadian Agriculture,    | 2/11/2005  |
|                | Issue 6                               |            |
+----------------+---------------------------------------+------------+
| ## CA5007      | GOC Proposes Expanded Access for U.S. | 2/2/2005   |
|                | Cattle and Beef                       |            |
+----------------+---------------------------------------+------------+
| ## CA5006      | This Week in Canadian Agriculture,    | 2/4/2005   |
|                | Issue 5                               |            |
+----------------+---------------------------------------+------------+
| ## CA5005      | This Week in Canadian Agriculture,    | 1/28/2005  |
|                | Issue 4                               |            |
+----------------+---------------------------------------+------------+
| **CA5004**     | Livestock Semi-Annual                 | 1/31/2005  |
+----------------+---------------------------------------+------------+

VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
U.S. Embassy homepage. To view the website, log onto
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FAS/Ottawa office can be reached via e-mail at: <agottawa@usda.gov>