Voluntary Report - public distribution

**Date:** 2/11/2005

**GAIN Report Number:** CA5009

CA5009

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 6**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Christina Patterson and George Myles

**Report Highlights:**

\* Canada/BSE Border Update \* U.S. Potato Industry Calls For Removal of
Canadian Trade Barrier \* Record U.S. Agricultural Exports to Canada in
2004 \* Softwood Lumber Dispute Rages On \* Canfor Announces Mill
Expansion \* Canadian Wheat Board Releases Annual Report

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.

**CANADA/BSE BORDER UPDATE:** U.S. Agriculture Secretary Mike Johanns
met with his counterpart from Canada, Andy Mitchell in Washington this
week to discuss a number of issues including BSE control measures and
the USDA's minimal risk rule. Secretary Johanns told Mitchell that the
U.S. will lift its ban on live Canadian cattle less than 30 months of
age on March 7^th^. However, Johanns said that the incomplete
investigations into the recent finds of BSE in Canada make it prudent to
delay the effective date for allowing imports of meat from animals 30
months and over. U.S. meat packers and the National Cattlemen's Beef
Association lobbied against the resumption of imports from Canada of
beef products from cattle over 30 months of age. They argued that the
U.S. packing industry would be disadvantaged under a scenario that
denied them access to older Canadian animals while Canadian packers
slaughtered those cattle and sold the meat into the U.S. market. It is
expected that a future USDA rule will regulate the import of Canadian
live cattle 30 months and older and their meat products.

**U.S. POTATO INDUSTRY CALLS FOR REMOVAL OF CANADIAN TRADE BARRIER:** In
a press release issued this week, the National Potato Council (NPC) says
the time is right for Canada to abandon a longstanding trade barrier
that restricts international and interprovincial trade, and thwarts
attempts by the North American potato industry to develop mutually
beneficial harmonized trade rules. The issue centers on Canada's bulk
waiver rule, a packaging regulation that severely restricts the U.S.
potato industry's access to the Canadian processing market for fresh
potatoes because of a regulatory requirement for the Canadian government
to grant a special exemption for imported bulk potato shipments.
According to the NPC, the bulk shipment restrictions reduce the
efficiency and competitiveness of the entire North American potato
processing industry. Over the past year, Canada has reviewed the bulk
restriction regulation with its own produce and processing industries
and the NPC feels that movement on the issue would advance other
mutually beneficial packaging and quality issues in two-way potato trade
between the United States and Canada. *Post Comment: Canada's bulk
waiver regulation severely limited the U.S. potato grower's ability to
supply fresh potatoes to processors in Canada during the rapid expansion
phase of the Canadian potato processing industry of the 1990s and early
2000s. As a result, U.S. potato growers are only minor suppliers to a
Canadian processing industry that last year exported \$557 million worth
of frozen potato products to U.S. foodservice and retail establishments.
Exports of Canadian frozen french fries now rank as the third most
important Canadian agricultural export to the United States after beef
and pork.*

**RECORD U.S. AGRICULTURAL EXPORTS TO CANADA:** With the figures just in
for 2004, Canada was the No. 1 market for U.S. food and agricultural
exports for the third consecutive year. U.S. agricultural exports to
Canada last year reached a record \$9.7 billion and accounted for 16% of
total worldwide U.S. food and agricultural exports. In fact,
agricultural product sales to Canada during 2004 were more than \$1.0
billion above sales to Mexico, \$1.6 billion above sales to Japan, and
\$2.9 billion more than to the EU-25. Consumer-oriented agricultural
products represented 73% of U.S. food sales to Canada. Record levels
were established for fresh vegetables (over \$1.0 billion), snack foods
(\$886 million), fresh fruit (\$884 million) and hefty year-to-year
increases were noted for eggs and products, up 58%, tree nuts, up 32%,
and poultry meat, up 23%, reflecting additional U.S. exports to offset
the poultry flock depopulation in British Columbia after an outbreak of
avian influenza in that province. U.S. exports of pet food exceeded
\$300 million for the first time and U.S. exports of wine and beer
reached a record \$170 million.

**SOFTWOOD LUMBER DISPUTE RAGES ON**: The Canadian government recently
announced it would seek the permission of the World Trade Organization
(WTO) to slap retaliatory sanctions on \$4.1 billion worth of U.S.-made
goods. Canada's International Trade Minister, Jim Peterson stated that
the move was done in hopes of ending the 41-month dispute and recover
the full amount of duties that have been collected to date. The
Independent Lumber Remanufacturers Association and the B.C. Lumber Trade
Council applauded the move, indicating it was time for the Canadian
government to take a more aggressive stance with the United States.
Others expressed their concerns regarding the impact of the retaliatory
measures on Canadian consumers and businesses that rely on and import
U.S. products. The approval process by the WTO will most likely take six
to nine months.

**CANFOR ANNOUNCES MILL EXPANSION**: Canfor Corporation has announced
plans to spend \$104 million to expand its mill in Vanderhoof, B.C., to
process millions of cubic meters of wood ravaged by the mountain pine
beetle. The expansion will increase the mill's annual production
capacity to 620 million board feet. According to B.C.'s chief forester,
the infestation threatens to kill 80 percent of the marketable Lodgepole
pine trees in north central British Columbia. The expansion will enable
Canfor to process infested trees more quickly in hopes of maintaining
some of their commercial value.

**CANADIAN WHEAT BOARD RELEASES ANNUAL REPORT**: According to the
Canadian Wheat Board's (CWB) 2003-2004 annual report, CWB revenues
increased by just under \$800 million to \$4.1 billion, of which \$3.9
billion was returned to farmers. The return to average production levels
helped increase revenues in the four pool accounts. Deliveries of wheat,
durum, designated barley and feed barley, were up 5 million metric tons
(MMT) from 2002-2003, to over 18 MMT in 2003-2004. In 2003-2004
transportation savings were up \$51 million, as a result of freight and
terminal rebates, CWB financial penalties for non-performance and
tendering. The annual report also indicated that the CWB underwent
significant corporate restructuring, cutting its workforce by 23% and
refocusing operations to better serve farmers and customers.

# 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       |
+----------------+---------------------------------------+------------+
| ## 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
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FAS/Ottawa office can be reached via e-mail at: <agottawa@usda.gov>