Voluntary Report - public distribution

**Date:** 7/23/2003

**GAIN Report Number:** CA3045

CA3045

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 27**

**2003**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Matthew Cahoon, Michelle Mullins, with input from Brad Kirbyson

**Report Highlights:**

New BSE Measures Announced By Government Of Canada \* Canada Takes
Further Action To Support Domestic Beef Industry \* \'Years\' Till
Cattle Ban Is Lifted, Says Senior CFIA Official \* Canadian Stance With
U.S. Could Soon Get Much Tougher \* Alberta Ready To Launch 'Plan B'
Within Days \* Western Canadian Cattle On Feed Numbers Plummet \* DFC
Urges Canadian Government To Clarify WTO Rules Through Litigation \* New
CWB Program Allows Farmers Access To 80% Of Initial Payment \* Hot And
Dry In Saskatchewan \* Ontario Apple Growers Accept New Marketing Plan
\* Western Canadian Wheat Growers Association To Continue ...and MORE!

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.

NEW BSE MEASURES ANNOUNCED BY GOVERNMENT OF CANADA--- In a press release
issued by Agriculture and Agri-Food Canada (AAFC) on July 18^th^, the
Government of Canada (GOC) announced an additional measure to enhance
the already existing food safety controls it utilizes regarding BSE. The
new measure, developed jointly by AAFC and Health Canada, will require
that specified risk materials (SRM), such as the brain and spinal cord,
be removed from cattle at slaughter. This new measure will take effect
on July 24^th^, and will only affect the carcasses of cattle older than
30 months, because scientific research has show that cattle younger than
30 months do not contain the infective agent that transmits BSE. \"We
are taking steps to implement this important measure as soon as
possible,\" said AAFC Minister Lyle Vanclief. \"By removing SRM at
slaughter we are making a very safe system even safer. It also further
demonstrates to our trading partners that Canada remains a most reliable
and responsible supplier of safe beef and beef products.\" Further
information on SRM can be found at:
<http://www.agr.gc.ca./cb/news/2003/n30718be.html>.

CANADA TAKES FURTHER ACTION TO SUPPORT DOMESTIC BEEF INDUSTRY---In a
July 18^th^ news release from the Canadian Department of Foreign Affairs
and International Trade (DFAIT), the Government of Canada (GOC)
announced that it has taken further measures to support domestic beef
and veal producers by limiting the amount of supplemental imports it
will allow. The GOC has said that all applications received after July
9, 2003 for supplemental imports from non-NAFTA countries will normally
be refused. It has also delegated a government-industry committee with
the task of examining the current policy on supplemental beef imports,
as it affects all stakeholders in the beef industry. The new policy
regarding supplemental beef imports will remain in effect until the
committee reports back to the Minister for International Trade and the
Minister for Agriculture and Agri-Food, no later than August 8, 2003.
The entire article and backgrounder on Canada's current tariff rate
quotas for beef can be found at:

<http://webapps.dfait-maeci.gc.ca/minpub/Publication.asp?FileSpec=/Min_Pub_Docs/106318.htm&Language=E>

\'YEARS\' TILL CATTLE BAN IS LIFTED, SAYS SENIOR CFIA OFFICIAL: The July
24 *Edmonton Journal* reported that borders won\'t reopen to live cattle
from Canada for years, says a top official with the Canadian Food
Inspection Agency (CFIA). Francine Lord, national manager of imports and
exports for the CFIA, said countries would likely consider Canadian
cattle too risky, but she expects trade would resume in beef, bovine
semen and embryos, if borders opened again to ruminants. The statement
marks the first time an agency official has spoken publicly about what
mad cow disease will mean for the future of Canadian cattle trade.
\"It\'s going to take awhile,\" Lord said of getting the live cattle ban
lifted. \"It depends on what we are going to be doing and what\'s going
to happen. This is going to be the longest one. This is considered the
highest risk.\" Last year, Canada exported nearly 1.7 million cattle to
the United States, 511,656 coming from Alberta. The industry generated
\$1.8 billion. According to World Organization for Animal Health
guidelines, Canada was considered provisionally free of bovine
spongiform encephalopathy (BSE) because while it had no homegrown cases,
its ban on giving ruminants feed made from ruminants hasn\'t been in
place for eight years. Lord said Canada would now classify itself as
having a minimal BSE risk. Under the international body\'s guidelines,
feed made from ruminants shouldn\'t be imported from countries with any
degree of mad cow risk. Lord expects countries will abide by this
guideline, wiping out this part of Canada\'s export industry.

*Reaction to Lord's remarks was swift.* The *Globe and Mail* article
continued, reporting that Herb McLane, spokesman for the Canadian Beef
Breeders Council, was taken aback by Lord\'s comments. \"I\'m very
disappointed a senior official in CFIA would articulate that position,\"
he said. \"We feel we are justified on a number of avenues, on the basis
of science, that we have a safe product.\" Cindy McCreath, spokeswoman
for the Canadian Cattlemen\'s Association, said cutting off trade to
live cattle for years would cause great problems for the industry, but
it could recover as long as borders reopened to beef. \"We have a very
integrated North American market. It works in a big circle,\" she said.
\"It would be problematic, but if we can get the border opened to muscle
cuts of beef, it would be a big relief.\" McCreath believes a shutdown
in live cattle trade would mean an expansion of Canada\'s meat packing
industry.

CANADIAN STANCE WITH U.S. COULD SOON GET MUCH TOUGHER: The July 24
*Edmonton Journal* reported that a frustrated Canadian government is
considering giving the U.S. a taste of its own medicine in an effort to
pry open the border for Canadian beef. Cabinet ministers discussed ways
Wednesday to pressure the U.S. into reopening the Canada-U.S. border to
Canadian beef and cattle. Sources said ministers considered such tactics
as shining a harsh spotlight on flaws and inconsistencies in the way
some U.S. beef exports leave that country. A decision has been delayed
to give the U.S. a little more time to reopen

the border, sources said. Agriculture Minister Lyle Vanclief had little
to say about the discussions as he left Wednesday\'s cabinet meeting.
But he did say Canada is taking a hard look at the way U.S. and Japanese
beef is handled for export. \"We are continuously reviewing the systems
in all of the countries, including Japan and the United States,\" said
Vanclief. Trade Minister Pierre Pettigrew said he intends to raise the
issue with counterparts during World Trade Organization meetings coming
up in Montreal.

ALBERTA READY TO LAUNCH 'PLAN B' WITHIN DAYS: The July 23 *Globe and*
Mail reported that Alberta is set to launch within days its Plan B for
coping with the mad-cow crisis. The province is contemplating ways to
reduce the number of cattle being sent to slaughter, with the resulting
reduction in supply boosting prices for the remaining animals. Alberta
Premier Ralph Klein said that the province will spend another
\$60-million in compensation for the cattle industry, in addition to the
\$100-million it has committed as part of a joint federal-provincial
program. Other possible elements of Plan B include raising the cap on
farm income support payments under current federal-provincial programs,
and increasing loans available to ranchers to withstand delays in sales
revenue of yearlings and newly weaned calves while export markets remain
closed. Alberta is considering a new compensation program would pay out
compensation to ranchers who agree to keep their animals out of
slaughterhouses for at least 60 days. The beef industry urged Alberta
Agriculture Minister Shirley McClellan on Friday to adopt such a
measure. Ken Moholitny, assistant deputy minister at Alberta\'s
Agriculture Department, said 100,000 animals would need to be
sequestered until late September to dispel the "panic-selling" mindset
in the industry, adding that the province would need to put any such
measure into effect in the next two weeks. Some industry observers have
said that a third of Alberta\'s 5.2 million cattle might need to be
killed.

WESTERN CANADIAN CATTLE ON FEED NUMBERS PLUMMET: The July 21 edition of
*Agriweek* reported that placements of cattle on western Canadian
feedlots during June plunged 88% from a year earlier to just 18,481
head, an all-time low, because of the mad-cow situation. The number of
cattle on feed as of July 1 was 569,162, 26% below last year and down
16% from a month earlier. Marketings by feedlots dropped 55% from June
2002 to 108,400. Of the total June placements, only 2,200 head went on
feed at 800 lbs. or more, compared to 93,000 in June 2002.

DFC URGES CANADIAN GOVERNMENT TO CLARIFY WTO RULES THROUGH LITIGATION:
In a July 23 news release from Dairy Farmers of Canada (DFC), DFC warned
that the U.S. and New Zealand have programs that are at risk of being
found inconsistent with their World

Trade Organization (WTO) obligations on agriculture, citing the findings
of a report from trade experts Grey, Clark, Shih and Associates,
commissioned by DFC. DFC has provided the report to the Canadian federal
government and has initiated discussions on how best to

pursue these cases. According to the report, WTO dispute settlement
processes have created new obligations that affect a broad range of
agricultural and food products, even programs that were thought to be
non-trade distortive or \"green\". \"This situation needs to be fixed
and the rules clarified! There are two ways to clarify the rules:
litigation and negotiation. We expect the Canadian government to show
strategic leadership on this issue,\" adds Jean Grégoire, DFC's newly
elected president. The study uses several examples of programs that are
at risk of being found inconsistent because the dispute settlement
process has made decisions that have broad implications. The report
demonstrates that various countries could find themselves in breach of
their WTO obligations. Based on the

findings of this report, Dairy Farmers of Canada urges the Government of
Canada to ask for consultations at the WTO in order to clarify the rules
and their interpretation.

NEW CWB PROGRAM ALLOWS FARMERS ACCESS TO 80% OF INITIAL PAYMENT: On July
22 the Canadian Wheat Board (CWB) launched a pre-delivery top-up program
(PDT) to provide farmers with access to a greater portion of the value
of their grain before delivery. The funds the CWB will make available
through this new program will top-up the amount of money farmers receive
through the fall cash advance program. Amounts received under the PDT
will be repaid through deductions on farmers\' adjustment, interim and
final payments. Farmers will pay interest - at prime - on money received
through the program and they can repay at any time without penalty. For
the 2003/04 crop year, this will be a pilot program on the CWRW, CWES,
CPSR, CPSW, CWHW and CWSWS classes of wheat. If the pilot program is
successful, it could be expanded to other classes of wheat and other
grains.

HOT AND DRY IN SASKATCHEWAN: Hot, dry weather and insects continue to
stress crops, according to Saskatchewan Agriculture, Food and Rural
Revitalization's July 20 crop report.

Some areas north of a line between Estevan, Moose Jaw and Lloydminster
saw localized thundershowers, but hot, windy weather during the week
prevented the moisture from having the maximum benefit. Crops are
advancing and early-seeded crops are beginning to

ripen in some areas. Peas could be ready to combine in a few weeks.
Provincially, spring cereals and oilseeds are at 67% of normal
development and 12% ahead of normal development; pulse crops are 71% of
normal development and 13% ahead of normal; and fall cereal crops are at
72% of normal development and 24% ahead of normal. During the past week,
crop conditions, on a provincial basis, either held their own or
deteriorated.

Deterioration was most evident in durum, triticale, mustard, pulse, and
canary seed crops.

Topsoil moisture conditions deteriorated with 34% of crop reporters
rating conditions on

crop land as adequate, compared with 50% last week. Insects were again
the main source of crop damage and included grasshoppers, aphids, leaf
hoppers, cutworms, and wheat midge. Other sources of crop damage during
the past week were heat and drought

stress, wind, hail, disease, and gophers.

ONTARIO CROP CONDITIONS: According to the July 18 Ontario Ministry of
Agriculture and Food (OMAF) crop update, most early-planted corn and all
corn that was planted under suitable soil conditions looks very good.
The tough conditions that much of the crop was planted in have not
significantly impacted Ontario\'s soybean crop to date, says OMAF.
Sporadic rainfall across much of the province has allowed the crop to
develop well. In general moisture levels are good, especially compared
to the last two summers. This availability of moisture will allow
farmers to keep many more soybean flowers per plant compared to 2001 and
2002, resulting in better yield potential at this point. Ontario's
winter cereal harvest has begun. OMAF says that early reports show
excellent wheat yields of 90 to 100 bu/acres and winter barley above 100
bu/acres. Trade sources indicate that the winter wheat crop should
exceed two million metric tonnes (MMT) with approximately 1.2-1.3 MMT
available for export. Some winter wheat quality concerns exist. Fusarium
damage is evident in wheat samples, from 0.5% to slightly above 1%.
Toxin levels range from 0.5 ppm (food quality) to well above 2.0 ppm
(feed wheat).

ONTARIO APPLE GROWERS ACCEPT NEW MARKETING PLAN: Ontario apple growers
have voted 72% in favor of a new regulated marketing plan which falls
just short of a marketing board, reports the July 21 *Agriweek*. The
proposed plan, yet to be named, will have the authority to negotiate
prices with apple processors, but not for the fresh apple trade. All
growers with 10 acres of orchards or more will pay \$20 an acre to
support the organization. The previous apple commission was dissolved
last year also after a grower vote.

WESTERN CANADIAN WHEAT GROWERS ASSOCIATION TO CONTINUE: According to the
July 21 *Agriline*, the Western Canadian Wheat Growers Association,
which announced last month that it is closing shop, is being reorganized
and will continue. A committee including former executives is working on
a recovery plan.

**Find FAS on the World Wide Web:**

Visit our headquarters' home page at 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

  CA3044            Canadian Controversy over Roundup Ready  7/23/2003
                    Wheat                                    

  CA3042            This Week in Canadian Agriculture, Issue 7/16/2003
                    26                                       

  CA3041            Promotion Opportunities Food and         7/14/2003
                    Beverage Shows-2003                      

  CA3039            Ban on Canadian Beef Exports Increases   7/08/2003
                    Short-Term Demand for Feed Grains        

  CA3032            Dairy Semi-Annual                        5/21/2003

  CA3030            Oilseeds and Products Annual Report      5/14/2003

  CA3021            Grain and Feed Annual Report             4/11/2003
  ----------------- ---------------------------------------- -------------

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