Voluntary Report - public distribution

**Date:** 9/3/2004

**GAIN Report Number:** CA4061

CA4061

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 30**

**2004**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Christina Patterson and George Myles

**Report Highlights:**

\* National Pork Producers Urge Canada to Stop Hog Subsidies \* Live Hog
Exports Increase, Pork Exports Ease \* Cattle Industry Looks to Increase
Slaughter Capacity in Light of U.S. Border Closure \* Less Non-NAFTA
Beef For Canada \* Canadian Seed Potatoes to Mexico \* WTO Appellate
Body Upholds Previous Ruling on the CWB \* Canadian Softwood Exporters
Celebrate Victory \* Canadian Wheat Board Hires A New Government
Relations Person \* Crop Update \* It\'s Cold Out There

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.

# 

# NATIONAL PORK PRODUCERS URGE CANADA TO STOP HOG SUBSIDIES: In a press release, The National Pork Producers Council (NPPC) called for an end to Canadian government subsidies to Canadian hog producers. The development follows the August 17, 2004 preliminary ruling by the United States Department of Commerce that Canada's subsidies for its hog industry are too small to justify the imposition of U.S. tariffs on hogs coming from Canada. In March 2004 the DOC initiated two separate investigations (countervail and anti-dumping) against live swine from Canada based on a petition from the NPPC. Jon Caspers, past president of NPPC stated in the press release "...as exports from Canada flooded the market in 2002 and 2003, U.S. producers responded to economic conditions, cut back their herd size and suffered serious losses. Even as economic conditions improve, the oversupply in Canada forces profits and prices to be lower than what they would otherwise would be if the Canadian government had not artificially reduced the risk faced by Canadian hog producers." The DOC's preliminary determination in the anti-dumping case is scheduled for October 15, 2004. The final determinations in both the countervail and the anti-dumping investigations have been aligned and are currently scheduled for December 28, 2004.

**LIVE HOG EXPORTS INCREASE, PORK EXPORTS EASE:** Canadian live hog
exports to the United States in the first half of 2004 ran 33% above the
level for the same period a year ago. However, the year-to-year rate of
increase is expected to ease somewhat during the last half of 2004
because the highest rate of exports last year occurred during the July
to December period. Still, total live hog exports to the U.S. in 2004
could exceed 8.5 million head. In the first six months of the current
year, total Canadian pork exports ran 2.3% below their level for the
same period last year. Increased pork exports to both Japan and Mexico
in the January to June period of 2004 failed to offset an almost 10%
year-to-year decline in Canadian pork exports to the United States.
Canada sold half of its pork production into international markets in
2003 via record exports of 975,000 metric tons, a 13% increase over the
year earlier level. When the pork equivalent of its live hog exports is
included, Canada exports about two-thirds of its total pork production.
For more information on developments in Canada's pork sector, see
CA4063.

## **CATTLE INDUSTRY LOOKS TO INCREASE SLAUGHTER CAPACITY IN LIGHT OF U.S. BORDER CLOSURE:** As part of its contingency plan to adopt made-in-Canada solutions to the BSE-related U.S. border closure to Canadian live cattle, the Canadian cattle industry wants to increase domestic slaughter capacity. According to industry sources, existing slaughter capacity in Canada is currently about 79,000 head per week. Through expansion to existing facilities, plant conversion, and new investment, the industry is targeting to have capacity increase to 86,000 head by spring 2005 and to 98,000 head by 2006. The medium term solution includes recapturing the ability to process non-fed slaughter cattle that previously were exported live to plants in the United States. 

**LESS NON-NAFTA BEEF FOR CANADA:** A major part of Canada's BSE-related
surplus cattle and beef supply strategy is to process for consumption a
much greater share of the Canadian domestic need for manufacturing type
beef that in recent years has been dominated by imported product. In
fact, past GOC policies that encouraged the importation of manufacturing
beef led, in part, to the decline in number of non-fed slaughter
facilities and to increased exports of live slaughter cows to U.S.
slaughter plants. Since Canada's BSE incident, the GOC has responded by
not issuing supplementary import permits for beef beyond Canada's
non-NAFTA tariff rate quota (76,409 metric tons). With regard to
supplementary imports, The GOC has told importers and further processors
(of non-NAFTA beef) that the principle tenet of the beef and veal
supplementary import policy is to deny applications if domestic product
is available at competitive prices. It also said that it may be
necessary for packers and processors to change the manner in which they
do business (i.e., buy more Canadian product) in order to adjust to the
new market situation. For more information on developments within
Canada's beef industry see the Livestock Annual CA4063.

**CANADIAN SEED POTATOES TO MEXICO:** Canada has negotiated a seed
potato workplan that will allow full Canadian access to the Mexican seed
potato market for the 2004-05 potato shipping season. Previously, seed
potatoes from New Brunswick and Prince Edward Island have been banned
from Mexico since December 2000 due to concerns with a potato virus
known as PVY^N^ The workplan reportedly includes pre-clearance
activities to be conducted by Canadian Food Inspection Agency (CFIA) and
Mexican inspectors including a field inspection of every seed potato
field destined for Mexico; verification of potato tuber sampling quality
assurance procedures; testing of representative samples in Mexico prior
to the certification of commercial shipments; and audit procedures at
the point of shipping. Under the initial phase of this pre-clearance
program, three inspectors from Mexico came to Canada to conduct field
inspections. According to the CFIA, the cost of the pre-clearance
measures will be borne by Canadian seed potato growers who ship to
Mexico. Access to the Mexican market could be worth more than a million
dollars to New Brunswick and Prince Edward Island seed potato growers.
After the U.S., Mexico is the number two market for Canadian seed potato
exports. In recent years only Canadian seed potatoes from Alberta and
Saskatchewan met Mexican certification requirements.

**WTO APPELLATE BODY UPHOLDS PREVIOUS RULING ON THE CWB**: The WTO
Appellate Body has upheld the April ruling by the WTO, which had found
that the CWB was acting in accordance with current WTO rules on State
Trading Enterprises (STEs). In their statement following the ruling the
CWB expressed their pleasure and stating that the decision by the WTO
Appellate Body once again demonstrates that the CWB is a fair trader and
that farmers are in control of the CWB. The Appellate Body ruling
continued to uphold the April ruling regarding Canada's grain
distribution and rail transportation systems, which were deemed unfair
and discriminatory against U.S. grains.

**CANADIAN SOFTWOOD EXPORTERS CELEBRATE VICTORY**: On its third ruling
regarding U.S. claims that Canadian lumber is subsidized and poses a
threat to U.S. jobs, a five member NAFTA panel clearly stated that the
U.S. failed to show that there was evidence to support these arguments
and that the 27% duties that have been collected on Canadian lumber
exports are not justified. The NAFTA panel ordered the U.S.
International Trade Commission (ITC) to comply with its ruling by
September 9, 2004 and that this ruling was final. The Free Trade Lumber
Council declared the ruling a victory, but would not be surprised if the
U.S. appealed the decision. Canada's Trade Minister, Jim Peterson called
on the United States to bring finality to this dispute once and for all.
Since the duties were imposed more than two years ago, the U.S.
collected roughly \$2.7 billion in duties. With a ruling earlier in week
by the WTO, granting Canada the right to fine the U.S. up to 72% of the
money collected under the Byrd Amendment, Canadian softwood lumber
exporters are looking towards reclaiming some of the money they have
paid in duties.

**CANADIAN WHEAT BOARD HIRES A NEW GOVERNMENT RELATIONS PERSON**: The
Canadian Wheat Board (CWB) as hired Avis Gray as the new head of their
government relations' section. Ms. Gray is a well-connected Manitoba
Liberal, who ran Canadian Wheat Board Minister Reg Alcock's re-election
campaign. Ms. Gray also served as a Liberal Member of the Legislative
Assembly in Manitoba at the same time as Mr. Alcock. The Opposition
Conservative Party quickly denounced the hiring as yet another example
of Liberal cronyism. The CWB and Minister Alcock denied there was any
political interference in the hiring of Ms. Gray, claiming she was
headhunted by a Toronto agency. For those opposed to the CWB, this has
added additional fuel to fire in their argument to end the monopoly.

**CROP UPDATE**: With the weather not really improving across the
Prairies, crops remain behind, fields remain wet and frost damage is
still being assessed. At a time when crops should be ready for swathing
and harvesting, canola is still blooming in some regions of Manitoba.
The Canola Council of Canada is reminding producers that with the
current weather conditions, swath curling will take longer than usual.
The provincial department of Agriculture in Saskatchewan is reporting
that harvesting remains at standstill as a result of the weather, with
crop quality is quickly deteriorating. Just 2% of the harvest was in the
bin as of August 29. This a far cry from last year, where 60% of the
crop was combined and heat and drought stress were the major source of
crop damage. Winter wheat acreage on the Prairies may drop as a result
of the late harvest. The delay in fall harvest is reducing the
availability of land for seeding to winter wheat. Late August and into
early September is the optimal time to plant winter wheat, but because
many crops are still on the fields, there is less acreage available for
winter wheat. A delay in seeding would result in a delay in maturity
next year. Producers have until September 15 to seed in order to have
full coverage for winter wheat in Manitoba. Last year, producers in the
three Prairie Provinces planted roughly 660,000 acres of winter wheat,
with a majority of it in Manitoba.

**IT'S COLD OUT THERE**: For all those sitting in air conditioned
offices, complaining about the heat, stop! At least you had some heat.
Manitoba has had one of the coldest summers on record. And not only was
it cold, it was wet. In fact, Winnipeg has broken the record for the
coldest May, June, July and August. The mean temperature was 19.7 C
compared to the normal temperature of 23.1 C. May started out with such
promise. Warm weather had enabled some farmers to seed early, prior to
the May snowstorm. Following the snow came cool, wet weather, which
delayed seeding of a good number of crops well into June. There were
actually some nice days, but those were few and far between. Despite the
lousy start and the crops being anywhere from 1-3 weeks behind,
producers in the province were actually looking at having a decent crop
that was until the August 20^th^ frost. Many of the crops in the
province, especially the canola and the field beans were hit the hardest
by the frost and apparently the odor coming off some of the canola
fields is none to pleasant. The corn and sunflower crops are severely
behind and the general feeling, especially with the corn crop, is that
it will be a write off. Right now September is forecast to be cool and
wet, a shocking turn of events for a province that has yet to experience
summer.

# 

# 

# 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       |
+----------------+---------------------------------------+------------+
| ## CA4063      | Livestock Annual                      | 9/1/2004   |
+----------------+---------------------------------------+------------+
| ## CA4062      | Canada Connect Matchmaker Program     | 9/1/2004   |
+----------------+---------------------------------------+------------+
| ## CA4060      | Poultry Annual                        | 8/27/2004  |
+----------------+---------------------------------------+------------+
| CA4059         | This Week in Canadian Agriculture,    | 8/27/2004  |
|                | Issue 29                              |            |
+----------------+---------------------------------------+------------+
| CA4057         | Grain and Feed Monthly Update         | 8/27/2004  |
+----------------+---------------------------------------+------------+
| CA4058         | This Week in Canadian Agriculture,    | 8/20/2004  |
|                | Issue 28                              |            |
+----------------+---------------------------------------+------------+

VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
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