""

Voluntary Report - public distribution

**Date:** 9/12/2003

**GAIN Report Number:** CA3058

CA3058

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 34**

**2003**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Matthew Cahoon

**Report Highlights:**

Canada Pleased With NAFTA Threat Of Injury Ruling On Softwood Lumber \*
Reaction To U.S. Decision To Accept Canadian Boneless Beef \* Canadians
Consuming Beef In Record Numbers \* Benefits To CWB Targeted At WTO
Talks \* Pasta Millers Defend CWB At ITC Hearing \* September Canadian
Grain And Feed Update \* Saskatchewan Harvest Conditions \* Ontario
Wheat Growers Opt For Open Market \* Consensus Reached On Voluntary
Standard For Labeling Of Genetically Engineered Foods \* New Brunswick
Food Quality Program Takes Inspection Duties From Federal Government

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 PLEASED WITH NAFTA THREAT OF INJURY RULING ON SOFTWOOD LUMBER:
Canadian International Trade Minister Pierre Pettigrew welcomed a North
American Free Trade Agreement (NAFTA) dispute settlement panel decision,
that, in the Canadian government's opinion, ruled that the May 22, 2003
U.S. International Trade Commission\'s (ITC) determination that
Canada\'s softwood lumber exports threatened to injure the U.S. softwood
industry was inconsistent with U.S. law. The panel ordered the U.S. to
issue a new determination within 100 days. \"The NAFTA panel agreed with
Canada,\" said Minister Pettigrew. \"The U.S. International Trade
Commission failed to provide a reasonable explanation for its finding,
and failed to ensure that its determination was based on the facts.\"
Canada has also challenge the ITC determination before the World Trade
Organization.

REACTION TO U.S. DECISION TO ACCEPT CANADIAN BONELESS BEEF: According to
September 4 coverage by the *Globe and Mail* of a Canadian Press
article, Claude Boissonneault of the Canadian Food Inspection Agency
(CFIA) said, following a decision by the U.S. to accept Canadian beef
slaughtered at plants which process both older and younger cows ---
clearing the way for boneless cuts to finally roll across the border,
\"There is some relief because this is essentially a turning point for
getting back on track for exporting beef products.\" \"It now means some
of our plants \... can start processing both classes of cattle again,\"
said Dennis Laycraft of the Canadian Cattlemen\'s Association. \"That
very significantly increases our capacity to handle the beef products
from our cull cows.\" The article reports that Canadian exporters have
suffered more than C\$1-billion in losses since the May 20 border
closure.

CANADIANS CONSUMING BEEF IN RECORD NUMBERS: The September 8 *Good
Morning Ontario* also reported that Canadians have stepped up to the
plate in support of the country\'s cattle industry by consuming record
amounts of beef. According to the Beef Information Centre, beef
disappearance - the amount of beef produced and no longer available in
the supply chain - increased 62% from a year ago, as of July. The Centre
is expecting an even bigger increase when August statistics are
compiled. Just over 123,000 tonnes of beef were removed from the supply
chain in July - something that hasn\'t happened in close to 30 years.

BENEFITS TO CWB TARGETED AT WTO TALKS: The September 4 *Globe and Mail*
reported that Canada is prepared to curb federal loan guarantees for
hundreds of millions of dollars in sales to Canadian Wheat Board (CWB)
customers if free trade talks taking place in Mexico target export
credit programs for reform, senior trade officials say. It would have to
replace them with programs on the same terms as commercial guarantees in
the private sector if the World Trade Organization classifies them as
unfair. But Ottawa said it\'s resisting strongly attempts by the United
States and Europe to severely hobble the activities of the state
grain-marketing agency at WTO talks. An export credit program backed by
the Canadian government supports between \$200-million and \$500-million
in annual CWB sales. \"In the WTO chair\'s framework, he\'s used
language that is close to the kind of language that we have been
suggesting to him, which is that we should be focusing on export
subsidies that may be provided to STEs \'state trading enterprises\' or
through STEs,\" he said. Asked how the elimination of subsidies in WTO
talks could affect Canada, he said \"it could have some impact on
operations like\" the CWB. \"If we reach agreements on how export
credits will be disciplined in the negotiations, the wheat board ---
certainly a user of export credit --- then they would be subject to
those disciplines,\" he said. The CWB says Canadian negotiators have no
business placing new restrictions on how the monopoly grain marketer
works in WTO talks. It says the initiative to curb how state-trading
enterprises operate was not part of the scope of talks launched in Qatar
in 2001. \"There is no mandate from the Doha declaration to target state
trading enterprise,\" said CWB spokeswoman Louise Waldman. A second
Canadian government official said Canada would have to reform its export
credit programs through the CWB so they were on commercial terms. He
said there would be a net benefit to Canadian farmers from any agreement
that saw these credit program reforms because it would only happen if
other countries did the same, including the U.S., and would level the
international farm sales market.

PASTA MILLERS DEFEND CWB AT ITC HEARING: According to a Canadian Wheat
Board (CWB) news release, U.S. millers and pasta makers buy Canadian
wheat for its high quality and consistency and despite its higher price,
according to milling executives who testified at the September 4 U.S.
International Trade Commission (ITC) hearings on in Washington. \"The
evidence presented was detailed, explicit and clearly established that
the CWB is trading fairly in the U.S. market,\" said Ken Ritter, chair
of the CWB board of directors. \"Far from undercutting prices, Canadian
wheat and durum is fetching a premium. I am confident that when the ITC
makes its decision based on the facts, the duties will be removed and we
will once again be able to meet the needs of our American customers.\"

SEPTEMBER CANADIAN GRAIN AND FEED UPDATE: Canadian grain production in
2003 is recovering from last year\'s poor showing, according to the
latest Statistics Canada pre-harvest survey of Canadian farmers. In
spite of insect damage and hot, dry weather experienced in the west,
crop production will easily surpass the drought year of 2002. Production
of most crops should be greatly improved, except in Manitoba, where
crops could show a slight decline, as farmers there were generally hit
less by the drought of 2002. In eastern Canada, good planting and
growing conditions will combine to produce some new records and strong
production values for crops. For additional information, see GAIN report
CA3057.

SASKATCHEWAN HARVEST CONDITIONS: Saskatchewan farmers now have 81% of
the 2003 crop in the bin, up from 60% last week, and well ahead of the
five-year (1998-2002) average of 46% complete, according to Saskatchewan
Agriculture, Food and Rural Revitalization's September 7 crop report.
The harvest is most advanced in the southwest, where 91% of the crop is
complete. The northwest is close behind with 68% of the harvest
complete. The winter wheat and fall rye harvest are almost complete.
Harvesting of peas, lentils, and durum is more than 90% finished at the
provincial level. Crops with more than 50% left to harvest include
sunflowers and flax. Hot and dry weather in most areas this week
continued to deteriorate moisture conditions in topsoil. On cropland,
74% of reporters rated topsoil moisture as very short, compared with 64%
last week. Strong winds were damaging

to crops in many areas of the province, scattering swaths and shelling
crops. Grasshoppers continued to cause damage to un-harvested crops.
Many farmers are waiting for moisture before seeding fall crops or
continuing with most fall fieldwork. Some livestock owners report having
to provide supplemental feed to their stock.

ONTARIO WHEAT GROWERS OPT FOR OPEN MARKET: According to the September 8
edition of covering by *Good Morning Ontario*, Ontario\'s wheat growers
are abandoning the wheat board in droves, reports the Western Producer.
\"The word in the trade is that it\'s a landslide away from the
(Ontario) wheat board,\" said Jeff Reid, marketing manager for C&M Seeds
of

Palmerston, Ontario. It\'s estimated that 70 to 80% of the record 2.2
million tonne wheat crop grown in the province this year will be sold
off-board under what is called the direct marketing option. Some say the
stampede to the open market simply means private

buyers are offering a better price than the board at the local elevator.
\"That could be the only reason,\" said Jim Whitelaw, a grain trader
with of FGDI of Blenheim, Ont. \"They\'re certainly not going to sell
outside the board if the board has the better price.\" But others say
it\'s more complicated than that, arguing that the board\'s ability to
compete is limited by structural and logistical factors, says the
Producer.

CONSENSUS REACHED ON VOLUNTARY STANDARD FOR LABELING OF GENETICALLY

ENGINEERED FOODS: According to a September 8 press release, the Canadian
Council of Grocery Distributors (CCGD) and the Chair of the Committee on
the Voluntary Labeling of Foods Obtained or Not Obtained Through Genetic
Modification, announced to committee members including the Government of
Canada that consensus approval has been reached on a voluntary standard
for labeling and advertising of foods that are, or are not, products of
genetic engineering. Committee members recently voted to approve the
draft of the voluntary standard. The next step is an internal review to
be conducted by the Canadian General Standards Board (CGSB), an
organization within Public Works and Government Services Canada which
oversees the process of developing standards for products and services.
This will be followed by the referral of the draft standard to the
Standards Council of Canada for consideration as a National Standard of
Canada. The Committee developing the Standard has been working since
November 1999 and consists of 53 voting members and 75 non-voting
members. It includes a balance of stakeholder representation that
encompasses consumers, producers and general interest groups such as
governments and universities. Agriculture and Agri-Food Canada, the
Canadian Food Inspection Agency and

Health Canada were among the six federal departments that participated
in the process for the development of a standard for the voluntary
labeling of biotechnology-derived foods. The Committee has followed the
established CGSB processes, which have been used to set standards for
many other consumer products in Canada.

NEW BRUNSWICK FOOD QUALITY PROGRAM TAKES INSPECTION DUTIES FROM FEDERAL
GOVERNMENT: A September 5 article from Truro's *The Daily News* covering
a Canadian Press article reported that the New Brunswick potato industry
has, according to the story, launched a revolutionary food quality
program that will see shipping companies take over inspection duties
from the Canadian federal government. The story says that industry
representatives gathered September 4 at the Potato Development Centre in
Wicklow, New Brunswick, for the signing of the inspection agreement
between potato shippers and the Canadian Food Inspection Agency. Seven
years in the making, the story says that the program is the first of its
kind in Canada and a first for the potato industry in North America. It
is designed to have packing sheds and shippers of potatoes conduct their
own quality assurance programs.

**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

  CA3057            Grain and Feed September Update          9/6/2003

  CA3056            This Week in Canadian Agriculture, Issue 9/5/2003
                    33                                       

  CA3055            Livestock Annual                         9/4/2003

  CA3054            Canada's Dairy Industry and the          8/28/2003
                    Implications of the WTO Dairy Dispute    

  CA3053            This Week in Canadian Agriculture, Issue 8/29/2003
                    32                                       

  CA3052            Poultry Annual                           8/27/2003
  ----------------- ---------------------------------------- -------------

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