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Published November 25, 2013, 11:11 AM

Canadian producers watch US farm bill

New meat labeling rules kick in.

By: John Cotter, Canadian Press

EDMONTON — Cattle and hog producers already struggling because of meat labeling rules in the U.S. are bracing for the prospect of more financial pain.

The latest version of the U.S. country-of-origin labeling (COOL) policy came into effect Nov. 23 with requirements that producers say will put more of a squeeze on Canadians who export livestock.

They worry that if the U.S. government doesn’t shelve or soften the rules — and soon — prices will fall, which could force more producers out of business.

“We need COOL to be gone and we need it to be gone sooner than later,” says Rick Bergmann, a hog farmer near Steinbach, Manitoba “It has really stripped away any meat on the bone that we had as far as assets.”

The new rules require meat products to be labeled to show where the animal was born, raised and slaughtered. U.S. companies won’t be allowed to package together meat from animals of different countries.

The policy was approved by the U.S. Department of Agriculture in May, but put on hold for six months.

Some U.S. companies say they can’t afford to sort, label and store meat from Canada differently than meat from domestic animals.

The Canadian Pork Council says the first version of the policy introduced in 2008 ravaged the hog industry and cost producers more than $1.9 billion as American firms stopped buying older, slaughter-ready pigs from Canada.

Martin Rice, the council’s executive director, says the latest version will prompt some U.S. companies to stop buying baby pigs from Canada.

“This new COOL rule will further lessen the number of producers who can sell into the United States,” Rice says.

“It would appear that we are going to lose, or we have already perhaps lost, another three or four U.S. plants that formerly were buying some Canadian-born animals and no longer will do so.”

Beef producers are already feeling the sting of the new labeling rules.

Last month, Tyson Foods Inc., one of the largest buyers of Canadian cattle in the U.S., said it would stop buying from feedlots north of the border because of the higher cost of complying with the regulations.

John Masswohl of the Canadian Cattlemen’s Association says there’s hope the U.S. might amend the policy in a farm bill that is before lawmakers in Washington, D.C.

“A lot of people are really holding their breath and hoping that maybe in this U.S. farm bill there will be some kind of a fix here in the next couple of weeks,” Masswohl says.

“If it doesn’t, I think that there is a lot of infrastructure on the U.S. side of the industry that is going to go out of business.”

Masswohl says that could lead to a chain-reaction in the beef industry.

If U.S. plants that slaughter Canadian cattle close, U.S. feedlots that supply those plants could close, which would mean Canadian producers would have fewer places to sell their animals.

That would mean less competition and lower prices.

Canadian Agriculture Minister Gerry Ritz has been lobbying against COOL and has met with U.S. government and industry officials.

Last June, Ritz announced that Canada would challenge the labeling policy at the World Trade Organization and seek permission to retaliate against the U.S. with trade sanctions worth $1.1 billion.

But it is a slow process.

Ottawa has submitted written arguments to the WTO. There is an oral hearing set for February. A preliminary decision is expected by spring. A final decision isn’t expected until late next year or early 2015.

In the meantime, producers and groups such as the Canadian Cattlemen’s Association are watching political developments in Washington closely.

“Either we are in for some good news of a fix by the end of this calendar year or some companies in the states are going to make these decisions about their packing plants,” Masswohl says.

“If we don’t get that good news ... by the end of the year, that first quarter of 2014 you are going to see some negative decisions being made.”

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