Volume 2 Issue 9 • April 26, 2010

In This Issue ...

 

All eyes on the lookout for rate hike; dollar set to gain


The Bank of Canada is keeping for now its record low overnight lending rate of 0.25 per cent, an emergency measure brought in last April to combat the recession. But the stage is being set for a rate hike when the central bank next meets June 1, now that the bank has removed a year-old conditional commitment to hold the rate steady until July.

News that the BoC dropped its conditional commitment April 22 launched the loonie 1.58 cents higher to $1.0012 U.S., to continue its flirt with par. Should the central bank raise the overnight rate June 1, Canada will be the first G-7 nation to raise interest rates, but more importantly, the action will put Canada ahead of the U.S. Federal Reserve. This could propel the high flying loonie further still, exacerbating problems for Canada’s cattle industry, where livestock prices are set in the U.S. and converted for exchange.

The Canadian Cattlemen’s Association (CCA) has sent a letter to BoC Governor Mark Carney asking the bank to take the impact of a high Canadian dollar on the cattle industry into its consideration of raising interest rates ahead of the U.S. (Click here to see the BoC letter in full.)

The letter notes that the impact of the recent accelerated appreciation of the Canadian dollar on the cattle industry may not be seen in the macro economic data until the industry has incurred serious economic damage and setback. “The effects of this recent accelerated appreciation may be so significant that should our dollar moderate in response to a slow down in Canada’s export industries, we may have already experienced significant economic damage due to scaled back investment and abnormally high business failures,” cautions the letter from CCA President Travis Toews.

The loonie hit parity with the greenback on April 6 for the first time since mid-2008. The loonie faltered briefly afterwards but resumed speed April 22. Many economists expect the Canadian dollar to stay in parity range as the economic recovery takes hold.

In its release, the BoC cited the persistent strength of the Canadian dollar as one of the factors that will continue to act as a significant drag on economic activity in Canada.

Glen Hodgson, Senior Vice-President and Chief Economist with The Conference Board of Canada, noted that the loonie is likely to remain strong for a long time to come.

“With the economic recovery starting to take hold, the Canadian dollar has settled in comfortably at parity with the U.S. dollar, and it is getting ready to soar even higher on occasion, once the global recovery becomes more widespread and sustained,” he wrote in: Learning to Live With a Strong Canadian Dollar, Four Options for Business and Government, for the board’s international trade and investment centre.

 
The CCA on Parliament Hill: Lobbying days


Lobbying days, affectionately known as ‘provincial fly-in days,’ are among the tactics the CCA uses to push for and get improvements in Ottawa that help Canadian cattle producers. These lobbying days show Members of Parliament (MP) that cattle producers from across Canada have similar aims and requests. The consistent messages that the CCA delivers with its provincial members help to move items forward. There is no end of pressure on MPs to focus on different issues. These meetings, along with the CCA’s regular Ottawa activities, keep bringing cattle producer issues to the top of the pile for MPs.

On April 20, the Ontario Cattlemen’s Association sent John Gillespie, Bill Herron, Rick Hobbs and Dave Stewart to Ottawa. After 15 meetings, Ontario MPs have a better understanding of the need for improving competitiveness and costs for the cattle sector, the need for improvements to business risk management programming, the need to extend the emergency cash advance, and the opportunity the European Union (EU) market presents for Canadian cattle production.

The previous week, Jack Hextall, Adrian Uzea, Duane Thompson and Keith Robertson from Saskatchewan were in for meetings with 11 MPs and staff from the offices of Federal Agriculture Minister Gerry Ritz and Minister of State Lynne Yelich.

The group pressed for improvements in AgriRecovery and AgriStability, development of a national price and basis insurance program and improvements in the cost of producing cattle and beef in Canada. The group spoke of the importance of increased market access around the world for Canadian beef and cattle. A deal for duty free and quota free access for Canadian beef into the EU would mean a customer that could rival the U.S. for Canadian exports.

Both groups stressed the need for Agriculture and Agri-Food Canada to take the lead in analyzing and developing a national price and basis insurance program for all cattle producers. As Alberta fed cattle producers have access to this program already, producers of calves or stockers, or those outside Alberta, are at a competitive disadvantage. It is CCA policy that all governments implement business risk management programs consistently across jurisdictions. 

Work continues in Ottawa and at the Federal Provincial Territorial level to move these issues forward.

 

BIC responds to Sobeys article promoting meatless meals


In the Spring 2010 issue of Sobeys Inspired Magazine, an article entitled, Easy Being Green, promoted going meatless one day a week because ‘studies suggest that eating less meat is better for the environment.’ Without identifying the studies cited, the article suggested readers ‘try going meatless once a week,’ based on the notions that ‘most animals raised for consumption need large amounts of land and water, which is a drain on our natural resources,’ and that cows produce methane, ‘which contributes to greenhouse gases.’ Cutting back on meat will benefit the environment, insisted the article, and lower cholesterol and saturated fat intake to boot. Eating less meat was one of three ‘simple ideas’ in the article to ‘help the planet.’

The Beef Information Centre (BIC), the marketing arm of the CCA, took umbrage with the Inspired article. In a letter to Sobeys, the BIC expressed its disappointment that the grocery retailer would suggest consumers cut a healthy and nutritious product like Canadian beef from their diet once a week, as the suggestion was likely made based on erroneous information.

In its letter to Sobeys, the BIC refuted all the assertions put forth in the Inspired article. In particular, the BIC letter noted that Canadian cattle producers are leaders in the environmental management of the land and water they use to raise cattle. “The long term sustainability of their farms and ranches depend on it,” the BIC wrote. (Click here to see BIC letter in full.)

The BIC received a written response from Sobeys, in which the grocer states that the articles it publishes ‘are accurate, reference credible sources and studies, and offer a variety of opinions for consumers.’

‘At Sobeys we greatly value the beef producers industry, along with our other industry partners as we do all our various food suppliers,’ stated the Sobeys letter to BIC.

Laura Bodell of Sherwood Park, Alberta, said Sobeys' response to BIC is not unlike the letter she received from the grocer in response to her own complaint about the Inspired article, sparked by similar reasons.

Bodell, a graphic designer who counts livestock producers among her clientele, noted the recently released study, ‘Clearing the air: livestock’s contribution to climate change’, by Dr. Frank Mitloehner of the University of California, concluded that the impact of meat and dairy production on the environment has been overstated in the oft-cited 2006 report, Livestock’s Long Shadow, from the UN Food and Agriculture Organisation.

And although the Inspired piece on meat ends with the sentence: ‘Even better, you’ll be all the more appreciative of that juicy steak on Tuesday,’ Bodell doubted readers would get that far and would instead be left with a negative picture of livestock production.

“I don’t think that one sentence about a juicy steak balances out with several paragraphs speaking negatively against livestock production,” Bodell told Action News.

“When they say something negative about one of their products it certainly doesn’t help their suppliers, and it won’t help them in the long run.”

Bodell suggested livestock producers wanting to help Sobeys understand the article’s impact to suppliers email them at: compliments@sobeys.com.

 

New report: Market and Regulatory Factors Affecting the Canadian – U.S. Fed Cattle Basis


The AB/NE fed cattle cash basis saw significant variation from historical trends after the border reopened in 2005. Most recently, COOL has shifted the basis again. In an effort to identify market factors and other drivers influencing the fed cattle basis Canfax Research Services, with the support of the Ontario Cattlemen’s Association, Alberta Beef Producers and Agriculture and Food Council, through the Agriculture and Agri-Food Canada's Advancing Canadian Agriculture and Agri-Food (ACAAF) Program, initiated a comprehensive research study to identify and measure the effect various drivers have had on the fed cattle basis. 

The Final Report, along with a short summary of the findings, is now available on the CCA website at: http://www.cattle.ca/cca-industry-analysis/

 
CCA Action News

Staff Contributors: Ryder Lee, Brenna Grant
Written, edited and compiled by: Gina Teel and Tracy Herbert



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