Volume 3 Issue 5 • August 16, 2010

In This Issue ...


Smart business planning means planning for par

The recession may be officially behind us but consumer confidence has yet to fully rebound, as continued poor jobs performance and a weak mortgage market in the U.S. fuel fears of a double-dip recession.

Canfax Market BriefsWhile the economies of Canada and the U.S. are recovering, the latter since the middle of last year, the U.S. is missing a robust jobs picture, which is “why you’re not seeing steaks flying off the shelves in supermarkets,” said Glen Hodgson, senior vice-president and chief economist of the Conference Board of Canada.

Until job growth stability in the U.S. returns, the fear factor in terms of consumer confidence will remain firmly entrenched.

This undercurrent of uncertainty was reflected in the negative reaction in the markets last week to the move by the U.S. Federal Reserve. Among other measures, the Fed announced it would hold securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.

The move caused the markets anxiety pangs but Hodgson said Fed chairman Ben Bernanke “did absolutely the right thing.”

Speaking at the International Livestock Congress (ILC) Beef 2010: Raising Optimism. Global Strategies conference in Calgary, Hodgson said the move by Bernanke is another effort to try to restore flagging confidence in the U.S. The Fed is essentially going to recycle the money that they put into the mortgage market, about $1 trillion, instead of remove stimulus -- until they have confidence restored in the U.S.

The move is an aggressive intervention that should help avoid a double-dip recession, Hodgson said.
Even in the event a double dip should occur, the U.S. Federal Reserve has other measures it can act on to restore confidence in the economy, he noted.

The restoration of consumer confidence is critical. Currently, consumer spending levels in the U.S. are at the same level as in 2007. And although the board is forecasting 3.0 per cent growth in the U.S. this year and 3.5 per cent next year, it’s being driven by cheap money and largely due to government fiscal stimulus spending.

This growth is bound to slow down as that stimulus is pared back. Canada has to consider the ripple effects of what’s going to happen in the U.S., he said.

At the same time, dealing with a high-flying loonie remains a big part of the picture going forward.

Interest rates in Canada will keep rising, Hodgson said, likely to 1.5 per cent to 2 per cent at the end of the year, and upwards after that. Meanwhile, the U.S. Fed signalled last week that it is going to keep interest rates at 0 or as close to it as possible, which will place upward pressure on the loonie.

The close link between the loonie and oil prices will continue to play a role. With oil hovering in the $80 per barrel range, its safe to assume a natural floor to global oil prices of around $75 to $80 per barrel. The board’s view is that global oil prices will rise.

Hodgson told the audience to plan for parity. The board’s forecast has the loonie breaking through par this fall and sitting at $1.02 to $1.03 in the first part of 2011.

Hodgson told the audience that they best adapt to this scenario and be prepared for rising interest rates. The forecast calls for Real GDP of 3.6 per cent in Canada this year, but next year is expected to dip to under 3.0 per cent as fiscal stimulus is pulled back as governments take away all the stimulus they put in. “Our challenge is going to be dealing with that,” he said.

Meantime, it’s time to stop talking recession; it’s over, he said. The chance of double dip has been reduced due to the Bernanke move. It won’t be a pretty recovery, especially in the U.S., so Hodgson suggested people think about emerging markets in China, India and Brazil and elsewhere.


CFIA investigates anonymous claim of clone

The Canadian Food Inspection Agency (CFIA) is investigating an anonymous claim that embryos from a cow bred from a cloned animal in Britain have been sold to breeders in Canada. The CFIA is in contact with their counterparts in the UK regarding the claim, which was made in the British press, and will receive pertinent information once the investigation there is complete.

The claim surfaced recently, amid an announcement by the U.K. Food Standards Agency that the descendents of a cloned animal made their way into the food supply there. Officials from CFIA are investigating the claim to ensure that Canadian regulations are properly enforced.

The investigation was triggered because no food products derived from genetically modified (GM) animals are approved for sale in Canada, including cloned animals.
Animals, their progeny and any related products and by-products derived from cloning, may be considered ‘new’ or ‘novel’ and would, therefore, be subject to stringent review and approvals prior to commercialization, officials said.

While animal clones can be produced in Canada, they must be kept under appropriate quarantine conditions since they have not been authorized for release into the environment or for entry into the food chain or feed chain. Upon their death, cloned animals are incinerated.

Matthew Wolf, a spokesman for Agriculture Minister Gerry Ritz, said officials at the CFIA “would of course inform the Minister if they found evidence that Canadian regulations have been violated.” “To date, this has not happened,” Wolf said.

Any individual that has information that regulations might have been violated is encouraged to speak to the CFIA, he added.


National youth initiative selects participants

The Cattlemen’s Young Leaders (CYL) Development Program has selected the six recipients to participate in the Alberta pilot phase of the mentorship initiative.

Announced at the ILC Beef 2010 Convention in Calgary, the six selected CYL mentorship recipients are: Cody Schooten, a feedlot operator from Diamond City, AB; Rosie Templeton, a student at the University of Alberta and a purebred cow-calf operator with her family in Coaldale, AB; and Samantha Sperber, a student at the University of Alberta and a cow-calf operator with her family near Rimbey, AB. These recipients will participate in the professional mentorship category.

Selected to participate in the industry leader mentorship are Keith Ypma, a feedlot operator from Taber, AB; Nanita Blomquist, a commercial cow-calf producer in Big Valley, AB and the Alberta Field Manager for the Canadian Cattle Identification Agency (CCIA); and Ricki Fleming, a senior herd manager for the Canadian Food Inspection Agency (CFIA) Animal Disease Research Institute in southern Alberta who ranches a purebred operation with her family in Granum, AB.

Click here to see the (August 11) release.


Waldron Grazing Cooperative wins TESA 2010

The Waldron Grazing Cooperative Ltd. of Stavely, AB, is the recipient of The Environmental Stewardship Award (TESA) for 2010. The Waldron, a 54,480 acre operation with a 10,000 head grazing capacity, received the award in recognition of management practices that ensure a sustainable resource for future generations.

The award was announced at the CCA Environment Stewardship Award Luncheon at Beef 2010, the International Livestock Congress in Calgary. Click here for the release and here for a profile on the Waldron.


The CCA Semi-Annual and Convention – It’s A Wrap

The CCA Semi-Annual Meeting and Convention was a huge success this year. The live auction raised $5,670, which will be donated equally to the Canadian 4-H Council and Alberta 4-H. We thank everyone who participated in this important event.


Canada’s Beef Science Cluster’s Priority Research Areas

The Beef Cattle Research Council (BCRC) Research funded by the National Check-Off and Agriculture and Agri-Food Canada through Canada’s Beef Science Cluster is focused on improving industry competitiveness by reducing production costs or improving product value. Here are some examples of how addressing the Cluster's priority research areas can contribute to the competitiveness of Canada's beef industry.

Animal Health and Welfare: It’s difficult to put actual dollar amounts to the actual or potential costs of any specific diseases, because there are so many diseases, and we don’t know how common many of these diseases are.

But here’s an example. If we assume that 3.25 million cattle enter Canadian feedlots every fall, and that average death loss is 2 per cent, that’s 65,000 dead calves. At $1.16/lb and 550lb, that’s $638 apiece, for a total of $41,470,000 per year. If we could reduce the death loss to 1.5 per cent ($31,102,500), the industry would save over $10 million annually. Those savings don’t include treatment and feed costs.

Forage and Grassland: Approximately 80 per cent of Canada’s beef production occurs while animals consume only forage. Keeping all of Canada’s beef cows and replacement heifers on pasture for one more day every winter would save the cow-calf sector $3.8 million annually.

Feed Efficiency: Reducing winter feeding costs by 1 per cent would save Canada’s cow-calf sector $6 million annually, and improving feed:gain by 1 per cent would save Canada’s feedlot sector $10 million annually.

SRM disposal: Costs of specified risk material (SRM) disposal have escalated since 2003. Deadstock pickup services for farms and feedlots have increased from $0 to over $75 per head. SRM disposal under the enhanced feed ban is costing small abattoirs close to $30 per head.

Food Safety: Saving 1 cent per pound (carcass weight basis) due to reduced food safety recalls would save Canada’s beef industry $21 million per year.

Beef Quality: A 1 per cent improvement in the value of cuts from the loin, rib and sirloin would be worth $27 million per year to Canada’s beef industry. A 1 per cent improvement in the value of cuts from the hip, chuck, brisket and shank would be worth $39 million per year to Canada’s beef industry. Reducing the incidence of dark cutters to 1999 levels would save the Canadian beef industry $13 million annually.

Approximately 25 per cent of Beef Science Cluster funds are devoted to beef quality research.

More information on research funded by the BCRC / Beef Science Cluster can be found at http://www.cattle.ca/projects-in-progress/

CCA Action News

Staff Contributors: Jill Harvie, Reynold Bergen
Written, edited and compiled by: Gina Teel and Tracy Herbert

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