Volume 3 Issue 10 • October 25, 2010

In This Issue ...


Round 5 is a wrap - Canada-EU free trade talks in Ottawa

With five rounds of negotiation sessions under their belts, the lead Canadian and EU negotiators’ assessment is that they are either on track or perhaps ahead of schedule to reach a deal in 2011.

Held in Ottawa last week, this latest negotiating session marked the mid-point in the two year schedule established last fall. Canfax Market BriefsA ‘period of reflection’ had been scheduled to take place between this 5th round and the next one in January, but all the signals coming out of this round of meetings are that a comprehensive ambitious deal remains very feasible.

The negotiators report that they are now moving into serious discussion in the difficult and politically sensitive areas. Beef access into Europe is definitely one of these difficult areas. Nevertheless, our assessment is that both sides understand at the highest levels that without significant meaningful access for Canadian beef into Europe, it will be extremely difficult to approve an agreement in Canada. For this reason, we expect that the results on beef will not be known until near the end of the negotiations.

As well as ensuring that beef access remains top of mind for negotiators and political decision makers, the Canadian Cattlemen’s Association (CCA) continues to provide technical input at the working level of the negotiations. Various areas beyond tariffs and quotas have been identified as needing to be sorted out. These include technical regulations/conditions for production on the farm and during processing and so-called rules of origin for determining which products would be eligible for the preferential benefits of the eventual agreement.

In non-beef agricultural areas, we understand that the EU has essentially agreed to provide tariff free access for most of Canada’s export interests. Pork is parked with beef for now as a sensitive product for the EU while Canada is holding back on access for dairy and poultry products.

Difficult areas outside of agriculture include how the agreement will cover government procurement, movement of people and labour, investment rules, dispute settlement and access to raw materials.

We understand that the main breakthrough of this latest session was agreement on how services will be covered. In essence, all services will be covered by the agreement unless specifically excluded instead of only specifically listed services being included.

Negotiators have yet to arrive at our key area. When they do, however, they know what they will need to get. The CCA maintains the view that unlimited duty free access for Canadian beef exports to the EU is a realistic and achievable goal. An agreement with the EU could be the biggest single opportunity for the Canadian cattle and beef industry since the Canada-U.S. FTA.


Loonie down, but not out, on BoC news

The loonie has lost some of its luster since Oct. 14, when it surged to parity with the greenback in intraday trading to post its highest close since April. The currency bounced around in the 97 cent to 99 cent US range but took a tumble to 96.91 cents US on Oct. 19, following the Bank of Canada (BoC) announcement that it is maintaining the overnight rate at 1 per cent due to a more gradual economic recovery in Canada than expected and a sluggish U.S. outlook.

“The economic outlook for Canada has changed,” the Bank said in its release as it retreated from the expectations it had announced in July.

Even with a rate hike on hold for now, most expect the dance with par to continue. Indeed by Thursday the loonie was at the 98 cents US mark, fueled by a weak greenback and rising equity markets. In April, the currency hit parity with the greenback for the first time since mid-2008.

“Our view is that the loonie will flirt with parity for some time to come, with the bank offering more fuel – since rates will rise, and faster than in the U.S.,” Glen Hodgson, senior vice-president and chief economist of the Conference Board of Canada, wrote in an email.

In its Oct. 19 release, the BoC projected it will take a year longer for the economy to return to full capacity than previously thought. The Bank also said it expects the composition of demand in Canada to shift away from government and household expenditures towards business investment and net exports.

The BoC now anticipates growth of 3.0 per cent this year (down from 3.5 per cent), 2.3 per cent in 2011 (down from 2.9 per cent), and 2.6 per cent in 2012. The inflation outlook has been revised downwards and total CPI and core inflation are now expected to converge to 2 per cent by the end of 2012, Canada’s central bank said.

In a research note, the BMO said the sluggish recovery south of the border and softer-than-expected Canadian growth in the second half of 2010 have pulled the BoC back onto the sidelines. “We judge they will remain on hold until May-2011,” wrote economist Robert Kavcic.

The next scheduled date for announcing the overnight rate target is Dec. 7, 2010.


Beef Cattle Code of Practice renewal moves ahead

The nearly 20-year old Beef Cattle Code of Practice will be updated through the National Farm Animal Care Council (NFACC) code development process, in partnership with the CCA.

The CCA Animal Care Committee has invested considerable time exploring the best option for renewing the existing Beef Code of Practice. The NFACC code development process is viewed as the optimum method to achieving an outcome-based, science-based Code of Practice supported by all stakeholders.

“The National Farm Animal Care Council process does a good job of bringing the scientific outlook and other stakeholders to the table,” said CCA Animal Care Committee chair Dave Solverson.

The NFACC code process involves a Code Development Committee and a Scientists’ Committee.  The work of the Scientists’ Committee informs the work of the Code Development Committee, which ultimately develops the Code. Codes of Practice are national guidelines for the care and handling of farm animals.

Stakeholders on the Code Development Committee include producers from different regions and types of production, and representatives from processors, veterinarians, animal welfare, Federal and Provincial governments, transporters and enforcement.

The Code Development Committee is chaired by Ontario producer Ian McKillop, a former chair of the CCA Animal Care Committee and a one-time president of the Ontario Cattlemen’s Association.

In place since 1991, the existing Beef Code of Practice will be one of the first Codes to enter the NFACC code development process, which was finalized in 2010.

Solverson said the code renewal process will play an important role in telling consumers how beef cattle are raised in Canada. It will also help producers by reinforcing scientifically-sound management practices and identifying improved methodologies in others.

“This process will give us a great tool to communicate both of these cases to new and existing producers and to consumers,” he said.

The Code development process is part of an Agriculture and Agri-Food Canada AgriFlexibility project administered by the NFACC. The revised code is expected to be finalized in 2013, following a public comment period.

For more information on existing NFACC’s Code development process, please visit www.nfacc.ca.

CCA Action News

Staff Contributors: John Masswohl, Ryder Lee
Written, edited and compiled by: Gina Teel and Tracy Sakatch

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