January 21, 2005
BSE: Disaster or Opportunity?
The detection of a second case of BSE in as many weeks could derail the planned opening of the U.S. border to live cattle, and could weaken the stellar support of Canadian consumers for our beef. Before we wallow in another round of despair, perhaps we should think about ways to turn this disaster to our advantage. Let’s take the lead and turn the tables by mandating that each and every animal be tested for BSE.
One objection to such a mandate is the high cost, about $40 per animal. But ask any beef producer who is now losing $400 to $800 per animal if that cost is too high. It’s a price we should be willing to pay to restore confidence. Moreover, mandatory testing would increase volumes and those costs would fall dramatically. Companies like MDS Laboratories of Toronto, with leading-edge medical testing technologies, have significantly reduced the costs of laboratory testing in the Canadian healthcare system. If this company or others developed automated BSE testing, costs and turn-around times would drop dramatically and traceability will be guaranteed.
Our beef industry should demand BSE testing of all slaughter animals. That leads us to the main objection. Canada would also have to ban exports of non-tested beef as a food safety issue. Since BSE testing is done only post-mortem, this would effectively end live cattle exports to the U.S. Traditionally, we have relied on live cattle exports because we don’t have adequate slaughter capacity at home. The two major killing plants in Alberta are American-owned with the advantage of corporate access to the U.S. supply network. Canadian investors are reluctant to build the needed capacity in Canada for two reasons: economies of scale and predatory pricing.
Large U.S. plants enjoy lower labour costs and hence lower operating costs. To run these giant plants at capacity, the final 5 to 10 percent are often purchased in Canada at a premium price, with these higher prices spread over the 90 to 95 percent of local purchases. If new Canadian capacity were built, a year of predatory pricing by U.S. killing plants might bankrupt the new operations. This has discouraged Canadian slaughter plant investment, but a total ban on live exports would stimulate it because the plants would be assured of the animal numbers required to run the new plants at capacity.
Tested Canadian beef would find new and expanded markets in Japan and the whole Pacific Rim. Canadian beef would replace U.S., Australian and Argentinian beef in major world markets, as these countries are unwilling to mandate testing. Indeed, demands by American consumers for safe beef could make the U.S. the biggest importer. It would be nearly impossible for the U.S. to close the border to tested Canadian beef. Making Canadian beef the “best and tested”, unique in the world market place, would ensure the future growth of export markets where the customer is “always right.”
Some say that mandatory testing will discover more cases of BSE and therefore damage the reputation of Canadian beef. Not so, as positive animals will never enter the food chain with mandatory testing. It also represents a radical departure from past business practices, where Canada simply rolls over to American trade policy. An independent policy could ensure Canadian beef producers a bright, growing future. Canada’s already favourable reputation as a reliable trading partner would be further strengthened.
These changes would cement consumer confidence in the very real advantages of Canadian cattle. Our beef herd is one of the healthiest and best in the world. Today’s producers are very sophisticated managers. Economic pressure long ago eliminated marginal producers, and those left are the best of the best. Families have spent decades and generations improving herd genetics to the point where all major breeds, whether British (Hereford, Angus) or European (Charolais, Simmental), are better in Canada than in their countries of origin.
Our temperate climate with its short growing season produces forage and feed grains of extremely high quality. Producers capture this burst of growth by using the newest process technologies and machinery, so the cattle herd thrives year round on our short summer growth binge. Combining this feed quality with superior genetics gives consumers the best quality red meat in the world. Just try beef in a sub-tropical climate – the Texas Longhorn T-Bone, for example – to taste the superiority of Canadian beef.
Other solutions to the BSE crisis fall short. A forced downsizing of the Canadian herd by killing and burying older animals – culling, for short – seems inappropriate in a hungry world and would be a policy disaster for the world’s best beef industry. To kill off thousands of healthy cows that represent years of genetic improvement to remove a potential handful of BSE positives is an incredible waste and far more expensive than testing. Further, this proposed cull offers no assurance of a U.S. border re-opened to live cattle.
Mandatory testing to solve the BSE crisis will establish a unique Canadian identity and differentiate ourselves from Americans. It’s time for industry and political leadership on the issue to set a new course. A Canadian approach that mandates testing, and therefore processing here, will increase slaughter capacity, expand export markets and give Canadian beef producers a hopeful future. Let’s turn adversity into opportunity.
The Honourable Donald Orchard farms at Miami, Manitoba. He was the Member of the Legislative Assembly for the constituency of Pembina for 18 years. He has held ministerial portfolios in Health, Transportation and Energy.
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