Mad Cow Chaos in Canada: Was It Just Bad Luck or Did Government Policies Play a Role?

Canadian Public Policy

Mad Cow Chaos in Canada: Was It Just Bad Luck or Did Government Policies Play a Role?Author(s): Danny G. Le Roy and K. K. KleinSource: Canadian Public Policy / Analyse de Politiques, Vol. 31, No. 4 (Dec., 2005), pp. 381-399Published by: University of Toronto Press on behalf of Canadian Public PolicyStable URL: http://www.jstor.org/stable/3552357 .

Accessed: 16/06/2014 05:16

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

University of Toronto Press and Canadian Public Policy are collaborating with JSTOR to digitize, preserveand extend access to Canadian Public Policy / Analyse de Politiques.

http://www.jstor.org

This content downloaded from 91.229.248.111 on Mon, 16 Jun 2014 05:16:57 AMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/action/showPublisher?publisherCode=utp

http://www.jstor.org/action/showPublisher?publisherCode=cpp

http://www.jstor.org/stable/3552357?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp


Mad Cow Chaos in Canada:

Was It Just Bad Luck or Did

Government Policies Play a Role?

DANNY G. LE ROY AND K.K. KLEIN

Department of Economics The University of Lethbridge Lethbridge, Alberta

Les auteurs soutiennent ici que les politiques du gouvernement ont contribu6 t une forte croissance dans l'industrie du boeuf au Canada, mais aussi B la vuln6rabilit6 de la structure de cette industrie, qui a conduit h un chaos financier lors de la d6couverte, en 2003, en Alberta, de l'enc6phalopathie spongieuse bovine (ESB). L'article d6crit la genise du problkme, I'impact de la d6couverte de I'ESB, les r6ponses des gouvernements f6d6ral et provinciaux et les effets aggravants du protectionnisme dont b6n6ficient les march6s 6trangers. Les auteurs mettent en lumibre les changements cl6s qui doivent etre r6alis6s si l'on veut qu'i long terme le march6 canadien ait des chances de succhs dans la comp6tition des march6s au niveau international.

The authors here argue that government policies helped to bring about a boom in the Canadian beef industry, but these policies also contributed to the industry's vulnerable structure, which then led to financial chaos with the discovery of BSE in Alberta in 2003. The paper describes the genesis of the problem, the impact of the discovery of BSE, the responses of the federal and provincial governments, and the exacerbating effects of protectionism in foreign markets. The authors highlight key changes that must occur if Canadian beef is to compete successfully in the international marketplace over the long term.

INTRODUCTION

n May 2003, bovine spongiform encephalopathy (BSE) - often called mad cow disease - was

detected in a Canadian cow. The consequences of this discovery have been devastating for cattle producers and other industry stakeholders. International borders were slammed shut and the export-oriented beef business suffered a tremendous financial blow. While waiting for borders to reopen, cattle producers in Canada showed tremendous resourcefulness

and resilience as they worked to get past this difficult situation. The worst thing about their ongoing, nightmarish experience is that there is no way to predict when normal trade in beef and live cattle will resume. Few imagined in May 2003 that more than two years later, the United States border would be only partially opened and most offshore markets still sealed shut. No one can say for certain whether it will be weeks, months, or years before governments in foreign countries allow consumers full access to Canadian beef products and live cattle.

CANADIAN PUBLIC POLICY - ANALYSE DE POLITIQUES, VOL. XXXI, NO. 4 2005



382 Danny G. Le Roy and K.K. Klein

The disastrous situation in the cattle industry also represents a dramatic problem for policymakers. Since the 1980s, governments and producer groups in Canada have promoted cattle production and value-added activities. The BSE crisis has demon- strated that this seemingly good idea became really complicated and really expensive really fast.'1 Losing access to the live cattle market in the United States has motivated policymakers in Canada to fo- cus on the domestic market for solutions. Authorities at both federal and provincial levels responded by providing ad hoc producer assistance programs, en- couraging the expansion of processing facilities, increasing testing for BSE, and other initiatives. Primary producers, processors, input suppliers, and consumers have adjusted their patterns of factor usage, production, and consumption to respond to the new state of affairs brought about by the new government programs.

The purpose of this paper is to determine how the Canadian beef industry got into this situation. Was it just plain bad luck? Did the industry make poor decisions? Did government policies contrib- ute to the devastating financial losses incurred in the industry since the discovery of BSE in an Al- berta cow in May 2003? The hypothesis is that both the livestock industry and government are respon- sible for the crisis. Industry optimism fuelled by government intervention helped to expand cattle and beef production in Canada and to increase the reli- ance on the United States market. This contributed to the industry's vulnerable structure and helped create the conditions for the financial chaos result-

ing from the loss of export markets. The problematic situation highlighted the importance of institutions that encourage private sector supply chains when export markets became a large portion of total demand.

The paper is organized in five sections. The next section provides an overview of BSE and of the federal and provincial governments' responses to the crisis. The third section analyzes the genesis of the

problem in Canada by reviewing the economic set- ting, government and industry initiatives designed to encourage beef production, and the responses of stakeholders to government programs. The fourth section highlights changes that we believe must occur if Canadian beef is to compete successfully again in the international marketplace. Finally, the last section summarizes and concludes the paper.

OVERVIEW

BSE Background Regulations enforced since 1990 have made BSE a reportable disease in Canada. BSE is one of a number of diseases known generally as transmissible spongiform encephalopathies (TSEs). TSEs are characterized by spongy degeneration of the brain with severe and fatal neurological signs and symptoms. Examples in animals include scrapie in sheep and goats, chronic wasting disease in mink and North American mule deer and elk, and BSE in cattle. BSE has an incubation period of approximately one to eight years with a mean of four to five years (Collee 1993) and is fatal within weeks of its onset. Strong evidence suggests the agent is composed largely, if not entirely, of a self-replicating protein, called a prion.2 It seems to be transmitted through the consumption of BSE-contaminated meat and bone meal supplements in cattle feed.

Creutzfeldt-Jakob disease (CJD) is the most well known TSE in humans. CJD is a rare type of de- mentia that affects about one in every one million people each year (NINDS 2005). Humans who develop CJD lose the ability to think and move properly, suffer from memory loss and progressive brain damage until they can no longer see, speak or feed themselves. About 90 percent of patients die within a year (ibid.).

Other human TSEs include Variant CJD, kuru, fatal familial insomnia, and Gerstmann-Straussler- Scheinker disease. Variant CJD (vCJD) is similar to




Mad Cow Chaos in Canada 383

CJD but has three notable differences. First, younger people generally are affected, with an average age at death under 30 years. Second, individuals with vCJD have a longer duration of illness from onset of symptoms to death. The median survival is 14 months in vCJD compared to four months in CJD (Johnson 2001). Finally, the route of transmission of vCJD is not yet fully proven, although it is generally believed that it is transmitted through exposure to food contaminated by BSE. Other human TSEs have not been linked to food exposure.

Since the early 1980s, there have been over 180,000 cases of BSE reported in England (Fearne 2004). From a population of 60 million, a high per- centage of whom ate infected beef for several years, there have been 101 confirmed deaths from vCJD since 1995, plus 36 probable deaths (Brown 2004). To give perspective to this number, it is worth not- ing that over the same period, there were nearly 500,000 reported cases in the United Kingdom of Salmonella poisoning, including 119 deaths in 2000 alone (ibid). In the United States there are 120-130 deaths per year and between 6,000 and 12,000 ill- nesses per year from meat and poultry E.coli contamination (ibid.).

International standards and guidance regarding transmissible animal diseases and sanitary safety have been developed by the World Organisation for Animal Health (OIE), known formally as the Office International des Epizooties. The World Trade Or- ganization recognizes OIE standards as reference international sanitary rules.3 Until it was revised in May 2005, the OIE Terrestrial Animal Health Code (OIE 2003) classified countries into one of five BSE- risk categories (BSE free, BSE provisionally free, country of minimal risk, country of moderate risk, and country of high risk). The OIE does not assign countries to particular categories, nor do the provi- sions suggest the complete prohibition of imports. Instead, governments in importing countries use the categories to determine the conditions under which they will allow consumers access to imported beef.

In practice, trade has been prohibited for even the slightest BSE risk. The federal government in Canada, for example, prohibited all beef and cattle imports from the UK, other European countries, and Japan when BSE was discovered there.

BSE in Canada

Up to mid-2005, six cases of BSE had been discovered in North America, five of which involved cattle that had been on farms in Alberta. The first, discovered on a farm near Red Deer on 8 December 1993, was a pure-bred beef cow that had been imported from the United Kingdom in 1987. That animal and its herd mates were subsequently destroyed, along with all offspring and all remaining animals imported from the UK since 1982.4 While cattle imports to Canada from the UK had been banned since 1990, the Canadian government implemented more stringent disease detection and control measures on farms and at slaughter plants. Due to the quick and deliberate actions taken in Canada, exports of beef and live cattle from Canada were not affected. In 1997, the Canadian and American governments introduced ruminant-to-ruminant feed bans in response to the high-profile BSE crisis in the United Kingdom.5 The federal governments of Canada and the United States continued their policy of prohibiting imports of ruminants and ruminant products from countries with a reported case of BSE.

On 20 May 2003, BSE was confirmed in an An- gus cow from a herd in Wanham, Alberta. Unlike the earlier case, the infected animal was born, fed, and raised in Canada. Governments of 34 countries, including the United States and Mexico, banned imports of ruminant and ruminant products origi- nating from Canada using the same OIE criteria the Canadian government had used to justify its import prohibitions against beef from countries where BSE had been detected. The consequences of this discovery were devastating for cattle producers and other industry stakeholders in Canada as the poten- tial risks to human and animal health from BSE had become a major economic and political issue. Cattle





prices at one Alberta auction dropped from $1.20 a pound to 32 cents before most cattle were taken home again. Slaughter plants in Canada stopped accepting new cattle. The Canadian government stopped all beef shipments not already in transit. Some live animals already in the United States were returned to Canada. The resulting dislocation in the cattle industry in Canada was unprecedented, and could have been much worse if the United States

Department of Agriculture had not readmitted imports of boneless beef muscle cuts and veal from Canada in September 2003.

The third case of BSE in North America was found in a Holstein cow in Yakima, Washington on 25 December 2003. The discovery unleashed additional economic havoc on the North American cattle market. Within hours of the United States Depart- ment of Agriculture (USDA) confirmation of this discovery, governments of more than 50 nations, including Canada, Mexico, Japan, South Korea, Chile, Mexico, and Taiwan, banned beef imports from suppliers in the United States. As in Canada, border closures led to a collapse of the beef export business, a reduction of trade between back-

grounders and feedlots, a decrease in the market value of slaughtered animals, and devastated export- oriented meat processing plants. In Canada, cattlemen relived a horrible nightmare they thought was almost behind them.

Initially it appeared the BSE status of Canada and the United States would be identical. Later it was determined the cow in Washington had been born in Alberta. The situation for the Canadian beef in-

dustry got even worse because opponents of the cattle and beef trade used the cow's Canadian con- nection as a tool to slow and frustrate the normalization of live cattle trade across the Canada- United States border.

To the relief of cattle producers in Canada, on 29 December 2004 the USDA announced that it would

reopen its borders to live cattle under 30 months of

age as of 7 March 2005. The ensuing enthusiasm in Canada did not last long. On 2 January 2005, a fourth case of BSE was confirmed in an eight-year-old Holstein cow from a farm in Barrhead, Alberta. Then, just over a week later, on 11 January 2005, a fifth case was confirmed in a seven-year-old Charolais cow from a herd in Innisfail, Alberta.

While material from the two most recent cases did not enter the food or feed systems, they raised concerns in the United States about lifting the import ban on live Canadian cattle. On 2 March 2005, a federal judge in Billings, Montana, granted a preliminary injunction against USDA regulations that would have allowed imports of live Canadian slaughter and feeder cattle less than 30 months of age. The next day, the United States Senate voted 52-46 in favour of keeping the border closed to Canadian cattle. However, the 9th Circuit Court of Appeals in Seattle overturned the temporary injunction barring live cattle less than 30 months of age imported from Canada on 14 July 2005. Four days later, the first truckload of live cattle since 21 May 2003 crossed the border at Lewiston, New York headed for a

slaughterhouse in Pennsylvania. A hearing sched- uled for 27 July 2005 on a permanent injunction against the USDA regulations, which would have re-imposed the ban on live cattle and also blocked beef shipments, was deferred indefinitely.

Border closures were catastrophic because net exports accounted for nearly half of the total amount of beef produced in Canada (Canada. Agriculture and Agri-Food Canada, various years). In 2002, the year before BSE was discovered in Canada, earnings from cattle and beef exports totalled about $4 billion (Canfax 2003). The resumption in Septem- ber 2003 of fresh and frozen boneless beef derived from bovines under 30 months of age to the United States and Mexico was critical in mitigating industry losses in Canada. The renewed ability to export live cattle under 30 months to the United States has also helped to restore revenues, but exports of bovines over 30 months or beef made from these





animals, which are important source of earnings, particularly for dairy producers in Canada, have not resumed at the time of writing this paper.

Government Assistance Governments in Canada transferred hundreds of millions of dollars to help cattle producers deal with the fallout of BSE. The federal and provincial governments provided $520 million through the BSE Recovery Program. The federal government gave an additional $120 million to help producers deal with a growing surplus of older cull animals as well as a further $680 million under the Transitional Indus-

try Support Program. The Canadian Agricultural Income Stabilization (CAIS) program also provided financial assistance to producers who experienced a loss of income as a result of BSE or other factors.

The federal-provincial BSE Recovery Program was intended to stabilize the market and get urgent help to producers facing a sharp reduction in demand and prices after the ban on exports to the United States. Despite its laudable objective, aid programs gave producers an incentive to sell cattle, as slaughter was required to trigger payments and domestic cattle prices plummeted further. As large owners of cattle themselves, packers in Alberta received $45 million of the total assistance, which was transferred not on the basis of financial need but

according to the number of cattle owned. At the same time, retailers were selling the beef at close to normal prices thanks to stable consumer demand in the domestic market and a lack of processing capacity that limited the ability to increase beef supplies.

In addition to the federal-provincial BSE Recov- ery Program, there were eight other BSE compensation programs announced in Alberta between 25 June 2003 and 4 June 2004.6 The

provincial programs covered 972,721 animals and transfers were made to 22,312 enterprises on a per animal basis. The total sum transferred to livestock

producers was over $400 million (Alberta. Agricul- ture, Food and Rural Development 2004) and was

the subject of a major audit (Auditor General of Al- berta 2004).

Government assistance programs were aimed at short-term solutions as policymakers and industry representatives believed the live-cattle import ban in the United States would be lifted shortly after the border was closed on 20 May 2003. Assistance programs were implemented swiftly and in an ad hoc fashion. Cattle producers and other industry stakeholders pushed for governments to transfer money quickly into the hands of producers. Trans- fers continued through federal, provincial, and federal-provincial programs until the border was partially reopened to live cattle.7

ANALYSIS

Genesis of a Crisis Government intervention is an overarching theme in the history and geography of Canada's beef industry. In 1879, Sir John A. Macdonald's National Policy provided the initial impetus for ranching in western Canada. To encourage individuals to take up ranching, the federal government brought one of the earliest cattle herds into Alberta, provided subsidies to improve breeding stock and, with the goal of improving the competitiveness of Canadian cattle in foreign markets, provided animal husbandry training (MacLachlan 2001). However, by reducing and fixing freight rates on western grains, the 1897 Crowsnest Pass Agreement had a negative impact on ranching because it increased the farm price for grain and discouraged cattle feeding and slaughter- ing activities in western Canada.8

The problems created by government intervention in the grains sector and policies to remedy them provided the catalyst for expanding livestock production in western Canada during the 1980s.9 The Alberta government developed major new programs to stimulate large-scale expansion of cattle production and processing activities. The Alberta





government (along with the Canadian and other provincial governments) was keenly interested in obtaining better and more secure market access. The pursuit of these objectives coincided with the nego- tiation of the Canada-United States Trade Agreement (CUSTA), and later NAFTA, which granted preferential trade status to goods produced within the signing countries while penalizing goods from outside, including beef. Expansion of the cattle industry thus was encouraged by domestic government assistance while imports from outside North America were discouraged through limited tariff rate quotas and relatively high tariffs for over-quota beef products.

Quantitative import restrictions into the United States under the Meat Import Act of 1979 created a significant trade impediment for beef exporters in Canada. Following the implementation of the CUSTA, beef produced in Canada became exempt from import quotas in the United States and beef exporters in the United States gained largely unham- pered access to the Canadian market.10 Tariffs on live cattle were eliminated. However, import barriers were maintained and enforced by governments in Canada and the United States against imports of beef from outside the CUSTA region. In Canada, the Canadian International Trade Tribunal limited

imports of subsidized beef from the European Un- ion and less expensive, unsubsidized beef from Latin America and Oceania. In 1994, the preferential trade system was extended to the government of Mexico under NAFTA.

The implementation of the Uruguay Round Agreement in 1995 required the conversion of non- tariff trade barriers, like those used to limit beef

imports into the NAFTA region, to specific tariff rates. This was done to improve the transparency of existing agricultural trade barriers and to facilitate their future reduction. Up to 76,000 tonnes of offshore beef imports (from non-NAFTA countries) could be imported into Canada without tariff. Im- ports above that quantity faced a 26.5 percent tariff or required a supplementary import permit."1

The economic consequences of a tariff policy are well known. The tariff benefits cattle and beef producers in the NAFTA region at the expense of the producers of other goods and services and at the expense of consumers. Shielded from the full competitive pressure of producers outside the NAFTA region, cattle and beef producers in North America focused on satisfying consumers within their trad- ing bloc and in high-price regions like Japan and South Korea.

Domestic Subsidy Programs In addition to limiting beef imports into the NAFTA region, other initiatives were designed and applied to further help the cattle producers in Canada. Dur- ing the 1980s, governments in Canada implemented programs designed to stimulate growth of the beef industry, particularly in western Canada.

Long frustrated by the effect of subsidized freight rates for prairie grains that increased the on-farm prices of grain, the Alberta government instituted a subsidy to offset its detrimental impacts on the growth of the cattle industry in Alberta. Beginning 1 September 1985, the Alberta Feedgrain Market Adjustment Program offered subsidies of $21/tonne for grain used for livestock feeding. This was cal- culated to be the approximate difference between the subsidized freight rate to transport a tonne of grain to export terminal locations and the full com- pensatory rate of shipping the tonne of grain (Klein et al. 1991). On 1 July 1987, the program was changed and became known as the Alberta Crow Benefit Offset Program. The level of subsidy was reduced - first to $13/tonne for the 1987-88 and 1988-89 crop years, and then to $11/tonne for the 1989-90 crop year. The Alberta government spent nearly $49 million on this program in 1989-90 (Al- berta. Agriculture, Food and Rural Development 1989/90) and the subsidy made cattle production more profitable in Alberta than in the other Prairie provinces. In response, both the Saskatchewan and Manitoba governments announced that they too would offer a Crow Offset program to livestock producers in those provinces. Beginning 1 September





1989, producers in Saskatchewan received $13/tonne for each tonne of feed grain used to feed cattle and hogs in a feedlot. The government in Manitoba restricted its program to slaughter cattle only and paid $9/tonne for feed used (Klein et al. 1991).

A second major initiative led to the expansion of cattle-slaughter capacity in Alberta. In May 1989, the multinational agri-business firm Cargill opened a $55 million state-of-the-art facility in High River. The cost of erecting this plant was subsidized by a $4 million grant from Alberta's Processing and Marketing Agreement, a regional development program designed to encourage secondary manufacturing firms and add value to agricultural products (Byfield and Johnson 1987). In 1987, when plans for the new plant became public, Alberta's existing meat packers denounced the taxpayer transfer required to build it. They observed that the number of cattle slaughtered in the province was only 21,000 cattle per week, yet the existing plants had slaughter capacity sufficient to handle 30,000 per week. Competitors feared the subsidy would enable the new plant to operate at a loss long enough to drive all the existing competitors out of the market (Byfield and Johnson 1987). The counter argument from the provincial government and Alberta feedlot operators was that some 200,000 finished cattle were being exported from Alberta each week at that time, and a new slaughter plant would add value to more cattle in Alberta. In addition, the creation of a big new market for cattle and low prices for grain would provide an incentive to increase the production of finished slaughter cattle in southern Alberta feedlots.12

To help diversify export destinations for beef, a third major initiative involved developing a beef export promotion agency. The market development division of Alberta Agriculture worked closely with Alberta meat processors, packers, exporters and the Alberta Cattle Commission (representing the producers) to develop an industry organization to address the market opportunities presented by the liberalization of the Japanese beef market (Alberta.

Agriculture, Food and Rural Development 1988/89). The Canadian Beef Export Federation (CBEF) opened its first trade office in the Canadian Embassy in Tokyo in November 1989. The Alberta government financed 80 percent of the CBEF's $800,000 initial budget (Edmonton Journal 1989).13 The se- lection of Tokyo for its first office was a direct result of the liberalization of the Japanese beef market through the Beef Market Access Agreement between Japan, the United States, and Australia. The Alberta government and the Alberta Cattleman's Associa- tion forecast a possible market for Canadian beef of $300 million per year (Edmonton Journal 1989) (slightly optimistic since sales in this market peaked at $171 million in 2001 and declined to only $96 million in 2002, ahead of the BSE problem in Canada).

Beginning in 1985, a federal-provincial producer program called the National Tripartite Stabilization Program supported production of several agricultural commodities, including beef.14 This program encouraged production by guaranteeing prices and financial margins at 90 percent of a ten-year moving average. In 1988, $7.7 million of beef-producer premiums triggered payouts to slaughter cattle producers in Alberta of over $62 million. In 1989, the average payout to Alberta producers of slaughter cattle was over $35,000 (Alberta. Agriculture, Food and Rural Development 1988/89, 1989/90). This program was terminated in 1994 due to its costs and from the threat of countervail action by the United States (Brinkman 2004).

Policy Objectives Were Met Primafacie evidence suggests that policy objectives of the 1980s and early 1990s to increase cattle production and processing activities were realized. The beef industry in Canada became an important part of the agri-food economy and the second largest (after wheat) earner of foreign exchange in the agricultural sector. In 2002, farm cash receipts from cattle and calves totalled nearly $8 billion, 21 percent of the total $36 billion in farm cash receipts in Canada (Statistics Canada, various years).





According to Statistics Canada, as of 1 January 2003, there were 13.8 million head of cattle and calves in Canada. Seventy-two percent of feeder cattle were located in Alberta, 17 percent in Ontario, with the remainder located in the other eight provinces. In Alberta between 1986 and 2001, the number of yearling steers increased from 426,000 to 960,000, the number of beef heifers for market increased from 225,000 to 720,000, and the total number of cattle and calves on farms increased from 3,746,000 to 6,500,000 (Statistics Canada, various

years).

Exports of live cattle added about $1.8 billion to the beef industry's revenues in 2002 (see Table 1), and exports of beef and beef products added an additional $2.2 billion (see Table 2). Canada was the third

largest beef exporter in the world, with 76 percent of exports going to the United States (Table 2)."15

Expansionary policies in Canada affected the pattern of production and trade of cattle and beef. Net exports of live cattle, which were relatively

small and occasionally negative prior to 1987, grew to about 1.5 million head by 2002 (Figure 1). Net exports of dressed beef, again of a minor magni- tude before 1995, grew to about 350,000 tonnes by 2002 (Figure 2). By 2002, beef export earnings totalled about CDN$4 billion compared to CDN$1 billion in beef imports (Canfax 2003).

As a large and growing portion of beef production in Alberta was exported, producers became increasingly dependent on access to foreign markets. Though beef can be frozen and stored for some time before deterioration in quality takes place, producers can ill afford lengthy supply-chain disruptions. Moreover, with increased integration of the North American beef market, slaughter capacity in Canada became inadequate to handle all the animals produced in the country. This was particularly critical for older breeding stock which is regularly culled as new replacements enter the herd. A large propor- tion of culls in Canada were exported for slaughter in plants located in the United States. They had no place to go when the border was closed to exports

TABLE 1 Canadian Live Cattle Exports to the United States

Quantity Value (no. of head) (millions of CON$)

2000 2001 2002 2000 2001 2002

Slaughter Steers 358,961 424,335 346,237 $464.60 $621.86 $478.92 Heifers 195,182 285,805 248,399 $244.40 $393.54 $329.33 Cows 171,488 257,584 372,294 $138.00 $230.59 $299.01 Bulls 44,286 53,575 57,448 $59.50 $79.45 $77.83

Feeder 115,524 190,538 574,992 $110.60 $186.37 $487.56 Other 78,864 94,318 87,082 $110.10 $143.41 $149.31

Total Cattle Exports 964,265 1,306,155 1,686,452 $1,127.20 $1,655.20 $1,821.96

Source: Canfax (2003).





TABLE 2 Canadian Beef and Beef Product Exports

Quantity Value (tonnes) (millions of CDN$)

2000 2001 2002 2000 2001 2002

Destination United States 318,464 355,942 373,432 $1,382.21 $1,688.70 $1673.22 Mexico 53,189 69,674 75,809 $180.25 $271.69 $282.52 Japan 28,390 29,245 23,982 $162.02 $171.37 $95.84 South Korea 20,593 9,420 17,254 $98.56 $28.64 $59.51 Taiwan 2,655 2,991 4,026 $16.07 $15.62 $20.97 Hong Kong 2,112 1,664 570 $8.97 $7.22 $2.78 China 1,203 1,405 2,494 $3.14 $4.11 $6.69 Southeast Asia 1,434 754 2,204 $1.56 $1.34 $2.48 Central and South America 7,099 7,524 7,526 $7.06 $9.03 $7.55 Caribbean 3,607 5,519 3,398 $5.55 $11.41 $6.76 European Union 422 220 67 $2.00 $0.78 $0.23 Russia 2,623 2,437 4,638 $2.43 $2.97 $4.32 Other 4,125 2,934 4,742 $6.43 $13.75 $17.79

Total Beef Exports 445,916 489,729 520,142 $1,876.07 $2,226.61 $2,180.65

Source: Canfax (2003).

FIGURE 1 Canadian Net Export of Cattle to the United States, 1975-2003

1,600

1,400

1,200

S1,000

o 800

,• 600

- 400 II

200

O 9. 1?

II~ei sl l

1975 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 -200

-400

Year

Source: Canada. Agriculture and Agri-Food Canada (various years).





FIGURE 2 Canadian Net Export of Dressed Beef, 1975-2003

400

300

200

-o

S100

0

17

U ml . I .

i ilI 115 I 17 1979 1981 1983 1985 1987 1 l9 1 l 11 3 1995 1997 1999 2001 2

-100

-200

Year

Source: Canada. Agriculture and Agri-Food Canada (various years).

of live animals and all major Canadian slaughter plants were overwhelmed with deliveries of more profitable high-grade, younger animals for slaughter.

Protectionism in Foreign Markets Rising protectionism in agriculture in the form of non-tariff barriers was a major concern during the 1986-94 Uruguay Round of multilateral trade ne- gotiations. Protectionist national governments had devised innovative ways to shield domestic agricultural producers from competing directly with foreign suppliers. Since most national governments have a responsibility to protect human, animal, and plant safety and health, a popular mechanism was to implement discretionary, arbitrary food safety measures. The Sanitary and Phyto-Sanitary Agree- ment (SPS), a product of the Uruguay Round Agreement on Agriculture, was aimed at eliminat- ing arbitrary food safety measures by requiring scientific justification of any import restriction based on concerns related to food, animal, and plant safety

and health (WTO 2003). The SPS Agreement states (in part) that:

No member should be prevented from adopting or enforcing measures necessary to protect human, animal, or plant life or health arising from:

* The entry, establishment or spread of pests, diseases, disease-carrying organisms or disease- causing organisms;

* Additives, contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs; and

* Diseases carried by animals, plants or products thereof (WTO 1994, SPS Agreement Annex A).

The SPS agreement also acknowledges the legal authority of a national government to enforce domestic SPS measures that are higher than the minimum if there is a legitimate reason to do so (SPS





Agreement, Article 3:3). In addition, national governments can enforce provisional SPS measures based on the precautionary approach.

Although the SPS Agreement is designed to cur- tail abusive use of a non-tariff import barrier, it contains sufficient ambiguity to encourage special interests to seek trade protection. To deal with remaining ambiguities, the SPS Agreement states that unilateral SPS measures must be "based on scientific principles" and cannot be maintained "without sufficient scientific evidence" unless it is a temporary, precautionary measure (SPS Agreement, Article 2:2). Three international scientific organi- zations are charged with the responsibility of evaluating the sufficiency of the evidence: (i) Co- dex Alimentarius Commission for food safety; (ii) Office International des Epizooties for animal health and safety; and (iii) International Plant Pro- tection Convention for plant health and safety.

The Canadian government was one of many that used the OIE Terrestrial Animal Health Code criteria to ban imports from the United Kingdom, France, Germany, Japan, and other countries where BSE was discovered. The import prohibitions enforced by foreign and Canadian governments set an unfortunate precedent for a similar response when a case of BSE occurred in Canada. Caswell and Sparling (2005) argue the harmful trade dislocations were not the result of a region losing its BSE-free status, but of the import restrictions that national governments have routinely imposed upon the loss of such status. Instead of the graduated restrictions recommended by the OIE, national governments have tended to ban all cattle and beef imports. The OIE makes clear that, except for short suspensions of trade during investigation following the confirmation of a BSE case, "it is apparent that some Member Countries are applying trade bans when an exporting country reports the presence of BSE, without consulting the recommendations in the Code or conducting a risk analysis in accordance with its OIE and WTO obli- gations" (OIE 2004). According to the OIE, this not

only results in trade disruptions that are unneces- sary to protect human and animal health, but also reduces the incentive to implement effective and transparent surveillance systems. Moreover, as total bans are not based on a risk analysis, it is unclear what is necessary to allow imports to resume.

Since international trade in cattle and beef remains open to political influence, cattle feeding and processing activities are more risky than they would otherwise be. With a view to resolving this problem, in May 2005, the OIE adopted revised standards for beef trade involving countries where mad cow disease has been identified. A new three-tier system (negligible risk, controlled risk, and under-determined risk) replaced the earlier five-risk category regime. The OIE now recommends that no trade restrictions be applied for boneless beef from cattle 30 months of age or younger regardless of the mad cow situation in the exporting country. De- boned beef will be added to milk, dairy produce, cattle hides, embryos, and semen that the OIE says can be traded without regard to a country's BSE status. Even though the OIE is only an advisory body, its revised rules may make it more difficult for governments to impede international trade because it has determined that no human or animal health risk is posed by importing meat from young cattle even from a country where mad cow disease is rampant.

Protectionism in foreign markets underscores the need in Canada for better methods to deal with border closures. Though the OIE has a protocol to limit trade upon the discovery of BSE and other serious diseases, there is no similar science-based mechanism to reopen the borders when scientific procedures ensure there is no significant chance of further incidence of the disease. This can be devastating for an industry that is dependent on export markets for a perishable product. Stakeholders in Canada must work within the existing set of institutions and trade rules while being ever cognizant and prepared for the seeming capriciousness of their intended foreign customers and their governments.





The Importance of the Japanese Market The Japanese government has been singled out for criticism for prohibiting beef imports from North America. By banning imports from the United States in December 2003, despite the scientific evidence that until that time no animal born in the United States had BSE,16 the Japanese government made it difficult politically for the Government of the United States to open the border to live beef animals from Canada.

Although Japan is the largest food importing country in the world, it has one of the most highly protected agricultural sectors, and the beef industry is no exception. The tight coordination between business and government in Japan is meant to support producers, not consumers, through export promotion, import limitations, and strong regimen- tation of the domestic market. The combination of

government intervention and market forces in Ja- pan has exacerbated the BSE crisis in North America.

Before the 1988 Beef Market Access Agreement (BMAA) with the United States and Australia, beef

imports in Japan were restricted using a strict quota administered by the Livestock Industry Promotion Corporation. Despite some liberalization of trade since the signing of the BMAA, beef imports were still subject to a 50 percent tariff at the time of the BSE crisis in Canada.

The first case of BSE in Japan was discovered on 11 September 2001. As of 11 August 2005, 18 additional cases had been confirmed (OIE 2005). Unlike in North America where domestic beef consumption was largely unaffected following the discovery of BSE, beef consumption plummeted by 60 percent in Japan (Lueck, Haley and Harvey 2004). In response to the intense worries about food safety expressed by Japa- nese consumers, the Japanese government required that every slaughtered animal (regardless of age) be tested for presence of the disease. The consumption of beef in Japan has subsequently rebounded.

When BSE was found in the Alberta animal in

May 2003, the Japanese government was among the first to ban imports from Canada. This action was not of great financial consequence to Canada's beef producers as the Japanese market accounted for less than 5 percent of Canada's beef exports (Table 2). However, when Japan stopped imports from the United States after the discovery of BSE in the Washington cow, the impacts in the United States, both financially and politically, were profound. Ja- pan was the most lucrative export market for producers in the United States. The loss of this market, combined with Japanese demands that every bovine slaughtered in the United States be tested for BSE, sent shockwaves through the North Ameri- can beef industry. It became apparent to Canadian beef producers that the long-term loss of this important market to exporters in the United States would make it very difficult politically for the United States government to lift its ban on live cattle imports from Canada.

The complex rules of the SPS Agreement provide the national governments of countries like Japan with the means to legally set stiffer conditions on the importation of meat products as long as they enforce the same conditions on their own producers, as is the case in Japan. Despite intense lobbying from American and Canadian government officials, the Japanese government had not yet re- voked this policy by late 2005.

WHAT NEEDS TO BE DONE TO REVIVE THE

BEEF INDUSTRY IN CANADA?

Government and industry officials have been active in presenting the Canadian case to Canadian consumers, the United States government and industry officials, and those in other countries. Their efforts have been unrelenting and noteworthy. However, a long history of producing mostly for the domestic market has led to institutions and "ways of think- ing" that left Canadian producers ill-prepared for





major exposure to the severe demands of the international marketplace. The industry expansion that started in earnest in the mid-1980s, led by enthusi- astic producers and supportive government policies, developed into a situation where suppliers became vulnerable to the closure of export markets. Efforts by governments to negotiate international trade ac- cords to prevent indiscriminate border closures ultimately proved fruitless in the face of the BSE discovery in Canada. Moreover, governments, primary producers, and packers in Canada appear to have learned little from the British experience of long-term closures to export markets and were not well prepared for the eventuality of discovering BSE in Canada.

The beef industry in Canada has suffered an enor- mous financial setback and it is clear that major restructuring must occur before long-term success in the industry can be assured. While it is difficult to predict all the changes that will occur in the Ca- nadian beef sector, several things need to become clear if Canadian beef is to compete successfully in the international marketplace over the long term. First, a single supply chain - where virtually all beef produced in Canada by producers, big and small, by highly knowledgeable, experienced and full-time operators, as well as those to whom beef production is little more than a hobby or sideline business, and where a consumer who purchases a sirloin steak in a Calgary supermarket has no way of knowing where and how the animal that produced the steak was raised - is inadequate for a modern export-oriented business. There are several examples of very successful meat industries that have moved well beyond this simple model of meat production, including beef industries in Brazil and the United Kingdom and the pork industry in Denmark (Hobbs, Kerr and Klein 1998).

Second, it is clear that Canadian beef producers, who wish to compete in high-valued international markets, need to meet the wants of final consumers for both the product and the process through which the product is made. Increased testing for diseases

(BSE as well as others), greater attention to animal health and welfare, further adoption of safety as- surance and certification schemes, and development of new models of business and contractual arrange- ments are some of the possible outcomes that may follow this unfortunate and financially devastating event in the Canadian industry.

Third, provincial and federal governments need to refrain from artificially stimulating this or any other industry. In 1995, the Alberta Minister of Ag- riculture, Food and Rural Development issued a challenge to the province's agri-food industry to become a $20 billion manufacturing industry and a $10 billion production sector by 2005 (from'the 1995 levels of $6.3 billion and $5.9 billion, respectively) (Alberta. Agriculture, Food and Rural Development 2002). While government "boosterism" can increase optimism in the industry and instill confidence among the producers, government programs like those used to stimulate the Canadian beef industry during the last two decades can lead to disastrous, unintended consequences.

CONCLUDING REMARKS

Innovative and enterprising business people with the support of a modern scientific establishment lead the beef industries in North America. It would be a serious setback to growth and productivity in the beef industries in both Canada and the United States if the freedom to exchange live animals and beef products continues to be restricted. Consumers in both countries have come to rely on safe and nutri- tious beef made available at reasonable costs. It is critical for long-term success in both countries that producer groups and government officials cooper- ate to ensure that trade is not restricted on

opportunistic grounds and producers be given en- couragement to develop production practices and supply chains that are in line with changing consumer wants in key export markets.





NOTES

'According to an economic impact analysis done in November 2003, estimated direct and indirect costs ex- ceeded $5 billion in just the first six months after BSE was discovered (Serecon Management Consulting 2003).

2The term prion is short for proteinaceous infectious

particle. Prion proteins occur in both a normal form, which is a harmless protein found in the body's cells, and in an infectious form, which causes disease. The harmless and infectious forms of the prion protein are nearly identical, but the infectious form takes on a different folded shape from the normal protein.

3This means that a country whose standards conform to those of the OIE cannot be challenged in a trade dis-

pute based on the legitimacy of its standards.

4Between 1982 and 1990, 191 breeding cows were

imported to Canada from the United Kingdom. Eighty of the British cattle had died by 1992 and one or more of them could have been rendered into meat and bone meal.

5These feed bans prohibit feeding most mammalian proteins to ruminant animals, such as cattle, sheep and goats.

6The programs included: the Alberta Fed Cattle Com-

petitive Bid Program, the Alberta Fed Cattle Competitive Market Adjustment Program, the Alberta BSE Slaughter Market Program for other Ruminants, the Alberta Steer and Heifer Market Transition Program, the Beef Product and Market Development Program, the Food Processor Assistance Initiative, the Alberta Mature Market Animal Transition Program, the Winter Feed Program for deer, elk, Ilama and alpca producers.

7Federal programs include the Loan Loss Reserve Pro-

gram and the Farm Income Payment Program; a recent

provincial program in Alberta was the Alberta Industry Tran- sition for other Ruminants; and federal-provincial programs include Canada-Alberta BSE Fed Cattle Set Aside Program and the Canada-Alberta 2004 Calf Set Aside Program.

8The Canadian Pacific Railway, in exchange for land, mineral rights and construction subsidies, agreed to trans-

port western grains to export terminals at fixed rates

indefinitely. These "Crowsnest Rates" were extended to all railways and made formal by statute in 1925. The rates were based strictly on distance and did not take into ac- count the volume or value of the transported grain or the relative cost of sourcing the grain.

9An unintended consequence of the statutory freight rates was that it dissuaded railways from reinvesting in their grain-handling infrastructure. Since the regulated rates fell well below the actual cost of moving grain, the western grain transportation system became obsolete and was in disarray by the 1970s (Vercammen 1996). This created the problem of "shut-in grain" which had no ready market except for cattle feed (Kerr and Ulmer 1984).

10Some import barriers remained in place because of concerns associated with the importation of cattle from the US with bovine brucellosis, bovine tuberculosis, blue

tongue and anaplasmosis. The Health of Animals Act provides the legal authority to prevent the introduction of those diseases into Canada that could have a significant economic effect on the Canadian livestock industry.

11A supplementary import permit allows a processor or wholesaler tariff free access to specific beef products that cannot be sourced from suppliers within the NAFTA region.

12The economies of scale of the new, large packing plants enabled them to outbid the older, smaller plants which subsequently shut down.

13Government commitment to the Canada Beef Export Federation remains at a high level. In 2003, CBEF oper- ated on a $7 million budget of which $1.8 million came from the Alberta government, $2.2 million from the federal government and smaller amounts from other

provincial governments. Canada's cattle producers contributed $2.1 million with the balance coming from private members (Canada Beef Export Federation 2003).

14Under tripartite stabilization, the federal government, provincial governments and producers who volunteered to participate, contributed equally to price or margin stabilization. Program costs were shared on a one-third basis between farmers, the federal government, and the

provincial government. Under the Tripartite Stabilization

Program for slaughter cattle, the margin over cash costs was stabilized and minimum margin guarantees and enti- tlements to payments were established quarterly.

'"In 2001, Australia accounted for 23 percent of world beef exports, the United States 16 percent, and Canada 15 percent.

160n 24 June 2005, the United States Department of Agriculture confirmed that a 12-year-old beef cow from Texas originally testing negative for BSE in November 2004 did in fact have the disease.





REFERENCES

Alberta. Agriculture, Food and Rural Development (AAFRD). 1988/89, 1989/90. AnnualReports. Edmon- ton: Alberta Agriculture, Food and Rural Development.

2002. Building Tomorrow Together: Agrivantage Report. Edmonton: Alberta Agriculture, Food and Rural Development.

2004. BSE Compensation Program Payments. Edmonton: Alberta Agriculture, Food and Rural De-

velopment. At wwwl.agric.gov.ab.ca/$department/ deptdocs.nsf/all/fin8687.

Auditor General of Alberta. 2004. Report of the Auditor General on the Alberta Government's BSE Related

Assistance Programs. Edmonton: Auditor General of Alberta.

Brinkman, G.L. 2004. Canadian Agri-Food Policy Hand- book. Guelph: Department of Agricultural Economics and Business, University of Guelph.

Brown, J. 2004. Media Fosters Confusion about Link Between Mad Cow Disease and Creutzfeldt-Jakob Dis- ease. Vancouver: Fraser Institute. At www.fraserinstitute

.ca/canstats/readmore.asp?sNav=pb&id=617. Byfield, M. and T. Johnson. 1987. "Cargill's New Plant

Creates a Furore," Alberta Report, 19 October, p. 29. Canada. Agriculture and Agri-Food Canada. Various

years. Livestock Market Review. Ottawa: Market and

Industry Services Branch, Agriculture and Agri-Food Canada.

Canada Beef Export Federation. 2003. "Canada Beef Set to Implement Export Recovery Strategy." News re- lease. 2 September.

Canadian Food Inspection Agency. 2003. Canada: A Mini- mal BSE Risk Country. Ottawa: Agriculture and

Agrifood Canada. December. At www.inspection.gc.ca/

english/anima/heasan/disemala/bseesb/minrise.shtml. Canfax. 2003. Annual Report. At www.canfax.ca. Caswell, J.A. and D. Sparling. 2005. "Risk Management

in the Integrated NAFTA Market: Lessons from the Case of BSE," in North American Agrifood Market

Integration: Situation and Perspectives. Proceedings from the First Annual North American Agrifood Inte-

gration Workshop, ed. Karen Huff et al. Guelph: The

University of Guelph. At naamic.tamu.edu/cancun/ caswell.pdf.

Collee, J.G. 1993. "BSE: Stocktaking 1993," The Lancet 324(8875):790-93.

Edmonton Journal. 1989. "Alberta Cattlemen Hoping to Herd More Exports into Japan," 16 November, p. D14.

Fearne, A. 2004. "Post-BSE Impacts on the Beef Indus- try and the Value Chain: Insights from the UK." Paper presented to Tiffin Conference. Lethbridge Commu- nity College, Lethbridge, Alberta.

Hobbs, J.E., W.A.Kerr and K.K.Klein. 1998. "Creating International Competitiveness through Supply Chain

Management: Danish Pork," Supply Chain Manage- ment: An International Journal 3(2):68-78.

Johnson, R.T. 2001. "Testimony on Transmissible

Spongiform Encephalopathies." A Statement of the

Special Advisor, National Institute of Neurological Disorders and Stroke, National Institutes of Health before the Senate Committee on Commerce, Science, and Transportation Subcommittee on Consumer Af- fairs, Foreign Commerce and Tourism. 4 April. At

www.ninds.nih.gov/news _ and_events/ congressional_testimony/nih_testimony.htm.

Kerr, W.A. and S.M. Ulmer. 1984. "The Importance of the Livestock and Meat Processing Industries to West- ern Canada." Discussion Paper No. 255. Ottawa: Economic Council of Canada.

Klein, K.K., G. Fox, W.A. Kerr, S.N. Kulshreshtha and B. Stennes. 1991. "Regional Implications of Compen- satory Freight Rates for Prairie Grains and Oilseeds."

Working Paper No. 3/91. Ottawa: Policy Branch and Grains and Oilseeds Branch, Agriculture Canada.

Lueck, D., M. Haley and D. Harvey. 2004. US 2003 and 2004 Livestock and Poultry Trade Influenced by Ani- mal Disease and Trade Restrictions. Electronic

Outlook Report from the Economic Research Service.

LDPM-120-01, July. Washington, DC: United States

Department of Agriculture. MacLachlan, I. 2001. Kill and Chill: Restructuring Cana-

da's Beef Commodity Chain. Toronto: University of Toronto Press.

National Institute of Neurological Disorders and Stroke (NINDS). 2005. NINDS Transmissible Spongiform En-

cephalopathies Information Page. 19 May. At

www.ninds.nih.gov/health_and_medical/disorders/ tse.htm.

Serecon Management Consultants. 2003. "Economic

Implications of BSE in Canada. Edmonton." November. At www.animalhealth.ca/BSEEconomicImplications.pdf.

Statistics Canada. Various years. "Cattle and Calves Sta- tistics." CANSIM Database. Ottawa: Statistics Canada.

United States Department of Agriculture. 2004. Red Meat Yearbook. Washington, DC: Economic Research Serv- ice. At usda.mannlib.cornell.edu/data-sets/livestock/ 94006/.





Vercammen, J. 1996. Description of Regulatory Change: Module B 1 in The Economics ofWestern Grain Trans- portation and Handling. Van Vliet Publication Series. Saskatoon: Department of Agricultural Economics, University of Saskatchewan.

World Organisation for Animal Health (OIE). 2003. Ter- restrial Animal Health Code. Paris: OIE. At

www.oie.int/eng/normes/mcode/a_00068.htm. 2004. "The OIE Standards on BSE: A Guide for

Understanding and Proper Implementation." Press re- lease. At www. oie.int/eng/press/en_04109.htm.

_ __ 2005. "Number of Reported Cases of Bovine Spongiform Encephalopathy (BSE) in Farmed Cattle Worldwide." Paris: OIE. At www.oie.int/eng/info/ en_urgences.htm.

World Trade Organization (WTO). 1994. WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). Geneva: WTO.

2003. Specific Trade Concerns: Committee on Sanitary and Phytosanitary Measures. Geneva: WTO.





APPENDIX BSE TIMELINE

March 1997. A Black Angus cow was born on Mel and Betty McCrea's farm near Baldwinton, Saskatch- ewan, six months before the ruminant-to-ruminant feeding ban was implemented in Canada.

April 1997. A Holstein heifer was born on the dairy farm of Wayne and Shirley Forsberg of Calmar, Alberta.

4 September 2001. In a dispersal sale, the Forsberg Holstein and 81 others were sold and trucked to a dairy feeding operation at Mattawa, Washington; later sold to a dairy farm at Mabton, Washington.

23 August 2002. The McCrea Black Angus was purchased, along with 35 other cows and calves, by Marwyn Peaster of Wanham, Alberta.

31 January 2003. The eight-year-old Black Angus was sent for slaughter to a provincially licensed meat facility in Alberta. The animal showed signs of illness, and a provincial meat inspector condemned the carcass as unsuitable for human consumption. The head of the animal was collected and submitted routinely as part of the BSE surveillance program. The remains of the cow were sent for rendering and made into animal feed.

20 May 2003. The World Reference Laboratory in Weybridge, UK, confirmed that the sample was positive for BSE.

20 May-16 June 2003. Herds in Alberta, Saskatchewan and British Columbia, which could be connected to the infected cow, were depopulated and tested for BSE. All test results were negative.

12 June 2003. Federal government announced training and short-term relief grants for workers laid off as a direct result of BSE.

18 June 2003. A $460 million federal-provincial compensation program for cattle producers was announced. The Alberta government committed $100 million.

25 July 2003. The Alberta government provided $79 million in interim support to producers as borders remain closed to Canadian cattle and beef. The Ontario government provided $17.5 million.

6 August 2003. The Manitoba government announced a $100 million loan program to help producers cope.

8 August 2003. United States Secretary of Agriculture announced that firms can apply for permits to export low- risk product including boneless cuts from animals less than 30 months and boneless veal from animals less than nine months. No live animal exports were allowed. The Mexican government quickly followed suit.

10 September 2003. Boxed beef exports from Canada to the United States resumed.

23 September 2003. A compensation program was introduced for bison, veal, sheep, goat, elk, and deer producers also affected by BSE.

9 October 2003. Two new compensation programs for cattle producers and processors were announced.





24 October 2003. Two new programs were introduced to help Alberta's meat-processing industry develop innovative solutions to deal with the surplus of cattle over 30 months of age.

9 December 2003. The Forsberg Holstein and 19 others were slaughtered at Moses Lake, Washington. Brain samples of the Forsberg Holstein and two others were sent for routine BSE testing.

23 December 2003. US Agriculture Secretary Ann Veneman announced a "presumptive positive" case of BSE, later confirmed on 25 December. The herd in Mabton was placed under quarantine.

24 December 2003. The USDA recalled meat from the 20 slaughtered animals and began traceout and quarantine procedures. The Canadian government banned imports of most live cattle and some other animal products from the United States.

30 December 2003. Nineteen countries banned imports of all US beef products. Several other countries extended the ban to include all ruminant products.

6 January 2004. American and Canadian officials announced jointly that DNA evidence showed that in all likelihood the infected cow was born in Alberta. The animal was born before the 1997 ban on feeding rendered ruminant carcasses - sheep, goats, cattle, deer and elk - to other ruminants.

12 January 2004. Agriculture and Agri-Food Canada announced $92 million in funding for BSE surveillance and enhancement of cattle identification and tracking.

19 April 2004. The United States announced that it had removed all restrictions on the import of beef from cattle less than 30 months of age, including ground beef, processed beef products, and bone-in beef.

23 April 2004. The American lobby group R-CALF filed an injunction in an attempt to prevent the USDA from allowing Canadian bone-in beef, ground beef, and processed beef products to enter the United States. Boneless beef shipments were unaffected.

29 April 2004. The USDA withdrew the expanded list of products eligible to import from Canada.

6 May 2004. The USDA reached an agreement with R-CALF, allowing the injunction to stay in place until the USDA published final rules regarding the importation of Canadian beef products.

10 September 2004. A second federal-provincial BSE assistance program was announced with the Alberta government committing $230 million in new BSE funds.

30 November 2004. Hong Kong lifted its ban on boneless beef from animals under 30 months of age.

14 December 2004. Cuba opened its borders to beef and beef products of any age, with minor exceptions, such as mechanically separated meat, vertebral column, trimmings, and tissues derived from the head.

29 December 2004. A new federal-provincial program to provide $8 million in support to Alberta's sheep, goat, deer, elk, reindeer and bison producers was announced. The United States disclosed that it would open its borders to live cattle and bison under 30 months of age as of 7 March 2005. Other ruminants such as





sheep, goats, deer, elk, llamas and alpacas will also be allowed entry. The United States would also allow imports of beef from cattle older than 30 months.

30 December 2004. The Canadian Food Inspection Agency divulged that preliminary tests have produced a positive result from a ten-year-old Alberta dairy cow.

2 January 2005. The positive result was confirmed. The proposed border opening was unaffected as the United States continues to consider Canada as a minimal-risk region.

11 January 2005. The Canadian Food Inspection Agency disclosed that it had detected BSE in a six-year- old Alberta beef cow.

28 February 2005. The Alberta Prion Science Initiative was announced. The $38 million research program will investigate the genetics, diagnosis and treatment of diseases related to prions and other proteins. Prions are best known for their link to BSE.

2 March 2005. A Federal District Court judge in Montana granted a temporary injunction preventing the proposed 7 March rule from coming into effect.

7 March 2005. An additional $37 million in funding for BSE recovery initiatives was announced.

31 March 2005. Cuba reopened its border to live Canadian cattle. Canadian exporters were able to ship live cattle, goats and sheep, meat from these animals, as well as bovine semen and embryos.

7 April 2005. An additional $2 million in marketing assistance was provided for sheep, goat, deer, elk, reindeer, and bison producers in Alberta.

24 June 2005. The United States confirmed its second case of BSE.

14 July 2005. The Ninth District Circuit Court of Appeals overturned the temporary injunction keeping the borders closed to Canadian cattle after a United States Department of Agriculture appeal.

18 July 2005. A truckload of 35 slaughter cattle crossed from Ontario at Lewiston, New York headed for a slaughterhouse in Pennsylvania. During the rest of the week another 10 to 15 loads went south with a total of about 500 head.

Source: Government of Alberta. 2005. "BSE in Alberta - A Timeline." Edmonton: Government of Alberta. At www.gov.ab.ca/home/index.cfm?page=751.




Documents

Mad Cow Chaos in Canada: Was It Just Bad Luck or Did Government Policies Play a Role?