Cattle Producers Still Live In BSE’s Shadow

Cattails and swamp grass are all that’s visible on some pastures as Menno Friesen drives a visitor around his Interlake farm in an aging pickup truck.

Friesen spent 45 years beating back bushes and shrubs to develop some prime crop and grazing land in the heart of cattle country. But due to the abnormally wet weather in recent years, intruding species are creeping back.

Two years ago, Friesen had 435 cows. Today about 35 cows and a few calves are huddled in a corner of one pasture. The rest of the herd was sold in early July. There was no feed.

Normally, Friesen would harvest 3,000 to 4,000 bales of hay on the 3,000-odd acres he either owns or rents. This year, he was lucky to salvage a tenth of that because of flooding.

Three straight summers of heavy rains have drowned crops, destroyed pastures and forced him to liquidate his herd. When asked what he’ll do next year, Friesen, 65 in December, doesn’t have an answer.

But when asked to pinpoint the root cause of his current predicament, Friesen doesn’t say flooding, high input costs, U. S. country-of-origin labelling or the Canadian

dollar. Instead, he names a date: May 20, 2003. It was the day Canada reported its first case of bovine spongiform encephalopathy (BSE).

That was more than seven years ago. But for Friesen, it might as well be yesterday, because the after-effects have made all the problems since then that much worse.

“It’s still happening,” he says. “It’s still ongoing.”

Friesen is far from alone.

LEGACY CONTINUES

Canada’s beef industry has never been the same since that black day when a cow was found with BSE in the rural community of Barrhead, 120 km northwest of Edmonton.

The legacy lingers through depressed prices, drained producer equity, herd selloffs, costly new regulations and, for many, difficulty planning for the future.

BSE hit Betty Green and her husband Robert, who raise cattle near Fisher Branch, at the worst possible time.

Their son Donald had newly married and rejoined the family farm with the goal of eventually taking it over. Plans were in motion to gradually transfer ownership to Donald and his wife, along with the Greens’ daughter and her husband, over five years.

BSE halted those plans. The Greens still aren’t entirely sure how to proceed with an intergenerational farm transfer. As Donald once said to his mother: “How can we move ahead right now? We don’t even know how to value the assets.”

Ah, yes, the assets. Practically overnight, BSE rendered cattle operations almost valueless on paper. Markets dried up. Prices crashed. Suddenly, cattle farms had limited worth. Who would buy one, given the situation?

“There were years when there was no way you could pay all the bills with the revenue from your cattle,” says Green.

Producers drained savings accounts, used up equity, sold animals at fire-sale prices, sought off-farm work – anything to keep their operations afloat.

Federal and provincial governments responded with financial aid to help producers through the troubled times. A BSE recovery loan program announced by the Manitoba government on August 6, 2003, provided one-year $50,000 loans at reduced interest rates to help with cash flow. In all, 1,815 Manitoba producers borrowed $70.2 million.

But continuing inadequate returns from the marketplace made repayment difficult and, in some cases, impossible.

As of Sept. 30, 2010, 1,044 producers still owed $27.5 million. Of that, 280 loans worth $4.6 million are “experiencing some difficulty in repaying, resulting in arrears,” as a Manitoba Agricultural Services Corporation official euphemistically puts it.

“Individual loan writeoffs may arise when MASC’s ability to recover the debt has been exhausted, such as in circumstances of bankruptcy or insolvency,” the official admits.

Although some sold their herds and got out, the Greens decided to hang in and make things work.

But drive through Manitoba cattle country and you get a sense of bone-deep weariness from seven lost years.

Some producers doubt they will ever emerge from BSE’s shadow.

EXPORTS REMAIN RESTRICTED

The absence of recovery is nowhere more evident than in Canada’s beef exports.

When foreign borders slammed shut on May 20, 2003, Canada’s exports of live cattle immediately went to zero. So did processed beef.

Today, only 17 of Canada’s 100- plus beef export markets have been fully restored to pre-BSE levels.

The Canadian Beef Export Federation calculates the value of beef exports lost over that time at $10 billion to $15 billion. Canada’s beef exports in 2009 were 135,000 tonnes ($830 million) lower than in 2002 – the last full year before BSE.

The continued loss of revenue from exports has depleted financial reserves that could have been used to adapt to other stresses, such as a higher dollar, says Ted Haney, CBEF president.

“Few people truly understand the deep and continuing cost of BSE to Canadian cattle producers and beef processors,” says Haney. “The trade disaster that is BSE is far from over.”

The reason why markets are so slow to recover lies in BSE’s history, according to Haney.

When BSE appeared, it was novel. Unlike foot-and-mouth, there was no clear precedent for restoring trade with countries affected by BSE. So it was treated radically. When BSE emerged in British cattle, other countries, including Canada, banned imports of live U. K. cattle and beef.

Haney says a lack of knowledge about the human health risk from BSE fuelled alarmist, knee-jerk reactions. At one point, the World Health Organization feared hundreds of thousands of people could contract Creutzfeld-Jakob disease, the human variant, from eating BSE-infected beef.

So while it wasn’t surprising that Canada was treated the same as the U. K., that should have changed as more became known about the risks, Haney said.

Several years ago, the Parisbased World Organization for Animal Health (OIE) developed clear scientific risk assessment guidelines for safe trade in edible beef products. Given appropriate disease control measures (SRM removal, surveillance, etc.), there should be no trade restrictions for beef from all ages of cattle in BSEaffected countries, according to the OIE.

Logically, import restrictions on Canadian beef should have been lifted long ago.

But although some markets have more or less returned to normal, some major ones continue elusive. South Korea remains closed, despite a World Trade Organization challenge. Japan accepts only beef from cattle under 20 months of age. China only recently agreed to accept limited shipments of beef and tallow.

Haney accuses nations of using BSE to practise trade protectionism.

“We still have years to go to recovery.”

POSITIVES

Some positives have emerged from the BSE experience, says John Masswohl, government and international relations director for the Canadian Cattlemen’s Association.

Age verification of cattle, already in motion when BSE hit, received a boost when countries such as Japan began demanding it as a requirement for readmitting beef imports.

Also bolstered were efforts to develop a mid-Canada livestock inspection point on the Manitoba- Ontario border as a step toward compartmentalizing the country in case of a disease outbreak.

BSE raised public awareness toward the possibility of foreign animal disease outbreaks and the need for disaster preparedness.

And it may have given impetus to AgriRecovery, the disaster assistance component of the federal- provincial Growing Forward farm safety net program.

Masswohl said there are signs the industry is finally recovering. Demand is starting to return. Foreign markets are gradually reopening. And if you still have cattle and haven’t sold out, there are some pretty decent prices to be found.

Instead of picking at the scab of BSE, Masswohl says people should move on.

“You don’t really have much choice. You either have to move forward or you’re stuck in the past. And if you’re stuck in the past, good luck to you. I can’t help people who want to be stuck in the past.”

Brenda Schoepp, an Alberta market strategist, gets the sense producers are getting on with life.

She says producers at meetings where she speaks no longer talk about BSE. She herself never mentions it in her presentations any more.

“From my perspective, it’s not a driving factor,” says Schoepp. “And from the grassroots perspective, they’re tired of hearing it. They want to get on with things and move ahead.

“That’s the spirit of the cattle business. You just get on with something else. You find another way to make it work.” [email protected]

———

Fewpeopletruly

understandthedeepand continuingcostofBSE.”

– TED HANEY, CBEF

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