Otherwise Canada along with Mexico will be putting their case for retaliatory duties to a special meeting of the World Trade Organization Dispute Settlement Body on June 17, the minister said in a statement.

The vote “marks a positive step. The only way for the United States to avoid billions in retaliation by late summer is to ensure legislation repealing COOL passes the Senate and is signed by the president,” the minister added. “The administration and Congress know that COOL is costing thousands of American jobs and billions in economic harm to our highly integrated North American livestock industry.”

The WTO has ruled four times that COOL violates international trade rules the United States helped draft. Canada has said it’ll be seeking WTO authority to impose just over $3 billion a year in duties on American food and consumer products starting in late summer. Mexico expects to request authority for about $1 billion in duties.

U.S. Agriculture Secretary Tom Vilsack has said that repealing COOL is the only option. The Senate has yet to decide on action on the program because of opposition to eliminating the program from several border state senators.

During a recent visit to Washington, Ritz warned that Canada will retaliate against products from their states when it sets its final list.

He said the program must end and not be replaced by some watered-down measures that interfere with trade.

In May, the WTO rendered its final ruling in the COOL dispute which dates back to 2008. The program cost Canadian farmers and processors about $3 billion in lost sales and lower prices.

Ritz reminded Washington audiences that in 2014, agriculture and agri-food trade between Canada and the United States was $51 billion, leaving Ottawa with lots of choices. It published a list of proposed targets for retaliatory tariffs back in 2013.

Meat labels became mandatory in the United States in March 2009 after years of debate. U.S. consumer groups and some farm groups supported the requirement, saying shoppers should have information to be able to distinguish between U.S. and foreign products.

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But Canada’s COOL fight isn’t over.

Support for repealing the legislation is less secure from the U.S. Senate where the agricultural leadership continues to express support for some sort of consumer information labelling. And the Obama administration has indicated a continued willingness to explore every option but the one vociferously promoted by Canada and Mexico.

So the Canadian government has issued an ultimatum of sorts: repeal COOL within three months — or else. An all-out trade war could ensue with retaliatory tariffs worth up to $3 billion annually on a long list of American goods that includes everything from meat to orange juice, wooden office furniture and communion wafers.

But first, Canada must show details to the WTO of the type and value of harm it has endured as a result of the offending country’s policies before it can receive approval to go ahead with those tariffs. And if the offending country disagrees with the complainant’s submission, it can request arbitration, under which the WTO dispute settlement process reviews both parties’ submissions and imposes a binding ruling.

It should be noted that there are conflicting assessments of how much damage has been done to Canadian livestock producers as a result of the U.S. labelling laws.

The Canadian meat industry asserts the U.S. law has reduced demand and increased the cost of accessing the U.S. market by at least a billion a year — to which the Americans and the WTO will now be saying “prove it.”

Presumably, some of that work documenting the actual impacts has been done — at least enough for the WTO to determine Canada has a case. And it has ruled in Canada and Mexico’s favour four times since 2009. So that’s promising.

However, an economic analysis commissioned by U.S. producer groups that supports COOL laws released earlier this year challenges the notion that Canadian access to the U.S. market has been impaired and that prices have suffered as a result.

After tracking animal movement across the border, the price spreads between U.S.- and Canadian-origin cattle and actual prices using Mandatory Price Reporting data, by C. Robert Taylor, says the fed cattle basis actually declined post-COOL. “In fact, the price basis is substantially lower in the six years since implementation of COOL than it was the preceding four years by class, grade, and purchase arrangement,” he said.

Taylor also casts doubt on whether the import of slaughter cattle was negatively affected once “the confounding effects of domestic and imported captive supply of slaughter cattle, or macroeconomic and beef demand uncertainty during the time period” are considered.

As for feeder cattle, he said USDA monthly data on imports did not show “COOL having a significant negative effect” on imports relative to placements in U.S. feedlots.

“The weight of credible economic and qualitative evidence demonstrates that COOL has had no demonstrable impact on the Canadian or Mexican cattle industries,” he said.

Maybe he’s right. Maybe he’s not. But that debate is now just beginning.

Much has been said about a recent USDA-commissioned study of the impact of COOL on U.S. consumers, producers and packers that found it had little impact on consumer demand, but imposed billions in implementation costs on meat producers, processors and retailers.

The economists who did that study cautioned they didn’t factor in the likelihood that implementation costs would dissipate over time as the industry adjusts. They acknowledge their estimates are likely overestimated.

That’s all very interesting. But because it is focused on the domestic impacts, it is irrelevant, except for one point. The USDA analysis found the COOL legislation remains politically popular with consumers — even though it likely increases the price of meat.

For the sake of argument, let’s say the Canadians do prove to the WTO that COOL is measurably hurting the Canadian meat industry, and let’s assume the Harper government gets the go-ahead to impose billions of dollars’ worth of tariffs on imported U.S. goods.

Now, when is that federal election happening again? The last time we checked it was Oct. 19.

So, a government that’s already riding low in the polls would have to be pretty committed — or something else — to impose tariffs on goods imported from Canada’s biggest trading partner that increase the price of food and other items just as consumers get ready to vote. It is unlikely the timing of all this has escaped the U.S. administration’s notice.

Nope, this isn’t over yet. Far from it.

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In the wake of the World Trade Organization’s final decision May 18 that COOL violates international trade rules, the House of Representatives agriculture committee approved a plan to labelling laws. The chairman of the committee has said he expected an early-June vote on the bill.

U.S. Agriculture Secretary Tom Vilsack says changing the law is the only way to avoid having American food and consumer good exports to its two neighbours hit with hefty duties.

“It’s clear that the U.S. must do the right thing and act quickly to repeal COOL or face billions in retaliatory tariffs,” said Agriculture Minister Gerry Ritz. Canada and Mexico will proceed with a request to the WTO for authorization to impose the tariffs hoping “just swinging this hammer will be enough to get the administration moving in double quick time in order to repeal COOL.

“It’s not Washington starting to move, it’s finishing the move to actually repeal COOL,” he said. “So it’s not the starting point, it’s the end point that counts. If it does not come through with the necessary administrative measures to repeal COOL, we have begun the process on retaliatory tariffs, which would take effect, by our best guess under the WTO process, in late summer or early fall,” he told reporters.

Tariffs

Ritz said the tariffs could amount to between $2.5 billion and $3 billion annually. Under the WTO rules, a country has to present the trade body with details of the harm done to it by another country’s policies before it can receive approval for imposing retaliatory tariffs. This can be done only after the WTO had completed its lengthy decision process.

Yet to make any comment on COOL changes is the Republican-dominated U.S. Senate agriculture committee, which could also have to approve any amendments.

In 2013, the government released a lengthy list of food and consumer items that could be included in the retaliatory tariffs. The government has been discussing the shopping list with food and consumer groups.

COOL was launched in 2008 and included labels on retail packages of meat that say where the animals were born, raised and slaughtered. The extra cost required to produce the information for those labels has cut imports of cattle and hogs from Canada by at least more than $1 billion a year.

COOL has supporters among northern U.S. ranchers, but has been strongly opposed to the U.S. meat industry, which has been urging its repeal for years — including meat processors that buy animals from abroad — have called for a repeal of the law, which they have fought for years.

Changes

After the WTO ruled twice that the 2008 version of COOL violated international trade rules, the Obama administration made changes. Canada and Mexico said the new rules made the impact of the law even worse. The WTO has issued its final rejection of the revised rules and called on the U.S. to act on the decision.

Ritz says COOL was “a wrong-headed political initiative that continues to do serious harm to our integrated beef and pork industries through North America. COOL is a political solution to a problem that never existed.”

The USDA recently reported that COOL “has cost the American beef and pork sectors billions with no benefit to American consumers,” he noted. “COOL is casting a dark cloud over trade and called on Congress to repeal COOL to prevent the loss of some 16,000 jobs stateside.”

Launched in 2008, COOL has cost cattle and beef producers more than $8 billion in lower prices and lost sales.

Rick Bergman, chairman of the Canadian Pork Council, said the WTO decision “is comprehensive and compelling. There is no wiggle room. Congress must accept the reality and act as a responsible WTO member and a leading force for trade liberalization.”

Dave Solverson, president of the Canadian Cattlemen’s Association, urged Congress to respect the WTO ruling that Canada has the right to fair market access. Pressure has to continue to ensure “the U.S. meets its international trade obligations.”

Joe Reda, president of the Canadian Meat Council, said the U.S. helped create the WTO trade rules and has a duty to respect them. “Seven years is much too long for a country to profit from ignoring the law.

“The time when the government of the United States should have brought its rules into conformity with its obligations passed long ago,” he added. “The U.S. is out of recourse mechanisms. It must eliminate the discrimination to avoid retaliation. This can be achieved by repealing COOL.”

The WTO had ruled the 2008 version of COOL was discriminatory against Canada and Mexico and that 2013 amendments to it not only failed to correct its violations of trade rules, they exacerbated the discriminatory nature of the rule,” added Jim Laws, executive director of the Meat Council.

“This is certainly good news for producers, but we will have to wait for the final announcement from the U.S. on what its stance is going to be,” said Manitoba Beef Producers president Heinz Reimer.

Reimer notes that Manitoba cattle producers have had a rough few years with multiple floods, diminishing prices and have often experienced the brunt of repercussions from COOL due to close proximity to the border.

“We are centrally located in Canada and so a lot of our feeder cattle or yearling calves have gone down to the U.S. and a lot of the U.S. plants have turned away Canadian animals.”

Though COOL remains in place for the moment, Reimer believes that Canadian cattle producers should look at this as a step in the right direction.

“This is certainly a win but we haven’t won. I do believe that with this ruling we have a far better chance of COOL going away,” he said. “One thing we need to remember with the cattle industry, we can’t push up our numbers overnight or within a short period. It will take two to three years before we can push up our numbers for marketing.”

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Pigs may be the answer.

Susannah Gross, who owns a five-acre farm north of Seattle, is part of a group experimenting with a solution that seems to make the most of marijuana’s appetite-enhancing properties — turning weed waste into pig food.

Four pigs whose feed was supplemented with potent plant leavings during the last four months of their lives ended up 20 to 30 pounds heavier than the half-dozen other pigs from the same litter.

“They were eating more, as you can imagine,” Gross said.

Washington and Colorado voters both approved recreational use of pot in November. While it’s still illegal under federal law, the Obama administration has not yet said what action, if any, it will take.

Aside from giving farm animals the munchies, cannabis pig feed might also create a new niche market for pork producers.

“We can have pot chickens, pot pigs, grass-fed beef,” said Matt McAlman, the medical marijuana grower who provided the pot leavings for Gross’s pigs.

Gross’s pigs were butchered by William von Schneidau, who has a shop at the famous Pike Place Market in downtown Seattle. In March, von Schneidau held a “Pot Pig Gig” at the market, serving up the marijuana-fed pork as part of a five-course meal.

He quickly sold out the remaining weed-fed meat at his shop but plans another pot-pig feast later this summer, he said.

“Some say the meat seems to taste more savoury,” von Schneidau said.

The results beg the question of whether pot-fed pork contains any measurable traces of THC, the mind-altering chemical ingredient in cannabis.

The European Food Safety Authority reported in 2011 that “no studies concerning tolerance or effects of graded levels of THC in food-producing animals have been found in literature.”

The agency also noted that “no data are available concerning the likely transfer of THC… to animal tissues and eggs following repeated administration.”

The post Got the munchies? How about some ‘pot’ roast? appeared first on Manitoba Co-operator.

The World Trade Organization gave the U.S. until May 23 to end its discrimination against Canadian and Mexican livestock and meat or face retaliatory actions by its neighbours. The measure has cost Canadian beef and pork producers more than $5 billion in lost sales and lower prices since it was enacted in 2008.

The U.S. Agriculture Department has proposed a reworking of its country-of-origin labelling (COOL) scheme that neither Canada nor Mexico find acceptable. Neither do mainstream U.S. farm or food industry groups.

However, a hodgepodge coalition of American agriculture, consumer and religious organizations has endorsed the proposal to make COOL more stringent in response to the WTO ruling.

“The only acceptable way to respond to the WTO challenge is to make labels more informative for consumers, not water them down,” the coalition says. The best-known member to Canadian farmers is R-Calf, a vociferous outfit that essentially wants to bar all imports.

The coalition says COOL allows “farmers and ranchers to take pride in their products and allow the American public to know the origins of their food and make more informed food-purchasing decisions.”

John Masswohl, vice-president of the Canadian Cattlemen’s Association, says the coalition’s position “confirms our expectation that the protectionist groups who want to maintain the discrimination on imported livestock are not going to give up easily and it confirms our expectation that to overcome this opposition, Canada will have to prepare a solid retaliation strategy that includes tariffs on U.S. exports to Canada produced by groups like this or in areas represented by them.

“The USDA proposal is absurd in its claim to bring the U.S. into compliance with WTO obligations by making the labelling requirements even more onerous,” he added. “It will increase the discrimination that the WTO found was the root of the U.S. WTO violation.”

The U.S. proposal would move beyond saying whether meat was the product of Canada or the United States to where it was raised and slaughtered. That would do nothing to reduce the discrimination against imports and would saddle farmers and processors with ever-more administrative costs, which would further increase the price discounts on imported meat and animals.

Comments on the proposed rule are due by April 11, and the deadline to comply with the WTO case is May 23. In theory, if the U.S. isn’t in compliance by that date, Canada and Mexico can impose retaliatory tariffs on any American imports.

Ritz says Canada is looking at products other than meat shipments because most U.S. farmers and processors have opposed COOL.

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Vilsack said furloughs of meat inspectors required under sequestration, or automatic budget cuts that took effect this month, will disrupt the meat industry. He said USDA will send furlough notices to meat inspectors, but it will be several months before they will occur because of the extensive preparations needed.

The furloughs, which could lead to spotty shutdowns of meat plants and meat shortages, would be one of the most visible effects of sequestration, he said. By law, processors cannot ship meat without the USDA inspection seal.

“We will do everything we can to minimize disruptions,” Vilsack said at a hearing of the House Agriculture Committee. “It will impact inspections.”

USDA has said it would stagger the furloughs to minimize their effect on operations. “I don’t think you’re going to see a continuous furlough,” Vilsack told lawmakers at a hearing on the state of the rural economy days after U.S. President Barack Obama signed the sequester order.

The Obama administration says all 8,400 inspectors might be furloughed for a total of 15 days. Vilsack said the total was more likely to be 11 or 12 days.

One-third of USDA’s 100,000 employees may be affected by furloughs.

Vilsack said the furloughs were unavoidable when spending must be cut by 10 to 12 per cent for the rest of the year — to achieve a five per cent cut for the fiscal year — and inspectors account for 87 per cent of the meat agency’s budget.

“No matter how you slice it,” said Vilsack, furloughs are certain. “We are going to try to maintain movement through the (meat industry) process,” he said.

USDA’s funding was cut by $1.9 billion by the sequester. USDA says the cuts mean less money for soil conservation and farm loans, the shutdown of campgrounds and visitor centres in some national forests and a smaller caseload for the so-called WIC program that provides additional food for poor, pregnant women, new mothers and their children.

The item-by-item cuts would also reduce slightly the funds available for a $147-million payment due this year to Brazil as a step toward resolving a World Trade Organization ruling against U.S. cotton subsidies, Vilsack said.

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The World Trade Organization has given the U.S. until May 23 to amend its COOL legislation or face retaliation from Canada and Mexico.

“Canada still expects the U.S. to meet the terms of the WTO ruling,” Agriculture Minister Gerry Ritz said at a recent Canadian Federation of Agriculture meeting, but he admitted his government is aware of political manoeuvring in the U.S. to block the administration from complying.

He said that given the looming deadline, the only fix may have to be done through a regulatory amendment to the law by the Obama administration.

That would be insufficient and little more than a “delaying tactic,” both the cattle and pork producers say.

Ottawa needs to push the matter into the spotlight, said Martin Rice, executive director of the Pork Council.

“We need to do more to make people in Congress aware of the situation,” said Rice. “We would like to see more public messaging by the government about it. We prefer to avoid retaliation because that won’t help our industry.”

It’s estimated that COOL has cost the Canadian beef and pork sectors $5 billion since the law was enacted in 2008. Trade expert Peter Clark says Ottawa should consider slapping tariffs on goods coming from the constituencies of congressional leaders.

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“We really have to wait until the kernels are counted and the (soy) beans are counted to know the impact of the drought,” said Vilsack. “I don’t think the United States of America is going to run out of corn.”

The USDA estimates the corn stockpile dipped below one billion bushels on Sept. 1 — the lowest beginning stocks level in eight years. Vilsack downplayed the effect the small stockpile could have on an Obama administration decision, due later this year, whether to relax a federal requirement to use corn ethanol in gasoline.

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In the first request of its kind, the Japanese groups, including Zen-Noh, the country’s biggest agriculture co-operative, asked Washington to consider a two-year waiver of the so-called ethanol mandate to curb gains in U.S. corn prices.

“This (price rise) has put great pressure on Japanese industries to seek alternative sources of corn and substitute feed grains,” the groups said in a Sept. 7 letter to U.S. Agriculture Secretary Tom Vilsack.

“This can potentially lead to a long-term loss of export market share for U.S. producers.”

The groups have received no reply yet, said an industry source who declined to be identified without authorization to speak to the media.

Higher U.S. corn prices have prompted Japanese users to import non-U.S. corn and cheaper feed wheat this year, resulting in their imports of U.S. origin falling to 8.31 million tonnes in the first eight months, down 15 per cent from a year earlier.

The ethanol mandate, formally named the Renewable Fuels Standard (RFS), guarantees biofuels a share of the gasoline market.

The RFS serves to limit exports and other uses of corn by requiring that 13.2 billion gallons of corn-based ethanol be produced in 2012 and 13.8 billion gallons in 2013, which are equivalent to 4.7 billion bushels and 4.9 billion bushels of corn, respectively, the letter said.

That would take up almost half of estimated production in the marketing year to August 2013 as the U.S. Department of Agriculture on Sept. 12 pegged U.S. corn production in 2012-13 at 10.727 billion bushels.

“We believe it is in the United States’ national interest, as well as Japan’s interest… that the playing field of the corn trade be levelled by waiving the RFS for at least two years in order to ensure adequate recovery of stocks and market access,” the groups said in their letter.

In the United States, the governors of two poultry-growing states in August asked the Obama administration for relief from the requirement to use corn ethanol in gasoline, saying the grain was needed to feed livestock used to feed people.

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The Obama administration is weighing whether to relax a requirement to use corn-based ethanol in gasoline as meat and dairy farmers complain that demand for corn-based biofuels is driving up the cost of food.

But the record-high corn prices caused by the worst drought in half a century will cause a 10 per cent decline in ethanol production next year, according to the Food and Agricultural Policy Research Institute, or FAPRI.

“Higher ethanol prices contribute to sharply reduced ethanol exports and increased imports, but domestic ethanol consumption declines by just two per cent,” said the newly updated FAPRI forecast.

Ethanol output will fall to 12.4 billion gallons next year compared to 13.8 billion gallons this year, according to the forecast. Exports would drop to 505 million gallons from nearly 1.1 billion gallons this year.

Virginia Governor Bob McDonnell joined governors of seven other states — Texas, Georgia, New Mexico, Arkansas, North Carolina, Maryland and Delaware — in asking the Environmental Protection Agency for relief from the so-called ethanol mandate. They say the Renewable Fuels Standard is disrupting livestock production and causing severe economic harm.

The so-called ethanol mandate guarantees use of 13.2 billion gallons of ethanol in 2012 and 13.8 billion gallons in 2013. An ethanol trade group estimates production will total 13.4 billion gallons during 2012, a reduction from earlier estimates.

“It could be lower than that depending upon market conditions through the rest of the year,” said the Renewable Fuel Association. The trade group had no forecast for 2013.

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