Legislative Debates (17 March 2005)

Legislative Debates

From Hansard - 17 March 2005

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United States Border Closing to Canadian Cattle
Mark Wartman (NDP- Regina Qu'Appelle Valley)moved the following motion, seconded by Bob Bjornerud (Sask. Party - Melville-Saltcoats):
Whereas the United States border remains closed to the movement of live Canadian cattle; and whereas Canada has implemented a strategy designed to help transition our industry to one that has increased domestic processing capacity and an increased and more diversified international market base, therefore it is moved:

That (1) Canada, as supported by provinces and industry, continue to take all available actions to get the US to open their border to all Canadian ruminants and ruminant products; (2) Canada enhance efforts to develop made-in-Canada solutions, including increased domestic meat processing and international market development; and (3) Saskatchewan continue to monitor the situation and as additional action is needed, work with industry and federal, provincial governments to implement these strategies.

Mr. Stewart: Thank you, Mr. Speaker. And before I begin I would like as well to acknowledge the Kids for Canadian Beef, a group of young people from Mortlach in my constituency who fought long and hard to draw attention to this issue of the closed border and the injustice of it and the negative way that its affected our beef producing families in Canada.

Mr. Speaker, its my pleasure to enter into this debate on the BSE crisis that has brought the cattle industry to its knees in Canada, and particularly in the provinces of Saskatchewan and Alberta where the vast majority of this countrys beef cattle are produced.

On May 20, 2003 a single case of BSE was discovered in an older cow that was part of a northern Alberta herd. The US border was immediately slammed shut to trade and live cattle, beef, and beef products. In the few days that followed, trade in cattle and beef was stopped to every other nation that we traded with in cattle and/or beef. The BSE crisis has so far cost the industry and the Canadian economy in the neighbourhood of $7 billion.

Mr. Speaker, of the 10 provinces in Confederation, only Alberta has been more seriously hurt by BSE than has Saskatchewan. This crisis has ended the businesslike, steady growth of our cowherd and absolutely put a stop to expansion of our fledgling feedlot industry. An industry, Mr. Speaker, that was just beginning to feel the wind under its wings when the crisis hit. Many communities had plans in the works to build feedlots. Those plans were immediately put on hold for an indefinite period of time, and many may be abandoned because of this new market uncertainty arising from the BSE crisis.

Mr. Speaker, we must expand our cattle feeding industry before we are likely to attract a well-funded, professionally operated, major packing plant to this province; the kind of packing plant that can survive the rigours of the brutal competition that the industry experiences in more normal times.

Mr. Speaker, the cattle industry is far from dead in this province, but it has had a life altering experience. The industry will never again be the way it was before May 20, 2003.

Mr. Speaker, calf and feeder cattle prices are off about 30 per cent from where they should be, and older cows and bulls are virtually worthless. This dramatically affects producers ability to cover their costs, and the lower value of their cattle inventory makes it difficult or impossible to service their debt and very difficult to borrow more money should the need arise. Couple that with the fact that lending institutions are now very reluctant to lend to the cattle industry. Our industry is in crisis, Mr. Speaker; the very industry that was the bright spot in Saskatchewan agriculture less than two years ago in crisis, Mr. Speaker, through no fault of its own.

Mr. Speaker, prior to the discovery of BSE, Canada was the third largest exporter of beef and cattle in the world. And as I have said, most of that from Alberta and Saskatchewan. In 2002, the last full year before the outbreak of BSE, Canadas export market was worth about $4.1 billion.

And, Mr. Speaker, in the months leading up to this crisis, Saskatchewan was exporting about $23 million worth of beef and cattle a month. Mr. Speaker, in those heady days before the discovery of BSE about 40 per cent of Canadas beef exports were live animals, almost all of which went to the United States. Prior to May 20, 2003, about 80 per cent of our beef exports found their home in the United States, Mr. Speaker, and our next most important markets in order of size were Mexico, Japan, South Korea, and Taiwan.

Mr. Speaker, the border was due to open on March 7 10 days ago now to live cattle under 30 months of age. That was the intention of the US government, Mr. Speaker. But that intention was thwarted by the protectionist organization of cattle producers from the northern tier states, R-CALF. R-CALF won a court injunction that stopped the border from opening to live cattle for what amounts to an indefinite period of time.

Since the BSE crisis hit our industry, the US border has been reopened to boxed boneless cuts of beef from animals under 30 months of age but it appears, Mr. Speaker, that even this trade may soon be challenged by yet another R-CALF lawsuit.

Mr. Speaker, the science is in and Canada has been found to have gone above and beyond the call of duty to protect the food supply, and everybody agrees, Mr. Speaker the USDA [United States Department of Agriculture], the US Secretary of Agriculture, and food inspection agencies around the world.

Mr. Speaker, it is known or believed with a high degree of certainty that BSE is not spread from animal to animal. In fact the only known way that it can be spread is by feeding infected ruminant tissue to another ruminant. Since 1997 it has been illegal in this country to feed ruminant tissue to ruminants. Mr. Speaker, only certain parts of an animal can transmit BSE if they are fed to ruminants or humans. Those parts are called specific risk material and in this country they are removed from all slaughtered cattle so there is no possibility of spreading the disease to humans in the form of Creutzfeldt-Jakob disease. And we test a higher percentage of our slaughter cattle for BSE than is the practice in the US. And we are escalating that percentage year by year. Mr. Speaker, our trace-back system has been proven to be second to none in the world.

And the sudden closure of the US border to exports of live cattle very quickly and dramatically highlighted the vulnerability of our beef industry to the whims of our largest customer. About 40 per cent of our beef exports to the US were live animals. Of course that is not by choice but out of necessity, since we dont have the packing capacity to slaughter them in this country. We have been lulled into a false sense of security by well over 100 years of virtually unfettered trade in cattle and beef with the United States. But now we have to change to survive.

Mr. Speaker, the packing industry has begun to expand in reaction to the closed border. Prior to BSE, Canada was slaughtering about 70,000 head of cattle per week. Today we slaughter about 90,000. And by the end of this year, it is projected that we will have the capacity to slaughter about 100,000 head per week. Mr. Speaker, a large packing plant in this province would be a major creator of jobs, economic spinoff, and value-added product. Considerable additional packing capacity will likely be built in Western Canada in the not-too-distant future.

Forty years ago, Mr. Speaker, the Government of Alberta invested substantial sums of money into irrigation infrastructure because they understood that to have a cattle processing industry, you first must provide a guaranteed supply of finished cattle through a feedlot industry. And to have a feedlot industry, you must have a guaranteed supply of feed close at hand and that is provided through irrigation development.

Mr. Speaker, this government has made no such plan and taken no such steps. In fact, Mr. Speaker, while Alberta uses close to 100 per cent of the water allotted to them from the water that flows through their province, Saskatchewan uses only about 3 per cent of the water that is allotted to us from our rivers.

Meanwhile our minister responsible for SERM [Saskatchewan Environment and Resource Management] announces a water conservation study. Dont they understand, Mr. Speaker, that what is needed is a water utilization strategy not a water conservation study? Such a strategy, if properly done, would attract the feedlot industry, and the additional hundreds of thousands of finished cattle flowing from the feedlots would attract the packing industry.

But this government, Mr. Speaker, seems incapable of generating any such long-term economic plan. Mr. Speaker, I wish them luck over there in their attempts to attract a major packing plant to the province because we need it. But it is a lot easier to attract business of any kind if you have the fundamentals in place first. You dont have to offer such deep incentives if you are trying to attract business to a jurisdiction where the fundamentals are in place. Trying to attract major business to Saskatchewan under the policies of this NDP government is like trying to force water to flow uphill. It takes a considerable amount of pressure to make it happen.

Mr. Speaker, Alberta is currently in the process of fast-tracking their regulatory approval process in order to get new packing plants online in that province. They will be formidable competition, Mr. Speaker, because regardless of what the members opposite may say, Alberta does have the fundamentals right. And jurisdictions that have the fundamentals right, get the jobs and the spinoff and the value added to their products.

Mr. Speaker, there are other NDP made impediments to business investment in this province that will mitigate against this government being able to attract a major packing plant that we need so badly. Saskatchewan has a corporate capital tax that Alberta doesnt have at all, and Manitoba has, but at a much lower rate.

Mr. Speaker, Saskatchewan has PST on many legitimate inputs that would be required to build and operate a packing plant. This is not the case in Alberta and it is one more NDP affliction that will mitigate against any major investment like a packing plant being made in this province.

Also, Mr. Speaker, Saskatchewan is the proud owner of the highest property taxes in Canada. And this is another huge disincentive to any company considering investing in bricks and mortar in this province.

Mr. Speaker, this NDP government says that it cant afford to reduce or eliminate the taxes that make us uncompetitive with our neighbours in order to attract investment and jobs to this province. But apparently, they can afford to invest hundreds of millions of taxpayers dollars in crazy, money-losing dot-coms, insurance companies, pipelines, telecommunications companies outside of the borders of this province that create no job or benefit of any kind for Saskatchewan.

Mr. Speaker, the packing industry is one that operates with razor-thin margins during normal competitive times, even when operated by large corporations with long histories of specializing in the industry and very deep pockets. And rest assured, the industry will return to more normal times, and maybe sooner than we can imagine.

This is no business for the government of a relatively small province to be fooling around in with taxpayers money. Im deeply concerned, Mr. Speaker, that this is exactly what they will attempt to do when they find out that they cant attract a major packing plant to the province for the reasons that I have outlined. The taxpayers of this province will be very wary of any such wild gamble with their hard-earned money.

Mr. Speaker, one more point before I wrap up, and mainly by way of free advice to the government. Because I know, as you do, that no member on the government side of this Assembly has even the vaguest idea of how the cattle industry operates. The US has proven itself to be an . . .

The Speaker: Order, please. Ill just ask the hon. member to not engage the Speaker into the debate.

Mr. Stewart: I apologize, Mr. Speaker. Its me that understands that the government doesnt have the vaguest idea of how the cattle industry operates. The US has proven itself to be an unreliable market. So we quite simply have to find other markets. To do this, we will have to do certain things. One of them in to increase packing capacity and another is to be prepared to test every animal possibly destined for export for BSE. We have been told by the packing industry and others, including the CFIA, that testing every animal is too expensive and time consuming to be practicable.

Mr. Speaker, we are told that BSE testing takes a week to ten days, and costs 100 to $300 per test. That probably would be the case if the CFIA were to do the testing. But in Europe and Japan, tests are done by private sector labs, right on the production line, for as little as $20 per test. And a recently approved test provides results in 100 minutes.

If we are to get more packing capacity in Western Canada, we must be prepared to do the things that we have to do to break into new markets as well. If we can beat the Americans at getting as efficient at testing for BSE as the Europeans and Japanese, we will surely be able to increase our markets, at least as fast as we can build new packing capacity.

Accordingly, Mr. Speaker, I support the motion.

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