Expect at least two big U.S. packing plants to shut soon: CCA

The Canadian Cattlemen’s Association now predicts “at least two” major meat packing plants in the U.S. will close early this year if the U.S. government’s mandatory country-of-origin labelling (COOL) law on meat remains in place.

In a newsletter Monday, the CCA said it “strongly believes” at least two plants will shut in early 2014 if COOL in its current form isn’t dealt with in U.S. federal legislators’ talks toward a new Farm Bill.

“It is the CCA’s view that a growing number of key U.S. influencers and decision makers are realizing that if (mandatory) COOL is not fixed in the Farm Bill, more U.S. packing plants will close and so will the U.S. feedlots that depend on them,” the association said.

CCA staff, having attended a number of U.S. state cattle meetings this past fall, report many U.S. cow-calf producers who once supported COOL “no longer do so,” facing the likelihood of losing beef plants and feedlots.

The association and its “U.S. allies” are now “working to ensure that this message gets factored into the Farm Bill negotiations.”

USDA released a new version of COOL in May 2013, after the law’s 2008 form was ruled out of order by the World Trade Organization’s Dispute Settlement Body (DSB) in 2011 and WTO Appellate Body in 2012, for discriminating against Canadian and Mexican livestock and meat.

Under the May revisions, in effect since late November 2013, COOL’s labeling provisions for muscle cuts now require covered products’ labels to include even more specific information about where each production step (birth, raising, slaughter) took place. The new rule also yanked the previous rule’s allowance for commingling of muscle cuts.

The CCA previously estimated its losses to COOL since 2008 at about $25 to $40 per head, or about $640 million a year — and more recently forecast USDA’s amended rule will increase the impact of COOL to about $90 to $100 per head.

Retaliation

A compliance panel of the World Trade Organization’s (WTO) Dispute Settlement Body (DSB) is now scheduled to hear oral arguments from Canada and Mexico next month, the CCA said Monday.

The WTO process, the CCA said, “will continue to play out through 2014, including an appeal and a request by Canada and Mexico to impose retaliatory tariffs.

“We ask U.S. decision makers to envision a scenario where Canada and Mexico impose those tariffs, perhaps as early as January 2015, and to further envision what that would mean for U.S. calf and feeder cattle prices starting around the first and second quarter of 2014.”

The association quoted estimates from CattleFax valuing U.S. beef exports to Canada and Mexico at over 10 cents a pound on U.S. fat cattle prices.

Market speculation, the CCA predicted, would see the “financial pain” from retaliatory tariffs start “several months” before the WTO authorizes such tariffs.

It’s hoped, the association said, that the U.S. Congress “will seek to avoid these implications as early as possible.” — AGCanada.com Network

Related stories:
U.S. Farm Bill writers eye $8B in food stamp cuts, Dec. 20, 2013
Canada’s appeal against COOL gaining U.S. support, Nov. 29, 2013
Cattle industry seen likely to shrink if COOL stays, Nov. 28, 2013
WTO compliance panel to probe revisions to COOL, Sept. 27, 2013

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