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CFIA might divest beef-grading supervision

BETTER BEEF? While similar, the U.S. allows beef to grade that Canada would reject. 
Yet many in the industry want to harmonize the standards

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The proposal to harmonize Canada’s beef-grading system with that of the U.S. is currently in regulatory purgatory, thanks to the latest federal budget.

“The Canadian Food Inspection Agency (CFIA) is basically doing some evaluation of their own processes and things, and they’re saying, ‘We’re health and safety, do we really want to be involved with grading?’” said Cindy Delaloye, general manager of the Canadian Beef Grading Agency (CBGA).

When the budget came down earlier this year, the feds made cuts across the board, and the CFIA was no exception. As a result, Delaloye says it remains unclear whether the agency will continue to claim responsibility for the current industry standards.

A proposal was sent to the CFIA before the budget was delivered and at that time, Delaloye was told the changes would have to go through all the ordinary scrutiny required to change regulations.

“My experience has been that it takes about five years. Nothing has happened since and I don’t know that people understand that,” she said. Delaloye was hoping to hear at a May 30 board meeting from a CFIA official what the agency’s intent is with regard to overseeing the beef-grading standards. “Whose door are we knocking on to get things changed?” she said.

The CBGA was privatized in 1996, but answered to the CFIA and had to continue to adhere to the federal standards. “Currently I am audited by the CFIA in our delivery, because we are still delivering federal government regulations. So the question becomes, does it stay a federal government regulation audited by some other group than CFIA, or do they do what the hog industry did and rescind all the regulations and it becomes nothing national?” said Delaloye.

“To me it would really hurt our export market if we did that, but maybe there’s a way to create something national that isn’t run by the government.”

If the CFIA walks away from beef grading entirely, industry will have to determine what direction it desires for beef grading in Canada. “If there’s no standard to deliver, then things get a little bit fuzzy, right?” Delaloye said.

Quality and safety separate

In the U.S., the USDA still administers its beef-grading system, and the service has not been privatized. “The CFIA is health and safety. That’s their real focus, they want to make sure that there’s no E. coli, there’s no listeria — their focus is there. If you start talking quality, that’s kind of out of their realm. It is the marketing people who should be concerned about quality. So should we be under Agriculture Canada? I don’t know,” Delaloye said.

The CBGA charges a per-carcass fee, which varies depending on the size of the operation. “It varies depending on the packing house and the economies of scale — that was the beauty of privatization. It’s a cost-recovery service based on economies of scale at the plant,” said Delaloye.

Grading isn’t a legal requirement, except in Ontario which has a provincial law mandating the grade must be illustrated on the retail package.

In the U.S. and Canada, there are both quality and yield grades assigned to each carcass. The current system of quality grading with respect to marbling is fundamentally the same between the two countries, but uses different terminology.

“The quality grades, Canada AAA and USDA Choice are equivalent as far as I am concerned, with the exception of what we call the Canadian Advantage — no dark cutters, no yellow fat,” said Delaloye. “Currently, if a producer markets cattle north of the border, he might get more off-grades than if he markets south of the border.”

Canada has three yield classes which represent how much lean meat comes out of a carcass. If a carcass is graded at yield three, the packer may apply discount to the price to the producer because the animal is overfat. In the U.S., there are five yield classes, and American packers don’t start discounting until a carcass reaches class four and five. However, packers don’t arbitrarily discount yield-three carcasses, and producers and packers pre-agree to overfat discounts in the sales contract.

Delaloye compared 100,000 head of cattle and found that 15 per cent of Canadian carcasses are yielding class three, and thereby discounted. In the U.S., only eight per cent of carcasses were placed in class four and five. What that means for Canadian feedlots is that it’s easier to make grade in the U.S., and once grade is made, it may be less likely a carcass will be penalized for going overfat. Delaloye believes that is why the feedlot sector is pushing to harmonize. “It’s a matter of discount,” she said.

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