Australia imposed import restrictions on Canadian beef in 2003, following the discovery of Canada’s first domestic case of mad cow disease. It lifted a similar ban on U.S. beef imports last week.

Canada’s government celebrated the long-awaited resumption of access to the Australian market.

“With restored access to Australia, a key market in the Indo-Pacific, we can unlock more opportunities for our producers to deliver the top-quality beef we’re known for,” said federal Agriculture Minister Heath MacDonald.

Analysts are skeptical about how much North American beef can be exported to Australia because the U.S. has a major deficit and is importing beef from Australia, Canada and other suppliers.

“U.S. beef is still very highly priced compared to Australian beef,” said Resilient Capital analyst Jerry Klassen.

“North American beef is really the highest-priced in the world.”

The Canadian Cattle Association, which represents farmers and feedlots that raise cattle, celebrated the Australian market reopening, saying in a news release it was one of the last remaining countries to have maintained mad cow disease restrictions on Canadian beef.

Canada’s cattle ranchers were devastated by the 2003 restrictions placed upon Canadian beef exports because much of the country’s beef production is exported, especially to the U.S.

—Reporting by David Ljunggren and Ed White

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The government has imposed precautionary movement restrictions at impacted premises and on animals that have been in contact with the case in Ayrshire, it said in a statement.

Further investigations to identify the origin of the disease at the farm are ongoing, the Scottish government statement said, adding there was no risk to human health.

“I want to reassure both farmers and the public that the risk associated with this isolated case is minimal. But, if any farmers are concerned, I would urge them to seek veterinary advice,” Chief Veterinary Officer Sheila Voas said.

BSE was first detected in Britain in the late 1980s, spreading from there to other parts of Europe and ravaging cattle herds until the early 2000s. It has been linked to the brain-wasting Creutzfeldt-Jakob disease in humans.

BSE incidence has markedly decreased over recent years and is now estimated to be close to zero cases per year worldwide, according to the World Organisation for Animal Health (WOAH).

The previous confirmed classical BSE case in Britain was in 2021, and an atypical case of the disease was reported last year.

Classical BSE occurs through the consumption of contaminated feed, while atypical BSE refers to naturally and sporadically occurring forms.

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Canada’s Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau announced the move Friday, saying Taiwan’s decision “will offer an opportunity to expand Canadian beef exports to Taiwan and diversify export markets in the Indo-Pacific region.”

“Expanding our trade relationships in the Indo-Pacific region is a top priority for the Government of Canada, and Taiwan presents many opportunities for Canada’s beef sector,” Bibeau said Friday in a release.

Ng had telegraphed Taiwan’s pending decision late last month during the Asia Pacific Economic Cooperation (APEC) trade ministers’ meeting in Detroit, noting ongoing negotiations between Canada and Taiwan on a foreign investment promotion and protection arrangement.

Taiwan, among many other countries, had blocked imports of Canadian beef in 2003 following the discovery of Canada’s first domestic case of bovine spongiform encephalopathy (BSE). It began accepting boneless Canadian beef from animals under age 30 months (UTMs) in 2007, though it paused those imports in 2015-16 on the discovery of Canada’s 19th BSE case, the first to be born after Canada’s “enhanced feed ban” was imposed in 2007.

The 30-month cutoff has been based on a safeguard imposed in Britain in the 1990s during that country’s BSE crisis. UTM cattle are believed to pose a lower risk of BSE infectivity even if those animals carry the agent that causes the disease.

Since then, however, Canada’s BSE-related beef safety cred has reached its highest possible ranking internationally. It was officially recognized in 2021 by the World Organization of Animal Health (WOAH) as having “negligible risk” status for BSE.

Canada last year was the seventh-largest supplier of beef and beef products to Taiwan, valued at almost $14 million out of Taiwan’s $1.9 billion total beef import market that year.

The Canadian Cattle Association said last month it’s “grateful for Taiwan’s decision to adhere to science-based trade,” noting the Indo-Pacific region “holds the greatest potential for beef export diversification.” — Glacier FarmMedia Network

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Canadian beef processors pay millions more than their U.S. counterparts to process and dispose of specified risk material (SRM), first targeted during the BSE era, in cattle older than 30 months (OTM). The regulations hurt smaller processors in particular and reduce processing options for producers, said a top industry official.

“We’ve seen a number of smaller, provincially inspected plants stop processing OTM animals. It was just too expensive,” said Dennis Laycraft, executive vice-president of the Canadian Cattle Association.

There are also costs passed down the value chain to producers, but they’re only part of the equation, he said.

“It’s not just the direct cost being passed on to producers. When you have that reduced capacity, it also affects competitive bidding for cattle. You may have to truck your animals further because of the policies,” said Laycraft.

“Those tend to add up to costs that are difficult to quantify but we clearly know they’re there.”

Held back

A recent industry study said federal SRM regulations are a barrier to growth in Alberta’s beef sector.

“SRM carve-out requirements in Canada require more carcass byproduct for over 30 month (OTM) cattle be allocated to less profitable uses,” said the Alberta Beef Competitiveness Study prepared by Calgary-based consultants Serecon.

“SRM regulations mean small- and medium-sized processors are charged more by the renderer in Alberta for byproduct removal.”

SRM refers to parts of the carcass that could potentially contain the BSE agent or prion in an infected animal.

The Canadian Food Inspection Agency defines SRM as the skull, brain, nerves attached to the brain, eyes, tonsils, spinal cord and nerves attached to the spinal cord in cattle aged 30 months or older. It also applies to the distal ileum portion of the small intestine for cattle of all ages.

Although Canada’s BSE risk status was downgraded to “negligible” by the World Organization of Animal Health in 2021, 18 years after the disease was discovered in Alberta, processors must still abide by regulations intended to tackle the disease.

Canadian processors must dispose of more material from each animal than do their U.S. counterparts, and that amounts to big dollars.

Adds up

According to the Canadian Meat Council, SRM disposal costs for 500,000 head of cattle in Canada are estimated at $6.5 million, while disposal costs for the same number of cattle in the U.S. are estimated at $514,000, a $6-million-dollar difference.

Canadian beef abattoirs also remove more (57 kilograms of material prohibited for use in feed or nine per cent of the animal, on average) compared to their U.S. counterparts (three kg or 0.5 per cent of the animal).

According to the meat council, this amounted to an average disposal cost of $167 per tonne among council members surveyed.

“There can be no doubt that when you have a higher cost at the processing level, over time that gets reflected back on what producers get paid,” said Laycraft.

Demand for small- and medium-sized processors is strong but few are responding to the need, he said. In addition to SRM woes, lack of workers might cause reluctance. Labour shortages were identified in the competitiveness study as the Alberta beef sector’s number one challenge.

Michael Munton, owner of Benchmark Angus and Bens Quality Meats, is a rancher, processor and direct marketer near Picture Butte. His provincially regulated business processes about 40 cattle per day and it takes time and labour to comply with SRM regulations.

“At the end of the day, it’s just more cost,” he said. “We’ve got more process to follow, more tracking. Just following the protocol adds cost. Any bit of SRM has to be disposed of separately so you have to track all of that, record all that and then our disposal company charges us more to dispose of (it).”

Munton ballparks his SRM handling costs at $100 to $150 per head, but it’s a big ballpark.

“If our crew is efficient and does a good job, it might be less. If we have trouble removing all the SRM, then our cost would be exponentially more.”

He continues to process OTM cattle but that could change with market conditions, he said.

“Right now cattle numbers are down tremendously. We have customers we’re supplying regularly who are looking for beef at a lesser cost, which we’re trying to satisfy with processing OTM carcasses.

“I think if the market wasn’t where it is right now, we may have that viewpoint where we just say we’re not going to process any OTMs.”

Same rules

The Canadian beef sector’s ultimate goal for SRM is harmonization of regulations with the U.S., said Laycraft. The question is whether the original “classical” case of BSE from 2003 has been eliminated. In Canada, that assessment lies with the CFIA.

“We’re working with the CFIA in completing a full risk analysis. We’re completing that risk assessment so we can use that to show we can safely move to harmonize with the U.S.,” he said.

“Obviously I can’t completely pre-judge a risk assessment until it’s completed but we’re very confident in the fact that classical BSE has been effectively eradicated around the world. There’s been a few born every three or four years in Europe after the enforced bans but it’s extraordinarily rare for it to ever show up now.”

Munton is more cynical about the industry’s chances against regulatory powers.

“Should (the current SRM regulations) be done away with? Absolutely. Will they be done away with? We have little to zero pressure we can put on the CFIA or meat inspection so will that happen? I’m not going to hold my breath.”

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Posting on Twitter Thursday from the Asia Pacific Economic Cooperation (APEC) trade ministers’ meeting in Detroit, Mary Ng said Taiwanese officials have confirmed the decision, which she hailed as “great news for Canadian beef farmers and exporters.”

“As we negotiate our foreign investment promotion and protection arrangement, we continue to foster opportunities between our two economies, creating good jobs for Taiwanese and Canadian workers,” Ng said in a follow-up tweet.

Ng and Taiwan’s trade representative John Deng had announced in February that the two parties had agreed to begin formal negotiations on the investment promotion and protection arrangement (FIPA).

Taiwan has had an off-and-on trade relationship with Canadian beef exporters since 2003, when it imposed import restrictions following the discovery of Canada’s first domestic BSE case. Canadian boneless beef from animals under the age of 30 months (UTMs) was again admitted starting in 2007.

Taiwan would again shut its ports to UTM beef in 2015, following the discovery of Canada’s 19th BSE case, the first to be born after Canada’s “enhanced feed ban” was imposed in 2007. Canadian UTM beef, including certain “specified offal,” was again admitted starting in July 2016.

According to market development agency Canada Beef, as of the end of March, Taiwan was ranked No. 10 in 2023 year-to-date among Canadian beef’s export markets by dollar value and No. 9 by volume, taking 270 tonnes worth $2.48 million.

In full-year 2022, Taiwan took in 1,185 tonnes of Canadian beef, valued at $13.96 million.

The Canadian Cattle Association, in a separate tweet Thursday, hailed the minister’s announcement as “welcome news for Canadian cattle farmers and ranchers” and thanked Ng for her work on the beef trade file. –– Glacier FarmMedia Network

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May 20, 2003, when the first positive test of a cow with BSE was confirmed; Aug. 10, 2003, when the U.S. and Mexico restored import access for Canadian boneless beef from animals under 30 months of age; July 14, 2005, when the U.S. reopened full access for all Canadian beef, both live and processed.

Two decades on, Laycraft also thinks about the longer-term impact of the discovery that an Alberta cow had classic-variant bovine spongiform encephalopathy.

“We basically almost lost a generation of beef producers,” said the long-time executive vice-president of the Canadian Cattle Association.

It also reshaped the sector, said Laycraft, who was raised on an Alberta cattle operation. He likened BSE’s effects to the oil sector’s boom-and-bust cycles of investment, loss and consolidation.

“Those farmers or ranchers with more equity ended up acquiring those with less equity who couldn’t weather the storm,” he said.

The number of beef herds with 200 head or fewer steeply contracted, and now a much greater proportion of western Canadian cattle herds number 1,000 or more.

Pasture, and particularly native grasslands, also took a huge hit.

Many tens of thousands of western Canadian acres were converted to cropland. The effects of that transformation on soil health and climate change mitigation are only now being acknowledged.

Laycraft used the word “paralysis” on multiple occasions when recalling the events of 2003. He remembers May 20 very well. He was in Edmonton that day, attending a press conference with then Canadian Cattlemen’s Association president, the late Neil Jahnke. He was on his way back to Calgary when he learned that U.S. Agriculture Secretary Ann Veneman had told a media gathering that her government had full confidence in the Canadian beef supply.

Nonetheless, within hours, the U.S. border closed to Canadian cattle and beef. Canada decided to suspend export permits, which prompted almost all countries in the world to ban imports from Canada.

“There were a couple of fringe markets that stayed open and were there when export permits resumed but they were not substantial importers of Canadian beef,” recalled Laycraft.

The impacts rippled through the sector. Processors cut back purchases. Producers had to implement strategies to keep cattle longer on farms. Any herd expansion halted.

At the time, knowledge about BSE was still developing. By 2014, countries in Europe were confident they had protocols in place to identify and contain BSE, so they called off further research into the disease. Even by 2007, there was a strong level of confidence globally that if protocols were followed, the disease could be effectively contained.

That year, Canada was declared by the World Organization for Animal Health as a “negligible risk country” for BSE, prompting numerous countries to begin discussions with Canada for resumed beef imports.

But back in 2003, Canada relied on established knowledge about animal disease containment and human food safety to implement a BSE strategy. Looking back, Laycraft recognizes how impressively that unfolded.

“It was by far the most comprehensive and transparent investigation of BSE that had ever been conducted anywhere in the world,” he said.

There was also a close working relationship with the U.S. counterpart to the Canadian Food Inspection Agency, and this set the stage for what now can be recognized as a surprisingly rapid resumption of trade in some products to the U.S. and Mexico.

Laycraft has high praise for supporters across Canada, both inside and outside the beef sector. He credited this support to the ability of the government and industry leaders to assure the Canadian public that biosecurity measures already in place before BSE had effectively contained its spread and that a strategy was being implemented after the discovery to insure the food supply remained safe.

“You started to see barbecues from one end of the country to the other,” he recalled. “By Father’s Day (in 2003) we actually had a shortage of beef because Canadians were so eager to help the farmers.”

By July 2003, year-over-year beef consumption in Canada had jumped by 70 per cent, a stark contrast to other countries that had BSE cases, some of saw beef consumption plummet by as much as 90 per cent.

Processing began to ramp back up and by 2005 was higher than two years earlier.

But other challenges came along. First, a strong loonie, which lowered returns for exports, and then high energy prices that increased farm costs. Then came a recession in 2008. “A perfect storm decade” is what Laycraft calls it now.

“We were pretty happy to see 2010 come along and hopefully start out a new decade.”

Two months ago, Japan — the country’s second-largest export market — lifted the last of the restrictions it imposed 20 years ago when it reopened its doors to processed beef. It was a move Laycraft described as “kind of the last little piece that’s left in Japan.”

A few countries in the same region, including South Korea and Taiwan, have “relic restrictions,” but they apply to the U.S. as well as Canada and are more a testament to “the long time it can take for these things to work their way through the various steps to approval,” he said.

It has taken a long time, too, for the positive repercussions of Canada’s brush with BSE to become apparent.

But there have been some, said Laycraft.

“One thing we became was one of the most efficient cattle production areas in the world.”

Resources, both from government and from industry, were devoted to research and innovation into producing high-quality beef in a feed-efficient manner that could demand a premium price internationally.

“We became a leader in sustainability,” he said. “Survival tends to make that happen.”

In 2012, McDonald’s restaurant chain picked Canada for its global pilot project into sustainably raised beef, a move that made the country a leader on that front, he noted.

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“The story remains one of a slow-to-move product market,” brokerage StoneX said in a note to clients.

Cattle futures also were weaker as traders digested news from Friday about a new BSE finding.

The U.S. Department of Agriculture (USDA) announced on Friday an atypical case of BSE in an older beef cow at a slaughter plant in South Carolina. USDA said the animal never entered slaughter channels and the agency did not expect any trade impacts as a result.

CME June live cattle settled down 0.675 cent at 165.05 cents/lb., while the most-active August contract was 0.7 cent lower at 163.6 cents (all figures US$).

CME August feeder cattle dropped 0.2 cent to finish at 234.9 cents/lb.

CME lean hogs for June delivery hogs dropped 1.2 cents, to 81.825 cents/lb. The most-active July contract fell 0.975 cent to end at 82.15 cents.

— Mark Weinraub is a Reuters commodities correspondent in Chicago.

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USDA said the animal never entered slaughter channels and the agency did not expect any trade impacts as a result.

It was the seventh detection of BSE in the U.S. since 2003 and all but one have been atypical.

“This finding of an atypical case will not change the negligible risk status of the United States and should not lead to any trade issues,” USDA’s Animal and Plant Health Inspection Service (APHIS) said in a statement.

— Reporting for Reuters by Caroline Stauffer.

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Canada’s federal agriculture department announced Monday that Japan has reopened to imports of “processed” Canadian beef — just days ahead of a significant reduction in Japan’s tariffs on imports of Canadian beef under the Trans-Pacific Partnership (CPTPP) trade pact.

“Our members view this as a critical market for their products, including processed beef and beef patties,” Chris White, CEO of the Canadian Meat Council, said in Agriculture and Agri-Food Canada’s release Monday.

“This agreement will allow our industry to further build on the recent successes they have enjoyed in Japan since the CPTPP was ratified.”

Nathan Phinney, president of the Canadian Cattle Association, said in a separate release Monday producers are “grateful for the re-opening for processed beef in Japan, our second largest export market for beef.”

Japan’s decision concludes another plot thread in the story of Canada’s BSE crisis. Japan had closed its ports entirely to Canadian beef in 2003, upon Canada’s first finding of a domestic cow with bovine spongiform encephalopathy (BSE). Canada in 2021 regained “negligible risk” status for BSE from the World Organization for Animal Health (OIE).

Japan reopened to imports of Canadian beef from cattle 20 months of age or younger in 2005, to beef from cattle 30 months or younger (UTMs) in 2013, and to beef from cattle over 30 months old (OTMs) in 2019.

Under the CPTPP — in force since the end of 2018 for Canada and Japan as well as Australia, Mexico, New Zealand and Singapore, as the first six of the 11 member countries to ratify that deal — Canada has since had preferential market access to Japan that has allowed it to build its eligible beef exports up to an amount the CCA pegged at $518 million in 2022.

Japan levies a 38.5 per cent tariff on beef imports, including on primary processed beef products. For Canada, however, the beef tariff has decreased since the CPTPP came into force and, starting Saturday (April 1), drops again to 23.35 per cent, en route down to nine per cent by 2033.

Tariffs on further-processed beef products “will be reduced even more and in some cases eliminated altogether,” AAFC said Monday, reiterating that the reduction “provides Canadian exporters with a clear tariff advantage over our key competitors.”

The value of beef in Japan has also increased, rising from $6.74 per kilogram in 2020 to $7.76/kg in 2022, the CCA said Monday.

Japan, and the larger Indo-Pacific region, “hold the greatest potential for beef export diversification” for Canada, the CCA added.

The federal government late last year launched its Indo-Pacific strategy, through which it says it plans to boost economic opportunities for Canada by strengthening partnerships in the region such as with Japan.

The strategy also calls for the establishment of Canada’s first dedicated agriculture and agri-food office in the region, at an as-yet unannounced location. — Glacier FarmMedia Network

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China’s General Administration of Customs approved the resumption of imports of Brazilian beef and authorized the new plants a day after Brazilian Agriculture Minister Carlos Favaro arrived in Beijing ahead of a visit by Brazilian President Luiz Inacio Lula da Silva next week.

Sales of Brazilian beef to China were voluntarily halted by Brazilian authorities on Feb. 23, following the discovery of an atypical case of BSE.

More than a quarter of the business leaders travelling to China with President Lula come from Brazil’s booming meat industry, highlighting the high stakes for a sector reliant on Chinese demand for most of its exports.

Lula will visit China accompanied by a delegation of 240 business representatives, including 90 from the agriculture sector.

Datagro Pecuaria, a consultancy, said on Thursday this is the first time since 2019 that China has issued new export permits for Brazilian packers, referring to the four new licenses granted to JBS and another three privately-owned companies.

Earlier in the day, Favaro welcomed the lifting of the month-long ban and said this was a sign that could lead to new export permissions.

Now, a total of 41 Brazilian beef plants are authorized to sell to China.

Beef producers in Brazil were losing up to US$25 million per day with the embargo in place. Some 62 per cent of Brazil’s beef exports went to China last year.

In time, Brazil aims to renegotiate a bilateral sanitary protocol under which a single mad cow case triggers an export ban for the whole country.

Shares in Brazilian packers Minerva and JBS rose in morning trade, but later pared gains amid a widespread market rout.

Chinese customers authorities on Thursday also removed a ban on a poultry plant operated by BRF SA enforced in December 2021, according to Datagro Pecuaria.

The agriculture ministry confirmed the ban was lifted in Rio Grande do Sul, without referencing the company.

— Reporting for Reuters by Andrew Hayley and Ningwei Qin in Beijing and Ana Mano and Nayara Figueiredo in Sao Paulo.

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