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PRB 03-01E
Print Copy

MAD COW DISEASE
AND CANADA'S CATTLE INDUSTRY

Prepared by:
Frédéric Forge, Science and Technology Division
Jean-Denis Fréchette, Principal, Economics Division
Revised 12 July 2005


TABLE OF CONTENTS

INTRODUCTION

GENERAL INFORMATION ABOUT BSE

BSE IN CANADA BEFORE 2003
   A. The 1993 Case
   B. BSE Monitoring
   C. Measures to Prevent the Emergence of the Disease in Canada….

MAY 2003: A NEW CASE OF MAD COW DISEASE
   A. Results of the Investigation
   B. Suggested Additional Measures

BSE: THE NORTH AMERICAN ISSUE

CONSEQUENCES FOR CANADA’S CATTLE INDUSTRY
   A. Resuming Export Trade
      1. The American Border
      2. International Trade Rules: Complying with National Health Measures
   B. Repositioning the Industry

CONCLUSION

CHRONOLOGY

APPENDIX: BEEF PRODUCT EXPORTS


MAD COW DISEASE AND CANADA'S CATTLE INDUSTRY

INTRODUCTION

The epidemic of bovine spongiform encephalopathy (BSE), or mad cow disease, has been spreading steadily in Europe since the mid-1980s. The discovery of a case of mad cow disease in Alberta in May 2003 – the second such case in Canada; the first dates back to 1993 – tested the measures introduced over the past decade to prevent the introduction and spread of the disease in Canada.

This paper gives a brief overview of the disease, as well as the measures taken by the federal government to monitor and limit its spread. The paper also presents the results of the investigation following the discovery of the May 2003 case, as well as the measures that have been proposed to improve the existing system, and examines the North American aspect of the issue. The last section discusses how the industry has been affected by the closing of the border to Canadian beef exports, and the possibility of reopening it.

GENERAL INFORMATION ABOUT BSE

Mad cow disease is a transmissible spongiform encephalopathy, or TSE, that attacks the central nervous system of cattle. Other types of TSE include scrapie in sheep, chronic wasting disease (CWD) in deer, and Creutzfeldt-Jakob disease (CJD) in human beings. There is no treatment for the disease and no vaccine against it. The cause appears to be associated with a protein called a prion, which is naturally present in people and animals, and becomes infectious when it acquires an abnormal form and accumulates, notably in brain tissue.

In 2000, a report following an independent inquiry (the Phillips Report)(1) studied the British government’s response to the emergence of the disease, and summed up current scientific knowledge about BSE. The report concluded that the exact origins of BSE would probably never be known. The most probable hypothesis is that the disease started in the 1970s following a genetic mutation that occurred within a single cow. Another hypothesis is that BSE was transmitted among sheep afflicted with scrapie.

There is, however, greater certainty regarding how the disease spread. The carcasses of diseased animals entered the feed chain, because at the time it was common practice to add meat products, notably rendered(2) ruminants (cattle, sheep, goats, deer, elk, bison), to cattle feed. The disease spread at the end of the 1970s and in the early 1980s because of this feed process. The protein linked to BSE is heat-resistant, as well as resistant to other normal pathogen inactivation processes. This means that it will not necessarily be destroyed when going through the meat rendering process, which cooks carcasses at high temperatures. In 1988, the United Kingdom prohibited the use of rendered meat products in cattle feed, thus eliminating material from the feed chain that risked being contaminated. Consequently, the number of cases of BSE found in the United Kingdom has steadily decreased since the winter of 1992-1993.

Other possible methods of transmission are still being investigated, notably transmission from cow to calves prior to birth, and the spontaneous emergence of the disease in the animal. “Horizontal” transmission from one animal to another within the herd has not been proven; nor has environmental contamination (of water, ground, or fodder through saliva, urine or excrement).(3)

The amount of time between the exposure of an animal to BSE and the appearance of symptoms averages between three and six years. Animals with BSE may show a number of different symptoms, including nervous or aggressive behaviour, abnormal posture, lack of coordination or difficulty in rising from a lying position, decreased milk production, and weight loss despite an increased appetite. These symptoms can last from two to six months prior to the animal dying from the disease.

Contrary to other TSEs such as scrapie or CWD, which are species-specific, introducing BSE-infected animals into the human food chain constitutes a public health risk. It is increasingly recognized that a new form of Creutzfeldt-Jakob disease, discovered in the United Kingdom in recent years, could be caused by human exposure to BSE through the consumption of BSE-infected animal products.

BSE IN CANADA BEFORE 2003

   A. The 1993 Case

The first case of BSE diagnosed in Canada was a fed cow that had been imported from the United Kingdom in 1987 at the age of six months. Following the discovery of this first case, the diseased animal was destroyed and the government attempted to trace every other head of cattle imported from the United Kingdom between 1982 and 1990, at which date cattle imports from the United Kingdom were banned. According to a report by the European Commission’s Scientific Steering Committee,(4) Canada imported 160 head of cattle from the United Kingdom between 1982 and 1990. Of these 160 animals, 53 had been slaughtered and entered the food chain, 16 had died and been sent for rendering, and 11 had been exported to the United States. Of the remaining 80 head, 79 were found and removed from the production chain – culled, then incinerated, buried or returned to the United Kingdom. This means that 70 head of cattle (53 slaughtered + 16 dead + 1 that could not be traced) entered the human or animal food chain.

The European Union (EU) has developed a geographical BSE-risk scale. In 2000, the EU announced that it was giving Canada a rating of 2, meaning that it considered that even though BSE was not likely present in Canada, the possibility could not be excluded. The main reason for this decision was the introduction into the human or animal food chain of those 70 animals imported from the United Kingdom during the critical period between 1982 and 1990.

By giving Canada a rating of 2, the EU made it impossible for Canada to export live cattle, cattle embryos or cattle ova, among other products, to EU countries. Canada vigorously opposed this ruling because at that time, before the discovery of the second case, it was on the Office international des épizooties (OIE) [International Office of Epizootics] list of provisionally BSE-free countries.(5) Imports from countries on that list cannot be restricted on grounds relating to BSE.

In 2001, using the Access to Information Act, the press obtained a report from the Canadian Food Inspection Agency (CFIA).(6) This report found that the risks of a BSE epidemic were low because no cases (of an epidemic) had been found in Canada and measures had been put in place to stop any spread of the disease emanating from the United Kingdom. But the report also said that the possibility of an outbreak of the disease in Canada could not be dismissed: given the long incubation period, most beef cattle would have been slaughtered before symptoms appeared.

   B. BSE Monitoring

BSE has been a reportable disease since 1990; any suspected case of BSE must be reported to a federal veterinarian. Since 1992, there has also been a national monitoring program that requires testing for any cow showing any signs of carrying the disease. In addition, every animal suspected of having rabies, but found not to have rabies, must be tested for BSE. Since the discovery of the first case of BSE in 1993, the number of tests administered each year, except for 1995, has surpassed the number recommended by the OIE.(7)

Since the 1993 case, other measures have been put in place. Notably, there is a policy for eradication if a case is discovered. This policy includes the destruction of:

In 2001, the Canadian Cattle Identification Program for cattle and bison was introduced in support of this eradication policy. The program enables the movements of each animal to be tracked, from the herd of origin to the slaughterhouse.(8)

   C. Measures to Prevent the Emergence of the Disease in Canada

Before 1997, there were no restrictions on using meat meal or bone meal in animal feed. Since 1997, it has been forbidden to feed ruminants with mammalian meat meal or bone meal – except for meal made exclusively from pork or horse. Meals that contain fish or chicken are still allowed in the cattle feed chain. Animal meals are still allowed for the feeding of poultry, pork and domestic animals. No other BSE-related measures apply to rendering plants.(9)

Canada also monitors its imports of products with a high risk of BSE. For example, Canada allows imports of live ruminants and their meat or meat products only from countries that it considers to be BSE-free. According to the CFIA, for more than a decade Canada has not imported from Europe any ruminant meat meal or bone meal for cattle feed. In December 2000, the CFIA suspended imports of rendered products from any species and from any country that Canada has not recognized as being BSE-free. Canada also restricts imports of animal products and by-products from countries where cases of BSE have been confirmed among the native animal herds. These animal products are evaluated on a case-by-case basis, and imports are authorized if it has been deemed that there is no risk of introducing BSE.

MAY 2003: A NEW CASE OF MAD COW DISEASE

On 31 January 2003, a fed cow (i.e., a cow being raised for slaughter) in Alberta was found lying down and incapable of rising. It was sent to a provincially controlled slaughterhouse in the Peace River district. The animal qualified for BSE monitoring under the national monitoring program, and the head was sent for testing. The carcass was condemned because of pneumonia. Under the Canadian program, any carcass intended for human consumption subject to TSE testing must be withheld pending test results. Since the carcass was condemned and could not enter the human food chain, it was released and sent for rendering, where it entered the animal food chain. On 20 May 2003, the CFIA confirmed that the animal had BSE. As in 1993, the CFIA conducted a BSE investigation.(10)

   A. Results of the Investigation

Following the confirmation of BSE, the CFIA launched an investigation to determine whether cattle herds might have come into contact with the infected cow and possibly become infected. The investigation followed three main paths: the infected cow’s herds of origin (upstream from the infected herd), herd lineage (downstream from the infected herd), and tracking of feed products that could contain traces of the diseased animal’s carcass. The CFIA’s BSE disease investigation report was published on 3 July 2003.

As a result of upstream and downstream tracking of the infected herd, 15 farms were quarantined and 25 other herds were examined. These investigations led to the slaughter of more than 2,700 head of cattle. Among these, more than 2,000 that were older than 24 months (able to carry the disease) all tested negative for BSE. The carcass of the diseased animal was tracked throughout the slaughter line, to the rendering plant, feed plant and producer, and on to its direct distribution as domestic animal and poultry feed as well as retail distribution to 1,800 farms. Following this step, three farms were quarantined because the investigation could not conclude that the animals from these herds (63 head) had not consumed poultry feed that could have contained traces of the BSE-infected animal. The animals were slaughtered and tested for BSE. The test results were negative.

The report also summarized the hypotheses regarding the sources of exposure to the disease. Several possibilities exist and none have been singled out as yet. Theories of spontaneous emergence and transmission following joint herding with CWD-infected deer were rejected, as well as the possibility of BSE linked to scrapie. Among the possible sources of the disease, the report mentions the following:

The true source of exposure will be known only if a thorough investigation is conducted. The report concludes, however, that the infected cow discovered in 2003 was probably born from one of the last birth cohorts to have been exposed to contaminated feed. In this case, given the structure of the cattle feed line and depending on whether the disease had spread, it is more likely that the disease would have spread to the northwestern United States than to eastern Canada. Epidemiologists believe that any new case discovered through increased monitoring would more likely originate from the period that preceded the 1997 ban on feeding cattle ruminant-derived meat meal and bone meal. It is also more likely to occur in a fed cow in the west (as opposed to a dairy cow in the east, for example).

   B. Suggested Additional Measures

In addition to its investigation, the CFIA asked an international group of experts to review its BSE investigation, and evaluate the BSE protection measures. Their report, published on 26 June 2003, stated that the Canadian response had been excellent and that it was not necessary to conduct an in-depth investigation to determine the source of exposure since it had been prior to the ban on meat meal and bone meal. Significantly, the report states that it is reasonable to believe that other cattle had been previously exposed to the disease, and that they are hosts for its incubation. The authors of the report believe that this warrants the adoption of additional measures to limit the risks for human health and avoid the spread of the disease. The group of experts recommends, among other measures:

The group of experts also suggested other types of intervention such as improving the identification system, imports, exports, awareness, communications, veterinary infrastructures, etc.

Table 1
BSE Monitoring: Animal Categories Tested
  Suspect Animals (exhibiting signs of BSE) Animals Eradicated Upon Discovery of BSE Animals at Risk
(e.g., dead on the farm)
Animals for Human Consumption
(older than 30 months)
BSE-free countries (Canada before 2003)
X
X
 
 
Proposal by international group of experts
X
X
X
 
European Union (since 2001)
X
X
X
X

 

In the weeks that followed the discovery of the second case of mad cow disease, there were suggestions that Canada be “regionalized” if BSE emerges. Under regionalization, if a case is discovered in a specific region, that region is isolated. Other regions can thus continue exporting without suffering economically from an outbreak at the other end of the country. This is currently the case with bovine tuberculosis: Canada is considered free of bovine tuberculosis even though the disease has been discovered among the wild animals in Riding Mountain National Park. The region surrounding the park has been isolated for health reasons, and the cattle herds there are subject to additional measures to avoid transmission of the disease outside the area. According to the CFIA, however, BSE cannot be regionalized because it is not transmitted from one animal to another. Regionalization can be used in the case of diseases such as bovine tuberculosis or foot-and-mouth disease, which are contagious through direct contact or the environment. Given that BSE is transmitted through cattle feed, which is transported throughout the country, and that incubation can take three years or more, it is very difficult to ensure that the disease will remain contained within a given region. According to the CFIA, no country has succeeded in regionalizing its herds to contain BSE.

BSE: THE NORTH AMERICAN ISSUE

Since the North American Free Trade Agreement (NAFTA) came into effect, Canada, the United States and Mexico have applied independent but harmonized BSE risk-management strategies. These strategies are aligned with OIE guidelines (see the section “Measures to Prevent the Emergence of the Disease in Canada”). For example, Canada and the United States introduced measures banning the addition of meat meal and bone meal to animal feed intended for ruminants over the same period in 1997.

Given their geographic proximity, management practices and long history of integration, the American and Canadian cattle industries have an almost identical structure and share the same BSE risk factors.(11) In fact, major markets for North American beef, such as Japan and South Korea, continue to ban imports of beef products from both the United States and Canada.

In light of the recognized effectiveness of the feed ban and the long incubation period of BSE, the number of BSE cases in North America might be expected to peak approximately six years after the 1997 feed ban, that is around 2003-2004.(12) There is no evidence, however, that North America would face an outbreak like the one that occurred in Europe.

It was therefore no great surprise that, on 23 December 2003, a case of BSE was discovered in the United States. The infected cow was raised in Washington State, but DNA testing indicated it had been born in Alberta. However, the international group of experts that studied the U.S. BSE measures stated that this instance of BSE cannot be considered an imported case, and that the two cases discovered in 2003 in Canada and the United States must be recognized as being indigenous to North America.(13) In the first half of 2005, two other cases were confirmed in Alberta, as well as the first case in the United States affecting a U.S.-born animal.(14)

Since 2003, Canada and the United States have strengthened their measures to limit the spread of the disease and ensure that human health is protected. These measures correspond to those suggested by the international groups of experts that studied the Canadian and American responses to the discovery of BSE cases (see the previous section of this paper). The measures include:

In 2004, the Canadian and American governments announced their intention to require the removal of bovine SRM also from the animal feed chain. On 10 December 2004, the CFIA proposed regulations to this effect, to come into force in 2005.(17) The U.S. government has yet to put forward such a measure, in large part because the American cattle industry is opposed to it.

Despite identical risk factors, similar protective measures and an integrated cattle industry, trade in beef products between Canada and the United States almost came to a standstill in May 2003 and has only partially recovered. The closing of the U.S. market had a severe impact on Canada’s cattle industry.

CONSEQUENCES FOR CANADA’S CATTLE INDUSTRY

As stated previously, there is no evidence that Canada faces an outbreak similar to the one that occurred in Europe. Domestic beef consumption has remained relatively stable, and the additional health measures will further reinforce consumer confidence in the inspection system. With health conditions stable and national consumption levels more or less unchanged, the loss of export markets is the biggest challenge the cattle industry faces, given that 60% of Canadian cattle production is exported.

   A. Resuming Export Trade

Since May 2003 and the ban on exports of Canadian beef products, Canada has had some success in reopening certain markets. On 8 August 2003, the United States announced a partial reopening of its border to some categories of beef products, but not to live cattle.(18) On 30 November 2004, Hong Kong agreed to resume imports of Canadian boneless beef from animals under 30 months with all SRM removed. Cuba also reopened its border to a wide range of beef and beef products from Canadian cattle of any age. Cuba went further in March 2005 and agreed to imports, under certain conditions, of Canadian cattle, sheep and goats, as well as bovine semen and embryos. On 8 July 2005, New Zealand, which is BSE-free, became the 15th country since May 2003 to reopen its border to Canadian beef.

      1. The American Border

In March 2005, the United States completed a rule-making process to provide the necessary authority to reopen the border to certain classes of live ruminants and a broader range of ruminant products. This so-called U.S. “BSE minimal-risk rule” amends the requirements regulating the importation of animals and animal products, and creates a new category for regions in which BSE has been detected in the national herd but in which precautionary measures have been taken that reduce the risk of BSE being exported to the United States. The rule, which was scheduled to take effect on 7 March 2005, adds Canada to this new category. In February 2005, U.S. Agriculture Secretary Mike Johanns announced that the United States Department of Agriculture (USDA) would delay the effective date for allowing imports of beef from animals over 30 months, but the other provisions of the rule – notably those allowing the importation of live cattle under 30 months for slaughter – would be implemented as scheduled. The rule does not apply to cattle over 30 months or to breeding cattle and replacement dairy heifers. A separate rule is being developed to address these classes of animals.

On 3 March 2005, the U.S. Senate passed a resolution of disapproval of the rule.(19) In order to keep the rule from going into effect, the resolution had to be passed by the House of Representatives and signed by President Bush. That same day, the White House issued a news release stating its support for an open border, praising the work of Canada’s scientists and government, and making it clear that President Bush, for the first time, would exercise his veto power should Congress demand that the border remain closed.

Independently of the congressional review, however, on 2 March 2005, a federal judge in Montana ordered a preliminary injunction to halt the implementation of the rule until the Court had the opportunity to review it. The preliminary injunction was obtained following a lawsuit filed by the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R CALF USA). The USDA appealed the preliminary injunction decision. The U.S. Ninth Circuit Court of Appeals in San Francisco heard the appeal and overturned the injunction on 14 July 2005, which permitted exports of live Canadian cattle to the United States to resume in late July 2005. However, the court case in Montana regarding the implementation of the rule is still pending, and the hearing initially scheduled for 27 July 2005 has been postponed indefinitely.

These events show that some stakeholders in the U.S. cattle industry are opposed to an integrated North American market. While the legal decisions have been in Canada’s favour, the U.S. market cannot be taken for granted. There is a strong possibility that some industry stakeholders will purse their cases in other areas, for example by making dumping allegations, to stop Canadian beef from crossing the border.

      2. International Trade Rules: Complying with National Health Measures

Despite the health measures put in place and the fact that it quickly became evident that no scientific basis existed for restraining the movement of live cattle and beef products for BSE-related reasons, Canada has still not been able – a little over two years after the discovery in 2003 of the first case of BSE in a domestic animal – to reopen certain markets for its live cattle (United States) or beef (Japan and South Korea).

In September 2003, Canada, the United States and Mexico jointly requested the OIE to provide an internationally agreed-on, science-based trade response to BSE. The OIE issued a statement in January 2004 indicating that a science-based standard for resuming trade with BSE-infected countries exists, but that countries do not follow it:

the existence of valid up-to-date standards did not prevent major trade disruptions due to a failure by many countries to apply the international standard when establishing or revising their import policies.

It has become commonplace for countries, Canada included, to close their borders to all beef products from a country that has discovered a BSE case, without regard for the actual risk, existing health measures or the incidence of the disease in the country. The fact that trade barriers related to BSE have never been challenged under the World Trade Organization (WTO),(20) however, shows that there is a need to develop a more practical approach to resuming trade when the disease appears in a country.

The U.S. “BSE minimal-risk rule” that was scheduled to take effect on 7 March 2005 (see the preceding section, “The American Border”) allows for a better harmonization of national import standards with the OIE’s science-based guidelines. After imposing restrictions on imports of U.S. beef following the discovery of a case of BSE in Washington State in December 2003,(21) the federal government amended its regulations to further align Canada’s BSE policy on imports from the United States with science-based international guidelines. On 29 March 2005, import regulations came into effect that allow for a range of U.S. commodities that had been prohibited since the Washington State BSE case was detected in December 2003.(22) This was an important step towards a harmonized North American import standard for BSE.

By complying with international science-based standards and resuming trade with the United States and Mexico in all types of beef products, including beef from animals over 30 months of age, Canada is sending a clear message to its other trading partners. The NAFTA partners cannot expect other export markets, notably Japan, to support a science-based approach if they themselves do not support it likewise.

The OIE also updated its BSE standard during its annual general meeting in May 2005. New scientific knowledge was integrated into the policy, leading to the establishment of new BSE-status categories. The new policy has three categories (instead of the previous five), each listing the products that can be imported with minimal risk or with the implementation of specific health measures. For example, Canada should be able to export SRM-free boneless beef from animals “under 30 months of age.”

While the new OIE standard more clearly defines what can be imported without risk from BSE-affected countries, it is the countries themselves that ultimately decide whether to align their import policies with the international standard. For its part, Canada chose to move ahead and conduct an in-depth review of its import policy on animal products to prevent the introduction of BSE. The government held consultations on a draft policy between 18 May and 22 July 2005.

The draft policy reflects both the new OIE three-category system for classifying bovine-trading countries, and those countries’ BSE-risk management approach. The new policy would be less restrictive than the existing one. Canada’s existing policy permits the importation of live ruminants, including cattle, sheep and goats, and products derived from them, only after the exporting country has been officially recognized by the CFIA as BSE-free, based on a risk assessment. In terms of current science, the “BSE-free” requirement is unnecessarily restrictive.

   B. Repositioning the Industry(23)

The discovery of a case of BSE in Canada in May 2003 immediately closed the U.S. border to imports of Canadian beef and cattle, as well as other major beef markets such as Japan and South Korea. Canadian exports of cattle and beef products were worth approximately $4.5 billion in 2002, 80% of which was destined for the American market – more than 70% of all beef exports and almost 100% of all cattle exports. The inability to export led to a dramatic drop in the prices producers were paid for beef. At the time, the industry estimated losses at close to $11 million a day in exports since the border closed, and around $7 million a day because of the drop in prices.(24)

Before the BSE crisis, Canadian farmers had access to both Canadian and American slaughterhouses, as well as to feedlots across the border. They thus benefited from greater competition when the time came to sell their livestock, which explains the growth of this sector over the past 20 years. In 2002, virtually all of Canada’s exports of live cattle went to the United States. Canada typically exported approximately 1.1 million head of cattle to the United States each year.(25)

The cattle industry on both sides of the border became increasingly vulnerable as the packing industry developed into an integrated North American trade. Although, due to a number of production factors, the size of the U.S. cattle herd declined by 8% over the past nine years, a growing supply of Canadian cattle allowed U.S. slaughter plants to continue operating at capacity. By the same token, under-capacity for slaughtering in Canada made Canadian beef producers increasingly dependent on American slaughterhouses. This dependence proved to be a weakness once the U.S. border was closed to all live cattle.

The closure of the U.S. border to all live cattle and meat from animals older than 30 months created a huge oversupply of live cattle that could not pass through the bottleneck of Canada’s domestic packing capacity, even though Canadian packers were slaughtering at a rate close to their maximum capacity during the fall of 2003 and the winter of 2004,(26) in response to the partial reopening of the U.S. and Mexican borders to some categories of beef. The country’s cattle herd grew in size,(27) and cattle prices remained very low. Cow-calf and feedlot operators suffered a sharp loss of income and equity that reduced the availability of cash flow and access to financing.

The cattle industry reacted to the new market conditions mainly by increasing domestic slaughter capacity, which went from 3.5 million animals per year in 2003 to close to 4.5 million in 2005. Capacity was increased in part by expanding existing facilities through added shift work, slaughtering on Saturdays, and the systematic use of overtime. New slaughterhouses were also built.

On 10 September 2004, the federal government announced a strategy to reposition the Canadian livestock industry,(28) including by facilitating increased domestic slaughter capacity and sustaining the industry until capacity was reached. In making that announcement, the federal government seemed to recognize that a return to the pre-May 2003 situation was unlikely in the near future. The prediction was to some extent confirmed by the government’s announcement, on 29 June 2005, that funds would be reallocated to “facilitate transformation of the cattle industry,” mainly through measures that would meet the goal of “processing 100% of the country’s livestock production.”(29) Cattle industry stakeholders also seem to believe that returning to a huge dependence on the American slaughter infrastructure would be out of the question, even after the border reopens to live Canadian cattle.

In the United States, the impact of border restrictions was greater in regions where packing plants relied heavily upon Canadian cattle imports for capacity utilization. Canadian imports represented 30% of cattle slaughter in Utah, 19% in Washington State and 10% or more in Minnesota, Michigan and New Jersey. As a result, many U.S. slaughter plants are facing financial difficulties, and have stopped production and laid off workers.

The reopening of the U.S. border to live cattle exports from Canada in July 2005 will have an undeniable effect on the North American industry’s efforts to reposition itself since May 2003.

CONCLUSION

The second case of mad cow disease in Canada in 2003, discovered almost 10 years after the first, has tested the ability of the industry and health authorities in Canada to respond to a public health crisis. Positive aspects include the fact that the Canadian monitoring system was successful in detecting the sick animal, and that the CFIA’s response has been hailed by the industry and cited as a model by international experts. This isolated case has also led to additional sanitary measures that will make Canadian beef even safer.

Even though Canada is unlikely to experience a BSE flare-up such as occurred in Europe, this single case of mad cow disease was enough to jeopardize an industry worth more than $7 billion annually. This event underlines the extent to which an industry is vulnerable when it is dependent on one market, namely, the United States. Now that the scientific aspects of this case of mad cow disease have been established, Canada is continuing to work towards the reopening of borders to Canadian beef and renewed access to the markets that existed prior to May 2003. As we have seen, however, despite the fact that the United States and Mexico have decided to partially reopen their borders, our trading partners remain on their guard. A return to “normal” conditions is still up in the air; Canada’s cattle industry will have to restructure itself to adapt to this new reality.

CHRONOLOGY

1986
1987
1988
1990
1991
1992
1993
1994
1995
1996
1997
1998
2000
2001
2002
2003

For a detailed chronology of events and government initiatives in Canada from 2003 onwards, see Marc LeBlanc, Chronology of BSE-related Events and Government Initiatives, PRB 04-12E (In Brief), Parliamentary Information and Research Service, Library of Parliament, Ottawa, June 2005.


(1) The BSE Inquiry Report, 2000.

(2) Rendering is the thermal treatment of inedible animal parts for industrial use. This produces transformed animal proteins and animal fat by-products, such as bone meal and meat meal.

(3) Each encephalopathy is unique in its mode of transmission; although it is thought that environmental transmission is not possible in the case of BSE, it is possible in the case of CWD in deer, and scrapie in sheep.

(4) European Commission, Report on the Assessment of the Geographical BSE-Risk (GBR) of Canada, July 2000.

(5) The OIE is an international body that monitors the emergence and development of animal diseases and sets standards for their monitoring and control. See the section of this paper entitled “Consequences for Canada’s Cattle Industry,” below.

(6) Canadian Press, “Report commissioned by Health Canada; Mad Cow Disease could be hiding in the food chain” [translation], Le Devoir, 2 April 2001.

(7) For a passive monitoring program to be effective, the OIE recommends 300 to 336 tests for a cattle population of between 5 and 7 million head that is over 24 months old. “Passive monitoring” means that the program relies on farmers and ranchers to report suspicious cases. “Active monitoring,” on the other hand, involves systematic screening for the disease in certain categories of animals even when they have no symptoms. See Table 1 above.

(8) This system differs from the tracking system in place in Quebec. The Quebec system records all animal movements, which allows greater accuracy and timeliness when tracking an animal, as well as the other animals with which the diseased animal came into contact.

(9) For more information on this topic, see the Bovine Spongiform Encephalopathy (BSE) and the CFIA's Feed Ban on the CFIA Web site.

(10) See BSE Disease Investigation in Alberta on the CFIA Web site.

(11) Government of Canada, Technical Overview of BSE in Canada – March 2005, 2005.

(12) Ibid.

(13) U. Kihm et al., Report on Measures Relating to Bovine Spongiform Encephalopathy (BSE) in the United States, 2004.

(14) The cases were confirmed on 2 and 11 January 2005 in Canada, and on 24 June 2005 in the United States (although the sample was taken in November 2004).

(15) Two regulations were amended: the Food and Drug Regulations and the Health of Animals Regulations.

(16) On 9 January 2004, the federal government announced $92.1 million in funding over five years to enhance measures for identification, tracking and tracing, and to increase BSE surveillance and testing.

(17) For further information on animal feed policies, see F. Forge, Canadian Feed Policy and BSE, PRB 05-06E, Parliamentary Information and Research Service, Library of Parliament, Ottawa, July 2005.

(18) The United States allows imports of boneless meat from cattle less than 30 months old, and boneless meat from calves 36 weeks or younger. Mexico, Canada’s second-largest market for beef, made a similar announcement on 11 August 2003.

(19) Fifty-two senators voted in favour of the resolution of disapproval (including 13 Republicans) and 46 voted against it (including 4 Democrats).

(20) The WTO is the only organization that can enforce OIE standards, since it uses them in its rulings.

(21) Canada continues to import U.S. boneless beef from cattle less than 30 months old, live cattle destined for immediate slaughter, and dairy products, semen, embryos and protein-free tallow.

(22) Under the new import regulations, some of the commodities now allowed include: fed cattle less than 30 months of age; goats and sheep less than 12 months of age for feeding or immediate slaughter; and bulls destined for animal semen production centres. Bone-in meat from sheep and goats under 12 months of age is also now permitted.

(23) For further information on the economic aspects of the crisis, see J.-D. Fréchette, Mad Cow Disease in Canada: An Economic Overview, TIPS-116E, Parliamentary Information and Research Service, Library of Parliament, Ottawa, 5 July 2005.

(24) On 18 June 2003, the government announced a national program (the BSE Recovery Program) to provide temporary assistance to help the Canadian cattle and beef industry continue to operate while the borders remained closed. This $460-million program was supplemented by a further $36 million on 12 August 2003.

(25) Competition Bureau, “The Competition Bureau's Examination Into Cattle and Beef Pricing,” News release, 29 April 2005.

(26) In May 2003, the industry had the capacity to slaughter about 70,000 cattle per week. After the discovery of BSE, the slaughter rate dropped to 30,000 cattle per week.

(27) Statistics Canada reported that, in January 2004, the Canadian cattle herd reached 14.7 million head, 1.2 million more than in January 2003.

(28) Federal funding for the strategy was initially budgeted at $488 million, including $66.2 million to increase ruminant slaughter capacity and $384.7 million for industry support.

(29) Agriculture and Agri-Food Canada, “Government of Canada Reprofiles Funds to Facilitate Transformation of the Cattle and Other Ruminants Industry,” News release, Ottawa, 29 June 2005.


APPENDIX

BEEF PRODUCT EXPORTS

(Tables and figures drawn from the Web site of Agriculture and
Agri-Food Canada and based on data collected by Statistics Canada)

Canada's Live Bovine Animals; Exports to all Countries

 

Graph representing exports to Client Countries from 2002 to March 2005; Pie Chart indicating Trading Provinces in last 4 years - Alberta: 33%, Ontario: 21%, Saskatchewan: 19%, Manitoba: 16%, British Columbia: 7%, Other: 4%; Graph showing monthly shipments of beef product exports in Canadian dollars from 2002 to March 2005.

 

Canada's Beef and Veal Products:  Quantity and Value (in Canadian dollars) of exports to all Countries from 2002 to March 2005

Canada's Beef and Veal Products:  Quantity and Value (in Canadian dollars) of exports to all Countries from 2002 to March 2005, continued from previous table.

Graph representing beef product exports to Client Countries (U.S., Mexico, Japan, South Korea, Taiwan and Other) from 2002 to March 2005 in Canadian dollars; Pie Chart indicating Trading Provinces in last 4 years - Alberta: 77%, Ontario: 15%, Quebec: 7%, Saskatchewan: 1% and Other: 0%; Graph showing monthly shipments of beef product exports in Canadian dollars from 2002 to March 2005.

 Canada's exports of Beef and Veal products to all countries from 2002 to March 2005 by month and by province, with Year-to-date totals; Graph showing monthly trade in Quantity of Beef Products from 2002 to March 2005


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