Transcript Policy Changes, Trade Tensions, & Disputes: Focus on

North American Trade in An Era of
Increasing Regulation & Market
Disruption
Parr Rosson
Professor & Director
Center for North American Studies
Texas A&M University
C
NAS
Food Safety & Security
Issues Disrupt Trade & Market
Integration
 Bovine
Spongiform
Encephalopathy & Avian Influenza
 Issues Related to Genetically
Modified Crops & Foods
 Bioterrorism Act Implementation
C
NAS
Mad Cows & Other
Monsters!!
Bovine Spongiform Encephalopathy
• December 23, 2003 Dairy Cow Tests
Positive for BSE
• Mega Markets Closed
– Japan, Mexico, Korea (80%)
• Canada (10%) Reopened 1/22/04
• March 3, 2004: Mexico Opens Market to
Deboned Meat from Cattle < 30 months
• Korea & Japan Still Closed
• U.S. Implementing Animal ID System
• U.S. Market Still Closed to Canadian
Cattle
US Feeder Cattle Futures, Nov 03-Jan 04
BSE
12/23/03
US Fed Cattle Futures, Nov 03-Jan 04
BSE
12/23/03
U.S. Beef Production & Cattle Inventory
28.0
Billion Pounds
Beef Production
Million Head
120.0
Cattle Inventory
27.0
115.0
26.0
110.0
25.0
105.0
24.0
23.07
100.0
23.0
21.0
1980
95.0
95.8
22.0
1984
1988
Source: USDA/FAS, www.fas.usda.gov/psd
1992
1996
2000
90.0
2004
US Beef Demand
120
Index & Pounds per Person
! Retail Choice Beef Index
&
&Per Capita Retail Consumption
100 !
!
! !
!
80
! &
&&&&&&
!
60
&&
! ! &&
! ! &&&&&&&&&&&&&&
!
! !
! !
! ! !
! !
!
! !
40
20
Retail Index Base Year 1980=100
0
1980
1985
1990
Livestock Marketing Information Center & ERS, USDA.
1995
2000
2004
Canadian Exports of Live Cattle and Hogs
to the United States, 1993 - 2003
Million Head
Hogs
10.0
Cattle
7.4
8.0
6.0
4.0
3.2
2.8
1.7
0.8
1.2
0.9 1.0
1.1
4.4
4.1
4.1
2.0
5.7
5.3
1.5
1.4
1.3
1.0
1.0
1.3
1.7
0.5
0.0
1993
1994
Source: USDA/FAS
1995
1996
1997
1998
1999
2000
2001
2002
2003
US Cattle Imports from Mexico
2000
1,000 Head
1,653
1,360 F
1500
Annual Avg. 800,000
Head
1000
500
2004 is CNAS forecast
0
1970
1975
1980
1985
1990
1995
2000
2004F
US Feeder Cattle Futures, Apr-Jun 04
Chicago Mercantile Exchange
US Fed Cattle Futures, Apr-Jun 04
Chicago Mercantile Exchange
Omaha Choice Steer Prices
$100
$/100 Pounds
Trend
$10 Above
Trend
$90
$85.59
$17 Above
Average
$80
$70
$60
$50
$40
1980
1985
1990
1995
2000
2004
Monthly Omaha Choice Steer Prices
$120
$105.50
$100
2004
$91.95
?
$80
$72.24
2003
$76.73
2002
$60
$62.49
$40
$/100 Pounds
$20
$0
J
F
M
A
M
J
J
A
S
O
N
D
US Boxed Beef Prices, Selected Boneless Cuts
$/Pound
June 2003
$8.00
June 2004
$7.31
$6.50
$6.00
$5.37
$4.95 $4.96
$3.98
$4.00
$1.49
$1.34
$2.00
$1.77
$1.34
$0.00
Ribeye
AMS, USDA
Chuck,
Top Inside Round
Shoulder
Loin Strip
Flank Steak
Canadian Cattle Inventory
16
Million Head, January 1
14.66
14
13.40 13.41 13.36
13.21 13.20
12.71
13.61
13.76
13.49
11.86
12
12.0
10
USDA, ERS, PSD.
8
1993
1995
2000
2004
Alberta Direct Sale Steer Prices
CN$/CWT
$115.0
$113.0
BSE
$110
$107.0
$106.0
$90
$84.0
$88.3
$75.0
$70
$50
Mid-month Average Prices
$41.5
$36.2
$30
Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca
$77.4
$70.8
Alberta Direct Sale Steer Prices
CN$/CWT
$120
BSE
$100
$80
$71.10
$60
2001
2002
2003
2004
$40
2002-04, Weekly Average Prices
$20
Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca
2001 prices are monthly averages, source CANFAX calculated by LMIC.
Canadian Beef Exports to US Market,
Jan-Apr 1989-2004
140
120
Actual
Trend
100
80
60
40
1,000 Tons
20
0
1989
1995
2000
2004
Canadian Beef Exports to US Market
140
1,000 Tons
Boneless
(January-April)
Bone In
120
111
101
100
80
90
72
60
40
31
27
24
20
1
0
2001
2002
2003
2004
Summary/Implications

Strong Demand, Low Domestic Production,
Limited Imports of Canadian Cattle
– Record High U.S. Cattle Prices

Uncertainty About Opening of U.S. Market
to Canadian Cattle
 Canadian Herd Size Up 8.7% from 2003
 Prices Appear to Be Following Seasonally
Normal Patterns
 How Will Canadian Producers Respond?
Frankenfoods!
Jumping Genes!
GMO Crop Acres: World & U.S.
Million Acres
200
165
145
130
150
115
102
100
100
92
81
77
70
69
60
30 29
50
11 10
0
1996
1997
1998
1999
2000
2001
Source: Wall Street Journal, 4/16/04, and NASS and ERS, USDA
2002
2003
US GMO Acres by Crop
Million Acres
Soybeans
70
Corn
Cotton
59.5
55.5
60
50.4
50
41.3
40
40.1
31.5
31
26.8
26.7
30
22.9
19.9
20
11.913.1
5.8
9.9
9.8
5.9
3.6
2.4 2.5
10.8
9.5
8.9
10
19.7
0
1996
1997
1998
Source: NASS and ERS, USDA
1999
2000
2001
2002
2003
U.S. GMO Share of Acres by Crop
100
90
Percent
&HT Soybeans $Bt Corn ' Bt Cotton %Ht Cotton
Ht Corn
&
80
&
70
&
60
&
50
&
40
30
%
20
10
0 $
#
%
&
'
1995
%
'
$
&
%
%
'
$
'
'
&
%
#
$
&
'
%
$
#
$
'
#
#
#
#
1996
1997
1998
1999
2000
2001
Source: ERS/USDA, April 2004
%
$
%
'
'
$
#
2002
$
#
2003
United Nations Biosafety Protocol







(Cartagena Agreement): Protect Biological
Diversity
87 Members (US Not Signatory)
Prior Notice of Exports to Recipient Countries
Liability Rules to Be Developed-Contamination
US Must Comply, Though Not Member
First International GMO Agreement
Adopted January 2000, Effective September 11,
2003, GMO Rules Implemented March 2004
European Union GMO Rules
April 18, 2004








Allows for Informed Consumer Choice
Moratorium on New Varieties Ended
Warning Labels Required for Products Containing
More than 0.9% GMO
Distributors Need to Maintain Tracking of
Products Containing GMOs
Not Certain if Feeds & Other Products
Affected
No Labels for Meat, Milk, Eggs
Greenpeace Opposes New Rules
10 New Countries Enter EU May 2004
Other Major Developments
 Brazil
Develops New GM Soybean
 China Approves Permanent GMO
Certificates for Corn, Cotton, Soybeans
 Australia & Argentina Rapidly Adopting
GMOs
 Monsanto Announces It Will Not Continue
to Develop Wheat GMOs
 France Announces 8 Trial Sites for GMO
Crops
Bioterrorism Act 2002
Food & Drug Administration
Registration
– What’s a Farm?
 a facility in one general physical location devoted to the
growing and harvesting of crops for food and/or the raising
of animals for food (including seafood)
– Farms Are Generally Exempt from RegistrationBut, Some Confusion
Prior Notice
– FDA Prior Notice Rule (Before Arrival): 2
Hrs. if Road, 4 Hrs. if Air or Rail, 8 Hrs. if
Water
Current Regulations Include Live Animals
Foreign Facilities—
Register or Exempt?
Register:
– Manufacturing/processing a finished food
product
– Packing or holding a food product or food
ingredient
Exempt:
– Manufacturing/processing a food ingredient that
is subsequently further manufactured/processed
outside the U.S.
Full Enforcement Begins August 13, 2004
FDA Contacts
 L. Robert Lake – Senior Manager
– (301) 436-2379 or [email protected]
 Leslye M. Fraser – Lead
– (301) 436-2378 or [email protected]
 HELP DESK
– Phone: 800-216-7331 or 301-575-0156
– E-mail: [email protected]
– Fax: 301-210-0247
Web Address: www.fda.gov
Center for North American Studies
C
NAS
“Informed Decisions for Global
Change”
Parr Rosson
Ph: 979-845-3070
E-mail: [email protected]