MINISTERS OF AGRICULTURE ANNOUNCE ASSISTANCE FOR CATTLE INDUSTRY

Federal, provincial and territorial Ministers of Agriculture today announced a national program to provide temporary assistance to help the Canadian cattle and beef industry continue to operate while borders are closed. Ministers agreed that reopening of the U.S. border remains their top priority. Once the border is open, they will meet immediately to review conditions during this adjustment period and determine what further action is needed, if any, to facilitate the continued movement of cattle.

The measures will help offset the impact of border closures following the discovery of a single cow with Bovine Spongiform Encephalopathy (BSE) in Alberta. The assistance package will be cost-shared by the federal government and participating provinces and territories on a 60-40 basis. The package has two key elements:

• Measures that will allow producers to receive payments for cattle owned as of May 20th, 2003 that have subsequently been sold for slaughter in Canada. The assistance will help compensate producers when the price of cattle falls below a reference price, based on market value in the U.S. Payments will be on a sliding scale, meaning that government support increases as the average price declines (see Table 1 attached). The percentage of government contribution decreases as the price declines, creating a strong incentive for producers to sell at the best price possible. Producers of other ruminants will also be eligible for payments. Specific program details will be announced shortly.

• Governments will also offer processors incentives to sell or otherwise move surplus meat cuts that were produced after May 20th out of inventory. These cuts have a very low domestic demand and are usually exported. This will free up storage space, allowing processors to operate at increased capacity to serve the domestic market.

The funding envelope of up to $460 million includes:

• $420 million for producers whose cattle are slaughtered to fulfill domestic demand, and for other ruminants;

• $30 million to reduce the inventory of products with limited domestic market;

• $10 million for administration (just over two per cent of total envelope).

The U.S. market and all of Canada's other major export markets for beef and cattle closed on May 20th after one cow tested positive for BSE. Canada exports some 60 per cent of its total annual production of beef and live cattle. Although extensive testing has not detected a single other case of BSE, markets remain closed, creating a growing surplus of beef and cattle.

The measures will be in place until there is a reopening of the U.S. border to beef products, or until the approximately 900,000 cattle on feed as of May 20th have been slaughtered (except for cull cows, veal and other ruminants for which the program will operate until no later than August 31st), or until funds for the program are exhausted.

The cost-shared funding envelope includes a maximum of $276 million from the federal government and a maximum of $184 million from the provincial and territorial governments. The exact costs will depend on how soon the U.S. border reopens to Canadian beef. Because their payments will reduce the draw on federal-provincial-territorial farm income programs, the net cost to governments of providing this assistance will be lower.

Governments acknowledge the contributions of the industry in development of this program. Governments and industry will jointly oversee the operations of this program and Ministers confirmed their commitment to continue to work together with industry on a broader action plan for the recovery of the Canadian beef industry.

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For More Information, Contact:

Scott Brown Agriculture, Food and Rural Revitalization Regina Phone: (306)787-4031