north american trade in an era of increasing …cnas.tamu.edu/presentations/moosejaw2004.pdfnorth...

North American Trade in An Era of

Increasing Regulation & Market

Disruption

Parr Rosson

Professor & Director

Center for North American Studies

Texas A&M University

CNAS

Food Safety & Security

Issues Disrupt Trade & Market

Integration

Bovine Spongiform

Encephalopathy & Avian Influenza

Issues Related to Genetically

Modified Crops & Foods

Bioterrorism Act Implementation

CNAS

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

Source: USDA/FAS, www.fas.usda.gov/psd

1980 1984 1988 1992 1996 2000 2004

21.0

22.0

23.0

24.0

25.0

26.0

27.0

28.0 Billion Pounds

90.0

95.0

100.0

105.0

110.0

115.0

120.0 Million Head

Beef Production Cattle Inventory

95.8

23.07

US Beef Demand

Livestock Marketing Information Center & ERS, USDA.

&

&

& & & & & & & &

& & & & & & & & & & & & & & &

!

!

! ! ! ! ! ! ! !

! ! ! ! !

! ! ! ! ! ! !

! !

1980 1985 1990 1995 2000 2004 0

20

40

60

80

100

120 Retail Choice Beef Index

Per Capita Retail Consumption

!

&

Retail Index Base Year 1980=100

Index & Pounds per Person

&

Canadian Exports of Live Cattle and Hogs

to the United States, 1993 - 2003

Source: USDA/FAS

0.8 0.9

1.7

2.8 3.2

4.1 4.1 4.4

5.3 5.7

7.4

1.2 1.0 1.1 1.5 1.4 1.3

1.0 1.0 1.3

1.7

0.5

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

0.0

2.0

4.0

6.0

8.0

10.0

Million Head

Hogs Cattle

US Cattle Imports from Mexico

1970 1975 1980 1985 1990 1995 2000 2004F 0

500

1000

1500

2000

1,000 Head 1,653

1,360 F

Annual Avg. 800,000

Head

2004 is CNAS forecast

US Feeder Cattle Futures, Apr-Jun 04

Chicago Mercantile Exchange

US Fed Cattle Futures, Apr-Jun 04

Chicago Mercantile Exchange

Omaha Choice Steer Prices

1980 1985 1990 1995 2000 2004$40

$50

$60

$70

$80

$90

$100$/100 Pounds

Trend

$85.59

$10 Above

Trend

$17 Above

Average

Monthly Omaha Choice Steer Prices

J F M A M J J A S O N D $0

$20

$40

$60

$80

$100

$120

$/100 Pounds

$105.50

$72.24

$91.95

2002

2003

2004

$76.73

$62.49

?

US Boxed Beef Prices, Selected Boneless Cuts

AMS, USDA

$4.95

$1.34 $1.34

$6.50

$3.98

$4.96

$1.49 $1.77

$7.31

$5.37

Ribeye Chuck,

Shoulder Top Inside Round Loin Strip Flank Steak

$0.00

$2.00

$4.00

$6.00

$8.00 June 2003 June 2004

$/Pound

Canadian Cattle Inventory

11.86

12.0

12.71

13.40 13.41 13.36 13.21 13.20 13.61

13.76

13.49

14.66

1993 1995 2000 2004 8

10

12

14

16

Million Head, January 1

USDA, ERS, PSD.

Alberta Direct Sale Steer Prices

Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca

$30

$50

$70

$90

$110

CN$/CWT

$106.0

$88.3

$41.5

$36.2

$84.0

$107.0

$115.0

$70.8

$113.0

$77.4 $75.0

Mid-month Average Prices

BSE

Alberta Direct Sale Steer Prices

Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca

2001 prices are monthly averages, source CANFAX calculated by LMIC.

$20

$40

$60

$80

$100

$120 CN$/CWT

2001 2002 2003 2004

BSE

2002-04, Weekly Average Prices

$71.10

Canadian Beef Exports to US Market,

Jan-Apr 1989-2004

1989 1995 2000 2004 0

20

40

60

80

100

120

140

Actual Trend

1,000 Tons

Canadian Beef Exports to US Market

31 27

24

1

72

90

101

111

2001 2002 2003 2004 0

20

40

60

80

100

120

140

Boneless Bone In

1,000 Tons (January-April)

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?

Jumping Genes!

Frankenfoods!

GMO Crop Acres: World & U.S.

Source: Wall Street Journal, 4/16/04, and NASS and ERS, USDA

11

30

70

100

115

130

145

165

10

29

60

77 69

81 92

102

1996 1997 1998 1999 2000 2001 2002 2003 0

50

100

150

200

Million Acres

US GMO Acres by Crop

Source: NASS and ERS, USDA

5.8

11.9

31

41.3 40.1

50.4

55.5

59.5

2.4

13.1

22.9

26.7

19.9 19.7

26.8

31.5

2.5 3.65.9

8.9 9.510.8 9.9 9.8

1996 1997 1998 1999 2000 2001 2002 2003

0

10

20

30

40

50

60

70

Million Acres

Soybeans Corn Cotton

U.S. GMO Share of Acres by Crop

Source: ERS/USDA, April 2004

#

#

# # # # # #

#

%

%

%

%

%

% %

% %

'

'

' ' '

' ' '

'

$

$

$ $

$

$

$ $ $

&

&

&

&

&

& &

&

&

1995 1996 1997 1998 1999 2000 2001 2002 2003 0

10

20

30

40

50

60

70

80

90

100 Percent

HT Soybeans Bt Corn Bt Cotton Ht Cotton Ht Corn & $ ' %

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 Registration-But, 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 Lloyd.Lake@cfsan.fda.gov

Leslye M. Fraser – Lead

– (301) 436-2378 or Leslye.Fraser@cfsan.fda.gov

HELP DESK

– Phone: 800-216-7331 or 301-575-0156

– E-mail: furls@fda.gov

– Fax: 301-210-0247

Web Address: www.fda.gov

Center for North American Studies

Parr Rosson

Ph: 979-845-3070

E-mail: prosson@tamu.edu

“Informed Decisions for Global

Change”

C NAS