Vol. 149, No. 17 — August 26, 2015

Registration

SOR/2015-214 August 5, 2015

HEALTH OF ANIMALS ACT

Regulations Amending the Compensation for Destroyed Animals Regulations

The Minister of Agriculture and Agri-Food, pursuant to paragraph 55(b) (see footnote a) of the Health of Animals Act (see footnote b), makes the annexed Regulations Amending the Compensation for Destroyed Animals Regulations.

Ottawa, July 31, 2015

GERRY RITZ
Minister of Agriculture and Agri-Food

REGULATIONS AMENDING THE COMPENSATION FOR DESTROYED ANIMALS REGULATIONS

AMENDMENT

1. The portion of items 7 and 8 of the schedule to the Compensation for Destroyed Animals Regulations (see footnote 1) in column 3 is replaced by the following:

Item Column 3

Maximum Amount ($)
7. 10,000
8. 4,500

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Compensation for Destroyed Animals Regulations (CDAR) set out the maximum monetary compensation amounts for each animal listed, allowing for reasonable compensation to be paid to owners of animals ordered destroyed by the Canadian Food Inspection Agency (CFIA) under the authority of the Health of Animals Act (Act) in an animal disease outbreak situation. As the market value of cattle has significantly increased since 2007, there is a need to revise the maximum monetary compensation amounts payable for registered and non-registered cattle to reflect current market value and to encourage early reporting of diseases and cooperation of producers.

Background

The CFIA administers a compensation program under the authority of the Act. This program helps to control the spread of animal diseases, including those that would have a significant economic impact, by encouraging early reporting. The outcome is better protection for Canadians from diseases that can be transmitted by animals.

The Minister of Agriculture and Agri-Food (the Minister) can authorize payment for the market value of an animal ordered destroyed minus the value of its carcass in an animal disease outbreak situation, pursuant to section 51 of the Act.

Pursuant to section 55 of the Act, the Minister can make regulations setting out maximum monetary compensation amounts for animals or things ordered destroyed by the CFIA for disease control purposes under section 48 of the Act. The CDAR, made under section 55 of the Act, give the Minister the authority to authorize maximum monetary compensation amounts for animals ordered destroyed. The actual amount to be paid to a producer is calculated based on the actual market value of the animal at the time it is ordered destroyed minus the value of its carcass. The maximum monetary compensation amounts represent the highest payment that the Minister can authorize under the CDAR.

The CDAR were published in 2000 (SOR/2000-233) and the maximum compensation amounts for each animal listed were revised and amended in July 2007 (SOR/2007-169). At the time, the maximum monetary compensation amounts specified for registered and non-registered cattle under the CDAR were established at $8,000 and at $2,500, respectively.

Cattle prices have experienced strong growth over the last decade and have significantly increased. The maximum monetary compensation amounts currently specified in the CDAR must be amended to more accurately reflect the current market value for both types of cattle.

Objectives

The objective of this amendment is to establish new maximum monetary compensation amounts in the CDAR for registered and non-registered cattle in order to continue promoting early reporting of diseases controlled under the Act.

This amendment will encourage continued producer cooperation and participation during control or eradication efforts meant to prevent or reduce the spread of disease.

Description

This amendment to the CDAR revises the maximum monetary compensation amounts for cattle ordered destroyed to reflect the current market value for both registered and non-registered cattle. The new maximum compensation amounts are based on current and future trends of the market value of cattle. The amount of compensation awarded, although based on market value of the animal ordered destroyed, cannot exceed the maximum amount prescribed in the CDAR.

Column 3, in items 7 and 8 in the schedule to the CDAR have been revised to reflect new maximum monetary compensation amounts of $10,000 for registered cattle and $4,500 for nonregistered cattle ordered destroyed.

“One-for-One” Rule

This amendment to the maximum compensation amounts for cattle in the CDAR does not impact the operations of the cattle industry nor the compensation process. There are no additional administrative costs to business therefore, the “One-for-One” Rule does not apply.

Small business lens

As this amendment to the CDAR does not affect the operations of the cattle industry nor the compensation process, the small business lens does not apply, as there are no costs to small business.

Consultation

In April 2015, the cattle industry, represented by the Canadian Cattlemen’s Association (CCA) and the Canadian Beef Breeds Council (CBBC), presented a case for raising the maximum monetary compensation amounts for cattle. Their supporting rationale indicated that at the time, cattle were being traded at prices above the maximum compensation amounts set out in the CDAR.

In May and June 2015, the CFIA engaged in discussions and consulted with the CCA, the CBBC, the Canadian Livestock Genetics Association (CLGA), and the National Cattle Feeders’ Association (NCFA) on behalf of the cattle industry in order to determine current market values for cattle. The CFIA received input, recommendations and supporting rationale for new maximum compensation amounts of $10,000 and $4,500 for registered and non-registered cattle, respectively.

The cattle industry’s recommended new maximum compensation amount of $10,000 for registered cattle reflects the higher value of animals that are bought as breeding stock for commercial cattle herds and purebred animals for their genetic lines. Prices for registered cattle ranged from $4,700 to $7,200 and above per animal at the time of the industry analysis. The industry’s recommended new maximum compensation amount of $4,500 for non-registered cattle is based upon reports of values for commercial bulls sold for slaughter that average $3,240 per animal and commercially bred cows and heifers that average as high as $3,100 to $3,900 per animal.

The CFIA confirmed the accuracy of the information and analysis on cattle prices and market trends provided by the cattle industry with Agriculture and Agri-Food Canada (AAFC). The observed price pressure for registered cattle is explained by the rebuilding of the Canadian herd that started more than a decade ago, and also by the strong demand for good quality breeding stock. For nonregistered cattle, supply and demand conditions explain the price increase in the cattle market. Furthermore, increased market access for Canadian cattle to foreign markets accompanied by an increase in global demand has contributed to higher prices.

The CFIA examined how the industry’s recommended maximum compensation amounts of $10,000 and $4,500 would have affected the total compensation paid for cattle ordered destroyed in the 2014–2015 fiscal year. In 2014–2015, a total of 133 cattle were ordered destroyed and the total compensation paid was $366,867. The analysis was completed on 100 claims (over 75% of total claims) that represented $295,952 in total compensation paid. According to this analysis, if the new industry recommended maximum compensation amounts of $10,000 for registered cattle and $4,500 for non-registered cattle were applied, the total compensation paid would have increased by $7,000. This estimated increase is shared between an overall payment increase of $6,000 for registered cattle, and $1,000 for non-registered cattle. On a per animal basis, the estimated increase is $75 and $50 for registered and non-registered cattle, respectively. This modest increase can be explained by the fact that few cattle compensated have reached the maximum amount value, and that compensation paid is calculated as the difference between the market value and the carcass value.

Rationale

The market value of cattle has significantly increased since the maximum compensation amounts in the CDAR were last amended in 2007. As a result, there is a need to amend the maximum monetary amounts payable for registered and non-registered cattle ordered destroyed.

Early reporting of diseases by producers to CFIA veterinary inspectors, encouraged by compensation reflective of current market value, is essential for prompt intervention and implementation of corrective actions to reduce the potential economic impact of a large-scale disease outbreak. Such actions are intended to minimize the spread of disease and its impact on human and animal health and subsequently, the economic viability of Canada’s cattle sector.

The overall impact of the new maximum compensation amounts on cattle compensation payments is expected to be relatively small based on the analysis completed by the CFIA.

Implementation, enforcement and service standards

The authority for the Minister to make regulations establishing maximum amounts of compensation for animals ordered destroyed is contained in paragraph 55(b) of the Act.

All compensation paid under the CDAR is recommended by a veterinary inspector designated under the Act. A mechanism for appeal of compensation amounts is available, as required, pursuant to the Act.

The new maximum monetary compensation amounts for registered and non-registered cattle come into force upon registration and are not retroactive.

Contact

Barbara Doan
Director
Regulatory, Legislative and Economic Affairs
Canadian Food Inspection Agency
Telephone: 613-773-5657
Fax: 613-773-5960
Email: Barbara.Doan@inspection.gc.ca