When Canada announced its first case of BSE two years ago, Ponoka, Alta., rancher Don Lysons made the heart-rending decision to sell his cow herd of 250 and switch to custom grazing.
“It was the smartest thing I ever did,” he said.
He made some tough business decisions along with 90,000 other Canadian beef producers caught in the political and economic eddies since three cases of the fatal brain wasting disease have been reported since May 2003.
While boneless beef exports to the United States and some overseas markets have returned to pre-BSE levels, the market for live animals has oscillated wildly, creating the widest steer price spreads between Canada and the U.S. in history.
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Canfax reports that a 500 pound Alberta steer on average, has traded at a discount to a U.S. steer with a price spread between $38 and $78 per hundredweight. The widest spread happened in July 2004.
The market uncertainty for all classes of livestock leaves farmers cash poor with added debt at a time in their lives when many were thinking of retirement.
“Most farmers are pushing 60 and what are they going to do? They are getting into equity. They are drawing on their bank accounts to survive,” Lysons said.
Still, they hang on, doing the normal farm work as the seasons roll by, hoping for a return to better times.
Maggie Dulaney of Innisfail, Alta., fits into the category of the over 60 farmer who continues struggling after three years of drought, rain-soaked crops last year and the loss of a beef market she built on her own.
She was shipping carcass beef from young D1 and D2 cows to butcher shops in South Korea for three years before the Asian trade stopped. She lost more than $60,000 when customers could not pay their bills.
Now mature cows are worth around $200 so people are retaining their older animals that are still producing calves. The result is a record cattle population of nearly 16 million head.
“You really have to sit down at the table and figure out where your bottom line is. You are not going to do it without some very forgiving lending agency or an off-farm job,” she said.
Dulaney does not expect the border to open soon, yet remains optimistic because more slaughter plants are beginning to open. They should be viable because they will be new, state of the art facilities able to compete against older American plants.
She worries BSE could lead to irrevocable change to the rural landscape as farmland is sold to pay bills rather than continue to produce food. There is little incentive for young people to start farming.
Dulaney is disappointed the federal government and Canadian Food Inspection Agency do not agree to test all cattle for BSE even though some Asian countries maintain testing as a condition to resume trade.
“We are businesspeople and we market. You do what your customer wants,” she said.
“You can’t tell your customer what is good for them. That is insulting and they are going to go somewhere else.”
While she appreciates the government support of more than $2 billion, she says in hindsight that money should have gone to help producer groups build slaughter plants.
She also believes trade action clauses in the North American Free Trade Agreement and World Trade Organization should have been acted on sooner.
She accepts the high price of beef in Canadian stores at a time when producers cannot even cover expenses from the marketplace. Beef is sold at American prices where the demand is strong, so Canadians are forced to pay the same, she said.
Regardless, the public remains supportive and went from eating 67 percent of what was produced in Canada in 2002 to 89 percent, or 800,000 tonnes of domestic beef in 2004.
She believes this crisis may have brought producer groups together to talk about practical solutions and push the federal government to listen.
Pushing the government to continue supporting the industry has been Stan Eby’s job description as he serves his second term as president of the Canadian Cattlemen’s Association.
As producers hold on by the skin of their teeth, he knows there is widespread frustration in the countryside.
“It’s been demoralizing that we couldn’t move this situation quicker,” he said.
Eby thought once boxed beef started moving to the U.S. in August 2003, live trade would quickly follow. His disappointment was keen when a U.S. court injunction stopped the scheduled restoration of live trade in all ruminants after March 7.
“It is extremely frustrating that one judge can stall it all,” he said.
“USDA had promised a bullet-proof rule, yet scientific evidence did not prevail. Instead, emotion and capitalism took over.”
A permanent injunction could come this summer from the court of Montana judge Richard Cebull, so Canadian cattle industry leaders are talking about contingency plans.
That includes looking for more cooler space to store beef in the short term so processing lines can continue operating at capacity. The CCA also wants Canada to gain permission to ship meat products through the U.S. to Mexico where Canadian beef is welcome.
The U.S. will continue as a major market but Canada must gain self-sufficiency on the processing side. Eby has little sympathy for American complaints about packers closing and job losses because of a shortage of Canadian cattle.
“We’ve been telling them for over two years now that what they are doing is hurting their own industry,” he said.
While producers do not receive enough money from the marketplace, he feels government programs helped even if it is difficult to measure if enough went to farmers.
Nithi Govindasamy, policy analyst with Alberta Agriculture, said government programs probably saved many from bankruptcy.
After two years there is less panic at the government level and officials are able to take their time and make better decisions to deal with the ongoing situation.
“If some of the policy decisions of June 2003 appeared haphazard it was because nobody had a playbook,” said Govindasamy.
And, the number of BSE cases is likely to decline over time because of improved food safety regulations. Stronger enforcement of a feed ban to keep restricted materials out of animal feed as well as removing specified risk materials from human and animal food should also help restore confidence in beef.
“Whatever we need to do, we have to do it to get this industry back on its feet. We recognize it is a new reality. We’re going to have to do some things differently.”
