Reopening live animal trade with Canada should have a positive economic effect for the United States, while maintaining the health of U.S. livestock.
That is the finding of an analysis by the Animal and Plant Health Inspection Service within the U.S. Department of Agriculture as part of the 500 page rule announced Dec. 29 to resume live trade with Canada.
The Americans expect a small decline in beef exports that will be replaced by live imports as Canada moves its backlog of feeder and slaughter-ready animals that has been building since borders closed May 20, 2003 due to a case of BSE.
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For 2005, Canada forecasts its beef exports should total 570,000 tonnes with the United States accepting 490,200.
The backlog is expected to move within three to six months of the March 7 border opening. The report suggested 394,500 fats and 204,000 feeder calves would likely leave Canada.
Differences in U.S. and Canadian prices were also noted. The estimates are in American dollars. In mid November 2004, a Canadian packer could buy a cow for $17 per hundredweight and sell the beef for $123 per cwt. A fed steer or heifer in Canada sold for $67 per cwt. and the beef sold for $132 cwt.
Comparatively, a U.S. packer bought cows for $55 per cwt. and sold the beef for $125 per cwt. Steers and heifers were purchased for about $85 cwt. and the beef sold for $135 per cwt.
The impact for fed cattle prices may be greater than for feeder cattle with the American report predicting a 1.9 to 4.4 percent decline in feeder prices and 3.8 to 6.9 percent decline for fats.
The report said large organizations can handle this price change. There are four major packers in the U.S. killing 80 percent of the cattle. Two percent of U.S. feedlots have more than 1,000 head and they market 85 percent of the cattle.
The rule also allows other species including sheep, goats, elk and deer but little economic impact is expected because of the minor amount of this business compared to beef cattle.
In 2002, the U.S. imported 139,161 sheep at an average $83 per head. These were mostly lambs and amounted to about four percent of the U.S. lamb slaughter. In 2003, the value of lambs went to $105 per head with strong demand and a tight supply. In 2005, prices could be $125-$133 per head. In January to April 2004, the Americans bought $96,000 worth of lamb and sheep meat compared to $102,000 in 2003.
