CALGARY – If the Canadian Wheat Board doesn’t give up its monopoly on export feed barley sales to the United States, pressure to stall the south-bound beef trade could result, says an official with the U.S.-based National Cattlemen’s Beef Association.
The Americans argue Canadians get cheaper feed grain because the wheat board keeps the price low for cattle feeders in this country. That gives Canadians a competitive advantage over their American counterparts.
“Canadian cattle feeders have basically free and open access to the U.S. market and our feeling is that should also be the case on feed grains,” said Chuck Lambert of the U.S. group’s international trade committee.
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Export projections
As of Oct. 12, 801,879 slaughter cattle went to the United States compared to the same period last year when 605,374 were exported by mid-October. Last year a record 925,000 head were exported with projections for higher numbers by the end of this year.
“Either we have equal access to the feed grains there or we will probably have to increase pressure to restrict the flow of those cattle because, in effect their feed costs are being subsidized by the presence of the Canadian Wheat Board,” said Lambert, a market and policy adviser to the cattlemen’s association based in Denver, Colo.
This summer, the national cattlemen’s association at its semi-annual meeting in Nashville called for the abolition of the wheat board’s control of barley and other livestock feed in North America.
Lambert said the American feeding industry from Washington to Arizona suffered a shortfall of corn and barley over the summer because of the poor 1995 harvest. This year, a more promising corn crop of at least 9.2 billion bushels will relieve the squeeze on feed supplies but the pressure will continue on the wheat board.
“It will be an ongoing issue, something that we will continue to press,” Lambert said.
Jim Miles, executive vice-president of the Washington Cattle Feeders, said feeders in his state would buy barley in Western Canada if a continental market opened.
“We don’t mind competing with the Canadian feeders as long as the playing field is level, but the Canadian Wheat Board has basically taken all international demand away from the local Canadian barley market,” Miles said.
Last year barley prices were high enough in the international marketplace that the wheat board opted to export overseas and feeders couldn’t get as much Canadian barley as they wanted, said Miles. They prefer to buy from Western Canada because freight costs are lower than if they bought U.S. corn grown in the Midwest.
In the Yakima Valley barley is trading in the $115 to $120 per ton (U.S.) range for barley weighing 48 pounds a bushel or better, said Miles.
The initial wheat board price on barley set Aug. 1 is $137 (Cdn) a tonne. That equals $112 per ton (U.S.)
While U.S. cattle producers complain about the high Canadian exports, Miles said Washington’s two main packers need the additional cattle to keep their slaughter houses open. With major expansion going on at Alberta’s two packers, Cargill Foods and Lakeside-IBP, that cattle flow could slow to a trickle.
“If they quit coming down because of the increased capacity in Canada it might have some effect on our plants,” Miles said.
Last year 254,000 Canadian finished cattle ended up in Washington plants.
Americans pay more
Mark Wright, president of the Alberta Cattle Feeders Association, agreed having a wheat board keeps grain prices lower at home than the international market is asked to pay.
“Because of the Canadian Wheat Board we are able to buy feed grains cheaper than we would on an open market,” said Wright. “It’s been a real boom for the Canadian market.”
The association doesn’t have an official stand on grain marketing because, “we don’t feel it is our business to tell grain farmers how to market their product.”
Part of the current problem is a lack of understanding among Americans about how the Canadian grain system works, said Wright.
He added the Americans created some of their own problems with grain shortages because of the export enhancement program when the U.S. shipped its own grain overseas and left its own producers scrambling to find other feed sources.
