SAN ANTONIO, Texas Ñ Rumours and worries U.S. producers have about the Canadian beef industry were debunked and debated in a report delivered to the National Cattlemen’s Beef Association convention in San Antonio Feb. 2-5.
The economic impact of renewed cattle trade with Canada is a major thorn in the side of many American producers, who have enjoyed two years of record profits since the U.S. border was closed to Canadian cattle after BSE was discovered in Alberta.
Following a tour of Alberta last month, an NCBA task force reported on Canada’s feed ban, BSE surveillance system, government aid programs and the economics of an open border.
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“I know more about the Canadian system now than I do about my own,” said team member Jamie Willrett, an Illinois feedlot operator.
The report offers no specific recommendations. It has been submitted to U.S. agriculture secretary Mike Johanns, who promised to make decisions on some aspects of the “Canada Rule” before March 7.
Permitting beef from older cattle is a major issue and Johanns has since announced that beef from animals older than 30 months will not be eligible for export to the U.S.
Although the NCBA report said the beef is safe because specified risk materials thought to carry the BSE infection are removed, if the U.S. was to allow in beef from mature cattle, Canadian processors would benefit at the expense of U.S. processors, according to the report.
Cull cows in Canada sell for about $18 (US) per cwt while the U.S. price is around $50.
“The arbitrage between the U.S. market for this lean beef and the value of these cull cows in Canada presents a significant profit opportunity and incentive for Canadian packers currently processing fed cattle to switch to cull cow (non-fed) slaughter,” said the report.
Concerns live prices could fall significantly are unfounded, said Dave Webber from Cattlefax.
For example, the U.S. Department of Agriculture said there were 450,000 mature animals in Canada. If they were all slaughtered that would equal about five million pounds of beef per week. The U.S. produces 540 million lb. per week.
“The cows that are out there in actual inventory are not open cows. They are bred cows,” he said. Producers will not kill a low value bred cow and sacrifice the calf.
Overall, the Canadian industry is not as large as the USDA reported so it is unlikely that large numbers of cattle will be ready for export next month when border restrictions are expected to be relaxed to resume more normal cattle trade.
A fly over of Alberta feedlots revealed they are not full but it is known a large number of calves have remained on farms, said team member Homer Buell of Nebraska.
“From what we could see from the air it appeared the numbers we were given were correct,” he said.
The report was also satisfied with Canada’s handling of its ruminant to ruminant feed ban and its surveillance for BSE among the high risk population of older animals. Canada’s systems are comparable with the U.S., indicating a low risk of infectivity.
“Canada appears to be in compliance with its feed ban,” said Tom Fields, a Colorado State University animal science and cow-calf producer.
The team is concerned over Canada’s proposal to ban specified risk materials from all animal feed. In addition, Canada prohibits the use of poultry litter and plate waste from restaurants in animal rations.
Banning all SRMs from all animal feed has no basis in scientific evidence and could have enormous economic implications to the U.S. industry, said the report.
By implementing this step, Canada could spark requests from importing countries that all exporters do the same.
Importing feeder or slaughter heifers was another issue for the team. They should be spayed to prevent pregnant females or their offspring getting into the U.S. herd, said rancher Sid Viebrock of Washington.
“We all know calves are born in feedlots from those heifers. We know it happens,” he said.
As slaughter capacity continues to expand in Canada implications for American packers were examined.
Canada could be competitive in world marketings as slaughter capacity increases, said Bill Donald of Montana.
“If that happens Canada will be able to handle its own slaughter needs.”
In addition, questions remained about government assistance and set-aside programs to delay cattle marketings to feedlots and packers. The team asked for assurances it would end when the border opened but the Canadians did not indicate what would happen, Donald said.
