SASKATOON – Canadian cattle and beef exports to the United States are not responsible for the drop in American cattle prices, said a Montana State University study.
Canadian exports only accounted for $2 of a $18 (U.S.) price drop, said John Marsh, professor of agriculture economics at the university.
“The effect is not zero, but it’s not devastating the way the reports have been,” said Marsh of Bozeman, Mont.
During the past year, with each dollar drop in the price of beef, accusations against Canadian cattle and beef have grown.
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“There were lots of rumors flying around and a lot of heavy accusations against the Canadians,” he said.
Rumors prove false
It was among these rumors and few facts, Marsh and fellow MSU economist Clyde Greer began their study on the effects of Canadian cattle on American cattle prices.
Using a supply and demand model, the pair entered several economic variables that could be responsible for the falling prices. They looked at fed beef production, non-fed beef production, poultry and pork supply, feed costs and consumer income.
The results showed “Canada’s contribution” to the $18 price drop from 1993 to 1994 was $2 to $2.20 cwt.
“Because of (Canada’s) small market share the price reduction due to these Canadian imports was not that big,” said Marsh.
Last year, total Canadian cattle export to the United States was 990,000 and most of those came from Western Canada. Even with a million cattle heading south, Canadian exports still account for only three to four percent of the entire U.S. beef supply.
The rest of the price drop was caused by more American cattle and feeding the cattle to heavier weights.
There was a six percent increase in beef supplies from the spring of 1993 to the spring of 1994, said Marsh.
Of that, two percent is increased beef numbers and four percent is an increase in the weight of cattle.
On top of that is an increased supply of pork and poultry.
Border crossings shifted
The accusations against Canada arise due to a shift in where Canadian cattle cross the border. About 85 percent of Canadian cattle go through Washington, Idaho, Montana and North Dakota.
In recent years, Montana has seen a 20 percent increase in cattle coming across the border. Washington has also had a three percent increase. But angry Montana cattle producers failed to notice that other states had a 20 percent reduction in Canadian cattle.
“It appeared to the people in Montana, that ‘oh my goodness they’re shipping hoards and tons of additional cattle into the United States.’ “
The number of cattle going into the United States from Canada is actually unchanged, it’s just been a shift in border-crossing patterns, he said.
