Many Canadian cattle producers were shocked when the discovery of BSE caused most countries to close their borders to Canadian cattle and beef.
Restoring trade access took far longer than expected, and the disruption ravaged the industry. Here’s how some key players experienced the storm.
‘by god, i needed that 16 cents’
In the early morning of July 18, 2005, Glen Thompson was involved in a covert operation supervising the loading of steers destined for a packing plant in Pasco, Washington.
Every animal had been documented and paperwork was double checked so nothing could derail this first shipment of live cattle to the United States since BSE had closed the border May 20, 2003.
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“We did this all very quietly behind the scenes,” he said.
The plant was hesitant at the last minute, but “I said the cattle are on the road. They are coming.”
The following day he sent three more loads from his feedlot at Iron Springs, Alta. Cattle younger than 30 months started to move across the border, ending years of stress and sleepless nights.
Fed cattle prices had dropped a dime a pound every week the first year that the border was closed. Bankruptcy haunted beef producers.
When the border closed in 2003, Thompson felt in his gut Canada was in for a long fight because U.S. protectionist forces would fight hard to keep the border closed.
“I knew there was no good going to come of this,” he said.
“It was all political. It had zero to do with any meat safety or any other issue. It was 100 percent political. It should never have been closed in the first place.… We made a company decision to sell our cattle in an orderly fashion, so we started selling cattle the following week.”
At the lowest point, he was paid 16 cents a pound for a load of 35 Holstein steers.
He figured he lost $35,000 in that deal, but any money was welcome in the early days of the crisis.
“By God, I needed that 16 cents.”
‘cattle devalued in half overnight’
New rules had been passed by November 2007 to allow the export of breeding and mature animals born after 1999. Hardy Shore of London, Ont., was among the first to export cattle under the new rules. The shipment went to Barbados.
His income depended on buying and exporting dairy cattle.
When BSE closed borders in 2003, he cancelled his annual June sale. The collapsing market drove the value of his heifers to about $600 each. They had previously been valued at $2,300 each.
“We were waiting for the border to open and what we really should have done was liquidate the inventory the minute we heard the news, but nobody knew what to do,” he said.
“Cattle devalued in half overnight. I am still struggling to get on my feet. That took everything away from me.”
His herd of 1,200 to 1,300 head is now down to 30 animals. He also sells bulls to artificial insemination centres, but that business was not affected.
The rush was on when the U.S. border opened to export breeding stock in 2007 because there was a suddenly a great demand for dairy heifers in the United States due to improved milk prices.
“We had more business than we could handle. We couldn’t fill the orders for young, milking animals,” he said.
He was among the more fortunate because many heifer producers and dealers went out of business and never returned. One of his colleagues turned his barns into storage units for cars and boats.
‘R-calf had a much stronger lobby than maybe we anticipated’
Most thought the disruption following the BSE discovery wouldn’t last long, said Stan Eby, president of the Canadian Cattlemen’s Association in 2004-06.
“Even in the first few days we thought that as an industry we had put enough safeguards in place that we would be treated differently by our trading partners. That was somewhat naive,” he said from his farm at Kincardine, Ont., where his family has a backgrounding and feeding business.
He and others met regularly with elected officials and trade representatives in Washington, D.C., to reopen the border, but discovered opposition from politicians influenced by powerful protectionist groups such as R-CALF in Montana.
“It is obvious the R-CALF people had a much stronger lobby there than maybe we anticipated at that time,” Eby said.
He describes one incident where the Canadians met with a congressional aide. Everyone exchanged business cards and Eby watched as the staffer folded their cards into tiny squares.
“I had never seen anything quite like it. His body language was even worse,” he said.
The stress lessened when the United States accepted boxed beef in August 2003.
That helped, but there were still too many mature animals with no market and no room at the packing plants.
‘It becomes another pawn in trade discussion’
It was vital to regain access to the U.S. and Mexico, but Canada also wanted to return to the growing Asian market.
That wasn’t easy.
It has taken 10 years to increase access to Japan, said Ben Thorlakson, who was chair of the Canada Beef Export Federation.
He said the response from Asian countries was often frustrating.
“The Asians really treat health issues (seriously) and are very concerned and they want to protect their consumers.”
However, they are also tough negotiators and place other issues on the table during the process.
“They want some sort of tradeoff if you are going to get back in,” he said.
“It is not just a case of the scientific basis for keeping our beef out. It also becomes another pawn in trade discussion.”
Hong Kong and Macau granted access early on, but he suspects that was because the governor of Macau had been educated in Canada.
For others involved in negotiations, the belief in scientific evidence about minimal risk was important.
‘here we are 10 years later, still not all the way through it’
Brad Wildeman, head of Poundmaker Agriventures at Lanigan, Sask., said there was no good scientific reason to keep borders closed.
“I was one of those naive guys who thought, ‘we’ve got OIE and we’ve got all this science, why would we worry about it,’ ” he said.
“It doesn’t take much for a particular country if they are looking for some reason to have some protectionist views. They will jump on anything.”
Wildeman thought borders would reopen in a few weeks.
“Here we are 10 years later, still not all the way through it,” he said.
Business has changed and producers have become more cynical. Some producers left the business once prices recovered.
Custom feeders with fewer than 1,000 head whose strategy was to add value to barley or manage income taxes are mostly gone, said Wildeman.
‘you went from one storm to another for an entire decade’
It has been more than a decade of crushing blows to an industry heavily dependent on exports, said Dennis Laycraft, executive vice-president of the cattlemen’s association.
The U.S. passed a rule to allow live trade to resume in March 2005, but then R-CALF got a court injunction against the rule. Trade stopped and morale among Canadian producers fell to an all time low.
“That was probably the second real black day for the industry,” Laycraft said.
An appeals court overturned the injunction, and cattle were eligible for export in July, but there was little rejoicing.
“Until you saw cattle moving across the border, you were always wondering when the next shoe would drop,” he said.
Meanwhile, other issues dogged the industry. The Canadian dollar rose, making exports less competitive. In 2008, mandatory country-of-origin labelling became law and the world sank into one of worst recessions in 60 years. Fuel and grain prices jumped, causing the cost of production to soar.
“You went from one storm to another for an entire decade,” he said.
