An American border open to Canadian cattle this year would not significantly increase industry income nor end the turmoil, predicts the chief economist of the federal crown corporation Export Development Canada.
Stephen Poloz, in an April commentary published by the EDC, argued that even if the U.S. border opens this summer to trade in live cattle younger than 30 months, export numbers still will be below 2003 totals and money earned in beef and cattle exports will be far from regaining 2002 levels.
He predicted a price crash because of oversupply even if the border opens.
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“The bottom line (is) even if all the lights turn green soon and no new BSE cases emerge, the Canadian beef industry will be adjusting to last year’s trauma for a long time,” said Poloz. “Exports will continue to recover, but increased competition in the global marketplace will make it an uphill battle.
“With prices likely to weaken significantly due to oversupply, export revenues are projected to increase a paltry two percent,” wrote Poloz. “Live cattle exports will probably decline further in 2004 compared to 2003, even if the ban is lifted by mid-year, all to suggest that the sector’s export revenues in 2004 might still be only about half of what they were in 2002.”
The EDC economist said that in the absence of Canadian product in the U.S. market for much of the past year, imports increased from Brazil, Uruguay, Mexico, Australia and New Zealand.
Regaining the traditional share of the U.S. market may be difficult because it will mean displacing these new competitors.
“Given this and the oversupply situation in the U.S., Canadian exporters may need to break into new foreign markets if they are to restore their business,” he said.
The EDC is a government corporation specializing in offering financing or insurance and risk management services to Canadian exporters.
Last week the Senate agriculture committee, in its report on lessons learned from the BSE border closure, said over-reliance on the American market should not become the norm again.
“The reopening of the border is vital to their survival but we would be foolish to return to the previous situation and feel comfortable,” said the senators.
