The American cattle industry’s largest producer association fears that a tidal wave of Canadian cattle pouring south once the border reopens will ruin what it describes as a robust market.
But Canadian cattle industry spokespeople say the fear is overblown.
BSE closed the border to live animals in May 2003, but it is expected that in May or June of this year the U.S. Department of Agriculture will propose new rules to reopen live-animal trade with Canada.
“U.S. cattle producers cannot afford harmful impacts on the domestic market from large movements of beef products or live cattle from Canada,” said National Cattlemen’s Beef Association president Jan Lyons of Manhattan, Kansas.
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“Any reopening of the U.S. border must be done in a step-by-step process so as not to disrupt the domestic cattle market.”
She said her association worries about the effects a large entry of feeder and fed cattle would have on American calf markets.
“We’ve had a very robust market this past year and we’d hate to undermine that by flooding (the U.S.) with Canadian cattle.”
Lyons said she believes there should be a staged opening of the border, beginning with fed cattle for slaughter delivery followed by feeder-stocker animals later in the year.
Stan Eby, president of the Canadian Cattlemen’s Association, said he heard those sentiments from Lyons and other industry leaders in Washington, D.C., during meetings the previous week.
He said he and other Canadian officials told the Americans that the Canadian system wasn’t in a position to flood U.S. markets.
Cindy McCreath of the CCA agreed.
The Canadian group estimates that current delayed marketings and placements of feeder cattle amount to about 275,000 head.
“By year end they shouldn’t exceed 750,000 head. That is about one week’s U.S. slaughter. A lot for Canada, not much in the U.S. system,” McCreath said.
The delayed marketings are similar to the 1996 market in which cow-calf producers held back feeder placements due to low calf prices across North America.
Eby said there are several reasons to doubt that Canadian cattle will flood U.S. markets.
“Even if we had enough cattle, which I don’t think we do, our processing is up 17 percent to 74,000 each week. Packers are making some money and won’t want to give that up. Our own placement in feedlots is down…. We don’t have the transportation infrastructure to move that many cattle right now. It was lost along with the border closure.”
Over the past year the American market has been good for U.S. producers but tough on packers.
Kevin Grier, a beef economist with the Guelph, Ont. based George Morris Centre, said in his April 5 report on Canadian boxed beef that “U.S. packers continue to wallow in red ink. Gross margins in the U.S. were approximately $110-$115 US per head, which means losses were around $20 per head.”
The third largest packer in the U.S., Swift, has been particularly hard hit. It has complained that its competitors, Tyson Foods and Cargill, each with a plant in Alberta, have an unfair advantage.
Swift has no access to Canadian cattle, but the Canadian plants owned by the other two can get cheaper Canadian cattle and sell the beef into the high-priced American market.
