THE Canadian cattle industry is on the ropes, trying to defend against a hurricane of blows from its opponent, bovine spongiform encephalopathy.
It desperately needs new government help so it can go to its corner, treat its wounds and develop a new strategy to come out fighting again.
A bad situation was made worse in recent weeks when, with resumption of live cattle trade prospects fading, many feeders said their financial institutions were pressuring them to rebalance debt-to-equity ratios.
That forced them to cut spending on inventory, resulting in lower demand and prices for feeder cattle.
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Sales of feeders are running at about half of last year’s pace. The average price is down about 17 percent from the beginning of this year and down 27 percent from the end of November.
Cattle are accumulating on farms.
Statistics Canada says the national beef herd is up almost nine percent over last year, calves younger than one year increased 15.4 percent and, with all the retained cows and heifers, an enormous calf crop is on the way.
Reacting to this new urgency, a host of cattle industry players met last weekend to discuss options ranging from slaughter cattle price controls to loan guarantees to herd reduction if the border is still closed next May.
Also discussed was the fundamental need to expand trade and clear away health-related import restrictions that irritate our trade partners.
Most of these ideas seem reasonable.
A federally funded loan guarantee program on all livestock directly affected by the BSE crisis is the immediate need. It is the round-ending bell that will take the heat off battered producers.
As for the health issues, Canada’s ban on Japanese beef because of BSE should end. Japan tests every slaughtered animal so its meat is safe.
The blue tongue and anaplasmosis restrictions on American cattle are mere irritations when considering the overwhelming need to get the American border open to live trade. To have any political value, they must end now, since U.S. action will soon be mired in the presidential election battle.
Supply and price controls would have been abhorrent to the industry just a few months ago and the fact they are being discussed shows the situation’s urgency.
While no one wants to see good beef go to waste, it is prudent to at least start planning for a controlled cull if trade restrictions drag on.
Finally, price controls are a road filled with potential pot holes, and at first inspection, one the industry should not travel on. Such controls could cause packers to restrict slaughter, limit investment and present trade problems.
The industry would do better to appeal again to Canadians, encourage them to eat more beef and pressure retailers and restaurants to lower their prices to stimulate consumption.
