Barring legislative or legal action, it appears the border to Canada will open March 7 to live cattle younger than 30 months of age, while boxed beef from cattle under 30 months of age will continue as it has since September 2003.
If you believe in free markets and market efficiency, that's as it should be.
As this column was being prepared, USDA's trade team had found nothing to warrant a resumption delay. It should be noted, however, Agriculture Secretary Mike Johanns did delay the effective date of allowing boxed beef from cattle older than 30 months of age as proposed in USDA's original rule.
Likewise, a fact-finding team of producers and advisors sent to Canada by the National Cattlemen's Beef Association (NCBA) last month returned to say, “Based on our observations and discussions it appears the Canadian feed industry is complying with the feed ban… From what we've seen, this is not a food safety concern.”
Even so, members of NCBA passed an 11-point directive last month calling for Canadian trade resumption to be tied to, among other things, the Bush Administration reaching an agreement to re-establish beef and beef by-product trade with Japan, South Korea and Mexico, applying economic sanctions if necessary.
An emotional issue
Making resumed Canadian cattle trade contingent upon re-established beef exports to Japan is emotionally popular. But it's akin to saying you refuse to sell your cattle until a certain price is achieved, even though there's no way of knowing when, if ever, the market will arrive at that price.
Despite hopeful reports, the fact is no one has any idea when Japan will open. In the meantime, tight supplies here that could be helped with Canadian imports continue to pressure the market infrastructure, even as Canada continues to expand its own harvest capacity.
Then, of course, you still have the Chicken Littles who think the whole mess is a dairy problem since the BSE case discovered in the U.S. was in a dairy cow. You also have those who feel Canadians should be punished because the infected dairy cow was of Canadian origin. Ludicrous.
Looking at the facts
When the border does open, NCBA's fact-finding team has done as well as anyone thus far in outlining the potential impact. The team's report includes:
Can-Fax and Cattle-Fax believe USDA's economic analysis of the rule missed the mark on fed cattle imports because the agency didn't fully account for the 22% increase in Canadian slaughter capacity between 2003 and 2004. Can-Fax (a Canadian market analysis organization) estimates there are about 900,000 head of Canadian cattle available for export — 600,000-700,000 head of fed cattle and 200,000-300,000 head of feeder cattle.
Canadian slaughter capacity is expected to grow 18% this year, 4% in 2006 and 8% in 2007.
Based on analysis and flyovers of Alberta feedlots where 71% of that nation's cattle are fed, feedlot occupancy is estimated at 65-70% of capacity. The mix of heifers is as high as 50%, and there's a low percentage of yearling cattle on feed.
Combine that with the fact Canadian harvest facilities continue to process cattle at optimum yield and quality grades, and the NCBA team concluded the cattle feeding industry in Canada is current.
Canada's increased slaughter capacity, lower cost of gain compared to the U.S., and the weakness of the U.S. dollar could contribute to fewer live cattle exports than otherwise expected.
Stronger prices and a more certain U.S. market could contribute to more cattle than expected coming this way, especially if the USDA rule ultimately limits live cattle exports to cattle 30 months and younger, while allowing beef from cattle 30 months and older.
The Canadian government's proposed rule to ban all specified risk materials (SRMs) from animal feed could significantly impact the U.S. cattle business. It could devalue Canadian fed cattle due to a loss in drop credit based on the additional cost associated with SRM disposal. Under certain circumstances, this could result in more movement of Canadian cattle into the U.S. to recoup the lost value.
“Depending on how an SRM ban is defined, this issue could create a trade disparity in which beef export markets require this measure of all exporting countries,” the NCBA group reports. “Given the U.S. industry is 10 times larger than Canada's, banning SRMs from feed in the U.S. would present enormous economic and environmental (disposal) challenges with little to no benefit to ruminant animal health and no benefit to human health.”
Best as anyone can tell, those are the facts. Ultimately, that's what the market will respond to, despite hopes, fears or any number of resolutions and lawsuits folks want to concoct.
NIAA heads to St. Paul
The 2005 annual meeting of the National Institute for Animal Agriculture (NIAA) is April 3-7 at the Radisson Riverfront Hotel in St. Paul, MN. NIAA's annual meeting brings together producers, veterinarians, business executives, scientists, academics, state and federal regulatory officials and other stakeholders in the animal food and fiber industry to discuss the latest issues in animal agriculture. To learn more, call 270/782-9798 or visit www.animal agriculture.org.
Crawford tapped for FDA
Lester M. Crawford is President Bush's pick to become Commissioner of Food and Drugs in the Department of Health and Human Services. The post has been vacant since March 2004 when Mark McClellan left to become administrator of the Centers for Medicare and Medicaid Services.
Crawford, who currently serves as acting commissioner of the Food and Drug Administration (FDA), is a former Administrator of USDA's Food Safety and Inspection Service and Deputy Commissioner of FDA. He's served as an advisor to the World Health Organization for nearly 20 years. He earned his veterinary degree at Auburn University and a PhD in pharmacology from the University of Georgia.
Montana education program
Montana MarketManager, in conjunction with the Montana Beef Network, will host a series of two interactive video conferences to be held in various locations across Montana on March 10 and March 21.
The first video conference will cover animal ID and country-of-origin labeling. The second will focus on getting ready for the cattle-breeding season, and will include discussion on the most effective and efficient ways to synchronize females.
Space is limited. To reserve a seat, contact Chris Labbe at 406/761-4596 or [email protected]. A schedule of locations is available at www.montanamarketmanager.org/st/education/lworkshops.html, under Education and Reference.