Canadian Beef Market Not Poised to 'Swamp' U.S. Market

Canada has no 'wave' of beef ready to flood U.S. market, but economics remain a concern about border reopening. NCBA delegation reports its findings during San Antonio meeting. Willie Vogt

Published on: Feb 3, 2005

As USDA continues the process toward reopening the U.S. border to Canadian cattle imports trade groups are working to better understand the potential impact of the move. The National Cattlemen's Beef Association sent a delegation of producers north gather information on a range of questions topics and:

  • Identify Canadian cattle that would qualify for export under the existing rule an determine their potential impact on U.S. producers.
  • Inspect feed manufacturers and secure a detailed assessment of feed ban compliance.
  • Verify how cattle will be inspected, identified/ag and be approved for entry into the U.S.
  • Determine Blue Tongue and Anaplasmosis requirements to export cattle to Canada.
  • Evaluate Canada's BSE testing/surveillance and review findings around recent BSE cases.

The team issued its report Wednesday at the Cattle Industry Conference in San Antonio, Texas. Their work is part of a policy-making process that is ongoing at the trade event as delegates debate their response and approach to the USDA rule-making effort that could start Canadian cattle crossing the border as early as March 7.

The team's report is not a series of recommendations, instead it is a series of facts that can be used by the NCBA executive committee and members as they move forward on policy recommendations. So what did the group find?

First, the group traveled in Alberta where about 71% of the country's cattle are finished. They found that the Canadian beef industry is current, meaning there's not a huge bubble of cattle waiting to move to the U.S. market. Feedlots were operating at about 65 to 70% of capacity and the population of heifers in those feedlots was up. "The market is not overdone, but current. Cattle in Canada over 30 months of age are severely discounted as well," says Homer Buell, a Rose, Nebraska, cow-calf producer from the team.

That's a concern since a USDA report estimated that as many as 2 million Canadian cattle could move across the border in 2005 if it were to re-open. That number was suspect because the country didn't move more than 1 million head at the previous peak - which at one time was driven by a major drought in Canada. More likely, the team notes, in the first year the number of cattle to come across would add up to perhaps 300,000 to 500,000 head. This number is still an estimate.

Second, the country is complying with the feed ban instituted in 1997 to keep cattle free of bovine spongiform encephalopathy (BSE). A visit to two large feed mills - Unifeed and Cargill Animal Nutrition - showed the team that key measures were in place to keep feed free of prohibited materials. Tom Field, a Colorado State University animal science professor and cow-calf producer, notes: "Feed processed prior to the feed ban is responsible for the infected animals, based on the cattle ages." Field notes that when the feed ban went into place product that was already in the retail or wholesale pipeline could be sold, none was recalled.

Third, the team noted that slaughter capacity is rising rapidly in Canada and it's state-of-the-art processing that's being put to work in the country. Buell notes that capacity rose by 22% in 2004, and it's expected to rise at least 18% in 2005. "If they process more cattle up there they won't be sending so many animals into our market," he says.

The group also did note that they found no feed safety concerns when they visited Canada. However, economic concerns were raised, especially with talk about loosening the rules to allow cattle over 30 months of age to enter the U.S. market. Some groups maintain that Canadian beef is safe and these older animals should be allowed into the country - but the team notes that the current price for over 30 month old cattle averages about 18 cents a pound versus 50 cents a pound in the United States.

NCBA President Jan Lyons noted during Wednesday's conference that this information will be put to use for policy making by the group, which will continue meeting this week in San Antonio. Timing is important since Congress is already looking at bills that might limit USDA's process.

Lyons did note that during the group's executive committee meeting Wednesday, they had a discussion with USDA Under Secretary J.B. Penn, who reiterated that USDA is moving forward with its original timeline for reopening the border. At the same time, U.S. officials are working with to try to reopen the Japanese and South Korean markets to U.S. beef imports.

Putting the issue in perspective, Colorado State's Field notes: "In 20 years we're going to look at this issue as a history lesson in overreaction in North America."

You can get a look at the report by clicking HERE. This is an Adobe portable document format file, which requires special software. You can download a free copy of that HERE.