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Closed border bad for feedlots, packers

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SASH

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Canada makes cattlemen uneasy




Apr 27, 2005 (Tri-City Herald - Knight Ridder/Tribune Business News via COMTEX) -- Cody Easterday, a third-generation cattleman, said the outlook for his Mid-Columbia feedlot looks bleak if the U.S. border remains closed to Canadian live cattle.

"We've closed the gate, and we are going to lose and they are going to win," he said.

Easterday and other members of the Washington Cattle Feeders Association discussed the situation Tuesday with John Masswohl, the director of international relations for the Canadian Cattlemen's Association, over plate-sized steaks in Kennewick.

Masswohl didn't give them much good news. He said Canadian producers have suffered for nearly two years and lost nearly $5.6 billion since May 2003 when an Alberta cow was found to have mad cow disease and the border was closed.

Yet, that's about to change.

Canadian cattlemen are tired of waiting for open trade to resume, he said.

"We would like to be entirely self-sufficient and never have to rely on American slaughterhouses again," he said. "The things that the Americans are doing now are going to cause American plants to shut down."

Masswohl said Canadian packing houses are expanding and shortly will have the capacity to process most of the country's beef.

Canadian statistics say the country was able to slaughter about 72,000 head of cattle a week before the ban. But at the end of 2004, Canada had increased that capacity to 86,000.

In June, a Tyson plant in Brooks, Alberta, will complete an expansion enabling it to slaughter an additional 800 cattle a day. The plant currently processes about 3,900 animals a day.

Another major plant, Cargill in High River, Alberta, also is expected to increase its production -- by 500 head a day, Masswohl said.

Those changes, along with the addition of new smaller Canadian beef processing plants, could squeeze already-stressed Northwest packers like Tyson in Wallula and Washington Beef in Toppenish.

Cattle feedlot operators, like Easterday, who sell their cattle to Northwest packers say they already are feeling the pinch. He said there aren't as many young cattle available to buy for his operation at the prices he's used to paying.

Easterday said if Mid-Columbia packers move elsewhere to turn a better profit, business will go bad for his family and others.

"I don't think the community realizes the impact that's going to happen here," he said.

Ray McGaugh, Tyson's Wallula complex manager, wouldn't say if the company is planning a move, but he said the lack of Canadian cattle had reduced the plant's production to about 60 percent of normal.

"There just aren't enough available cattle in the Northwest to supply Tyson and Washington Beef," McGaugh said.

About 20 percent of the Tyson plant's cattle had come from Canada before the border closed, he said. The company usually hires about 1,850 workers but now has about 1,700 workers.

McGaugh said keeping the border closed eventually would hurt the entire U.S. industry.

"There is going to be an economic reckoning," he said.

But not everyone in the U.S. cattle industry is in agreement.

U.S. and Canadian government officials were close to opening the border earlier this year, but a federal judge in Montana ruled in favor of Ranchers-Cattlemen Action Legal Fund, or R-CALF, a group of American ranchers who want the border closed until Canadians can prove their herds are free of mad cow disease.

"We want to do business with Canada, but we don't want to trade at the risk of our industry," said Shae Dodson, a Billings, Mont.-based R-CALF spokeswoman. "We don't want to introduce BSE into our American herd -- or any other foreign disease."

Dodson said she didn't believe packers would move to Canada.

"It makes no sense for these packers to threaten that they are going to move north," she said. "We've got enough cattle here within the borders."

Masswohl said Canadian producers didn't want to compete with the U.S. cattle industry for the same customers, but they weren't willing to wait any longer.

"We've had enough of this," he said. "We are making our own plans. We've got to survive."
 

Tam

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"It makes no sense for these packers to threaten that they are going to move north," she said. "We've got enough cattle here within the borders."


Nice that Shae thinks this way but hasn't one already been moved to Manitoba from Washington.
 

Murgen

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SHAE, mouthpiece for R-calf, analyist she's not. Look at the numbers honey, you've been duped by pinniochio. "we're all going to get rich!", NOT.

Question, with the Canadian dollar expected to stay at it's current level, or go higher, is the margin that US based packers are used to, pre BSE, still there? Or is it now going to become more economical to kill in Canada, and ship boxes?
 

Silver

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cowsense said:
The packers may be moving........sure won't be to Montana :roll: :wink:

Well, according to Oldtimer, they don't want those plant there anyway. They tend to employ undesirables. :roll: :roll: :roll:
 

Brad S

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If OT calls the labor force "undesirables" he is being polite. Fact is Garden City, Ks (pop 50K) is much much more dangerous than Wichita, Ks (pop 250K).

Unless Canada brings in the Asian and Mexican immigrants, their new plants won't be able to compete with US plants when the border does open to live cattle.
 

SMS

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"We want to do business with Canada, but we don't want to trade at the risk of our industry," said Shae Dodson, a Billings, Mont.-based R-CALF spokeswoman. "We don't want to introduce BSE into our American herd -- or any other foreign disease."


This statement sound so much like what Canada said for years about ANA and BT, you guys didnt buy it, and told us it was economic's and trade distorting. Kinda looks like the reverse now, to me.
 

SASH

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Unless Canada brings in the Asian and Mexican immigrants, their new plants won't be able to compete with US plants when the border does open to live cattle.

That's actually fairly common practice up here already but you are forgetting that in rural Canada that we also have a high number of otherwise unemployed indigenous people who can fill these jobs and they live here already anyway.
 

Brad S

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This statement sound so much like what Canada said for years about ANA and BT, you guys didnt buy it, and told us it was economic's and trade distorting. Kinda looks like the reverse now, to me.[/quote]

It is similar, but the trade distorting result was insignificant with blue tomgue - for the record, many Canadian producers called the restrictions for what they were.



Canada reports a fairly high unemployment rate, but its quite a leap suggestion the unemployed would accept a $7/hr job that is quite demanding. I have a theory that the unemployed don't want a job very badly.
 

SASH

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Canada reports a fairly high unemployment rate, but its quite a leap suggestion the unemployed would accept a $7/hr job that is quite demanding. I have a theory that the unemployed don't want a job very badly.

Most of the packing jobs in this area start closer to $10 per hour with guaranteed wage increases as long as you stay with the company. There are other incentives for perfect attendance. I don't know if they are still doing it, but for awhile, Maple Leaf in Brandon was drawing for a truck about every ninety days among employees with perfect work attendance. I do agree that the unemployed often don't want to work but with the proper incentives, even the slackest people can be motivated.
 

Kato

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There's a town near us that has a large potato processing plant. The town has about 2000 citizens, and the plant employs over 700. Obviously they have no trouble attracting people to work. Some commute for 50 miles or more every day. The plant pays well, and treats it's employees well. And it makes money. If you've eaten McDonalds fries anywhere in western Canada, they've come from here.

This is also within 40 miles of the Maple Leaf plant in Brandon, which also has a very large workforce. Both of these operations offer working conditions that encourage people to stay. If you pay $7.00 an hour, that's the quality of a workforce you will have. As the saying goes, "You pay peanuts, you get monkeys".

There's more to having a profitable plant than being able to save on wages. Poorly paid workers that don't put their hearts into their work will cost money too. Retraining costs money too. Staff turnover is not cheap.
 

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