Beef industry believes 'cut-in-Canada' solution is key to survival
Judy Monchuk
Canadian Press
Sunday, May 15, 2005
CALGARY (CP) - If Stan Eby has his way, the only way cattle will be leaving Canada is in a box. After two years with no international markets for live cattle - and no end in sight - the embattled beef industry believes a cut-in-Canada solution is the key to survival.
The goal is for the Canadian market to process all beef before export, eliminating the vulnerability to trade action from the United States, its largest trading partner.
"If we can get our slaughter capacity up to just shy of 100,000 per week, we can handle the numbers," said Eby, president of the Canadian Cattlemen's Association.
The goal, unthinkable before the detection of mad cow disease in an Alberta heifer in May 2003, is tantalizingly within reach. In the first week of May, some 88,000 cattle were processed in Canadian plants - the most since 1976.
New and expanded facilities are on track to have weekly capacity up to 110,000 by November 2005: an additional 1.65 million animals a year, says Jim Laws of the Canadian Meat Council.
That's more than Canada exported to the United States for slaughter in 2002.
The outlook sounds positive, but does little to erase the economic hardships of the last two years.
Billions of dollars and thousands of jobs have been lost since the discovery of bovine spongiform encephalopathy, or BSE, crippled Canada's beef exports. The pain has been spread across rural Canada and agriculture-related industries, but the bulk has been felt in Alberta, where 70 per cent of young export cattle are raised.
Much of the increased kill capacity has also come in Alberta, through expansion of the meat packing plants owned by American interests: Cargill Inc.'s High River plant and Lakeside Packers in Brooks, a subsidiary of Arkansas-based Tyson Foods.
The two plants process more than 80 per cent of Canadian beef. Some say Cargill and Tyson have probably saved the industry.
"If they didn't ratchet up their kill, we'd have an even bigger problem," said one southern Alberta feedlot operator. "We'd be shooting and burying the cattle."
The Canadian herd has grown to about 15.2 million - a considerable jump from the 13 million when the first cow tested positive for BSE two years ago. Just under 7 million are over 30 months old - animals whose meat can only be consumed in Canada or exported to tiny destinations like Cuba and Macau.
Eby says the ownership concentration is a concern, since the fewer players competing for cattle, the less likely prices will rise.
"The plants obviously see a future," said Eby. "We know they've had significant margins and have capital to put into facilities. We'd certainly like to have more diversification, there's no question it would be better to have a number of smaller plants spread across the country."
Ron Glaser of the Alberta Beef Producers says the new, smaller slaughterhouses coming on stream will strengthen the market by bidding against the established packers. That should lead to higher cattle prices.
"In the long term it's in our best national interest to see our packing industry grow and take the role of those U.S. bidders we've traditionally had in our marketplace," he said.
Canadian producers are not the only ones feeling the economic crunch.
More than American 6,000 meat packing jobs have evaporated over the last 18 months without Canadian cattle to process. Packers south of the border say they are losing an estimated $38 million US a week.
"It's not only in the northern tier states," said Mark Dopp of the American Meat Institution, which wants trade in Canadian cattle resumed. "The impact has been felt all the way down into Texas."
Glaser says the processing shift could lead to permanent change in the North American marketplace.
"The day may come where we will be importing U.S. cattle for processing," he said. "As modern new facilities are built in Canada, they will likely be taking the place of older, less competitive plants in the U.S. that are even now starting to close or throttle back production because they can't access cattle from Canada."
Alberta Premier Ralph Klein, whose government has contributed more than $700 million in aid to the province's ranchers, says creating self sufficiency is the best option for the future prosperity.
"We should continue along that vein with or without the opening of the American border," said Klein, adding he believes litigation from U.S. protectionist ranchers will likely keep the border closed to Canadian cattle for another two years.
The biggest worry facing the industry is that R-CALF United Stockgrowers of America will convince a Montana judge to end trade in processed beef products from Canada. R-CALF has long argued Canadian beef and cattle pose safety risks because there have been three mad cow cases north of the border.
Judy Monchuk
Canadian Press
Sunday, May 15, 2005
CALGARY (CP) - If Stan Eby has his way, the only way cattle will be leaving Canada is in a box. After two years with no international markets for live cattle - and no end in sight - the embattled beef industry believes a cut-in-Canada solution is the key to survival.
The goal is for the Canadian market to process all beef before export, eliminating the vulnerability to trade action from the United States, its largest trading partner.
"If we can get our slaughter capacity up to just shy of 100,000 per week, we can handle the numbers," said Eby, president of the Canadian Cattlemen's Association.
The goal, unthinkable before the detection of mad cow disease in an Alberta heifer in May 2003, is tantalizingly within reach. In the first week of May, some 88,000 cattle were processed in Canadian plants - the most since 1976.
New and expanded facilities are on track to have weekly capacity up to 110,000 by November 2005: an additional 1.65 million animals a year, says Jim Laws of the Canadian Meat Council.
That's more than Canada exported to the United States for slaughter in 2002.
The outlook sounds positive, but does little to erase the economic hardships of the last two years.
Billions of dollars and thousands of jobs have been lost since the discovery of bovine spongiform encephalopathy, or BSE, crippled Canada's beef exports. The pain has been spread across rural Canada and agriculture-related industries, but the bulk has been felt in Alberta, where 70 per cent of young export cattle are raised.
Much of the increased kill capacity has also come in Alberta, through expansion of the meat packing plants owned by American interests: Cargill Inc.'s High River plant and Lakeside Packers in Brooks, a subsidiary of Arkansas-based Tyson Foods.
The two plants process more than 80 per cent of Canadian beef. Some say Cargill and Tyson have probably saved the industry.
"If they didn't ratchet up their kill, we'd have an even bigger problem," said one southern Alberta feedlot operator. "We'd be shooting and burying the cattle."
The Canadian herd has grown to about 15.2 million - a considerable jump from the 13 million when the first cow tested positive for BSE two years ago. Just under 7 million are over 30 months old - animals whose meat can only be consumed in Canada or exported to tiny destinations like Cuba and Macau.
Eby says the ownership concentration is a concern, since the fewer players competing for cattle, the less likely prices will rise.
"The plants obviously see a future," said Eby. "We know they've had significant margins and have capital to put into facilities. We'd certainly like to have more diversification, there's no question it would be better to have a number of smaller plants spread across the country."
Ron Glaser of the Alberta Beef Producers says the new, smaller slaughterhouses coming on stream will strengthen the market by bidding against the established packers. That should lead to higher cattle prices.
"In the long term it's in our best national interest to see our packing industry grow and take the role of those U.S. bidders we've traditionally had in our marketplace," he said.
Canadian producers are not the only ones feeling the economic crunch.
More than American 6,000 meat packing jobs have evaporated over the last 18 months without Canadian cattle to process. Packers south of the border say they are losing an estimated $38 million US a week.
"It's not only in the northern tier states," said Mark Dopp of the American Meat Institution, which wants trade in Canadian cattle resumed. "The impact has been felt all the way down into Texas."
Glaser says the processing shift could lead to permanent change in the North American marketplace.
"The day may come where we will be importing U.S. cattle for processing," he said. "As modern new facilities are built in Canada, they will likely be taking the place of older, less competitive plants in the U.S. that are even now starting to close or throttle back production because they can't access cattle from Canada."
Alberta Premier Ralph Klein, whose government has contributed more than $700 million in aid to the province's ranchers, says creating self sufficiency is the best option for the future prosperity.
"We should continue along that vein with or without the opening of the American border," said Klein, adding he believes litigation from U.S. protectionist ranchers will likely keep the border closed to Canadian cattle for another two years.
The biggest worry facing the industry is that R-CALF United Stockgrowers of America will convince a Montana judge to end trade in processed beef products from Canada. R-CALF has long argued Canadian beef and cattle pose safety risks because there have been three mad cow cases north of the border.
If we keep the border closed for another two years................we are screwed!