Question for Agman

[Bill]

For well over a year Canadians have questioned if the US was following all the OTM, UTM and SRM removal regulations. With no price drop after the Dec. 2003 US cow it was easy to see how those doubts would arise.

How much of the drop in price on cull cows and fats are due to the processors now attempting to follow the rules (I assume most of them are) and deducting that additional cost?

 

[RobertMac]

For well over a year Canadians have questioned if the US was following all the OTM, UTM and SRM removal regulations. With no price drop after the Dec. 2003 US cow it was easy to see how those doubts would arise.

How much of the drop in price on cull cows and fats are due to the processors now attempting to follow the rules (I assume most of them are) and deducting that additional cost?

That's why we need COOL...I wouldn't want Canadians to unknowingly buy a suspect USA product??? :lol: :lol: :lol: :lol:

 

[agman]

For well over a year Canadians have questioned if the US was following all the OTM, UTM and SRM removal regulations. With no price drop after the Dec. 2003 US cow it was easy to see how those doubts would arise.

How much of the drop in price on cull cows and fats are due to the processors now attempting to follow the rules (I assume most of them are) and deducting that additional cost?

The situation in Canada is unique since you cannot export any OTM under current guidelines. Per the latest data there is a backlog of approximately 900,000 cows in Canada. All that product must be processed and consumed locally. This situation provides a serious imbalance between local supply and local demand.

In the U.S. cow inventories are at a cyclical low versus a cyclical high and backlog in Canada. Domestic cow slaughter has declined from 7.2 million head in 1996 to 4.8 million head this year. The five year annual average cow slaughter in the U.S is 5.65 million head. Cow exports from Canada averaged approximately 330,000 head per year pre-BSE.

The price disparity you see has very little if anything to do with SRM removal. Basic supply/demand factors are at the opposite end of the spectrum which accounts for the price differential. Thanks for an excellent question.