Cattle movement across Canadian border expected to be slow
By JIM GRANSBERY
Of The Gazette Staff
When the U.S. border opens to Canadian cattle older than 30 months on Nov. 19, the influx of older cattle coming south will be minimal, ranchers in Alberta and Saskatchewan say.
Age verification requirements, currency parity and transportation costs will limit movement.
Nevertheless, Montana cattlemen argue that the timing of the opening is poor for the U.S. cull market and is premature in that age limitations on U.S. cattle/beef exports should first be resolved with Japan and South Korea. Also, the risk of bovine spongiform encephalopathy contamination from Canadian cattle is too great, some say.
The specters of congressional intervention or judicial injunction are hovering just offstage, too. The mid-November deadline is the latest chapter in a saga that began in 2003 with the discovery of BSE in cattle on both sides of the border. Since that time, 10 Canadian animals have been verified with BSE; three animals in the United States have been confirmed, the first being an import from Canada.
BSE, also known as mad cow disease, is a brain-wasting disease caused by warped proteins called prions that are found in the central nervous system tissues of infected cows. In the mid-1980s, an outbreak of BSE in the United Kingdom resulted in the slaughter of thousands of infected cows and collapse of the cattle and beef markets.
Creutzfeldt-Jakob disease
Since the 1990s, about 150 people in the United Kingdom have died as a result of variant Creutzfeldt-Jakob disease from eating the infected tissues of BSE cows. Another 10-12 persons have died in Europe as a result of vCJD. There has been no indigenous case of vCJD in Canada or the United States.
Since July 2005, Canadian live cattle under 30 months and beef from such animals have been allowed into the United States. Under the new rule, the U.S. Department of Agriculture will allow imports of cattle and bison born on or after March 1, 1999, and meat from all animals.
"Most of us cannot prove the age of our cattle," said Brian Weedon, who ranchers outside Swift Current, Sask. "We have a set of records but they're not specific enough.
"We are just one of thousands of operators, and other than the purebred producers, we can't verify the age," he said.
Weedon said there are 20,000 producers in Saskatchewan, but that three-fourths of them have fewer than 70 head of cattle in their herds.
"We've downsized on the cattle because of grain prices," he said. "We're grain farmers with a few cows."
Wheat and barley prices in Canada and the United States have risen to record levels this summer and fall because of narrow supplies around the world. More acres are being planted to wheat this fall and prospective plantings for spring wheat are expected to increase.
The Canadian dollar has risen sharply and is now worth more than the U.S. dollar.
In November 1998, a Canadian dollar was worth 65 cents in U.S. currency. This week it took $1.03 to buy a Canadian dollar.
Economic millstones
Weedon said the loss of the export market with the discovery of BSE in Canada in 2003 and the rise in the value of the "loonie," as the Canadian dollar coin is known for the engraved loon on its head, have been "economic millstones that are tough to bear."
"There is not a lot of optimism up here because of the exchange rate," said Reynold Bergen, who oversees animal health and welfare issues for the Alberta Beef Producers in Calgary. "It is more difficult for us to send feeder or fed cattle. It is providing a disincentive."
Bergen said calf prices in Alberta this fall are off by 30 percent because feed prices are so high. Canadian cattle feeders use barley as the mainstay of the feeding ration, and like all grains this year, it rose to prices not seen before.
"The border will open when it opens," he said referring to the Nov. 19 date and possible U.S. congressional and court action.
He added, "There are not a lot of animals eligible" under the USDA's new rule.
As of July 1, the USDA reported there are 120.7 million cattle and calves in the United States and Canada. The U.S. inventory checks in with 104.8 million head, while Canada has 15.9 million.
More than half of Canada's cattle are in the two provinces directly north of Montana: Alberta counts 6.5 million, Saskatchewan, 3.4 million. The remainder are spread among the other eight provinces in Canada. The report was prepared in cooperation with Statistics Canada.
South of the 49th Parallel, views are split as to what effect the new rule will bring.
"When we commented on the USDA proposal, we opposed it," said Errol Rice, executive vice president of the Montana Stockgrowers Association. "It is not that we feel the cattle are unsafe, but because of the timing and the economic impact.
"It is right in the middle of the bull and cow cull market," he said. "We suggested that it be made effective in March or early spring."
"We want our cull cattle to cycle through," he said. In late fall, ranchers cull their old bulls and cows and send them to slaughter. The beef ends up in various canned beef products.
Rice also alluded to a previous interference with the market when the whole-herd dairy buyout was instituted by USDA in 1986. The sharp influx of dairy cattle into the market collapsed prices for feeder calves and fed cattle ready for slaughter that year.
"It was quite serious," said Dr. Dick Raths, DVM of Lewistown, referring to the unintended effects of the dairy buyout. "It did not do that much for the dairy guys either."
"The market has already factored it in and that is money out of people's pockets," Raths said.
Rice said the USDA argues that foreign buyers "are looking to how we and Canada work together."
"We'll set the standard with Canada, but first we need to get Japan and Korea on the same level," he said. The two Asian countries have imposed a 20-month limit on beef coming from the U.S. and Canada.
Alberta rancher Erik Butters describes that position as "blatant economic protectionism." Butters operates just west of Calgary.
Rice said that a labor shortage and the parity of the dollars have Canadian slaughter plants running below capacity.
"We don't expect too many cattle to come south," he said. "The original estimates were about 700,000. Now they say 75,000 or less."
Rice noted the U.S. feeder cattle market has declined since USDA announced the November deadline.
"There has been a psychological impact already on the feeder market," Rice said. "It is not down solely because of the USDA, but that weighs into it."
At the beginning of September feeder cattle futures were at $119 a hundredweight. October futures are now below $111.50 per cwt.
Butters said the currency exchange rate is "absolutely a disincentive" to send cattle south. "It affects everything we sell you - lumber, oil, cattle," he said. Trade between the United States and Canada is more than $1 billion a day.
He added that the USDA is trying to set rules based on international standards based on scientific evidence because Canada and the United States want access to world markets. Butters agrees with that goal, but wants Japan and South Korea on the same standard.
Feed barley prices have nudged up to $5 a bushel, he said. One reason is that feed wheat used by Canadian ethanol producers has taken a feed substitute away from feedlot operators.
Feeder steer prices are down to $1 per pound, Butters said, while feeder heifers are down to 80 cents a pound.
Regardless of how few over-30-month cattle that come across the border, the cattle producers organization R-CALF USA (Ranchers-Cattlemen Action Legal Fund) remains opposed to any.
The group is pondering a third attempt to keep Canadian cattle out of the United States via the courts.
CEO Bill Bullard said Wednesday that seeking an injunction "is under serious consideration."
R-CALF has fought a protracted and expensive legal battle against any importation of Canada's cattle until it is proved that its herds are BSE-free.
Bullard added that R-CALF supports congressional efforts to pre-empt the Nov. 19 opening. Sen. Byron Dorgan, D-N.D., has introduced a resolution opposing the USDA's action. A companion bill is in the House. The measure would have to pass both chambers and be signed by the president in order to preempt the effective date.
"The USDA admits that the new rule would allow BSE into the United States, Bullard said. "That is unacceptable. And the USDA does not specify how it is going to verify the age of the cattle."
"We have little confidence that few numbers would enter," he said.
Bullard said that the USDA estimates that 19 to 105 BSE infected animals could enter the United States under the new rule.
The bans on feeding rendered ruminant animals to cattle on both sides of the border are not being enforced, therefore putting U.S. cattle at risk of BSE contamination.
Raths said the USDA's credibility is at stake.
"They have said that 1999 is the effective feed ban year in Canada," Raths said. "Yet animals born after that date have been identified with BSE.
"How do you justify that?" he asked. "It don't fly right with me."
Bullard emphasized that ruminant feeding "is the leading source of infection in Canada."
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