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Some More Late Night Reading...

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Sorry for drowning the board with posts. Long night watching for calves and basically killing time between checking the girls. Thought these were a couple of well written articles. If anyone else is doing nightchecks it's at least some reading material for them.

Going It Alone

By Stephanie Veldman Associate editor

Feb 1, 2005 12:00 PM

As the Canadian cattle crisis lingers — it's now entering its 21st month since the discovery of the first case of BSE in May 2003 — the industry keeps encountering bumps on its long road to recovery.

Just when Canadian producers thought they saw a light at the end of the tunnel with USDA's release of a final rule that would reopen live cattle movement between the U.S. and Canada on March 7, a second and third case of BSE were discovered in Canada in a nine-day period.

The second Canadian case of BSE, announced Jan. 2, was found in an Alberta dairy cow. Canadian officials said the 8-year-old Holstein cow was born before Canada's ruminant-derived protein feed ban was enacted in 1997.

The third case, announced Jan. 11, was found in an Alberta beef cow born in 1998, after the feed ban was implemented.

"It was born slightly after the feed ban was implemented, and is consistent with what we've seen in Europe and the United Kingdom. There was likely some residual feed left in the system," says Dennis Laycraft, executive director of the Canadian Cattlemen's Association, Calgary, Alberta.

"In both the U.S. and Canada, when the feeding bans were instituted, there were no recalls required of the feed. Whatever was in the system was used up. That type of feed is used up fairly quickly," he adds.

Laycraft says finding two cases of BSE so close together isn't a cause for concern, but does prove Canada's surveillance program is working. Currently, Canada is testing about 7,000 head/month of the high-risk, or 4-D, cattle — dead, dying, diseased and downer cattle.

"Last year, we indicated that to reach our OIE requirements, we needed to test 30,000 head per year total," Laycraft adds. "Right now, we're surveying at a rate of about 84,000 head per year.

"At this stage, it isn't totally unexpected that we'll find a few additional cases. You never know with surveillance if they are going to be grouped together just a few days apart, or if they are going to be six to 12 months apart," he says.

Brian Ross, president of the Saskatchewan Stockgrowers Association and a producer from Estevan, says Canada is still considered a "minimum-risk" country by OIE standards.

"In order to maintain our minimum-risk level, which the OIE outlined for us, we can find up to two positives per million head of cattle more than 24 months old. As we have 5.5 to 6 million head of cattle in that category, we're allowed to have up to 12 positives per year and still be considered minimum risk," he says.

Following the second case being discovered on Jan. 2, USDA said it planned to follow its original March 7 timetable for allowing live cattle imports from Canada. Shortly after the third case was discovered just nine days later, however, the agency said it would conduct an investigation before issuing a final ruling.

"Since this animal was born shortly after the implementation of Canada's feed ban, and to determine if there are any potential links among the positive animals, we'll expedite sending a technical team to Canada to evaluate the circumstances surrounding these recent finds," says Ron DeHaven, administrator of Animal and Plant Health Inspection Service.

Ross says Canadian cattlemen are confident that if USDA's decision is based on science, the border will be opened.

"What we worry about is when politics gets involved. Then, it's anyone's guess," he says. "Our Canadian Food Inspection Agency (CFIA) has been completely open and transparent to everything going on and we welcome any U.S. delegation to come up here and investigate what's happening."

Industry reaction

The National Cattlemen's Beef Association (NCBA), which originally backed the opening of live cattle movement across the border, has also grown more cautious. NCBA assembled a team of producers and industry leaders in January to visit Canada and conduct its own investigation.

Bill Donald, president of the Montana Stockgrowers Association and a producer from Melville, was a member of the investigative group. Before departing, Donald said the group would meet with CFIA scientists, tour feed mills and rendering facilities and visit slaughter plants to view how they deal with specified risk materials (SRM).

"We also plan to visit feedyards and do a flyover to get an idea of the inventory," he says. "It's one thing to have these protocols in place but if they aren't being followed we have some serious problems."

The findings were to be presented at NCBA's annual meeting in early February as a precursor to the membership determining its position on the border issue.

"We're working to have a reasoned, democratic process that allows members to resolve this issue," says Terry Stokes, NCBA CEO. "We as a staff don't have the authority, nor does the executive committee have the power, to make an autonomous decision of this magnitude."

Industry response to USDA's first announcement that it planned to forge ahead with the border reopening despite the discovery of a second BSE case was severe.

"The timing was horrible," says Scott Jones, a Midland, SD, producer and president-elect of the South Dakota Cattlemen's Association. "USDA apparently knew there was a suspect case when it announced the opening. I think it betrays the confidence producers and consumers have in USDA."

Donald adds, "Two things indicate to me USDA's decision to open the border on March 7 was premature. The first is the reported violations of Canada's feed ban. The second is the latest BSE cows."

Donald says it's important that protocols in both countries be identical in makeup and administration before reopening the border.

"At every level, whether dealing with feed or SRM removal — the protocols should be the same if we're going to purvey a product from both countries," he says. "We need to have rules that allow for a country to have a case of BSE without shutting down all the borders, but I think there's some work yet to be done in Canada to ensure its feed ban is firmly in place. Their cow herd is one seventh the size of ours but they have had four cases of BSE to our zero. We need to find out why."

Cutting the apron strings

While it awaits a U.S. decision to reopen its border to Canadian live cattle, Canada hasn't spent the past 21 months twiddling its thumbs. The Canadian beef industry has worked to insulate itself from similar catastrophes by decreasing its dependence on the U.S. market.

Much of the problem has been a lack of processing and storage space, which has caused a backlog of market-ready cattle. So, while producers have found it difficult to market cattle, packers and retailers have seen high prices due to tight supply and lack of harvest capacity.

Canada is working to change that, however, by significantly increasing harvest capacity by building new plants and expanding existing ones.

According to Brian Nilsson, a co-CEO of Nilsson Bros. Inc., Canadian packers lost 40% of their supply from the mid 1970s through the '90s.

"During this cycle, we had a bunch of pressure coming from the U.S. in the form of changing to boxed beef… By the end of the cycle, we'd lost Canada's packers — Burns, Swift, a bunch of regional plants," he says.

Canada's cattle numbers recovered in the 1990s. Its packing industry didn't, however, due to the disparity in the grading system between the U.S. and Canada.

As the BSE crisis entered its second year, the Canadian Cattlemen's Association (CCA) appointed a committee to develop a strategy to address Canada's lack of harvest capacity. It explored four key areas to determine how to best position the industry in the event of a protracted border closure:

to facilitate and increase domestic slaughter capacity,

regain and expand domestic and international markets,

ensure that cattle meet Canada's surveillance targets, and

manage live inventories until capacity balances supply.

It's clear Canada's financial crisis of BSE didn't result from a collapse in consumer demand but an imbalance of slaughter capacity vs. production, says Brad Wildeman, president of Pound-Maker Agventures Ltd. "It resulted in a total disconnect between what producers were seeing and what consumers were paying the retailers," he says.

Wildeman says no one in Canada understood the dangers of relying on a foreign country for processing, and Canadian producers paid for the oversight.

Dennis Laycraft, CCA executive director, says, while the U.S. processing industry is seeing plant closings because of a tight supply chain, Canada's processing expansion is in full swing.

"We've been able to sell everything we produce. It's just from time to time we have more cattle ready for market than we have processing capacity to handle it," he says.

Current plans call for Canada to expand packing capacity to 100,000/head week. And, Larry Martin, CEO of the George Morris Centre, Guelph, Ontario, says the expansions should continue even if the border opens.

"These capacity expansions are already underway," Martin says. "We're very close right now to being back in the position where we have a fair amount of balance between the production and harvest of cattle."


High Hopes For The Future

By Stephanie Veldman Associate Editor

Feb 1, 2005 12:00 PM

The Canadian cattle industry has lost more than $5 billion during the past 21 months after a case of BSE was discovered in Canada and the U.S./Canadian border closed. Producers are struggling financially as they search for markets to sell their cattle — especially cull cows and bulls.

At the 2004 Canadian Western Agribition in Regina, Saskatchewan, I spoke with three producers about how their lives have changed since May 2003 and to get their opinion on how this crisis was handled.

Larry Toner

Canadian cattlemen have learned a hard lesson about being too dependent on marketing their cattle through another country for processing, says Larry Toner, an Angus seedstock producer from Kelfield, Saskatchewan. The U.S. market accounted for 60% of Canadian cattle exports, while Canadian cattle only accounted for 4-5% of U.S. slaughter capacity.

He says that since the border closed in May 2003 the thought among cattle producers is that they must further process their product in Canada before moving it on. "In a box you can move it anywhere in the world. On hoof we can only send it to one export market," he adds.

Since the border shut down, Toner says his bull sales have dropped 60%, and he's lost about $500/head on those he has sold.

"The culling program was put on hold because we couldn't get any value for the cows. We didn't even bother preg-checking," he says. "Consequently, inventories have increased and values have dropped."

Horror stories have circulated around Canada about cattle bringing pennies per pound, and Toner found himself in that position when a valuable bull became lame. He brought the bull to a local auction house where he hoped to get 15-20¢/lb.

"They told me he went through the ring too slowly, no one bid on him so they passed him up no sale," Toner says. "A pet food representative there offered us 2¢/lb. for him."

Instead, Toner processed the bull for hamburger. "Instead of getting a check for $30, I got a bill for $960 and we've been peddling a lot of hamburger," he says.

Toner says despite the challenges faced during the past 21 months, Canadian cattlemen are in it for the long haul. "We believe it is a North American cow herd we are dealing with here," he adds.

Reed Andrew

Reed Andrew, Regina, Saskatchewan, says he initially didn't think much about the impact BSE would have on the Canadian market. He was busy calving in the spring of 2003, and didn't anticipate the U.S border closure lasting.

Andrew raises 290 cows and farms about 7,200 acres of grain crops. He says he now backgrounds and feeds out his calves instead of selling them off the cows. He takes advantage of shows and sales like the Canadian Western Agribition, and retains ownership of his calves in feedlots.

Andrew tried to put a positive spin on Canada's beef crisis, saying cattlemen are adjusting to the border closure and are finishing their calves in Canadian feedlots. The downside is the lack of space to harvest cull cows and bulls.

"Our numbers (of animals) have actually increased where the U.S. numbers have decreased, especially in the breeding herd," he says. "So we will have what they need when the border opens — we just don't know when that will be.

"My prediction is the moment the border opens, there will be a nice spike for feeder cattle for a period of time," he says, adding it all depends on the strength of the Canadian dollar.

"An 84¢ dollar isn't really friendly to agriculture in Canada. We're better off with a 65¢ dollar than an 84¢ dollar," Andrew adds.

Reg Schellenberg

Reg Schellenberg is a commercial cow-calf producer from Beechy, Saskatchewan. "The climate is similar to northern Montana. We can graze our cow herd until about Christmas," he says.

He runs 400 cows on 1,400 acres of native grass. Calving on the range starts April 10, and steers are sold off the cows in October. The heifers are backgrounded and those not retained are sold as replacement females at the end of the year.

Schellenberg says producers initially thought the border closure would be temporary. "We didn't fully comprehend the impact until it was prolonged," he says. "The first hit we took was on the value of dry cows off the grass."

He says they usually sell those cows in June when they are in peak condition for the hamburger season. In 2003 those cows lost 80% of their value right off the top.

Prices, which had increased in fall 2003 amid speculation of an open border, fell again after BSE was found in a Washington state cow.

"It was tough after that," Schellenberg says. "Value-wise, we saw the brood cow herd lose 50% of their value."

Shellenberg says Canadian ranchers believe the issue isn't a scientific crisis, but a political one.

"It gets hard not to point blame, but the bottom line is nothing was based on science. It was based on policy," he says.


Take care.

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