NAFTA's RANGE WARS
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by Kent Paterson
Range wars between cattlemen are a favored Hollywood story of the Old West. On the eve of the 21st century, a modern range war is breaking out from the Mexican border in the south to the Canadian border in the north. But instead of fights over verdant spreads, today's conflict is over the import of Mexican and Canadian cattle into the United States, a commerce that preceded but picked up with the advent of the North American Free Trade Agreement (NAFTA).
One strategic landmark in this trade battle is the bustling port of entry at Santa Teresa, New Mexico. Whipped through pens on the U.S.-México borderline, calves and feeder cattle can be glimpsed in large numbers passing through the crossing before being loaded onto large semi-trailers bound for the highways of the Southwest.
"Mostly the cattle we import from México come from Chihuahua state," explained Arturo García, the Santa Teresa administrator for the Chihuahua Regional Cattlemens Union. Garcia's group operates the cattle crossing. "Chihuahua has always been recognized as a livestock raising state," added García.
Since the current Santa Teresa facility opened in 1992, more than 1.7 million head of Mexican cattle have crossed the borderline, where they are then shipped to buyers and feedlots in California, Texas, New Mexico, Colorado, and Kansas. After fattening, the animals are sent to the slaughterhouse, eventually winding up in the supermarket. Although tariffs or duties on Mexican cattle do not exist as such, purchasers pay several different fees for each animal destined for the U.S. market.
According to one Santa Teresa customs broker, the fees include a United States Department of Agriculture inspection charge of $1.75 per head; a New Mexico Livestock Board fee of 35 cents per head; and the controversial beef assessement fee of $1.00 per head, used to promote beef consumption in the United States. Additionally, the United States Customs Service receives .0019 cents per animal.
For many years, the crossing of Mexican cattle at Santa Teresa and other ports of entry went along generally unnoticed. However, the trade has recently come under fire from some cattle producers in the western United States, who charge that both México and Canada are dumping cattle on the domestic market and driving down prices. For example, Imports of Mexican cattle soared from 500,000 head in 1980 to a record 1.6 million head in 1995, when Chihuahua cattlemen, besieged by a double whammy of drought and debt, sold off their herds en masse.
Last year, ranchers in North Dakota, upset at a similar surge in Canadian imports, blockaded ports of entry in the plains state. Increasingly, NAFTA livestock opponents are getting organized. Founded in 1998, the non-profit Ranchers and Cattlemens Legal Foundation (R-CALF) is spearheading much of the discontent. The group counts supporters and members in Montana, South Dakota, North Dakota, Idaho, Utah, Colorado, and New Mexico, among other places. Since last year, R-CALF has filed three anti-dumping and anti-subsidy petitions with the Washington, D.C.-based International Trade Commission (ITC) the body charged under NAFTA with hearing unfair trade complaints. In two of the cases, ITC issued rulings against R-CALF, although decisions on the appeals and new R-CALF trade data submissions are expected this summer.
In February, the ITC threw out the Mexican anti-dumping petition, but R-CALF appealed the case to U.S. District Court in New York state. Then, in early May, the ITC issued a preliminary ruling against R-CALF's Canadian anti-subsidy petition, declaring that Canada's barley subsidy utiliized in cattle production was insignificant. R-CALF has until August 1 to produce its own data in an attempt to get ITC to change its mind. In the meantime, it is also anticipated that the trade agency will decide on the Canadian anti-dumping petition later this summer.
Colorado rancher Kathleen Sullivan Kelley, R-CALF vice-president, claimed that research by her organization revealed that Canadian cattle were being sold in the U.S. at $200 dollars per head below the cost of production, while Mexican cattle were underselling for as much as $400 per head. "It's a good thing for the cattle feeders," said Sullivan Kelley, "but essentially it really pushes the domestic producer out of the cattle feeding market, especially New Mexico and Texas and that region."
Figures from the New Mexico Agricultural Statistics Service show that the average price for beef cattle in the state dropped from 68 cents a pound in 1993 to 59 and-a-half cents a pound in 1997. Prices paid for calves, cows, steers, and heifers all decreased during the same period.
With the removal of tariffs and duties under NAFTA, Sullivan Kelley said one recourse left for ranchers is legal action. "The only thing they left us were anti-dumping capabilities," added the R-CALF spokeswoman, who said the purpose of her group's complaints is to force a government investigation, and possible retaliatory trade action. "If the (imports) were found to be illegal and excessive, and damages were found, we'd ask that appropriate tariffs and duties be
placed," said Sullivan Kelly.
Cattle country is divided on the import issue. Importer Carl Frazier, who ranches near Columbus, New Mexico, disagreed with allegations that Mexican cattle are having a negative effect on the business. Large numbers of Mexican livestock, he noted, have been crossing into the U.S. for years, well before NAFTA or recent price drops. Other reasons, he contended, are to blame for the price downturn, including "overproduction" and the waning popularity of beef. The average size of a steer, he pointed out, has increased about 200 pounds recent years.
"People from the northern states are complaining about the Mexican imports and the Canadian imports, but the imports, I feel, are a small fator in the pricing of cattle," said Frazier. "And the consumer is not using and we're not exporting any more beef than we did 10 years ago."
On the other hand, opined Frazier, the Mexican cattle imports are a boost to the border economy. Trucking and fuel companies are benefitting from the commerce. "There's a lot of people making money out of this," he claimed.
An earlier, 1996 report by the Congressional Research Service (CRS) minimized the effect of NAFTA on cattle prices, blaming instead high grain prices for feed and the existence of a domestic cattle oversupply. According to the report, the size of the U.S. cattle herd increased from about 96 million head in 1990 to 104 million head in 1996.
The CRS report was inconclusive about the impact of another recent phenomenon on low cattle prices: concentration of feedlot and slaughter facility ownership. The government research agency noted that three companies-Iowa Beef Processors, Con Agra and Excel (Cargill)-controlled 81 percent of cattle slaughter in the United States by 1994. Other major firms steering the feed and slaughter gravy train included Beef America, Continental Grain, and Cactus Feeders.
"If there's an oversupply and we're producing heavier cattle, then why do we need imports at all?" questioned ranching activist Sullivan Kelley. She maintainted that numbers compiled by R-CALF now show that the U.S. is importing nearly one-fifth of its cattle and beef consumption. R-CALF- hired economists, she continued, are certain the imports are having repercussions on domestic prices. "To say that 17.6 percent of our total domestic consumption doesn't have an impact on price, I think, is either being blind or naive," concluded Sullivan Kelley.
As NAFTA's range wars extend from border ports of entry to East Coast courtrooms and suites, the northern Mexican livestock export economy faces an uncertain future from other enemies. Still battered by dry climatic conditions, Chihuahua ranchers are slated to receive government financial assistance this summer so they can purchase crtically-needed feed supplies. Lack of water is forcing ranchers to turn to the market instead of pasture land. And quoted in the Diario de Chihuahua newspaper, Manuel Payan, the new president of the Chihuahua Regional Cattlemens Union, said the majority of his organization's almost 7,000 members remain burdened with overdue loans, a legacy of the 1994 peso crisis. Payan estimated that Chihuahua's livestock herd has been reduced by nearly two-thirds in the last ten years.
