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U.S. packers failing due to closed border
this document web posted: Wednesday March 16, 2005 20050317p5
By Mary MacArthur
Camrose bureau
When Wythe Wiley and a group of Iowa cattle producers built their own meat slaughtering plant in 2003, they believed they would finally have some control over their industry.
But the discovery of BSE in a Washington state cow and the continued closure of the Canadian border forced the plant to close only a year after it opened.
"It killed the packers," said Wiley, chair of the Iowa Quality Beef Supply Co-operative, which formed to supply local beef at a premium to the Iowa Quality Beef plant.
"It just started to become profitable and BSE came along and decimated that part of the operation," said Wiley.
While Iowa Quality Beef may be one of the first American casualties of the continued border closure to Canadian cattle, industry officials say it likely won't be the last.
Jeremy Russell, communications director with the National Meat Association, which represents small and medium-sized packing plants in the United States, said the temporary injunction that keeps the border closed must be reversed or many of its member plants are in danger of collapse.
"Unless the decision is reversed, U.S. jobs will be lost forever," said Russell.
The National Meat Association has tried two previous times to be granted intervener status in the R-CALF lawsuit, but was rejected by U.S. district court judge Richard Cebull. He is the judge that granted the injunction request from R-CALF to stop a March 7 scheduled border opening to Canadian cattle.
On March 10, the packer group filed an emergency appeal to the Ninth Circuit Court of Appeal to see if a different judge would look more favourably on its case.
The packers want intervener status in the R-CALF case to present evidence of the economic hardship created by the border closure and they want R-CALF to post a bond to cover the losses from plants that can't get Canadian cattle.
Ted Schroeder, a Kansas State University agriculture economist, said losses to the American packing industry continue to grow each day. By the end of 2004 he estimated packing plants that had traditionally bought Canadian cattle had lost close to $1.7 billion in sales. The economic spinoff from the reduced shifts and the closure of some plants has cost the industry 5,000 jobs, worth about $282 million a year.
"It is much more severe in certain regions than others," said Schroeder. "In the long run some of the plants will continue to stay closed."
When the border first closed many producers and packers believed it was wise to create a separation between the beef industry in the two countries, but few people believed the border closure would last as long as it has.
"I'm surprised it was closed this long. It's not in the hands of the scientists or the economists, but in the hands of the politicians and judges," Schroeder said.
His research shows the border closure has created an incentive for Canadians to invest in further beef processing.
Gary Mickelson, manager of communications with Tyson Foods, said the continued border closure was a factor in his company's decision to temporarily suspend operation at four of its U.S. beef plants and drop a second shift at another in January. While the plants are back in operation, they are on reduced shifts.
"The border closure was a factor in that decision," said Mickelson.
Tyson buys three to five percent of its cattle from Canada. Some of its plants in Washington and Idaho received 10-20 percent of their cattle from Canada.
"When we got word of the injunction, we were very disappointed with the delay in the reopening. We hope this matter can be resolved quickly. As USDA has said, there's no scientific reason for keeping the border closed," said Mickelson.
In the United States, Cargill Meat Solutions announced it would make additional staff cuts at its seven U.S. beef plants because of the continued border closure.
"What we fear, as does industry, is if we lose some of those plants in the U.S. they don't just come back the next day.
"The fear is once a plant is gone, it's gone. In the short term there might be some producers in the U.S. that think the economics right now are on their side. That's a very short-term view. What's best for the industry is normalized trade and an open border," said Robert Meijer, director of public affairs with Cargill in Winnipeg.
Karen Batra, public affairs director with the National Cattlemen's Beef Association, said it too believes there is danger in keeping the border closed.
"It's going to adversely affect the packing capacity here in the United States," said Batra.
Steve Kay, editor of Cattle Buyers Weekly, said while packing plants that normally slaughter fed or finished cattle have been affected, the plants that slaughter older cows have had the real blow.
"Cow processors have been under very severe pressure because the border has remained closed," said Kay. "There's not much relief in sight for those guys," said Kay.
He predicted many of the smaller cattle processing plants will close, accelerating the concentration of the packing industry into the larger plants
this document web posted: Wednesday March 16, 2005 20050317p5
By Mary MacArthur
Camrose bureau
When Wythe Wiley and a group of Iowa cattle producers built their own meat slaughtering plant in 2003, they believed they would finally have some control over their industry.
But the discovery of BSE in a Washington state cow and the continued closure of the Canadian border forced the plant to close only a year after it opened.
"It killed the packers," said Wiley, chair of the Iowa Quality Beef Supply Co-operative, which formed to supply local beef at a premium to the Iowa Quality Beef plant.
"It just started to become profitable and BSE came along and decimated that part of the operation," said Wiley.
While Iowa Quality Beef may be one of the first American casualties of the continued border closure to Canadian cattle, industry officials say it likely won't be the last.
Jeremy Russell, communications director with the National Meat Association, which represents small and medium-sized packing plants in the United States, said the temporary injunction that keeps the border closed must be reversed or many of its member plants are in danger of collapse.
"Unless the decision is reversed, U.S. jobs will be lost forever," said Russell.
The National Meat Association has tried two previous times to be granted intervener status in the R-CALF lawsuit, but was rejected by U.S. district court judge Richard Cebull. He is the judge that granted the injunction request from R-CALF to stop a March 7 scheduled border opening to Canadian cattle.
On March 10, the packer group filed an emergency appeal to the Ninth Circuit Court of Appeal to see if a different judge would look more favourably on its case.
The packers want intervener status in the R-CALF case to present evidence of the economic hardship created by the border closure and they want R-CALF to post a bond to cover the losses from plants that can't get Canadian cattle.
Ted Schroeder, a Kansas State University agriculture economist, said losses to the American packing industry continue to grow each day. By the end of 2004 he estimated packing plants that had traditionally bought Canadian cattle had lost close to $1.7 billion in sales. The economic spinoff from the reduced shifts and the closure of some plants has cost the industry 5,000 jobs, worth about $282 million a year.
"It is much more severe in certain regions than others," said Schroeder. "In the long run some of the plants will continue to stay closed."
When the border first closed many producers and packers believed it was wise to create a separation between the beef industry in the two countries, but few people believed the border closure would last as long as it has.
"I'm surprised it was closed this long. It's not in the hands of the scientists or the economists, but in the hands of the politicians and judges," Schroeder said.
His research shows the border closure has created an incentive for Canadians to invest in further beef processing.
Gary Mickelson, manager of communications with Tyson Foods, said the continued border closure was a factor in his company's decision to temporarily suspend operation at four of its U.S. beef plants and drop a second shift at another in January. While the plants are back in operation, they are on reduced shifts.
"The border closure was a factor in that decision," said Mickelson.
Tyson buys three to five percent of its cattle from Canada. Some of its plants in Washington and Idaho received 10-20 percent of their cattle from Canada.
"When we got word of the injunction, we were very disappointed with the delay in the reopening. We hope this matter can be resolved quickly. As USDA has said, there's no scientific reason for keeping the border closed," said Mickelson.
In the United States, Cargill Meat Solutions announced it would make additional staff cuts at its seven U.S. beef plants because of the continued border closure.
"What we fear, as does industry, is if we lose some of those plants in the U.S. they don't just come back the next day.
"The fear is once a plant is gone, it's gone. In the short term there might be some producers in the U.S. that think the economics right now are on their side. That's a very short-term view. What's best for the industry is normalized trade and an open border," said Robert Meijer, director of public affairs with Cargill in Winnipeg.
Karen Batra, public affairs director with the National Cattlemen's Beef Association, said it too believes there is danger in keeping the border closed.
"It's going to adversely affect the packing capacity here in the United States," said Batra.
Steve Kay, editor of Cattle Buyers Weekly, said while packing plants that normally slaughter fed or finished cattle have been affected, the plants that slaughter older cows have had the real blow.
"Cow processors have been under very severe pressure because the border has remained closed," said Kay. "There's not much relief in sight for those guys," said Kay.
He predicted many of the smaller cattle processing plants will close, accelerating the concentration of the packing industry into the larger plants
