Texas Cattle Industry Leaders
Fret Over Canadian Situation
By David Bowser
HALLETTSVILLE, Texas — The head of the Texas Cattle Feeders Association says keeping the border closed to Canadian live cattle has turned Canadian cattlemen from allies to competitors in the international market.
The U.S. border was closed to Canadian cattle in May 2003 because of a case of bovine spongiform encephalopathy, or BSE, in Alberta. The U.S. Department of Agriculture proposed new rules that would have opened the border in March, but a lawsuit by R-CALF USA halted the move. That case goes to trial in July.
Dr. Richard McDonald, president and chief executive officer of the Texas Cattle Feeders Association, warns that keeping the border closed has caused the Canadians to expand their packing industry. Instead of sending their cattle south for slaughter once the border reopens, the Canadians have increased their slaughter capacity, he says, and that will probably be at the expense of the U.S. packing industry.
McDonald says packing plants across the northern U.S. are already operating at less than capacity. In many instances, he says, they are open only two or three days a week.
McDonald fears that could mean that as the Canadians add new, modern packing plants north of the border, the older plants in the U.S. may be shut down.
"Over the past couple of years, I've had quite a few chances to meet with people from Canada," McDonald says. "I will tell you that they're right now aiming to become independent."
The Canadians don't want to get in a situation like they were in when BSE was first discovered in their herd, McDonald says. They relied basically on one market, the United States. When BSE was discovered in Alberta, the U.S. border was closed to their cattle and their market was devastated. Now they are trying to expand into a diversity of markets.
The Canadian government and the provinces are putting money into expanding their packing industry and building new slaughter plants. The provincial and federal governments are also funding export promotions for Canadian beef.
"This year, they have put right at $87 million into promotion of their product," McDonald says.
He says they are actively talking to foreign markets.
"We will probably see Canada going directly to Japan," McDonald says. "They will be working at taking part of what we used to have."
Canada wants to replace U.S. beef now with Canadian fed beef.
"You've got to remember one of the things that Canada has, even though it may not be the world's best, they have an individual ID system already in place," McDonald says. "They can trace back to the herd of origin."
That is one demand the Japanese continue to make.
"It's going to be a while before we have that," McDonald points out.
He says that in the future, Canada won't ship cattle to the U.S. to be slaughtered.
"It looks like that's the direction they're going."
McDonald says the thing that scares him the most is that Tyson and Excel both have plants in Canada.
"They're doing everything they can to improve the output," he notes.
He says those are the companies' newest plants.
"In the Texas Panhandle," McDonald says, "the Tyson plant was opened in 1974. The Swift plant was 1973. The two Excel plants were opened prior to that. We have plants that are over 30 years of age."
McDonald says Canada is trying to become independent, and the U.S. seems to be trying to motivate them to do so.
"The cattle feeders along the Canadian border," McDonald says, "their market has become extremely unstable."
The packing plants across the northern United States are running only two or three days a week.
"When a plant runs very few days a week," McDonald says, "the thing that's going to happen is we're going to lose those plants."
At the same time that the U.S. border is closed to Canadian cattle, it is open to Canadian beef.
Canada shipped 1.1 billion pounds of beef into the U.S. last year and is expected to ship 1.5 billion pounds into the U.S. this year, according to Matt Brockman, executive vice president of Texas and Southwestern Cattle Raisers Association.
Indeed, the Canadian news media reports that if Stan Eby has his way, the only way cattle will be leaving Canada is in a box.
Eby, president of the Canadian Cattlemen's Association, says they need to be able to increase their slaughter capacity to almost 100,000 head per week, and they are almost there.
By the first week in May, they were up to 88,000 head. By November, Jim Laws of the Canadian Meat Council says, Canada should have a weekly capacity of 110,000 head. That's an increase of 1.65 million head a year and more than Canada exported to the U.S. for slaughter in 2002.
The Canadian herd grew from 13 million to about 15.2 million in the past two years. About eight million head are less than 30 months old. Under proposed U.S. Department of Agriculture rules, only cattle under 30 months would be imported into the U.S. for feeding or slaughter.
Those rules, however, are being challenged in federal court in Montana.
Beef from cattle under 30 months of age with so-called "specified risk materials" removed can be imported into the U.S.
Canada is reportedly selling meat from animals over 30 months of age to Cuba and Macau, which are small markets, or consuming it in Canada.
Tyson says it will invest $17 million at its Brooks, Alberta, Lakeside plant to increase the daily kill by 900 head.
In a prepared announcement, Tyson says the investment is in response to a backlog of cattle in Canada caused by the continued closure of the U.S. border to Canadian cattle.
Tyson says production in its U.S. plants is reduced due to the lack of access to Canadian cattle that normally supplied about three to five percent of its production.
Winnipeg's Cargill Ltd., a subsidiary of Cargill Inc., says it is purchasing the beef processing operations of Better Beef Ltd. of Guelph, Ontario. Better Beef Ltd. is one of the leading beef processors in Canada, with global distribution capability.
Cargill Inc.'s High River plant and Tyson's Lakeside Packers in Brooks process more than 80 percent of Canadian beef.
That may create a new headache for Canadian cattlemen.
Eby admits packer concentration is a concern. Because fewer players will be competing for cattle, prices likely will remain depressed. Those depressed prices impact cattlemen on both sides of the border.
Packers in Canada are buying cattle 10 to 20 cents cheaper than in the U.S.
"They're slaughtering those cattle, and that beef is coming down here," McDonald says.
That's adding to the margins of packing plants in Canada.
"If they weren't killing those cattle up there and they were having to come down here," McDonald says, "our prices could be higher. That cheap beef is coming down. That's put the floor on us."
McDonald says the U.S. should be letting the cattle come across the border and keeping the beef out.
"At least when the cattle come down here, they're killed under our market conditions," McDonald says. "If they're killed under their market conditions, that depresses our prices."
Still, a few packers are better than no packers.
McDonald argues that a healthy packing industry is necessary for a healthy cattle industry. If the packers aren't there, there's no place to sell cattle, he says.
Eby says packers moving into or expanding their operations in Canada have had significant margins and have the capital to expand. He says, however, that he would like to see more diversification.
Ron Glaser of the Alberta Beef Producers says there are new, smaller slaughterhouses being built that will strengthen the market by bidding against the established packers.
Glaser says it's in Canada's best interest to see its packing industry grow.
Ralph Klein, Alberta governor, says creating self-sufficiency is the best option for future prosperity.
Klein's government has contributed more than $700 million in aid to the province's ranchers. He says he thinks R-CALF's litigation will keep the U.S. border closed for another two years.
The Canadian news media says the biggest fear Canadian cattlemen have is that R-CALF will convince the judge in the border suit to stop imports of Canadian beef into the U.S. as well as Canadian cattle.
The Canadian press bemoans the loss of billions of dollars and thousands of jobs in Canada since BSE was discovered 2003 in Alberta, where 70 percent of the country's export cattle are raised, and McDonald worries that pain is about to shift to the U.S.
More than 6000 American meat packing jobs have evaporated over the last 18 months without Canadian cattle to process. U.S. packers say they are losing about $38 million a week.
Mark Dopp of the American Meat Institute says the impact has been felt all the way down into Texas. He says what is taking place is a permanent change in the North American beef industry.
Dopp agrees with McDonald that Canada may eventually import cattle from the U.S. for slaughter in the new, modern plants in Canada as older packing plants are retired in the U.S.
"The fourth largest packer in the United States is National," McDonald says. "National does not have any foreign plants. Swift has a plant in Australia, so they're making money off of it."
Tyson and Excel both have packing facilities in Canada.
National, McDonald says, is hurting.
"In Amarillo, we have a Tyson plant, and those guys are only getting about 36 hours a week," McDonald says.
Along the Canadian border, shift workers are getting about 14 to 18 hours a week.
"You're going to lose those people," he warns. "The type of people who will work in a packing plant, if this goes on much longer, will move to construction."
_____________________________________________________________
Canada has their state of the art ID system,they have adequate packing facilites,they compete with the USA for the export markets and win.Do you really think they are going to be allowed to ship boxed beef into the USA and depress the American cattle man's prices? Will canada trade the USA market for Japan's.
Fret Over Canadian Situation
By David Bowser
HALLETTSVILLE, Texas — The head of the Texas Cattle Feeders Association says keeping the border closed to Canadian live cattle has turned Canadian cattlemen from allies to competitors in the international market.
The U.S. border was closed to Canadian cattle in May 2003 because of a case of bovine spongiform encephalopathy, or BSE, in Alberta. The U.S. Department of Agriculture proposed new rules that would have opened the border in March, but a lawsuit by R-CALF USA halted the move. That case goes to trial in July.
Dr. Richard McDonald, president and chief executive officer of the Texas Cattle Feeders Association, warns that keeping the border closed has caused the Canadians to expand their packing industry. Instead of sending their cattle south for slaughter once the border reopens, the Canadians have increased their slaughter capacity, he says, and that will probably be at the expense of the U.S. packing industry.
McDonald says packing plants across the northern U.S. are already operating at less than capacity. In many instances, he says, they are open only two or three days a week.
McDonald fears that could mean that as the Canadians add new, modern packing plants north of the border, the older plants in the U.S. may be shut down.
"Over the past couple of years, I've had quite a few chances to meet with people from Canada," McDonald says. "I will tell you that they're right now aiming to become independent."
The Canadians don't want to get in a situation like they were in when BSE was first discovered in their herd, McDonald says. They relied basically on one market, the United States. When BSE was discovered in Alberta, the U.S. border was closed to their cattle and their market was devastated. Now they are trying to expand into a diversity of markets.
The Canadian government and the provinces are putting money into expanding their packing industry and building new slaughter plants. The provincial and federal governments are also funding export promotions for Canadian beef.
"This year, they have put right at $87 million into promotion of their product," McDonald says.
He says they are actively talking to foreign markets.
"We will probably see Canada going directly to Japan," McDonald says. "They will be working at taking part of what we used to have."
Canada wants to replace U.S. beef now with Canadian fed beef.
"You've got to remember one of the things that Canada has, even though it may not be the world's best, they have an individual ID system already in place," McDonald says. "They can trace back to the herd of origin."
That is one demand the Japanese continue to make.
"It's going to be a while before we have that," McDonald points out.
He says that in the future, Canada won't ship cattle to the U.S. to be slaughtered.
"It looks like that's the direction they're going."
McDonald says the thing that scares him the most is that Tyson and Excel both have plants in Canada.
"They're doing everything they can to improve the output," he notes.
He says those are the companies' newest plants.
"In the Texas Panhandle," McDonald says, "the Tyson plant was opened in 1974. The Swift plant was 1973. The two Excel plants were opened prior to that. We have plants that are over 30 years of age."
McDonald says Canada is trying to become independent, and the U.S. seems to be trying to motivate them to do so.
"The cattle feeders along the Canadian border," McDonald says, "their market has become extremely unstable."
The packing plants across the northern United States are running only two or three days a week.
"When a plant runs very few days a week," McDonald says, "the thing that's going to happen is we're going to lose those plants."
At the same time that the U.S. border is closed to Canadian cattle, it is open to Canadian beef.
Canada shipped 1.1 billion pounds of beef into the U.S. last year and is expected to ship 1.5 billion pounds into the U.S. this year, according to Matt Brockman, executive vice president of Texas and Southwestern Cattle Raisers Association.
Indeed, the Canadian news media reports that if Stan Eby has his way, the only way cattle will be leaving Canada is in a box.
Eby, president of the Canadian Cattlemen's Association, says they need to be able to increase their slaughter capacity to almost 100,000 head per week, and they are almost there.
By the first week in May, they were up to 88,000 head. By November, Jim Laws of the Canadian Meat Council says, Canada should have a weekly capacity of 110,000 head. That's an increase of 1.65 million head a year and more than Canada exported to the U.S. for slaughter in 2002.
The Canadian herd grew from 13 million to about 15.2 million in the past two years. About eight million head are less than 30 months old. Under proposed U.S. Department of Agriculture rules, only cattle under 30 months would be imported into the U.S. for feeding or slaughter.
Those rules, however, are being challenged in federal court in Montana.
Beef from cattle under 30 months of age with so-called "specified risk materials" removed can be imported into the U.S.
Canada is reportedly selling meat from animals over 30 months of age to Cuba and Macau, which are small markets, or consuming it in Canada.
Tyson says it will invest $17 million at its Brooks, Alberta, Lakeside plant to increase the daily kill by 900 head.
In a prepared announcement, Tyson says the investment is in response to a backlog of cattle in Canada caused by the continued closure of the U.S. border to Canadian cattle.
Tyson says production in its U.S. plants is reduced due to the lack of access to Canadian cattle that normally supplied about three to five percent of its production.
Winnipeg's Cargill Ltd., a subsidiary of Cargill Inc., says it is purchasing the beef processing operations of Better Beef Ltd. of Guelph, Ontario. Better Beef Ltd. is one of the leading beef processors in Canada, with global distribution capability.
Cargill Inc.'s High River plant and Tyson's Lakeside Packers in Brooks process more than 80 percent of Canadian beef.
That may create a new headache for Canadian cattlemen.
Eby admits packer concentration is a concern. Because fewer players will be competing for cattle, prices likely will remain depressed. Those depressed prices impact cattlemen on both sides of the border.
Packers in Canada are buying cattle 10 to 20 cents cheaper than in the U.S.
"They're slaughtering those cattle, and that beef is coming down here," McDonald says.
That's adding to the margins of packing plants in Canada.
"If they weren't killing those cattle up there and they were having to come down here," McDonald says, "our prices could be higher. That cheap beef is coming down. That's put the floor on us."
McDonald says the U.S. should be letting the cattle come across the border and keeping the beef out.
"At least when the cattle come down here, they're killed under our market conditions," McDonald says. "If they're killed under their market conditions, that depresses our prices."
Still, a few packers are better than no packers.
McDonald argues that a healthy packing industry is necessary for a healthy cattle industry. If the packers aren't there, there's no place to sell cattle, he says.
Eby says packers moving into or expanding their operations in Canada have had significant margins and have the capital to expand. He says, however, that he would like to see more diversification.
Ron Glaser of the Alberta Beef Producers says there are new, smaller slaughterhouses being built that will strengthen the market by bidding against the established packers.
Glaser says it's in Canada's best interest to see its packing industry grow.
Ralph Klein, Alberta governor, says creating self-sufficiency is the best option for future prosperity.
Klein's government has contributed more than $700 million in aid to the province's ranchers. He says he thinks R-CALF's litigation will keep the U.S. border closed for another two years.
The Canadian news media says the biggest fear Canadian cattlemen have is that R-CALF will convince the judge in the border suit to stop imports of Canadian beef into the U.S. as well as Canadian cattle.
The Canadian press bemoans the loss of billions of dollars and thousands of jobs in Canada since BSE was discovered 2003 in Alberta, where 70 percent of the country's export cattle are raised, and McDonald worries that pain is about to shift to the U.S.
More than 6000 American meat packing jobs have evaporated over the last 18 months without Canadian cattle to process. U.S. packers say they are losing about $38 million a week.
Mark Dopp of the American Meat Institute says the impact has been felt all the way down into Texas. He says what is taking place is a permanent change in the North American beef industry.
Dopp agrees with McDonald that Canada may eventually import cattle from the U.S. for slaughter in the new, modern plants in Canada as older packing plants are retired in the U.S.
"The fourth largest packer in the United States is National," McDonald says. "National does not have any foreign plants. Swift has a plant in Australia, so they're making money off of it."
Tyson and Excel both have packing facilities in Canada.
National, McDonald says, is hurting.
"In Amarillo, we have a Tyson plant, and those guys are only getting about 36 hours a week," McDonald says.
Along the Canadian border, shift workers are getting about 14 to 18 hours a week.
"You're going to lose those people," he warns. "The type of people who will work in a packing plant, if this goes on much longer, will move to construction."
_____________________________________________________________
Canada has their state of the art ID system,they have adequate packing facilites,they compete with the USA for the export markets and win.Do you really think they are going to be allowed to ship boxed beef into the USA and depress the American cattle man's prices? Will canada trade the USA market for Japan's.
