As expected, USDA has released its final rule expanding cattle and beef imports from Canada. The National Cattlemen’s Beef Association has monitored this issue carefully from the beginning, including our filing of comments back in March.
Let me say at the onset this final rule is not perfect. It allows import of beef from cattle of any age, and live cattle born after March 1, 1999. This is the date USDA determined to be the effective date of Canada’s ruminant-to-ruminant feed ban.
A feed ban date reflecting Canada’s youngest BSE cases would have been more appropriate and our comments reflected that. But USDA did maintain the requirement that all imported cattle be permanently identified through harvest.
NCBA also requested that only beef from older cattle slaughtered after the effective date of the rule be allowed for import. We felt this would help minimize any impact on the U.S. cattle market, especially with respect to cull cows. But because of this rule’s age requirement, many Canadian beef cows will not qualify due to lack of acceptable documentation. And with the Canadian dollar riding at a very high level and a tight cattle supply north of the border, market experts don’t expect a dramatic impact.
There is a gap in the U.S. and Canadian price for cull cows, but that’s mostly because of the limited number of Canadian buyers. Once this rule takes effect, we expect the cull cow price in Canada to rise immediately. This will remove any incentive to rush older cattle across the border. The U.S. cull cow price is about 10 percent higher than a year ago. While some decline could occur, the price is still expected to stay well above 2006 levels.
As for calf, feeder cattle, and fed cattle prices – we just don’t expect much of a negative impact. Calf prices traditionally pull back $5 to $10/cwt during the fall run, and this year will be no exception. But U.S. cattle supplies are tight across the board, so competition for these calves will remain strong. As for the Canadian herd, it has declined about six percent since 2005. These numbers indicate there will not be a “wall of cattle” to descend from the north as some have predicted.
We should definitely see a positive impact on our export opportunities, for both live cattle and boxed beef. NCBA has worked for years to remove trade barriers related to anaplasmosis and blue tongue. Capitalizing on Canada’s desire to normalize trade has helped us greatly reduce these trade barriers, allowing both feeder cattle and breeding stock to be exported to Canada more freely.
After several years of drought and herd reduction, Mexico is in great need of quality breeding stock. But because trade with Mexico mirrors the U.S.-Canada policy, our seedstock producers have been unable to sell bulls and stock cows into Mexico. With these roadblocks coming to an end, we expect significant improvement in live cattle export opportunities for U.S. cattlemen.
Armed with a minimal risk classification for BSE, the United States has also been pressing our trading partners to accept beef from older cattle. We’ve had some successes, but many still hold to the 30-month limitation. As you might guess, some countries cite our policy toward Canada as a rationale for maintaining the status quo. Those countries are intently watching our actions on this rule. Retiring this 30-month barrier is certain to pay dividends, as we work to regain global market share for the best and safest beef in the world.
If we dwell on the negative rhetoric, the Canadian border will remain a divisive issue for U.S. cattlemen. But we should view this issue in the larger arena of global trade, because it actually presents a significant opportunity. It’s time to put the border issue in our rear view mirror, and get on with the business of expanding our export opportunities, growing global demand for beef, and building a brighter future for our industry.
Bill Donald is a rancher from Melville, Montana. He serves as vice chair of the Policy Division of the National Cattlemen’s Beef Association.