July 6, 2004

BSE In Canada Contributed To Decline In 2003 U.S. Beef Imports

The May 2003 ban on Canadian beef (and the easing of restrictions announced that August) was a major factor causing earlier expectations of record U.S. beef imports in 2003 to go unrealized.

Other significant factors include high levels of imports in the first third of 2003 resulting from drought-induced slaughter in Australia, which had declined by early summer. A weakening U.S. dollar made imports of processing beef from Australia and New Zealand more expensive at a time when larger supplies of U.S. cow beef (a substitute for imported processing beef) became available later in 2003.

Increased supplies of domestic cow beef became available because drought conditions in the United States and lower returns in the dairy sector led to increased slaughter of both beef and dairy cows. The demand for processing (lean) beef declined further when the declining carcass weight of U.S. fed beef reduced the supply of trimmings with which processing beef is mixed. As the demand for processing beef declined, total beef imports fell to 3.0 billion pounds in 2003, slightly below the amount in 2000.

The U.S. action to ban Canadian beef from the U.S. market was temporary.  Restrictions announced August 8, 2003, allowed Canadian beef into the United States provided it is properly deboned and from cattle less than 30 months old.  These requirements significantly limited the type but not the quantity of beef Canada was able to export.

Between May and August, products accumulated in Canada. Consequently, exports to the United States for the last quarter of 2003 were nearly 6 percent higher than a year earlier. Through April 2004, however, Canadian exports to the United States have been 9 percent less than a year earlier, at least in part because of a doubling of Canadian beef exports to Mexico, which has similar limitations on imported Canadian beef. Since Canadian beef remains banned in the major Asian markets, Canada may export more than normal amounts of beef to the United States and/or Mexico in 2004.

Source:  ERS/USDA