December 29, 2004

 

 

Canadian Cattle May Not Cross US Border Until Early 2005

 

Although Canadian beef has already made its way into the United States, live cattle may not cross the border so soon.

 

According to John Lawrence, ISU Extension livestock economist and director of the Iowa Beef Center, it could be February before Canadian fed and feeder cattle can enter the US.

 

He said rules have been compiled by USDA and approved by the Office of Management and Budget (OMB).

"The final rules should be published very soon, and then there is a 60-day comment period," Lawrence said. "That puts us into February before we could start seeing anything."

 

He added groups such as R-CALF (Ranchers-Cattlemen Action Legal Fund) might also challenge the rules.

 

Slaughter cattle must be 30 months of age or younger, he said. Lawrence added before feedlots can bring in Canadian feeder cattle, they must be able to verify those cattle will go to market younger than 30 months of age. Older cattle will not be allowed into the United States.

 

Lawrence said the cattle feeding provinces of Alberta and Saskatchewan produce roughly the same amount of fed cattle as Iowa does. He said the recent cattle on feed report in Canada indicated 938,000 on feed in those provinces, with 327,000 placed in feedlots in October.

 

Canadian slaughter capacity has also increased since the US border was closed in May 2003. Lawrence said weekly slaughter in Canada is up 25 percent this year, meaning if US packers want fed cattle out of Canada, they will face stiff competition.

 

"They need cattle there, and they will bid aggressively against our buyers," he said. "They've been killing 75,000 per week in all of Canada, and we slaughter 120,000 to 125,000 per day in the US. I really don't think there will be a large negative impact on our prices."

 

He added the US dollar is weaker in Canada, which should help temper enthusiasm. "I don't think all of this adds up to a stampede," Lawrence said.

 

He believes the biggest impact will be seen in the feeder cattle market. Lawrence estimates a drop of $2.50 to $4.20 per hundredweight once the borders are fully opened.

 

Reopening the Canadian border may also help the US restore its own export market, said Kendal Frazier, vice president of public opinion and issues management for the National Cattlemen's Beef Association (NCBA).

 

He said shutting the door on Canada has been mentioned during trade discussions with Japan.

 

"When we discuss opening our markets, they ask about why we haven't gotten the Canadian situation taken care of," Frazier said. "They hold that against us."

 

He said discussions with Canada have included allowing US feeder cattle into that country.

 

"For years they have kept us out, but they have agreed to open the border," Frazier said.

 

He said it's important to have Canada as a trading partner. "We are going to trade with Canada. We've been doing that for 200 years," Frazier said.

 

"They are probably our most significant trading partner.

 

"We're already importing a lot of beef from Canada right now, and the cattle will follow."