June 18, 2005

Canada now a competitor to US beef markets

Canada has without a doubt presented itself as a competitor to the US in cattle production. Gregg Doud, chief economist for the National Cattlemen Beef Association (NCBA) said that since the closure of the US border to live Canadian imports, Canada has in actuality increased its cattle slaughter by more than 10,000 head per week since the 2003 BSE finding, moving from about 63,000 head per week to an average of about 73,000 head per week.

By the end of summer, they will have the ability to run at about 90,000 head per week and will eventually reach a state where there is little need for Canadians to send fed cattle to the US.

While this may be good news to some US producers, Doud believes Canadian producers will continue to increase herd sizes if there is no incentive to move cattle across the border. Before the border was closed, the US processed about 40 percent of Canadian non-fed slaughter cattle.

On another note, he said that even as it becomes a more formidable competitor for export markets (e.g. Mexico), Canada continues to move large amounts of boxed beef into the US. However, rather than the US having a chance to add value at slaughter facilities once it arrives in the states, the product is already processed in Canada.

Should the border be opened, Doud said that US packers would at least have the opportunity to outbid their Canadian counterparts for fed cattle, possibly idling some of the slaughter capacity north of the border.