01/06/05 Reopening Canada, finale

There is debate over U.S.D.A.'s final rule to reopen our border to Canadian live cattle and some beef products, banned since May of 2003 when an Alberta cow was diagnosed with b.s.e. There is debate whether or not the final rule is based on sound science, especially after news that another Canadian cow has been found to have Mad Cow disease. But maybe the most intriguing debate on the U.S. once again accepting Canadian cattle involves the economic aspects. For one, what will happen to the price? That is a question members of the cattle industry, like South Dakota based livestock market owner Herman Schumacher are asking. But Schumacher takes a guess that the impact will be negative. SCHUMACHER: We were getting a million and a half before the first b.s.e. case and if you go back to '02 the average fat cattle from '02 brought $67 dollars from one end to the other and can they go back there again, yes they can, especially when you look in light of into whose hands are these cattle coming back into, you know, most of them are either into packer feed yards or are they coming across as ownership of the packers. But if a negative market impact for U.S. cattle producers is indeed the case, what would the length of a down cycle be? If you ask some cattle producers, even economists like U.S.D.A. Chief Economist Keith Collins, they will tell you the price decline will be slight before stabilizing, maybe even moving back up within a relatively brief period of time. In Collins' opinion, his analysis stems from the belief that there may not be as much beef coming from Canada as feared, due to the strict regulations the U.S. has issued in the final rule in allowing Canadian live cattle and beef products into our country. COLLINS: We actually believe that there will be a slight decline in imports of beef from Canada. And that's a result of the fact that there's a substantial incentive for Canadian meat packers to ship and slaughter more cows, that is animals thirty months and older, which are not eligible live for export to the United States. As Canada begins to slaughter more cows, cows yield less beef than steers and heifers so they'll have smaller exportable supplies and therefore, we think they're be a slight decline to beef exports to the United States. But then again, on the packer side, Collins estimates that in the year following trade resumption, the U.S. will import an estimated two million head of cattle from Canada. That may be a flood to make up for almost two years of inactivity. Collins says for the five years prior to 2003, average U.S. live cattle imports from Canada were 1.25 million head a year.