Far from over

Cattle Market & Farm Reports, Editorials
Jan 3, 2005
by WLJ
The Canadian cattle import rule was announced last week by USDA and the intention is to resume full beef and cattle trade with Canada starting March 7. The announcement comes one year after the U.S. found its Canadian case of BSE and nearly 19 months after Canada announced its first case of the disease.
Last Wednesday’s announcement will, without doubt, cause an immediate reaction from R-CALF USA who is expected to file an injunction to the rule stating that a previous risk assessment of Canada’s BSE measures is not valid and that the Canadian feed ban has not been adequately implemented.
The futures markets took immediate action, as well, and live cattle fell nearly $2, and feeder cattle closed down nearly the $3 daily limit. The announcement was officially released after the markets closed, so it appears that USDA may have a leak.
USDA produced a 500-page report on the issue and left no stone unturned. It is expected USDA will have a fight on their hands very soon, and it looks as if they may have taken some extra time to tighten up the proposed rule so that R-CALF will have a more difficult time suing. There was special attention regarding R-CALF’s concerns as to the credibility of the Harvard Risk Assessment. Obviously USDA concluded that the study is valid and justifiable.
It’s not a complicated rule, and USDA spent the most effort justifying the rule and minimal risk criteria and providing an economic analysis. USDA claims Canada has met the requirements for a minimal risk country outlined by the World Animal Health organization (OIE), which include, bovine import restrictions from countries with BSE, surveillance programs to detect BSE, a ruminant feed ban, and appropriate epidemiologic investigations, risk assessments and other elements. A quick check of the OIE guidelines indicates that Canada has indeed met the requirements.
We expected that Canadian feeder cattle under 30 months of age would be permitted into the U.S. to go to specific feedlots. There will be no grass cattle allowed. Feeder cattle must be permanently marked with a Canadian brand and tagged with an official ear tag to identify the BSE minimal risk region of origin before entering the U.S. The tag must be applied before arrival at the port of entry and be traceable to the animal’s premises of origin.
The fed cattle portion is also simple. Fed cattle under 30 months of age will be allowed into the U.S. for slaughter and will arrive at recognized slaughter facilities in sealed containers, and slaughtered as a group. The cattle will have to be marked as to the country of origin, but that designation will not follow through to consumers—at least until the end of September of 2006, when mandatory country-of-origin labeling (COOL) is to be implemented.
The perplexing part of the proposed rule is that the U.S. will accept all Canadian beef, providing specified risk materials (SRMs) are removed, but the U.S. won’t slaughter any live cattle coming in to the U.S. that are older than 30 months old. In other words, Canada can ship us non-fed cow/beef that is over 30 months old, but the U.S. cannot slaughter non-fed cows over 30 months of age from Canada. Seems like a double standard at work here.
Accepting cow beef was a bit surprising since the feed bans have only been in place for seven years. Just recently a Canadian newspaper found that Canada’s feed ban may not have been very well enforced, and that is likely to be one of R-CALF’s talking points when they reach the courts in their efforts to point out that Canadian beef is unsafe.
It would seem logical to expect some market pressure. The futures have already made adjustments for the March and April months. USDA’s economic analysis point out that down side pressure may only be $2-3 dollars per cwt.
However, showing the world that we will take Canadian beef may help us get our export markets back, which should help fed cattle prices move as much as $15 higher. So, I suppose a net tradeoff of $12 is a good thing. Also ,the rule kept a lid on blue tongue and anaplazmosis as a trade barrier for U.S. feeder cattle going north. There is also no provision for breeding stock so there won’t be any genetic trade between the two countries. One thing is for certain—it will never be normal again.