July 25, 2005
It was a big surprise when U.S. District Court Judge Richard Cebull vacated the July 27 hearing regarding R-CALF’s lawsuit requesting a permanent injunction on live cattle trade from Canada. He said this decision was because the Ninth Circuit Court of Appeals had not yet filed their opinion outlining the reasons behind the reversal of his prior decision to grant a temporary injunction that kept the border closed.
By the looks of things, it appears this entire episode may be over. It would seem that going any further on this R-CALF v. USDA case would just be an exercise in futility since this thing would more than likely go back to the appellate court if Cebull made the wrong decision—to close the border again. This may be a graceful way out for Cebull. My guess is this judge just got handcuffed.
The three-judge panel at the Ninth Circuit determined that USDA did follow proper protocol in developing their import rule, and that nothing in their rule was “arbitrary” and/or “capricious” as R-CALF claimed, even though it took the agency two times to get the rule right.
When it comes to herd health and human health, the debate seems a bit senseless for two reasons. One, we’ve been importing Canadian beef from cattle under 30 months of age for nearly two years, which neutralizes the human health issue. Then, the confirmation of the first domestic BSE case pretty much shoots the herd health issue out of the water—whether you like it or not, it did happen and, remember, BSE is not contagious.
Now the question many are asking is, “What’s R-CALF going to do now?” Knowing that this next hearing was going to be an uphill battle, R-CALF may want to save their legal funds for another more winnable battle. Nearly everything that R-CALF does goes back to mandatory country-of-origin labeling (mCOOL).
R-CALF, in their post-decision press release, said the decision by the Ninth Circuit makes mCOOL all that much more important so that consumers know where their beef comes from.
They remain confident that USDA’s final rule was not justified, and that USDA did not provide sufficient justification for overturning a longstanding policy that protected both the U.S. cattle herd and U.S. consumers from the introduction of BSE.
USDA’s final rule is based merely on a reinterpretation of existing science that has been around for years. USDA is motivated by political considerations of wanting to resume trade with Canada.
I’ve been told that the Ninth Circuit Court of Appeals’ hearing on the issue was strictly business and the judges were swift and deliberate in their questioning. It wouldn’t seem that this court concerned themselves with political consideration, unlike Cebull.
Meanwhile, packers are indeed shopping for cattle in Canada and it appears that trade is going to move at a fairly quick pace, even though the word is there aren’t many cattle to send. The second business day after the announcement, there were three loads of cattle that moved across the border—one load that crossed in New York, going to a Cargill plant, and two loads that crossed in Idaho, destined for Tyson’s Pasco, WA, plant.
USDA sources have told us that the infrastructure is in place and the importers have to notify the proper border crossing that they are coming, which is part of the Bio-Terrorism Act. The shipment must include the health papers and the cattle are to be permanently marked with a “CAN” brand and transported in sealed trucks.
Since Canadian beef has been crossing for some time, and the boxed beef cutout has already reflected that supply, it would appear that cattle markets may not experience that much pressure. Fed cattle were down $1, to $79, but the current fundamentals support that move. Feeder cattle have been more resilient that originally thought.
The difference between Canadian fed cattle prices and U.S. prices has narrowed over the past several weeks, to about an $11 differential. Last January, the difference was about $25. Normally, there is about a $5-7 basis between the two markets, roughly the price of a truck ride. Trucking appears to be one of the issues that could regulate movement as there are few trucks available to haul cattle to the U.S.
I have to suggest that the border is open for good to cattle under 30 months of age. The slaughter cow segment will go under a separate USDA rule at a later date.
You can call it politics, big business or whatever you want, but the fact is that Canadian beef has been in the U.S. for some time, and now the cattle producing that same beef are on their way, and fed cattle are $80 without any help from Canada. — PETE CROW