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Canada Eligible to Export Live Cattle to U.S.

The USDA announced Wednesday that the U.S. has established Canada as a minimal risk region for bovine spongiform encephalopathy (BSE). The rule will allow imports of live cattle under 30 months of age and certain other commodities from regions with effective bovine spongiform encephalopathy (BSE) prevention and detection measures.

The rule states cattle can be exported to the United States beginning March 7, 2005. The rule calls for a Congressional review period but will still come into effect on the March 7th date unless Congress takes action before that date to prevent the flow of cattle. The rules establishing the minimal risk standard will be published in the Jan. 4, 2005, Federal Register.

Live cattle imported from Canada under this rule, which is over 500 pages, will be subject to restrictions designed to ensure that they are slaughtered by the time they reach 30 months of age. Dr. John Clifford, deputy administrator for APHIS, says these include permanent marking of the animals as to their origin with a tattoo that is a C, upside down D and N as well as an ear tag; requiring them to move in sealed containers to a feedlot or to slaughter; and not allowing them to move to more than one feedlot while in the United States. Clifford explains that breeding herd animals will not be allowed.

A statement from the National Cattlemen's Beef says Canada has expanded its restricted feeder program to allow for year-round movement of feeder cattle to Canada from 39 U.S. states with no testing requirements for Bluetongue or Anaplasmosis, a dispute settled last year.

USDA Chief Economist Keith Collins forecasts a total of 2 million cattle entering the United States in the 12 months following the opening of the border. According to USDA's Economic Analysis, the largest effects for cattle are expected to occur in 2005, when the backlog would be imported and the Canadian displacement of fed cattle slaughter by cow slaughter would be largest. The impact for fed cattle would be greater than for feeder cattle because of the larger number of fed cattle expected to be imported.

For fed cattle, the annual price declines may range from 3.2% in 2005, to 1.3% in 2009. For feeder cattle, the price declines may range from 1.3% in 2005, to 0.6% in 2009. Estimated net benefits in 2005 for fed cattle are estimated to range from $25.0 million to $26.9 million, and for feeder cattle, from $10.4 million to $11.0 million. In each successive year the net benefits are expected to become smaller, such that by 2009 they may range for fed cattle from $3.8 million to $4.3 million, and for feeder cattle, from $4.3 million to $4.8 million.

Collins explains that with the U.S. cattle cycle down in 2005 with producers holding back heifers there will be excessive slaughter capacity for Canada's cattle. While U.S. prices will drop slightly, Canada prices will rise--bringing the two market prices to closer levels.