A positive outlook for Canadian Producers

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IF THINGS go as planned, or at least as announced, history may judge the May 2003 border closing by the United States as one of the biggest favours the U.S. could have done the Canadian beef industry.
It is not a view that will win much sympathy from beef producers in the BSE trenches who have watched generations of equity disappear during the past 15 months while income collapsed. The pain and hardship that has been visited upon thousands of farm families cannot be minimized.
So for those cattle producers that have suffered directly, it is a favour they could have done without.
But for those who make it through the next several years, the result could be that they are part of an industry that is more rationally organized, more independent and more viable.
That almost certainly would not have happened if the Americans had not administered their brutal dose of protectionist politics dressed up as scientific caution.
For months, leaders in the American packing industry and many cattle producer officials have been warning that the protectionism symbolized by the closed border was short-term thinking that could come back to hurt the U.S.
If the Canadian plan works, their words will be prophetic.
While some U.S. cattle producers have benefited from lack of competition, the long-term result will be bad for the U.S. - a reduction in the flow of live cattle to northern-tier packing houses that had come to depend on Canadian stock, a loss in packing industry jobs and increased competition in the U.S. market and in third country markets from Canadian meat products.
Of course, this is the optimistic outlook for Canada. The Sept. 10 government announcement has its skeptics.
Will the enticements really succeed in expanding Canada's domestic packing industry within two years to the point where supply and capacity are near balance?
Will the set aside and the cash advance programs work well enough to keep producers in business until that supply-demand equation hits a balance? Some provinces say they will not or cannot pay their share of the costs and the up-front money is supposed to be delivered through what many farmers believe to be a flawed Canadian Agricultural Income Stabilization program.
But let's be charitable and presume the answer to the above two questions is 'yes'. Then, will sufficient cattle continue to flow to the new domestic capacity once (if) the U.S. border opens or will the lure of American markets return some producers to a pre-May 20, 2003 mentality?
These are all questions that could derail the good intentions announced by federal agriculture minister Andy Mitchell. But at least government and industry have realized at long last that building a sector dependent on the political goodwill of another jurisdiction makes it vulnerable to the protectionist politics of that country. It is a house built on shifting sands.
If the border had remained open or had opened quickly after May 20, it is doubtful cattle sector leaders would have challenged their dependency on the U.S., believing as they seemed to that at least in the cattle industry, North America is one big happy country without borders.
Canada owes the U.S. government and its protectionist constituents a 'thank you' for disabusing us of that fiction.

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