Border closure bad for US packers

[Cattle Rack Rancher]

AMI's Boyle boosts Canadian imports in editorial

by Pete Hisey on 9/22/04 for Meatingplace.com



The U.S. ban on cattle imports from Canada is hurting both countries — that's what the American Meat Institute's Chairman and Chief Executive Officer J. Patrick Boyle wrote in an editorial published in the September issue of Alberta Beef magazine.

"The U.S. border should never have been closed for an extended period of time in the first place," Boyle wrote, "because … Canadian beef is as safe from BSE as is American beef, and failing to resume trade immediately is causing those who make a living in the beef industry on both sides of the border to be permanently, and perhaps irrevocably, damaged."

The import ban has created a surplus of cattle in Canada, leading to crashing prices, while the lack of Canadian cattle has left American processors and packers with their facilities running at less than capacity. Boyle recommends that trade harmonization agreements be developed that codify universal precautions against BSE so that trade will never be disrupted again.


Take care.

 

[Texan]

CR, I had seen this earlier when Annie posted it. I suppose you brought it back up for comments, so here's mine:


"The U.S. border should never have been closed for an extended period of time in the first place......"

I can agree with Boyle on this. The thing seems to have gotten out of hand and the longer it goes on, the worse its going to get when trade resumes.


"...Canadian beef is as safe from BSE as is American beef...."

And I don't have any trouble agreeing with this one, either. This is no longer a food safety issue and everyone should admit that. By failing to admit it, in my opinion we lose credibility on future issues that involve real food safety concerns.


"....failing to resume trade immediately is causing those who make a living in the beef industry on both sides of the border to be permanently, and perhaps irrevocably, damaged."

This is where I see a slight problem with his position! On our side of the border, a cattleman would have to look way off into the future to see any permanent, irrevocable damage. I'm willing to bet that 95%+ of producers here can't see any damage at all from continued closure. That number is only anecdotal and there's no way to prove it. My point is that its gonna be a hard sell over here......

 

[la4angus]

Texan
It seems that you are looking inside of my little pea-brain. Our thoughts are the same.
Most producers can't see the damage that will be done. Or is being done. They are now resting on the laurels.
They will want to blame our Canadian friends for the price drop when the border opens. The price has already been dropping for several months on choice fats. The feeders expect to cut a fat hog in the ass, when buying these high priced feeders.
Just remember that market highs are made when the market can never have another down day. So far the cattle market has made a high several months ago and the charts suggest more lower money to come. The feeder producer hasn't noticed it, because feeder prices have remained high and higher through the summer setting new record highs.

Just remember the silver and golld markets in 1980 when Bunker was going to corner the silver mkt. One day silver and gold could never have a down down day again. I sure glad that I sold all of mine on that day. That nite everyone told me how dumb I was. A friend of mine sold his the next day.
To my knowledge the check that he received has never cleared the bank.

 

[Cattle Rack Rancher]

I guess the kind of damage I think you will see is the permanently lost slaughter capacity in the northern states. If we as Canadians, build all this slaughter capacity, the plants where our cattle used to go in the northern states will go under because we will have all these sparkling new and efficient slaughter plants. I actually saw an article a couple of days ago on one of these pages about a plant closure in Iowa? Idaho? Ohio? I always get those ones mixed up. I'll see if I can find it. I think this could mean some opportunities for Canadians to make some money slaughtering and marketing American beef.

 

[Texan]

I guess the kind of damage I think you will see is the permanently lost slaughter capacity in the northern states.

I can see worse problems than that in our future, CR. I can see the possibility of some serious equity loss in this business during the next phase of the cycle. And not just in the northern states.

I think this could mean some opportunities for Canadians to make some money slaughtering and marketing American beef.

Just keep in mind that you guys would still have your future tied to something that could be disrupted by border and trade issues. More things that you can't control.....

 

[Cattle Rack Rancher]

Just keep in mind that you guys would still have your future tied to something that could be disrupted by border and trade issues. More things that you can't control.....

The new trade rule is supposed to prevent border closures from ever happening again, at least from BSE. FMD or any other ugly communicable disease may not be covered. I have an idea, why don't you guys annex western Canada. Then there won't be any border issues. In return, we'll throw in all of Quebec and the southern part of Ontario. Deal?

 

[Texan]

The new trade rule is supposed to prevent border closures from ever happening again, at least from BSE.

Bet that's reassuring, huh?

I have an idea, why don't you guys annex western Canada. Then there won't be any border issues. In return, we'll throw in all of Quebec and the southern part of Ontario. Deal?

NO DEAL! Western Canada would be fine with me. We'd just prefer to give our Northeast for it. And figure out a way to get California and Oregon over there, too!

 

[MULDOON]

I don't know if this should be a new topic , or if it all fits together , But about a week ago , I heard on the news , where a Alaskan Politician ( Women , can't remeber her name) Was talking about requesting that Canadian borders be open, She was saying that to get American cattle to Alaska , They would have to be brought on a barge , and it would cost 800$ per animal just to send them, Isn't 800 dollars per animal Transportation kind of steep??

 

[la4angus]

NO DEAL! Western Canada would be fine with me. We'd just prefer to give our Northeast for it. And figure out a way to get California and Oregon over there, too!

About 80% of the Californians could just go back home to where they came from. The northeast.
The rest are pretty good farmers and ranchers, several who I can call friends.

 

[Texan]

.......several who I can call friends.

You've got a friend in Oregon too, don't you? ;-)

 

[la4angus]

.......several who I can call friends.

You've got a friend in Oregon too, don't you? ;-)

Noooooo

 

[Cattle Rack Rancher]

We'd just prefer to give our Northeast for it. And figure out a way to get California and Oregon over there, too!

Okay, sounds good. Let me call Paul Martin, you guys can call G.W. and they can negotiate the next time they sit down to talk about BSE, softwood lumber etc. Maybe they could make a deal. Just think how many problems that would solve.

 

[Texan]

I don't know if this should be a new topic , or if it all fits together , But about a week ago , I heard on the news , where a Alaskan Politician ( Women , can't remeber her name) Was talking about requesting that Canadian borders be open, She was saying that to get American cattle to Alaska , They would have to be brought on a barge , and it would cost 800$ per animal just to send them, Isn't 800 dollars per animal Transportation kind of steep??

Muldoon, I meant to tackle this question yesterday, but I forgot. So you won't think we're ignoring you, I'll try it now with a little input from some of our Canadian friends.

It seems mighty high to me, but I don't know anything about shipping cattle by barge to Alaska. I really have trouble believing the real cost would be that high because I think a black market would rapidly develop if it were. At 40 cows to a load, that would be $32,000 freight to get across Canada. I just think some of the Canadians could get it done a helluva lot cheaper. Rapid development of the following smuggling idea would push the price down pretty quick.

I'm thinking that CR and Frenchie would work out some kind of deal to cross 'em at both borders in the dark of the night. One of them could work the US/Canada border and the other one could get them from Canada into Alaska. Annie would trail them all the way for a lot less than that, I bet. Of course, Bez would send his womenfolk to help Annie and that's all he would do for his share. Amazed would just do that. Be amazed at how easy the money is rolling in. Collections could be his job.

I don't know what the final bid would be. But I bet it would be a lot less than $800/hd! ;-)

 

[frenchie]

CRR which border do you want............ :lol: :lol: :lol:

 

[Cattle Rack Rancher]

I'll take the south border. CattleAnnie can take the Alaskan border. frenchie can be in charge of filling the trailers up with Canadian cattle for the return trip. Hold it, why don't we just smuggle Canadian cattle north and south. It would be way less expensive and it would be more profit for the same amount of work. We'll start at my place and work our way up to frenchie's. CattleAnnie can ship hers north to Alaska and then we'll worry about the rest of the Canadian producers.

 

[CattleAnnie]

Hah! I don't know if I could afford to ship to Alaska, although my home town is at the beginning of the Alaska Hiway. It already costs me about three cents to a nickle per pound to get my calves to auction in the fall, any more than that might end up breaking me this year.

Take care.

 

[ollie]

I guess the kind of damage I think you will see is the permanently lost slaughter capacity in the northern states.

I can see worse problems than that in our future, CR. I can see the possibility of some serious equity loss in this business during the next phase of the cycle. And not just in the northern states.

What are you talking about Texan? I would assume that there is always some equity loss in any reversal . I would also assume that there is equity gain in a market like today.

 

[Texan]

What are you talking about Texan? I would assume that there is always some equity loss in any reversal . I would also assume that there is equity gain in a market like today.

Ollie, I'm not really talking about the feeder's 3 digit profits recently or their 3 digit losses that are surely forthcoming. I'll try to give you the long story, short version of what I see as a possibility.

Canada and other countries around the world will quickly tire of American protectionism. Canada, for one, could have new slaughter capacity on line during the next big numbers phase of our cycle. Nothing they'd like better than to use it to kill for our former export customers. South American countries that can produce fats so much cheaper than we can. Hell, Paul Engler is already feeding cattle down there. Packing plants to follow, just like they did in the plains.

Envision all of our export markets gone for good, with some of these other countries still making inroads into our own domestic consumption. Big numbers here after the buildup from heifer retention. Americans have to eat it all because we have no export markets. Feeders taking slaughter weights higher and higher just trying to breakeven 'cause they paid too much going in. Just more supply we have to eat.

Meanwhile, while we've been blaming the Canadians, blaming the Mexicans, blaming the packer and blaming the checkoff, our real competition has been steadily plodding along, taking more and more market share, because they can provide animal protein cheaper and because they have remained focused. My vision involves the chicken and the pig kicking our ass into the poorhouse! And I don't wanna go!

 

[ollie]

Not only is that possible that is going to happen. I just don't see it related to the Canadian border. I do think there are other things to consider I'll pm you.

 

[Texan]

I just don't see it related to the Canadian border.

Ollie, the relationship I see with Canada is simple, although possibly incorrect. Our protectionist trade policies have now given the Canadians the incentive to integrate their cattle industry from within their own borders with new slaughter and marketing concepts. To increase their own slaughter capacity and to export high value cuts to Pacific Rim countries. Those that were formerly our export bread and butter from a dollar value standpoint. Once they do that, they will have the rest of the carcass to do something with. That will make them court Mexico heavily for the lower valued market.

Its all about the incentive we have given them. What I'm trying to say is, that if this "new" Canadian cattle industry that is likely within a few years is as aggressive and cutthroat with us as we have been with them, our export markets could easily be a thing of the past. Seems to me like its in our best interest to continue to work with them than to have to work against them. Course it may be too late for that now.