What Is The Cost Of One Case Of BSE?
By Troy Marshall in Beef Cow-Calf Weekly Electronic Newsletter 11-21-03
According to an economic analysis commissioned by the Canadian government, the Canadian beef industry has lost an estimated $2.5 billion since the discovery of a single case of bovine spongiform encephalopathy (BSE). The report says the discovery of BSE "represents the greatest threat and shock the Canadian agricultural industry has ever experienced."
The report also states that the impacts are far from over. The Canadian cowherd will have to be reduced, ranchers will continue to be forced out of the business, and rural communities must readjust to the new economic environment that has been created.
Admittedly, the U.S. cattle industry isn't nearly as reliant on exports as Canada's industry, but with an industry nearly 10 times as large as Canada's it is probably safe to assume that the damage from a single case of BSE in the U.S. would amount to tens of billions of dollars.
It could also be argued that the U.S. industry is far less prepared for such an instance, and that the costs could actually move much higher. Regardless, it is important to realize the level of the threat and the degree to which it has changed the debate over national livestock identification programs and developing an effective traceback system. With the realization that the industry's choice now is less about whether or not to support these systems, but rather whether such systems will be created and run by the industry or come as the result of government mandates.
Meanwhile, sales of Canadian beef to the U.S. and Mexico are booming since their borders reopened in September. Food Chemical News says more export certificates were issued for Canadian beef shipments to the U.S. the last three weeks of October than for the same period in 2002. As of early November, more than 55,000 tons of boxed beef has gone from Canada into the U.S. and Mexico.
With the U.S. beef supply tight, trade is expected to remain brisk, reports the National Meat Association.
-- Troy Marshall
Comment by Harlan Hughes
Troy may have made the same mistake that I did (see my postings below on beef trade). While "in the meet trade" maybe equal to last year level, last year had a very significant "live animal" trade also. In the Fall of 2002 a substantial number of Canadian feeder calves were exported to the U.S. -- one of higher Fall exports on record. No way are current Canadian beef exports equal to 2002's level.
posted by Dr. Harlan Hughes 2:59 PM
NAFTA & Canadian Impact On U.S. Beef Industry
by John Marsh, Montana State University
He acknowledges that since 1994 the U.S. beef trade deficit with Canada has increased. Average U.S. net beef imports from Canada increased by 128% during the period. This resulted in reducing fed cattle prices by $1.35/cwt. and feeder prices by 77?/cwt.
posted by Dr. Harlan Hughes 2:41 PM
A Better Analysis To The Canadian Beef Export Picture
Over the week end I posted a message containing a recap of the Canadian beef being exported to the U.S.
I have elected to share with you Jim Robb's (Western Livestock Market Information Center, Denver, Co) explanation to my concerns. I think Jim's comments puts the export picture in better perspective than what I did in my previous posting.
"Many Canadian by-product items and some meat items cannot be exported, that is some items remain isolated from world market not just U.S., (reducing Canadian animal value some compared to surge in U.S. by-product value, etc.) and the U.S. only allows boneless meat from animals from under 30 months of age (this adds costs in removing bone and in segregation and sorting) ..... Thus at least part of the wider margin in Canada is value and cost related."
"Also, note that packer margin is the U.S. is currently well in the red. But, due to cattle supply in Canada, their packers are in the black (abrupt reversals in each country compared to just a few weeks ago). Obviously, if cattle could flow to the U.S. the situation would normalize quickly and both countries might have similar packer margins."
Jim also pointed out that before May 20th, Canadian exports consisted of "meat exports" and "live animal exports." The newsrelease that I posted earlier only pertained to the "meat exports." So having "meat exports" above a last year's same week does not mean above both last year's "live animal export" plus "meat export". To para-phrase a country music song "What Was I thinking?"
Thanks Jim. This makes more sense out of the published Canadian export numbers.
posted by Dr. Harlan Hughes 6:28 PM
Cow Slaughter Remains High
?First-half cow slaughter is over 8 percent above year
earlier-levels and the largest cow slaughter since
1997. Dairy cow slaughter was up 13 percent, the
largest since 1997, the result of abnormal culling and
low milk prices. Beef cow slaughter was up 4
percent, the largest since 1998 as forage uncertainties
in some areas and continued drought in much of the
West stems expansion considerations.
Replacement heifers being retained on January 1, 2003, were about
unchanged from the levels of the past couple of years.
Consequently, it appears almost certain that the beef
cow herd will continue to decline. Inventories may
increase in a few states, where inventories had been
pulled down due to drought, and forage conditions are
much improved over the past couple of years.
Fairly large numbers of replacement heifers will have to
calve and enter the cowherd to begin to stabilize the
cowherd, much less begin to expand the base.
posted by Dr. Harlan Hughes 6:22 PM