Cattle Today

Cattle Today

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by: Wes Ishmael

Bad luck and worse timing will beat sound science and meticulous planning every time.

At least that seems to be the case with USDA submitting its proposed rule to pave the way for resumed Canadian cattle trade with the U.S. on the very day that the Canadian government announced its suspected third case of native-born bovine spongiform encephalopathy (BSE) inside of two years.

By now, you're likely aware of the massive industry debate that has ensued. The National Cattlemen's Beef Association (NCBA), for example, had ballyhooed USDA's new rule and the progress made toward trade normalization when USDA announced the rule January 29. Just five days later when the suspect Canadian cow was confirmed positive for BSE, the organization reckoned, along with USDA, how the new case should not impact the USDA rule. Only a few days later, undoubtedly heeding the outcry of members, NCBA was urging them to write and call congressional leaders to demand, among other things: an FDA review of Canadian compliance with that country's ban on feeding ruminant protein, and resumed export trade with Japan and other Pacific Rim countries prior to resuming Canadian cattle imports.

While this occurs, at member direction, NCBA says it will evaluate USDA's economic analysis of resuming Canadian trade, which pegged the short-term price impact to fed cattle at –3.2 percent this year; -1.3 percent for feeder cattle. However, this economic analysis estimates the net economic impact to be positive overall to the tune of $66.3-$74.6 million (depending on the discount rate), as consumers here will presumably have to spend less to buy beef.

NCBA also plans to send a trade team north of the border. Duties of this contingent will include: inspecting border crossings to determine how Canadian cattle will be identified and age-verified; inspecting feed manufacturers and demanding that the Canadian government provide a detailed assessment of feed ban compliance; verifying Canadian compliance with BSE firewalls.

If the issue is not yet resolved as you read this—at least relative to whether or not USDA's proposed rule will take effect March 7 as was proposed—odds say implementation of the rule will be delayed, at the very least, if not shredded to allow starting from square one all over again.

Hopefully that's the way it goes, anyway. Otherwise, there's a string of casualties fixing to pile up behind the USDA meat wagon.

What Price, Credibility?

For starters, even if the science is in fact correct, and resuming trade with Canada poses no more BSE threat to the U.S. than retaining the ban, given the firewalls presumably in place on both sides of the border, the unsettling reports of Canadian feed companies' porous compliance with the ban of ruminant proteins in cattle feed presents a perception that many U.S. producers will be unwilling to ignore. Likewise, producers are reasonably concerned about a report issued by USDA January 7 indicating at least one birth cohort of the latest BSE case was imported to the United States for slaughter in 2002.

Incidentally, while it may be tempting to point fingers, remember that following the discovery of BSE in this country, the industry was reminded of a damning report issued by the General Accounting Office in 2003 regarding FDA's lax compliance with auditing and enforcing the ban on ruminant feeds in this country.

In short, moving forward without further review is going to make it tougher to convince consumers here at home that they can approach the retail beef case without fear. On both counts, USDA credibility would receive another black eye, just as new leadership is picking up the reins.

Speaking of credibility, if NCBA is unsuccessful in rallying its members to pressure lawmakers, and if the organization itself can't must enough political clout to delay implementation until further review occurs, the industry is going to have to question how much power the organization actually wields.

Perhaps worst of all, if the implementation moves forward, if in fact at least the vocal majority of producers have spoken out against resuming trade without further review, then one more nail gets pounded into the coffin of producer trust. It's not that most producers believe that the government is here to help them, or that any producer organization can take care of them, but it's been awhile since there was evidence to suggest that either element, by design or folly, could do much to hurt them.

Prevention is Still the Most Effective Medicine

Obviously, there is nothing simple in any of this.

For instance, economic principles say that despite the anticipated depression of cattle and beef prices in the short-run, once the border does open, this nation's beef environment will be more healthy with Canadian trade than without it (assuming of course it poses no health risk to cattle or consumers). And, the longer the border remains closed, the more severe the short-term impact of trade resumption will likely be. That's true whether or not the U.S. resumes trade with Japan and other leading export customers before or after Canadian trade resumes.

If you doubt that consider the fact that three of the top four packers in this country have shut down shifts and entire plants for stretches to stem losses at least partly incurred because they don't have the opportunity to play on Canadian fed cattle, even though boxed beef from animals 30 months and younger is coming into the country at a record pace. The packers who have plants on both sides of the border have had a tremendous competitive advantage. Anytime packers here are out of the market, producers are at more of a competitive disadvantage.

Keep in mind that this debate is occurring a full year after former Agriculture Veneman declared that development and implementation of a national animal identification system was a priority in light of the BSE discovery last December. This effort does have an official name at least—the National Animal Identification System—and most states were at least in the process of launching premises identification systems by the end of 2004. But, getting cattle and livestock tagged individually or identified by groups so that any head of any livestock can be traced back to all previous locations of residence within 48 hours (the NAIS goal) is still years away at the current pace.

Few argue that the U.S. cattle industry needs to resume trade with Japan, Canada and the rest of the world. Most believe, however, that the decisions involved in trade resumption should be based on common sense, as well as science.

When you get into a storm like this one, there's no question about whether or not damage will occur, just how much. Perhaps the best thing producers can tell their government and their organizations is simply this: You can't keep betting on the come and win. Let's cover the bets we already have on the table by reviewing what is or isn't actually happening north of the border and here at home, relative to BSE firewalls. Let's also make a priority of establishing a containment program—NAIS—rather than allowing that effort to get mired in the minutia of tag type and color.

Worse decisions could be made than simply concentrating on growing demand here at home while the wreckage in the rear-view gets sorted out.


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