Border Reopening Rules Will Gradually Increase Number of Canada Live Imports

The removal of provisions allowing the importation of beef from cattle over 30 months of age will likely result in larger-than-expected slaughter of cattle under 30 months old in Canada.

U.S. Agricultural officials say logistically the border reopening to Canadian cattle may take months to iron out. The complex rules to regulate how Canadian cattle are allowed to reenter the U.S. market may take as much as three to four months.

According to a Wall Street Journal article, Canadian exporters will have to adapt to new regulations. The new regulations include age verifying animals before being shipped to the U.S. Because regulations have to be implemented on both sides of the border, the article reports it will take some exporters longer than others to comply.

The potential lag of some exporters will essentially create a gradual opening for Canadian cattle. New estimates from the World Agriculture Outlook Board predict imports of cattle from Canada to total approximately 1.3 million head. U.S. commercial beef production in 2005 is expected to be 25.7 billion pounds. This compares with production of 26.1 billion pounds forecast in the February 9 World Agricultural Supply and Demand Estimates (WASDE) report.

In 2005, imports of cattle under 30 months of age are forecast to increase as the border opens. However, the removal of provisions allowing the importation of beef from cattle over 30 months of age will likely result in larger-than-expected slaughter of cattle under 30 months old in Canada, the outlook says.

"Based on increased slaughter of steers and heifers in Canada, U.S. packers will have to compete more aggressively for the pool of slaughter-ready cattle, somewhat dampening an expected decline in fed steer prices," the outlook says. This is a major concern of Secretary of Agriculture Mike Johanns and many senators as Canada's slaughter capacity increases creating a shift north in beef processing. The outlook does forecast U.S. Nebraska Choice Steer prices in 2005 to average $80-$85 per cwt.

U.S. beef imports are forecast to be 3.74 billion pounds in 2005. This is higher than the 3.66 billion pounds projected in the February 9 WASDE report. Imports from Canada are expected to increase as Canadian slaughter remains primarily focused on fed steers and heifers. In addition, prohibiting imports of beef from cattle over 30 months of age from Canada likely will stimulate U.S. imports of processing grade beef from other sources.

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