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Archive for Saturday, January 8, 2005

Canadian imports should cut beef prices

U.S. producers brace for less cattle income

January 8, 2005

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Consumers likely will pay less to put steak on the dinner plate once cattle imports from Canada resume later this year, industry experts say.

But it's just as likely that the nation's cattle producers -- who have been enjoying near-record sale prices -- will get less for their livestock if, as expected, a reopened border leads to a flood of Canadian cattle into the U.S. meatpacking market.

"We would probably have had an impact that was much less had this been reopened quickly," said Darrell R. Mark, an agricultural economist at the University of Nebraska.

"We wouldn't have cattle backlogged in Canada."

The cattle industry is preparing for the potential economic effects should Canadian imports resume in March, as scheduled. Essentially, a bigger cattle supply means lower beef prices for consumers and lower sale prices for cattle producers.

Mark predicts beef production will increase this year by 2.9 percent -- leading to a 5 percent decrease in cattle prices. Consumers could also see prices at the meat counter drop by about 5 percent, Mark said.

The market tumult comes after the United States closed its borders to Canadian beef imports following the discovery of mad cow disease in that nation. Last month, the U.S. Department of Agriculture lifted a ban on importing live Canadian cattle younger than 30 months and loosened restrictions on importing boxed beef, starting in March.

In the days since, the nation's cattle industry has tried to determine the potential economic impact of the decision, while new efforts mount in Congress to keep the border closed.

The United States imported 1.7 million live cattle from Canada in 2002, the last full year of imports. Canadian cattle comprised 5 percent of the U.S. slaughter that year. In the first year after the import ban is lifted, live cattle imports from Canada could reach an estimated 2 million head, according to Agriculture Department estimates.

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