After spending the last four years marrying the U.S. cattle market to Canada’s cattle market – the new family’s name is “the integrated North American beef market” – the USDA is now saddled with its handiwork.
Canada’s mad cows are America’s problem.
Indeed, in an effort to solve the $4 billion mad cow disaster Up There, we’re ready to reopen our markets Down Here to Canadian cattle and beef exports.
Not easy. But Canada isn’t making it easy.
Mad cows – another on Jan. 11 – keep popping up Up There faster than government officials Down Here can explain ’em.
Yet like any good, integrated North American brother, we keep trying.
Economics. We’re trying with economics: bringing their cattle and beef here will save our carnivores money. USDA’s analysis of the proposed import rule, as noted last week, shows “consumer gains” of 6- to 26-cents per person.
But even that ridiculously paltry benefit is just a guess.
There’s no promise that the estimated $2.91 billion less U.S. cattlemen will receive after the border is reopened can or will be passed on to consumers.
Safe bet. A safe bet is that it won’t. After all, U.S. meatpackers are not in the habit of passing windfalls to American meat buyers.
And, notes USDA’s economic analysis of the proposed rule, packers will receive windfall profits when the cattle begin moving.
According to USDA, Canadian packers will stop killing slaughter cattle – most will walk across the newly opened bordered – and start killing the nation’s backlog of older cows for two reasons.
Reasons. First, imports of bone-in, Canadian beef from animals older than 30 months of age will be permitted under the new rule.
Since August 2003, only boneless beef from animals under 30 months of age has been allowed.
Second, this seemingly minor rule change means major money for packers because – again, according to USDA’s own analysis – packers can buy cows Up There for $17 per hundredweight and sell the cow beef Down Here for $123 per hundredweight.
That’s real money anywhere. But Down Here is where it’s headed because U.S. cow slaughter is running 15 percent below year ago levels.
That number will grow in 2005 and 2006 as U.S. ranchers retain cows and save heifers to rebuild herds.
In short, we’re short – and getting shorter – of hamburger and Canada has it.
Who has it? Well, Canada’s packers have it.
The packers Up There are the same as the packers Down Here.
According to numbers recently compiled by Canada’s National Farmers Union, Cargill and Tyson collectively kill 60.7 percent of all Canadian beef cattle.
Similarly, those two, with Swift and National Beef, kill nearly 84 percent of all U.S. cattle.
Domination. That domination of the “integrated” slaughter cattle market also means the Big Boys can’t lose on the cheaper Canadian feeder and fat cattle walking to the United States.
If they can’t get ’em to fatten in their feedlots, sooner or later they’ll get ’em to kill in their slaughter plants.
Heads they win; tails they win.
Which brings up one of the more curious aspects of the proposed rule. USDA’s import rule mandates Canadian cattle be branded and segregated upon arrival, then kept segregated all the way through the slaughter plant.
Ending. USDA estimates its cost of administrating this identity program at $10 per head, or less than 1 cent per pound – far less than its 2003 estimate that undermined the 2002 farm bill’s mandatory country-of-origin labeling law.
But this segregation, essentially a country-of-origin labeling program for Canadian cattle in the United States, ends at the slaughtering plant’s back door.
The meat will not be sold with a Canadian label despite the clear ability to do so.
This back-door COOL will assure Japan that no Canadian beef brought into the United States will find its way into our export channels even as we twist both of Japan’s arms into buying our – not Canada’s – beef.
That means what’s good for the Japanese market, certified and labeled American beef, isn’t good for American consumers.
Alas the woes inherent in the global marketplace and the “integrated North American beef market.”
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at email@example.com.)