After two years of anxiety and uncertainty, cattle producers across the country are gearing up for a brighter fall in the firm belief that the mad-cow crisis has strengthened their industry at home.

The U.S. border recently opened to young Canadian cattle destined for slaughter, but a stronger Canadian dollar and new and expanded packing plants have prevented a mass dash south, says the Canadian Cattlemen's Association (CCA).

Domestic slaughter capacity has increased by 24 per cent, allowing cattle to be slaughtered and processed in Canada, says CCA executive vice- president Dennis Laycraft.

Prior to the discovery of mad cow, or bovine spongiform encephalopathy (BSE), Canada slaughtered 72,000 animals a week. By the end of this year, that figure is expected to jump to 97,000 animals a week. Before the border closed two years ago, about a million animals were shipped annually to the U.S.

File photo by Larry MacDougal, Business Edge
Protectionism has turned BSE into a trade issue, rather than a health issue.

"We expect less than half of that to move now because of our increase in slaughter capacity," Laycraft says.

"Keeping our industry here and having more slaughter plants, especially for older animals, is a good thing," agrees Don Grant, who raises Charolais and Salers cattle near Olds, Alta. "We have to have more control."

The U.S. border opened to Canadian cattle younger than 30 months on July 18, the first time live cattle have entered the U.S. since BSE was discovered in an Alberta cow in May 2003.

Since then, Canada has shipped approximately 25,000 cattle to the U.S. Of those, 23,524 were from Western Canada. Prior to BSE, 17,000 cattle were shipped each week.

"It's not really an open border," adds Grant. "If you want to send a message that beef is safe, there shouldn't be any restrictions. I've got older cows that are still producing, but should have been shipped two years ago."

The first cattle trucked south were from Ontario, but the fact there hasn't been a stampede across the border reflects a movement toward the industry's self-sufficiency, says Ian McKillop, who runs a cow/calf operation near Dutton, Ont.

"I don't expect you'll ever see the numbers reach what they were before BSE," says McKillop, president of the Ontario Cattlemen's Association. The province has about 21,000 cattle farmers.

Since the border opened, about 2,000 animals - worth about $2.6 million - have been trucked from Ontario to the U.S.

Before BSE, Ontario exported $354 million worth of live cattle to the States and beef was the province's second-largest agricultural commodity worth $1.2 billion, behind dairy products.

After the mad-cow scare, beef dropped to Ontario's fourth-largest agricultural commodity, after dairy, hogs and floriculture/nurseries.

In British Columbia, it's been a slow trickle across the border into Washington state, says David Borth, general manager of the B.C. Cattlemen's Association. Prior to BSE, the province shipped about 50,000 cattle to the U.S. The majority of B.C. cattle are now shipped to Alberta feedlots and slaughter plants, he adds.

B.C.'s beef industry accounts for only seven per cent of Canadian beef exports to the U.S., but it is the province's second-largest agricultural product (dairy products are the largest), providing 10,000 jobs on 5,000 ranches. It brings in about $300 million annually.

"I think there's a good future for the beef industry in Canada," Borth says. "We have an abundance of natural resources, plenty of grass and grain. People are worried about South America moving in (on the market), but they don't yet have high-quality, grain-fed cattle like we do.”

Most cattle in South America are grass-fed.

Across the country, packing plants are being expanded and new ones built as boxed beef exports are expected to increase.

In Ontario - where BSE cost the economy $600 million - all culls, or older animals, used to be shipped to the U.S. But in the last two years, a renovated slaughter plant has opened near Kitchener and $7 million in provincial funding has been made available for eight plants, including the Gencor Foods packer in Kitchener, McKillop notes.

Earlier this year, Blue Mountain Packers in Salmon Arm began processing up to 250 cattle a day. Other new Western Canadian packing plants include Ranchers Beef (being built just outside Calgary), Ranchers Own Meat Processors near Edmonton and the Alberta Value Chain Co-operative at Fort Assiniboine.

By 2007, the industry expects Canadian packing plants will be processing all cattle raised in Canada. "There's a strong desire to keep cattle in Canada and do the processing here, so I don't think there's going to be a huge rush south," McKillop says.

With more capacity, local packers are expected to bid higher, keeping more cattle at home. The stronger Canadian dollar also makes Canadian cattle less of a deal for U.S. buyers, Laycraft said.

While producers are pleased that the border is finally open to young cattle, a cautious optimism still prevails.

"There's still a dark cloud out there," says Grant, referring to the outstanding court challenge by the Montana-based cattle group known as R-CALF. The group, representing 18,000 U.S. cattle producers, is seeking a permanent border closure to Canadian cattle and beef.

It's such protectionism, says McKillop, that has turned the BSE crisis into a trade issue, rather than a health issue.

After the OIE (World Organization for Animal Health) declared Canada a minimal BSE risk country, the border should have immediately opened, but the process was delayed by the U.S. elections. "That allowed protectionist groups to get together to fight it and raise the funds for their challenge," adds McKillop.

Protectionism in the U.S. goes in cycles, says Borth. "There's more support right now because the Americans are feeling threatened."

There's no reason the border should not be open to breeding cattle and cattle of all ages, says Ted Haney, president of the Canada Beef Export Federation. Protectionism isn't new, he adds. "This was not unexpected. It was totally predictable."

Haney notes that breeders are buying fewer and less fancy bulls. "It's difficult to improve genetics without the profits from international trade of breeding stock. People are looking to shore up their costs."

The CCA's Laycraft says the ban on trade of breeding stock and older animals will be the next barrier to undergo review. But the U.S. Department of Agriculture isn't expected to consider broadening the opening until the legal challenges to the initial opening are over.

It's not just R-CALF that is fighting the border opening. Last month, the U.S. National Farmers Union (NFU) requested the USDA initiate import tariffs against Canadian cattle if subsidized cattle are exported to the U.S. The NFU claims Canadian cattle were subsidized through government BSE recovery programs.

"Alberta ranchers need to take charge of their industry," says Grant. And that may involve testing all cattle for BSE, he adds, noting that consumer confidence is a must if the beef industry is to move forward. "If it takes testing to do that, then it should be done."

Testing all cattle may also be necessary if Canada wants to move into overseas markets, says David Pope, who runs the Highwood Ranch at High River, Alta.

In Japan, 77 per cent of people are in favour of testing, Pope adds. Local governments in Japan continue to test all cattle, even though the country recently changed its policy to require only cattle 21 months and older to be tested. "South Korea looks to Japan. Asia is watching Japan. They'll do what Japan does," Pope says.

But Bill Rupp, president of Wichita, Kan.-based Excel Beef, a wholly owned subsidiary of meat processing giant Cargill Inc., said BSE testing of all animals would be extreme and unscientific. "Testing cannot find the BSE prion in animals under 30 months old," Rupp told delegates at a recent International Beef Congress held in Calgary. "It would add cost to production with no gain."

But not all producers buy into that argument, especially when BSE has been discovered in animals less than two years old.

"If testing is what the customer wants, that's what they should be doing. I don't think it would be that much more expensive, about $10 to $15 a head to test for BSE," says Pope.

Web Watch: www.cbef.com

(Wendy Dudley can be reached at wendy@businessedge.ca)