Analysis: U.S. awaits Asia cattle response

LOS ANGELES, Dec. 30 (UPI) -- The United States' decision this week to allow limited resumption of cattle imports from Canada could have a greater potential payoff if it convinces Asian nations will follow suit by lifting their current bans on American beef.

Agricultural analysts said Thursday the plan to allow at least some Canadian cattle and beef to once again be sold into the United States would help get the long-time relationship between U.S. slaughterhouses and Canadian ranchers back on track. Large volumes of Canadian beef are packaged in the United States where it is either consumed or shipped abroad.

At the same time, it is hoped that the move would convince Japan and South Korea that the North American beef supply was as well protected as possible against bovine spongiform encephalopathy (BSE), the dreaded mad cow disease, and re-open the markets that have been closed to U.S. beef exports for the past year.

"It could influence those countries' decisions regarding future resumption of beef imports from the United States, but we have little basis for assessing whether the influence will be positive or negative," the U.S. Department of Agriculture conceded in an analysis of the effects of the import resumptions that will take effect March 7.

Under the U.S. proposal unveiled Wednesday, Canadian ranchers will be allowed to sell live cattle younger than 30 months into the United States where processing plants have for decades depended on their northern neighbors to augment the domestic supply of cattle for a meat-hungry nation.

The price of cattle is naturally expected to drop in the United States in the months immediately after the cross-border shipment ban is repealed, although only by single-digit percentages at the wholesale level, which will translate, maybe, to slightly lower hamburger prices at the supermarket.

The benefits should be more pronounced in Canada, which saw the $4 billion worth of beef and cattle exports in 2002 stumble to less than $1.9 billion this year; virtually all of Canada's cattle exports wind up in the United States.

"Canada's cattle producers are delighted," said Stan Eby, president of the Canadian Cattlemen's Association said Wednesday. "This announcement will put confidence into the live cattle market in Canada. Getting slaughter cattle back moving to the United States will help relieve the bottleneck at the packing plants that has been the main reason for depressed cattle prices in Canada."

The U.S. beef processing industry was also pleased with the move that it touted publicly as proof positive that the mad cow issue had been aggressively tackled.

There were also calls from some quarters of the industry that restrictions on Canadian beef should be lifted altogether.

"Calling Canadian beef unsafe is like calling your twin sister ugly," said Mark Dopp, vice president and general counsel of the American Meat Institute, which coincidentally filed a lawsuit in Washington Thursday seeking to end the ban completely on the grounds there was no scientific evidence that cross-border mad cow disease posed a threat to the United States.

"The United States and Canada both have implemented state-of-the-art, meat inspection and animal disease prevention systems," Dopp told reporters Thursday. "As we look across the borders, we see near mirror images of one another."

Dopp voiced concerns that continuing the ban would result in Canadian packers increasing their capacity while U.S. slaughterhouses withered away and forced border-area ranchers to ship their cattle hundreds of miles for slaughter.

The economics of the U.S.-Canadian beef trade, however, are not solely a North American affair. Exports continue to be a pivotal issue and the ultimate priority for interests on both sides of the border will be to re-open the overseas markets that are currently closed to them.

Classic commodities economics holds that the more export opportunities that are available, the more likely domestic market prices will remain high, which would be good news for both U.S. meat packers and Canadian ranchers.

The industry's thrust this week has been that American and Canadian neighbors are in this together, and that by declaring the risk of mad cow from Canadian cattle to be low, the United States is signaling to the rest of the world that BSE is no longer a major threat.

"On the other hand," the agency said, "the rule may be viewed by other countries as increasing BSE risks in the United States and therefore may prolong market closures, even though there would be no scientific basis for it."

The situation wasn't helped on Thursday when the Canadian government reported that it had found a dairy cow possibly stricken with BSE in Alberta. The animal was too old to have been allowed into the U.S. processing chain, and the Agriculture Department said it would not delay the March re-opening of the border.

"Because of the mitigation measures that Canada has in place, we continue to believe the risk is minimal," stated Dr. Ron DeHaven, head of the Agriculture Department's Animal & Plant Health Inspection Service.

The next, and possibly biggest step for both the Americans and Canadians will be to convince leery governments in Asia -- where the beef will ultimately be consumed -- that the risk of mad cow disease from North America is indeed minimal.

(Please send comments to nationaldesk@upi.com)