02/18/05 The packers` argument, Part one

02/18/05 The packers` argument, Part one

There is no question that the economies of Boise Idaho and the Tri-Cities area of Washington expressed relief when Tyson Foods recently agreed to resume normal operations of their beef processing facilities. But there still remains the underlying concern of why those plants reduced operations last month in the first place. The lack of available cattle and beef for processing at a profitable level. Now the obvious answer to those in the packing industry is resume import of Canadian live cattle and some beef products into the U.S. That is scheduled to happen in March barring a legal challenge or change of proposed U.S.D.A. policy. But the fear is that reopening the border to Canadian beef will mean a dramatic drop in U.S. cattle and beef prices, thus affecting both the ranchers and the processors. U.S.D.A. Chief Economist Keith Collins recently told a Senate committee looking into the resumption of beef trade with Canada that by his estimates there would be a decline of about three dollars per hundredweight of fed cattle. And that is because of another U.S.D.A. estimate that was reduced & the number of Canadian cattle that might come into the U.S. In other words, the reduced number of Canadian cattle in our country means the reduced price impacts. But Collins says no matter the numbers, the U.S. processing industry needs additional cattle. And if the cattle are in Canada, some packers may concentrate moving plants to our northern neighbor if it means keeping in business. COLLINS: We've been reducing cattle numbers in the United States for nine years. We are in a cyclical low in cattle slaughter in the United States. Without opening up the border to Canada, slaughter numbers are going down, capacity utilization is going down, packer costs are going up. So we have a situation with no trade with Canada that the packing industry is under some stress. Now some groups opposed to Canadian cattle coming into the U.S. again would say that processors should just prepare beef from American cattle, especially with the concerns of Canadian cattle infected with b.s.e.. You might remember one such group, R-C.A.L.F. U.S.A., is behind an injunction request to stop U.S.D.A. from implementing its final rule. But then take the flip side of the issue. The American Meat Institute, which represents the packer industry, has also filed a lawsuit. It wants U.S.D.A. to push forward with its plan to reopen the border to Canadian live cattle and currently banned beef products. And that includes cattle and beef from cattle thirty months and older, which was removed from the final rule. More on that, and how it might affect packers, is the subject of our next program.
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