Trade relations between the U.S. and Mexico have been strained of late. Here's a Mexican cattlemen's take on the situation
”Neighboring” is a ranching tradition likely as old as the industry itself. Born of necessity, it is still one of the most enduring and endearing parts of the business.
Fernando Perez understands neighboring. The U.S. and Mexico, he says, have been neighboring for hundreds of years, for the most part to the mutual benefit of cattlemen on both sides of the border.
Perez is a rancher in the northern part of the Mexican state of Chihuahua as well as in the U.S. state of New Mexico. He's also president of the Union Ganadera Regional de Chihuahua, or the Chihuahua cattlemen's association. And he's afraid recent events that have strained the cross-border cattle relationship — mandatory COOL, cattle tuberculosis (TB) and brucellosis — will create unnecessary and unproductive tensions.
However, he's aware that fully restoring trade — as it used to happen in the pre-BSE days — will be a long and ongoing effort.
Following the first diagnosed BSE case in the U.S. in a dairy cow from the state of Washington, Mexico stopped all live-cattle imports from the U.S. Technically, that trade has been re-established. From a practical perspective, however, essentially no U.S. breeding cattle have crossed into Mexico since December 2003.
For Chihuahua cattlemen, that's a problem. “Our genetics come from the U.S.,” Perez says, referring to the long-standing tradition of cattlemen from Chihuahua coming north of the border to buy most of their bulls and occasionally, replacement heifers. In return, Chihuahua cattlemen relied on the U.S. as a significant market for their steers.
Mexican cattlemen have effectively been shut out of the U.S. bull markets the past five years. Now, with COOL, they're losing their market for feeder cattle. The U.S. market for Mexican (and Canadian) cattle isn't as attractive as it once was, and cattle coming north to the U.S. from Mexico have dwindled.
For 2008, Mexican cattlemen sent 702,837 feeder steers to the U.S., according to USDA's Livestock and Grain Market News office in Las Cruces, NM. For 2007, the figure was 1,074,261. Cattle crossing through Chihuahua ports totaled 335,529 in 2008, compared with 477,441 in 2007.
More telling is the price. In December 2008, the average price for a 300-lb. Mexican steer was $88, compared with $126 in 2007. In comparison, December 2008 prices for 300 to 400-lb. steers in Oklahoma City ranged from $113.50 to $127.50/cwt. December 2007 prices ranged from $137.50 to $154.
That drop in steers coming from Chihuahua to the U.S. is much more concerning to Chihuahuan cattlemen than it is to American cattlemen, Perez says. “The cattle that we ship to you guys are very few in your numbers. It is very important to us, in Chihuahua numbers.” Perez says that historically, about 80% of the feeder steers produced in Chihuahua are exported to the U.S. and 20% of the heifers, which must be spayed before export. Under COOL, that percentage will drop.
Mexico is the number-one export market for U.S. beef, a fact not lost on Mexican cattlemen. “There are many people here in Mexico who are saying ‘OK, they put COOL in place, let's put some barriers to the beef that is coming here.’ I don't agree with that because it's going to push us to a battle that we're not going to get any good out of.” He says he is often criticized for that opinion, saying that many Mexican states aren't convinced that increasing trade with the U.S. is a good idea.
That's because most Mexican states don't rely as heavily on the U.S. for cross-border cattle trade as does Chihuahua. That relationship and reliance on the U.S. as a trading partner puts Perez firmly in the camp of “let's get along.” When it comes time to sing around the campfire, though, he often is singing solo.
“If we are important to you as a buyer (of U.S. beef), life is a two-way street, as you say in the U.S. So why are they attacking Mexican cattle or attacking Canadian cattle, if we can join forces and I buy your meat, you buy my steers? We can make this happen.”
Mixing politics and business
COOL isn't the only issue bedeviling ranchers in Chihuahua. USDA has put a lot of pressure on Mexico, and Chihuahua in particular, regarding TB and brucellosis. In Perez' opinion, those regulatory actions have complicated efforts by Chihuahuan cattlemen to convince the Mexican government to open the border to U.S. breeding cattle.
And, in his opinion, how the TB issue is handled will bear on how Mexico goes forward with opening the border to U.S. breeding bulls and heifers. “USDA is trying to (institute) a plan that is very hard for Mexico. In many ways, it is impossible to reach,” he says. “They're saying in five years we need to go from three cases to none. I think that is impossible for Chihuahua and all the Mexican states.”
Perez says the perception in Mexico is the U.S. wants Mexico to accomplish in five years what the U.S. hasn't done in 100 years, “with a much bigger wallet and a lot more capacity. (U.S. officials) need to be flexible with that. And I think as far as they are flexible with that, Mexico is going to be flexible with this issue (opening the border to U.S. breeding cattle). We're fighting the disease; you're fighting the disease. Let's not complain. Let's fight it together.”
If being a cattleman makes you anything, it makes you a realist. And Perez is realistic in his approach to being a change-maker in solving the cross-border trade issues with the U.S. But he thinks ultimately it can be done.
“Somos vecinos,” he says — we're neighbors. “I think we need to work on (the concept of) North American beef. If we want to keep commerce and to be as successful as we have been, both in the U.S. and Mexico, we need to be partners.”