At press time, the 4½-month legal skirmish over the importation of Canadian live cattle into the U.S. appeared to be resolved. If unimpeded, Canadian live cattle less than 30 months of age were expected to be moving into the U.S. “within days, not weeks,” said USDA Secretary Mike Johanns.
In fact, an undisclosed number of Canadian cattle crossed the border into Niagara Falls, NY, on July 18, USDA said. The cattle's origin and destination were not disclosed.
It was in early March, on the eve of USDA's intended border reopening date of March 7, that U.S. District Judge Richard F. Cebull in Billings, MT, granted R-CALF an injunction on the rule. But on July 14, a three-judge panel of the Ninth Circuit Court of Appeals in Seattle lifted Cebull's preliminary injunction. In ruling for a temporary stay, Cebull said reopening the U.S. border to Canadian live cattle would endanger the U.S. beef industry and present “a genuine risk of death for U.S. consumers.”
In announcing its decision July 14, the panel said it would issue the rationale for its ruling at a later date.
At press time, there was one potential obstacle to resumed live cattle trade yet to be hurdled, however — a scheduled July 27 hearing before Cebull. Analysts, however, thought the unanimous ruling by the Appeals Court panel — delivered within 24 hours of hearing oral arguments — might convince claimants to drop their case, or exert pressure on Cebull to change his injunctive view.
A long process
Trade in live cattle from Canada had been blocked since May 2003 when Canada announced its first case of BSE in an Alberta cow. In September 2003, the U.S. reinstated trade in beef cuts from Canadian cattle younger than 30 months. Reinstatement of trade in live cattle had proven more problematic.
Every time it seemed headway in reopening live-cattle trade was being made, a BSE-related incident would arise. In December 2003, it was the discovery in Washington state of a BSE-infected cow of Canadian origin. Then, on the eve of the border reopening in early March, Canada discovered its second case of BSE.
USDA Secretary Mike Johanns lauded the Seattle ruling, calling it: “great news for the future of the U.S. beef industry, specifically the many ranchers, feeders, and processing plants that have been struggling to make ends meet due to the closed border.
“It also bolsters our position with other international trading partners by following the very advice we have given them to base trade decisions on sound science,” he said.
Because the ruling is effective immediately, Johanns said USDA would take “immediate steps” to resume importing cattle less than 30 months of age. He said the Animal and Plant Health Inspection Service already was in contact with the Canadian Food Inspection Agency to prepare to certify cattle for shipment.
“We've been safely importing boneless boxed beef from Canada since September 2003, and now we will use the scientific approach laid out in our minimal risk rule to once again safely import live Canadian cattle for processing,” he said.
Jim McAdams, an Adkins, TX, cattle producer and president of the National Cattlemen's Beef Association, said his organization is pleased the Court agreed with the science — beef is safe from BSE.
“U.S. cattlemen are best served when international trade is based on science and we expect our trading partners to follow the science that BSE does not pose a public health or food safety risk,” McAdams said.
Meanwhile, Bill Bullard, CEO of R-CALF USA, said he was “disappointed” in the ruling.
“R-CALF USA remains confident that USDA's Final Rule was not justified, and that USDA did not provide significant justification for overturning a longstanding policy that protected both the U.S. cattle herd and U.S. consumers from the introduction of BSE.
“R-CALF is confident that when we have a full hearing on the merits of the case, we will demonstrate to the district court that USDA's actions are premature and unjustified,” he said.
Expect more volatility
Jim Robb, director of the Livestock Marketing Information Center, says the border reopening will likely add volatility to the U.S. cattle market. But, on Friday, the first day of trading following the Thursday evening court announcement, there was little downward movement in the livestock markets.
“Some of this had already been factored into the market,” Robb says. “We could have had this kind of movement without the court decision.”
Robb says analysts are in the process of revising their forecasts, as resumption of live cattle trade with Canada wasn't expected until late 2005 or early 2006.
“I'd advise cow-calf producers to focus on the Midwest corn crop as it will be more fundamental to pricing their cattle this fall than the border situation,” he said.
He says he envisions no relief for cattle feeders this fall.
“We're just getting into the real ugly time for cattle feeders,” he said. “By the time we get through August breakevens, feeders will be losing $100/head. Breakevens are 90¢ and we'll be lucky to get an 80¢ market in August.”
He says an interesting scenario to watch in Canada is how much Canadians will ramp up cow kill. With fed cattle now apparently able to cross to the U.S., he believes Canada might shift its resources toward harvesting cull cows and bulls in order to send more fed animals to the U.S.
Even then, Robb doesn't immediately expect a big run of fed cattle to the border. For one thing, Canada has added significant harvest capacity over the past two years. Plus, today's Canadian feed-yard placements won't be market ready until November, he adds.
Robb mentioned one other interesting fact: The just-concluded second quarter of 2005 will be the first quarter in history that the U.S. will have imported more than 1 billion lbs. of beef (carcass weight, not product weight).