With summer's approach come key dates in molding the beef industry's direction. Decisions on hot-button issues like the beef checkoff, Canadian border closure, the National Animal Identification System (NAIS), and the opening of U.S. beef export markets loom in the next few months.

The next hearing on the Canadian border dispute is July 27, while the U.S. Supreme Court decision on the beef checkoff's constitutionality likely will be announced by the time you read this article. (See “Go Time For The Checkoff,” page 34.)

In early May, USDA released its strategic draft of NAIS, including a timeline for program implementation. (See “Mandatory NAIS date revealed.”)

Officials also are still working to reopen Japanese and South Korean beef markets, the top U.S. beef export destinations in 2003. Lynn Heinze, U.S. Meat Export Federation (USMEF) vice president of information services, says the 2004 lockout of those markets cost U.S. producers $150/head in 2004.

The export fight

The U.S. has regained about 40% of the export markets it lost in the aftermath of a single BSE case 18 months ago. Newly opened markets include Egypt, Vietnam, Oman and Taiwan.

Taiwan is the most significant as it imported almost 200,000 metric tons of U.S. beef and beef variety meats in 2003, totaling $76.3 million. Boneless beef, now eligible for exports, accounted for 74% of the total U.S. beef exports to Taiwan.

The first products landed in Taiwan in late April, and were well received, Heinze says. The big promotional push to get U.S. beef back on menus and in retail outlets began with reopening ceremonies in May.

While Japan and South Korea remain closed, progress is being made. Negotiations are underway in South Korea, Heinze says, and a Korean trade team visits the U.S. in June. South Korea says Japan must accept U.S. beef before it will consider importing U.S. product again.

But Heinze says USMEF patience is wearing thin as Japan's process drags on.

“We've made much progress in Japan, but Japan's government put itself in a position where it convinced the public 100% testing meant 100% safety,” Heinze says.

Backing off that position — enacted following the discovery of Japan's first case of BSE in fall 2001 — to adopt the internationally recognized science-based standards has been difficult, Henize adds. But significant progress was logged in early May when an independent Japanese safety panel recommended Japan's government exempt from its 100% testing requirement cattle less than 21 months of age. This opens the way for Japan to begin importing U.S. beef under 21 months after approval of U.S.-proposed age-verification methods.

“If you're an optimist, it may be another 4-8 weeks [as of early May], and if you're a pessimist it may be the beginning of 2006. As a realist, it's somewhere in that window,” Heinze adds.

Border war

The lost markets has been a blow to the U.S. beef industry, but the U.S. beef infrastructure is also smarting from the protracted closure of the U.S. border to Canadian live cattle.

The U.S. border was set to open March 7 to imports of Canadian cattle less than 30 months of age. But on March 3, U.S. District Court Judge Richard Cebull, ruling on a suit filed by R-CALF, enjoined it, writing that Canadian product posed a “genuine risk of death to U.S. consumers.” He'll revisit the decision July 27.

A study, published in December 2004 by Kansas State University economists, studied the closed border's impact on the U.S. industry. It estimated decreased production caused by reduced cattle supplies cost up to 5,000 jobs at U.S. harvest facilities and trimmed U.S. income by $282 million/year.

The report, entitled “Impacts on U.S. Beef Packers, Workers and the Restricted Cattle Trade Between Canada and the U.S.,” also states Canadian cattle prices have been discounted by as much as $20/cwt. relative to the U.S. as Canada faced an oversupply of slaughter cattle relative to its harvest capabilities.

“These events are strongly encouraging the development of plans and investment strategies to expand Canadian beef slaughtering and processing capacity,” the report states.

Canada is working on a long-range plan for reopening international markets and building harvest capacity, says John Masswohl, Canadian Cattlemen's Association (CCA) director of international relations. Harvest capacity has increased nearly 20% and beef production has increased more than 30% since the border closed, and expansion continues. Meanwhile, U.S. plants have been idling plants and cutting shifts.

“Our harvest capacity is somewhere around 86,000 head/week currently. By early summer, we'll be around 90,000 head,” Masswohl says. “We think we need to get to about 110,000 head/week.”

Cargill and Tyson have both invested considerable amounts into expanding harvest facilities in Canada, the latest being Cargill-Canada's purchase of a Better Beef Ltd. beef processing facility in Ontario.

But, Masswohl believes good relations with the U.S. cattle industry will be important, especially as competition from South America heats up.

“We want to work more closely with producer groups in Uruguay, Brazil and Argentina to learn their 3-, 5- or 10-year plan,” Masswohl says. “How is their industry changing? How are we going to adapt and change our industry in North America to compete globally with them?”

But, he makes no bones about Canada's ambition to unshackle itself from its traditional dependence on the U.S. market.

“We aren't holding our breath for live-cattle access into the U.S.,” he adds. “We have a plan to control our own destiny.”