Organization for Competitive Markets
P.O. Box 6486
Lincoln, NE 68506
Date: February 22, 2005
FOR IMMEDIATE RELEASE
Contact: Michael Stumo, 860.379.6199
OCM –Congress Should Overrule USDA on Border Opening,
$240 Per Head Price
Decline Possible
Lincoln, NE ~ The Organization for Competitive Markets (OCM)
today urged Congress to overrule the U.S. Department of Agriculture’s intention
to resume imports of live Canadian cattle and expanded boxed beef products from
Canada on March 7. Congress is on recess this week but will reconvene on
Monday, February 28. Industry experts
say producers face a potential $20 per hundredweight price decline or $240 per
head.
"U.S. borders are scheduled to reopen in two
weeks," noted Keith Mudd, OCM president. "USDA has not indicated any
willingness to withdraw its final rule, even in light of the increasingly
dismal economic forecasts if it proceeds to do so. It is time now for Congress
to step in and take decisive action that will protect U.S. producers from irreparable
harm."
Schwieterman Marketing, LLC, a firm specializing in risk
management and cash grain and livestock marketing plans estimates that a
minimum of 100,000 cattle per month will pour over U.S. borders if USDA’s rule
is implemented, increasing weekly slaughter by four to five percent. In
typically normal livestock markets, a one percent change in supply results in a
two percent change in price. With Asian export markets still closed, the firm
is forecasting a 10% break in August live cattle prices that could easily grow
to 20% unless export markets are opened.
Brett Crotts, a risk manager with Schwieterman Marketing
said, "Currently the August live cattle are between $80 and $81. By the
time we reach August, the fundamentals of the cattle market will be similar to
2002 and 2003. It’s important to note that we had Asian export markets at that
time. It’s entirely possible to have a $20 break in price if the border reopens
and Asian markets remain closed."
A recently released Grimes and Plains Report says cattle
prices "will come under sustainable pressure" if U.S. borders reopen
on March 7. "We have been expecting more stockpiling of feeder cattle in
Canada than fed cattle," noted the analysts. "If so, feeder cattle
prices are likely to be impacted more negatively than now indicated."
Estimates of Canadian cattle available to cross U.S. borders
range from one million to two million head.
"Canada has not yet demonstrated that it has control of
its bovine spongiform encephalopathy (BSE) crisis. Canada’s testing program
falls far short of the BSE surveillance program underway in the U.S. A recently
released report from the Office of the Inspector General shows that not a
single Canadian processing facility meets the minimum requirements of product
segregation, meaning those processors still haven’t properly implemented
methods to appropriately segregate meat derived from younger and older animals.
There simply are too many unanswered questions for Congress to allow the
borders to reopen," said Mudd.
"Before borders are reopened we must have mandatory
country of origin labeling in place, Asian export markets must be
re-established at previous export levels, and all Canadian cattle already
residing in the U.S. must be located and permanently marked in order for
appropriate segregation from both the human food supply and the animal feed
supply chain," stated Mudd.
The Organization for Competitive Markets (OCM) is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities. OCM helps lead the Cattlemen’s Competitive Market Project which is a voluntary contribution program funding the effort to increase demand for U.S. cattle and beef in open and competitive markets.