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Cdn. mad cow crisis forces U.S. layoffs
Leah Janzen
CanWest News Service
Sunday, May 08, 2005
WINNIPEG -- Canada's mad cow crisis -- once viewed as a financial windfall for the American beef industry -- is now forcing layoffs and the "imminent economic collapse" of some slaughterhouses in the United States.
Losses to American beef producers and that country's packing industry as a result of the continued border closure to live Canadian cattle are expected to reach over $490 million this year alone.
And some experts predict the Canadian beef industry actually stands to come out ahead of the U.S. system, if Canada continues to ramp up its own processing facilities and court other foreign markets.
The Canadian industry has lost an estimated $7 billion since international borders slammed shut to Canadian cattle two years ago when a cow in Alberta was discovered with the wasting disease known as mad cow, or bovine spongiform encephalopathy (BSE).
American producers reaped the benefits almost immediately. Cattle prices soared south of the border and ranchers had no competition when it came to finding slaughterhouses to process their beef.
But the tables appear to be turning.
In an affidavit attached to a recent American Meat Institute court motion to reopen the U.S. border to Canadian cattle, Thomas Rosen, president of the Rosen Meat Group, said the lack of Canadian animals to process will mean the end of some slaughterhouses in the U.S.
"They will likely have to reduce and suspend operations at many plants and possibly even close certain facilities permanently," wrote Rosen.
Three U.S. slaughter facilities have already closed their doors. Many others have reduced staff, shortened work weeks or eliminated overtime to stay afloat.
Rosen Meat Group is one of the biggest meat packers in the United States, with four plants capable of processing 4,000 beef cows and bulls a day.
In the last year, the company has cut its workforce by 10 per cent.
Rosen estimates that Long Prairie, Minn. -- where one of the company's four plants is located -- has suffered job losses resulting in direct payroll reductions of almost $2.5 million and an overall loss of household earnings of over $11 million in the community.
A packing plant in Tama, Iowa, recently closed, sending 540 workers to the unemployment line. Tama's population is just over 2,500.
In Long Prairie, Minn., Mayor Don Rasmussen said his residents are worried work-week reductions at the Rosen plant will progress to full-on layoffs if the border doesn't reopen soon.
Long Prairie is home to about 3,000 people, 300 of whom work at the plant.
"People are certainly talking about it and are worried about it," Rasmussen said. "It would be a huge blow if it closed. We'd sure like to see the reopening of the border."
But it's tough to rally much sympathy among Canadian beef producers for the boomerang effect the crisis is starting to have on the U.S. cattle business.
"It is hard to feel too sorry for them," said Larry Schweitzer, president of the Manitoba Cattle Producers Association. "We've been living this for two years."
Schweitzer said he hopes the downturn in the U.S. industry will help spark a groundswell of support among American producers for the reopening of the U.S. border to Canadian animals.
Some experts say they believe it won't be just small packing plants that will pay the price if the U.S. border remains closed to Canadian cattle.
Ted Schroeder, an agriculture economist at Kansas State University, said the expansion of Canadian meat packers could soon mean the United States will be dependent on the Canadian industry.
``It's not hard to imagine a future where we're sending our cattle to Canada for slaughter,'' he said.
Schroeder said the ramped-up slaughter capacity will mean Canada will be a stronger competitor for beef export markets when the border does open.
According to Agriculture Canada, Canadian slaughter capacity has increased from 77,000 head per week in 2003 to 86,000 last year.
About two dozen Canadian packing plants have been built, expanded or tagged for expansion since the mad cow crisis began.
Earlier this year, the National Meat Association, which represents small U.S. meat packers, appealed a federal judge's injunction against reopening the border to Canadian cattle imports. The association said small U.S. packers that relied on Canadian cattle to survive could face ``imminent economic collapse'' if the border does not reopen soon.
A federal U.S. judge is expected to hear arguments later this summer from a U.S. protectionist group on why the border should remain closed to Canadian cattle.
The $16-million Ranchers' Choice Beef Co-op processing plant is expected to be up and running in Manitoba later this year.
A second new facility slated for Neepawa, Man., is still in development.
© CanWest News Service 2005
Leah Janzen
CanWest News Service
Sunday, May 08, 2005
WINNIPEG -- Canada's mad cow crisis -- once viewed as a financial windfall for the American beef industry -- is now forcing layoffs and the "imminent economic collapse" of some slaughterhouses in the United States.
Losses to American beef producers and that country's packing industry as a result of the continued border closure to live Canadian cattle are expected to reach over $490 million this year alone.
And some experts predict the Canadian beef industry actually stands to come out ahead of the U.S. system, if Canada continues to ramp up its own processing facilities and court other foreign markets.
The Canadian industry has lost an estimated $7 billion since international borders slammed shut to Canadian cattle two years ago when a cow in Alberta was discovered with the wasting disease known as mad cow, or bovine spongiform encephalopathy (BSE).
American producers reaped the benefits almost immediately. Cattle prices soared south of the border and ranchers had no competition when it came to finding slaughterhouses to process their beef.
But the tables appear to be turning.
In an affidavit attached to a recent American Meat Institute court motion to reopen the U.S. border to Canadian cattle, Thomas Rosen, president of the Rosen Meat Group, said the lack of Canadian animals to process will mean the end of some slaughterhouses in the U.S.
"They will likely have to reduce and suspend operations at many plants and possibly even close certain facilities permanently," wrote Rosen.
Three U.S. slaughter facilities have already closed their doors. Many others have reduced staff, shortened work weeks or eliminated overtime to stay afloat.
Rosen Meat Group is one of the biggest meat packers in the United States, with four plants capable of processing 4,000 beef cows and bulls a day.
In the last year, the company has cut its workforce by 10 per cent.
Rosen estimates that Long Prairie, Minn. -- where one of the company's four plants is located -- has suffered job losses resulting in direct payroll reductions of almost $2.5 million and an overall loss of household earnings of over $11 million in the community.
A packing plant in Tama, Iowa, recently closed, sending 540 workers to the unemployment line. Tama's population is just over 2,500.
In Long Prairie, Minn., Mayor Don Rasmussen said his residents are worried work-week reductions at the Rosen plant will progress to full-on layoffs if the border doesn't reopen soon.
Long Prairie is home to about 3,000 people, 300 of whom work at the plant.
"People are certainly talking about it and are worried about it," Rasmussen said. "It would be a huge blow if it closed. We'd sure like to see the reopening of the border."
But it's tough to rally much sympathy among Canadian beef producers for the boomerang effect the crisis is starting to have on the U.S. cattle business.
"It is hard to feel too sorry for them," said Larry Schweitzer, president of the Manitoba Cattle Producers Association. "We've been living this for two years."
Schweitzer said he hopes the downturn in the U.S. industry will help spark a groundswell of support among American producers for the reopening of the U.S. border to Canadian animals.
Some experts say they believe it won't be just small packing plants that will pay the price if the U.S. border remains closed to Canadian cattle.
Ted Schroeder, an agriculture economist at Kansas State University, said the expansion of Canadian meat packers could soon mean the United States will be dependent on the Canadian industry.
``It's not hard to imagine a future where we're sending our cattle to Canada for slaughter,'' he said.
Schroeder said the ramped-up slaughter capacity will mean Canada will be a stronger competitor for beef export markets when the border does open.
According to Agriculture Canada, Canadian slaughter capacity has increased from 77,000 head per week in 2003 to 86,000 last year.
About two dozen Canadian packing plants have been built, expanded or tagged for expansion since the mad cow crisis began.
Earlier this year, the National Meat Association, which represents small U.S. meat packers, appealed a federal judge's injunction against reopening the border to Canadian cattle imports. The association said small U.S. packers that relied on Canadian cattle to survive could face ``imminent economic collapse'' if the border does not reopen soon.
A federal U.S. judge is expected to hear arguments later this summer from a U.S. protectionist group on why the border should remain closed to Canadian cattle.
The $16-million Ranchers' Choice Beef Co-op processing plant is expected to be up and running in Manitoba later this year.
A second new facility slated for Neepawa, Man., is still in development.
© CanWest News Service 2005
Not a particularlly well written article, but it is a subject I have wondered about. With billions in Canadian beef staying this side of the divide, how are the packers doing?
Apparently not very well.
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