Column submittal of 09/09/04 by David Kruse, President, CommStock Investments

   Canadian cattlemen aren't one bit happy with the U.S., as we haven't opened the border to live animals. Understandably they are in financial agony from the collapse of their cattle market but blaming the U.S. for their current misery is not fair.

   First of all, U.S. beef exports have been shut off because of an 'expletive' deleted Canadian cow. All animals confirmed with BSE on this continent were Canadian in origin. Science currently lays blame on lax Canadian feeding rules that allowed meat/bonemeal feeding to ruminant animals in Canada after the practice was ended in the U.S. No cow of U.S. origin has yet been confirmed with BSE. The Canadians screwed up and somehow or another they think we're unfair calling us protectionist.

   The Canadian border is not closed to beef trade, but U.S. beef exports have sure as heck been devastated by the Canadian origin BSE-positive cow found here.

    Nobody imported more beef this year into the U.S. than Canada, 522 kmt in the first six months of 2004, up from 422 kmt the year previous. That was up 23.6% from 2003, representing 29% of all U.S. beef imports. The U.S. border is not closed to Canadian beef. We are taking more beef from Canada because they can't sell it to anybody else so we're taking everything they can produce up to their kill capacity. The U.S. beef market is wide open to Canadian beef imports that meet BSE risk material and age restrictions (and some the USDA missed that didn't). U.S. beef exports, however, have collapsed from 1.26 mmt in 2003 to only 155 kmt in a first half of this year comparison. We're only selling 12% of the previous year's exports.

   Why? Because of that 'expletive' deleted Canadian cow. The Canadians are mad because they can't send us more cattle without first guaranteeing that there aren't more cows like the one that ruined our market in Canada. U.S. beef imports for the period totaled 1.801 mmt. That's up 16% from last year. Our beef market is not closed. We're importing more beef than ever while our export market has collapsed. We imported 1.801 mmt beef and only exported 155 kmt. Canadians are going to sue us under Chapter 12 of NAFTA because we haven't opened our border to live animals.

   Just what exactly do Canadian cattlemen expect of the U.S. industry? They ruin our exports, we're importing record amounts of Canadian beef while our beef market has been struggling to handle the current front end supply and we're bad guys because we don't want to let them dump live animals on an already depressed cash market before we've revived U.S. beef exports?

   They were the ones who destroyed our Asian export market, and they think having the patience to reopen it be before receiving full access to our cattle market in unreasonable.  The financial stress they are experiencing has skewed their judgment. If I evaluate who should sue who, I believe it's the U.S. beef industry that's suffered damages from Canada. The NCBA wants the border opened to Canadian live imports. I think that we've done enough and the NCBA is insane. Until Asian export markets reopen we can't afford to produce more beef without serious market consequences here. Damaging the U.S. beef industry is not going to benefit the Canadian beef industry.

   The U.S. beef industry is struggling to hold itself up and rising feedlot breakevens loom over the U.S. cattle market like the Canadian Rockies. The U.S. has treated the Canadian cattle industry fairly. They made their own mess, created their own disaster and ruined our export market with theirs.

   They want to get mad? Bring it on, we've got plenty to be mad about too. Cargill/Excel and Tyson/IBP are running rampant over the Canadian industry, banking exorbitant profits buying Canadian cattle at depressed prices exporting the beef to U.S. markets, draining Canadian feedlot equity, discriminating against R-CALF members with Canadian cattle on feed (a violation of Packers and Stockyard's Act here), while hypocritically claiming they too want the border reopened. And shut off their gold mine?

    How much are they making? Enough to defy a contempt of Parliament order to keep it a secret. How much power do they have? Enough clout with Canadian politicians to cow-tow the Canadian government. If Canadian cattlemen think U.S. cattlemen are their problem, they'd better take a closer look as to who's screwing them.