Opening Mexican border an accomplishment, but packer says it needs to be

able to buy cheaper cattle from up north

By Robert Pore

Mexico’s decision on Wednesday to partially lift its ban on U.S. beef is a good first step, but Grand Island’s largest employer said the border situation with Canada is causing a huge financial drain on U.S. beef processors.

While the company welcomes the news about Mexico, Swift & Co. spokesman Jim Herlihy said on Thursday, the inability of U.S. beef processors to access live cattle from Canada puts the company at a competitive disadvantage. That disadvantage has led the company to make significant reductions in employees’ hours at its Grand Island plant.

On Wednesday, the Mexican government announced it would lift the ban on boneless cuts from animals less than 30 months old and veal from animals less than 9 months old.

Mexico and more than 40 other countries closed their borders to U.S. beef imports after a dairy cow in Washington state tested positive for bovine spongiform encephalopathy (BSE) on Dec. 23, 2003. BSE is more commonly known as mad cow disease.

The Mexican government’s action was hailed by Nebraska’s two U.S. senators.

Sen. Ben Nelson, D-Neb., said Mexico made the right decision. "One case of BSE should not jeopardize our trading relationship with one of the largest markets for U.S. beef," Nelson said.

Sen. Chuck Hagel, R-Neb., also welcomed the news. "The Mexican government’s decision to drop the ban on U.S. beef imports is very important news for beef-producing states like Nebraska," Hagel said. He said Mexico is the second-largest importer of U.S. beef, behind Japan. "The Mexican government’s decision sends an important signal to other countries that American beef is safe," Hagel said.

While Mexico has agreed to partially lift its ban on U.S. beef, the United States has yet to reopen its borders with Canada for live cattle. Last September, the United States reopened its border with Canada to boxed beef products.

The United States and other countries banned live cattle and beef products from Canada after that country found a dairy cow that tested positive for BSE last May.

Herlihy said that, since the border opened last fall to boxed beef from Canadian cattle under 30 months of age but remained closed to live imports of the very same cattle, processing volume in the United States has fallen by more than 12 percent.

Canadian cattle have sold for an average of $275 less per head than comparable domestic cattle, said Herlihy, who is based in Greeley, Colo. That has enabled Canadian processors to undercut U.S. processors in the U.S. marketplace.

And for the last quarter, he said, that has equated to a $240 million difference in price between Canadian and domestic cattle. That has left Swift, which employs more than 2,500 people in Grand Island, reeling financially. Along with the loss of its high-value export markets because of the BSE incident, hours for Swift’s employees in both Grand Island and Greeley, Colo., have been cut considerably. According to an economic impact study conducted in Greeley, the financial loss to that community’s economy in the last four months has exceeded $100 million from diminished economic activity because of declining production levels.

While a similar study has not been done for Grand Island, Herlihy said he would expect a similar negative financial impact on the area economy. While Swift is doing everything it can to avoid additional layoffs and reduced work schedules, Herlihy said, the ban on live cattle under 30 months of age has to be lifted in the near future to avoid further financial hits on both the company and its employees.

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C The Grand Island Independent