Canada’s livestock exports to the United States continue to fall, even after last year’s free fall caused by the U. S. country-of-origin meat labelling law.
Cattle exports to the United States fell 23.1 per cent in the first 30 days of 2010 to 71,277 head, compared with January 2009, according to the Canadian Agriculture Department. Hog exports fell nine per cent to 491,028 head.
The United States is Canada’s largest livestock export market.
Last year was the first to reflect the law that required U. S. packers to label their products with the country of origin, which has added to their costs and hurt prices for Canadian farmers.
Total Canadian livestock exports to the United States fell 32 per cent in 2009 to 7.2 million head of cattle and hogs.
A World Trade Organization panel is expected to report by autumn on a complaint by Canada and Mexico against the labelling law.
Both the cattle and hog industries are downsizing because of the labelling law’s effect, along with other challenges, such as a strong Canadian dollar that discourages exports.
“A number of producers have gone out of business, so you’re seeing that decline in exports,” said Patti Negrave, a red meat analyst with Canada’s Agriculture Department.
Exports of slaughter-ready hogs fell 22 per cent in January, while farmers shipped five per cent fewer feeder hogs to be finished in the United States.
The labelling law requires packers to segregate both types of hogs, but processors have more time to find markets for the younger feeder pigs, a factor that may be buffering the reduction of those exports, Negrave said.
Hog exports are likely to continue falling this year as more farmers go out of business, Negrave said.
The hog industry has set a goal of cutting production by 18 per cent from 2008 levels to 25.5 million pigs annually by 2014, assisted in part by government funds that pay farmers to stop raising hogs.
The drop in cattle exports was due to an 80 per cent plunge in exports of feeder cattle and calves in January, countered partly by flat exports of slaughter-ready cattle.
Feeder cattle exports are down because the cost of gain, a benchmark measurement of the cost to fatten cattle, is now similar between Canada and the United States.
Earlier high barley prices in Canada had made finishing cattle in the United States more advantageous in recent years, said Brenna Grant, research analyst with Canfax.
The labelling law has also reduced U. S. feedlots’ interest in buying Canadian cattle.
Regulations for processing specified risk materials from cows – parts such as the spinal cord that are most likely to carry mad cow disease – are tougher in Canada than in the United States, which encourages them to go south for slaughter, Grant said.
“U. S. packers are able to pay more because they don’t have as long a list (of risky materials).”
Feeder cattle exports have further to fall, Grant said, adding that even though they fell sharply in 2009 they were still above typical levels.
Slaughter-ready cattle exports should be steady to lower, as domestic packers slaughter a greater proportion of the cattle supply with ranchers downsizing, she said.