Border closing has taken a toll on dairy producers’ livestock sales

Livestock raisers have lost half a million dollars because of lost breeding stock sales and insiders believe it will take time to recover

by DON STONEMAN

The closing of the U.S. border after the discovery of a BSE-infected cow in Alberta in 2003 has been costly for dairy producers.

Phil Cairns, economist for Dairy Farmers of Ontario, says livestock sales used to represent 10 per cent of an average dairy farmers income. That’s been halved since the BSE crisis began. Farmers who had been working with pedigrees and striving to sell high-value animals to domestic and export markets have fared much worse, he says.

Cairns says the Ontario Dairy Farmer Accounting Project, which is used to determine the price that dairy farmers get for their milk, links livestock income to milk sales from Ontario dairy farms.

The survey of farm costs and incomes found that, in 2002, livestock sales across Ontario dairy farms averaged $6.77 per hectolitre of milk sold. In 2005, livestock sales averaged $3.74, a 45 per cent decrease.

That reduction came off the bottom line, Cairns says, noting that the same cost structure was there regardless of income from the livestock. If a cow is going to produce milk, she must have a calf first and the calves must be fed, Cairns said.

Rick McRonald, executive director of the Canadian Livestock Genetics Association (CLGA) says livestock raisers have lost half a million dollars a day because of lost breeding stock sales. The cost is even higher because domestic breeding cattle and heifer prices have not recovered to pre-BSE prices either, he says.

The major stumbling block has been the United States’ rejection of Canada’s efforts to re-open the border. In January, the U.S. Department of Agriculture (USDA) released a proposed new rule that would open the border to trade in Canadian bovine breeding stock. The deadline for public comment on the new rule falls on Mar. 12 and McRonald is keeping his fingers crossed.

When the border opens “depends on the comments and what action (government officials) need to take to address the comments,” he says. “We could have cattle moving in this calendar year, but I am in no way predicting that we will.”

On the positive side, he says, some important American producer groups are on side.

The Washington State Dairy Association believes that “science should prevail” in decisions on opening the border, regardless of whether members feel imported Canadian dairy heifers are needed.
On the negative side, McRonald expects that anti-trade organizations such as R-CALF USA will go to court to keep the border shut.

McRonald says American dairy producers don’t have to worry that they will be overwhelmed by a wall of live animals that will increase milk production and reduce prices. “Heifers don’t stay heifers for ever. There aren’t any more of them available now than there ever was,” McRonald says.

Research shows that, even in the heaviest heifer shipping years, heifer imports haven’t affected the milk price in the United States.

At peak exports of 70,000 a year, Canadian heifers were 1-1.5 per cent of annual replacement heifer requirements in the United States, McRonald says. “It’s a drop in the bucket to them. It’s a big issue to us.”

McRonald believes that it will take time for the industry to recover. The heifer raising industry “is kaput,” McRonald says. “We will have to rebuild an infrastructure.” The dollar is the single biggest factor affecting the number of heifers being sold to the United States, McRonald says. The peak in heifer exports was a few years before the BSE crisis. Organizations such as R-CALF are fear-mongering when they say that there is a wall of live animals waiting to cross the border.

Blyth farmer Steve Webster, president of the Ontario Holstein Heifer Raisers Association, got nationwide attention when he slept in his car at Queen’s Park last March to protest low farm incomes.

He says he has made nine trips to Washington, D.C., since then, lobbying to open up the border to heifer imports, at a cost of $30,000 to $40,000. Better Farming contacted him by cell phone in Washington on a Saturday night in late January. Webster said that “a number of dairy farmers, a number of grassroots farmers and a couple of powerful unions” fund his lobbying. “They believe in what I am doing.”

He said he has been lobbying politicians of both parties and also American farm organizations that are sympathetic to opening the border.

McRonald stresses that getting American farm groups to endorse opening the border is key. Canadian comments on the USDA rule don’t carry any weight, he told Better Farming.

The CLGA is also looking at opening up other markets. However, it’s tough for Canadian exporters to look elsewhere than the United States because the market there is easy to access and it is easy to get paid, McRonald says. BF