050804 Professor: Beef Prices May Fall, But Not Too Far

Casper, WY - A federal appeals court's decision to allow Canadian beef imports to resume will result in lower cattle prices - but not dramatically lower, a University of Wyoming professor says.

"Most of the people I talk to don't think what we're going to see from the border's opening is going to be all that damning," said Chris Bastian, agricultural marketing specialist in the Department of Agricultural and Applied Economics. "I think there is some potential for short-term impact here as they try to get current on cattle, and then afterward I think we'll see things normalize."

The United States banned Canadian beef imports in May 2003 after mad cow disease was found in a Canadian herd. Last December, the U.S. Department of Agriculture announced plans to resume imports, but a ranchers' group sued to preserve the ban. A federal appeals court ruled in July that limited imports could resume.

When the ban first went into effect, prices soared. Ground beef cost about $1.85 retail before the ban, but now costs about $2.55, according to J. Patrick Boyle, president of the American Meat Institute.

But not all of that increase was because of the ban, Bastian said. Before the ban, a number of ranchers were reducing their herds, in part because of drought conditions that made it more expensive to feed livestock. With more cattle going to slaughter, beef supplies were high and prices were low. At the same time that the ban was keeping Canadian beef out of the country, U.S. ranchers were rebuilding their herds, meaning less beef on the market and higher prices.

Prices already are softening somewhat, said Jim Magagna, executive vice president of the Wyoming Stock Growers Association, although he said it's hard to pinpoint why.

Magagna agreed with Bastian that the resumption of Canadian beef imports probably wouldn't dramatically affect prices. "There's more beef cows in the state of Texas than there are in all of Canada," Bastian said, and Magagna pointed out that some Canadian beef already is coming to the United States as boneless boxed beef.

But if ranchers aren't hurt, consumers might not be helped much either, said Randy Stevenson, vice president of the Organization for Competitive Markets who runs a feedlot and raises cattle in Wheatland. Citing a study conducted by the organization, he said meatpackers will benefit the most from increased demand for their services.

"Basically, what they're showing is an exchange of wealth between the producer and the packer, and the consumer just gets to sit and watch," Stevenson said.

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