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Kill or Shill: Processing Capacity and Cattle Prices with a Closed Border

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  • Rude, James
  • Carlberg, Jared G.

Abstract

The discovery of bovine spongiform encephalopathy (BSE) in Alberta and the subsequent U.S. border closure raised concerns about the reliance of Canada’s cattle industry upon U.S. packers. It became clear that Canada lacked the slaughter capacity to support the number of cattle going to market. This and other factors resulted in steep price declines. Since 2003, slaughter capacity has increased by approximately 46 percent. Given that many of the start-ups are small-scale operations that in many cases lack experience and financial backing, questions arise regarding the viability and sustainability of these enterprises. This study examines existing processing capacity as well as planned expansions and discusses the implications for Canadian cattle prices. Even though the U.S. border reopened in July 2005, concerns about slaughter capacity remain. Animals over 30 months of age must still be slaughtered in Canada. There are also ongoing concerns about Canada’s continued ability to export live cattle to the United States. Future exports are threatened by potential trade actions and by unpredictable animal health issues that could again close the border.

Suggested Citation

  • Rude, James & Carlberg, Jared G., 2006. "Kill or Shill: Processing Capacity and Cattle Prices with a Closed Border," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 7, pages 1-9, October.
    • Handle: RePEc:ags:cafric:46378
    DOI: 10.22004/ag.econ.46378
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    References listed on IDEAS

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    1. MacDonald, James M. & Ollinger, Michael, 1997. "U.S. Meat Slaughter Consolidating Rapidly," Food Review/ National Food Review, United States Department of Agriculture, Economic Research Service, vol. 20(2), pages 1-6.
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    Cited by:

    1. Janelle Mann & Derek Brewin, 2021. "Investigating the Impact of Trade Disruptions on Price Transmission in Commodity Markets: An Application of Threshold Cointegration," JRFM, MDPI, vol. 14(9), pages 1-7, September.
    2. Ward, Clement E. & Schroeder, Ted C. & Schulz, Lee L., 2009. "Impacts from Government Regulations on the Canadian-U.S. Basis for Fed Cattle," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49327, Agricultural and Applied Economics Association.
    3. Le Roy, Danny G. & Klein, Kurt K. & Klvacek, Tatiana, 2006. "The Losses in the Beef Sector in Canada From BSE," Commissioned Papers 24161, Canadian Agricultural Trade Policy Research Network.

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