110922, r calf usa presentation on animal health and id

1

Debilitating Effects of Recently Weakened U.S. Livestock Disease Protections and USDA’s New Animal ID Scheme: A

Solution in Search of a Problem

Presented toSouth Dakota Stockgrowers Association Members

by

Bill Bullard, CEO, R-CALF USA

September 22, 2011

2

The United States Is the Largest Beef Producer and

Largest Beef Consumer in the World

Our Reputation of Producing the Healthiest Cattle and the Safest, Most Wholesome Beef Is Contingent on Maintaining the Highest Possible Health and Safety

Standards, But . . .

3

The United States Has Weaker BSE Import Requirements for

Beef than Most Major Beef Importing Countries

4

2011 BSE Requirements Imposed by Major U.S. Export Markets

R-CALF USA

Source: USDA-FSIS Index of Export Requirements for Meat and Poultry Products Country & Import

Rank Age Restriction Commodity Restrictions

Mexico #1

Less than 30 months No ground meat.

Japan #3

20 months or younger No ground beef, processed beef, head meat, finely textured beef, or mechanically separated meat.

South Korea #4

Less than 30 months Cattle must be born and raised in the United States, or imported from a country deemed eligible by the Korean government to export beef or beef products to Korea, or raised in the United States for at least 100 days.

Hong Kong #5

Less than 30 months

No ground beef, bone-in beef, edible offal, or beef derived from advanced meat recovery systems.

Taiwan #6

Less than 30 months No ground beef or internal organs. Cattle must be born and raised in the United States, raised in the United States for at least 100 days prior to slaughter, or legally imported into the United States from a country deemed eligible by Taiwan to export deboned beef to Taiwan. Beef or beef products of cattle from Canada fed less than 100 days prior to slaughter in the United States is limited to deboned beef derived from animals less than 30 months of age.

Vietnam #7

Under 30 months

Russia #9

Under 30 months The beef and beef byproducts must be derived from cattle raised in the United States. Ground red meat, packaged in bulk form or in the form of meat patties, is prohibited.

United Arab Emirates

Under 30 months Ritual: Islamic Halal Slaughter requirements apply.

Singapore Under 30 months Only Fresh/frozen boneless beef derived from animals less than 30 months of age is eligible. Beef derived from cattle imported from Canada is not eligible.

5

Numerous Countries that Accept U.S. Beef Continue to Ban Canadian Beef

U.S. EXPORT MARKETS CLOSED TO CANADIAN BEEF 26 countries continue to ban Canadian beef due to BSE. The following 10 countries accept U.S. beef; but, according to information provided by the Canadian Food Inspection Agency, do not allow Canadian beef:

Chile Dominican Republic

Haiti Jamaica

South Korea Kuwait

Malaysia Peru

Saint Lucia Ukraine

Sources: USDA, FSIS, Index of Export Requirements for Meat and Poultry Products,

undated, (accessed September 16, 2011). Canadian Food Inspection Agency, Summary of the Situation with Foreign Markets relative to BSE as of November 5, 2009 (latest available information), available at http://www.inspection.gc.ca/english/fssa/meavia/man/ch11/annexre.shtml, accessed September 16, 2011.

6

The United States Has Weaker Disease Import Standards for Cattle than Many, If Not Most,

Cattle Importing Countries

7

BSE Age Restrictions

COUNTRIES WITH STRICTER THAN U.S. AGE REQUIREMENTS FOR IMPORTING CANADIAN CATTLE

COUNTRY AGE RESTRICTIONS ON CANADIAN CATTLE Algeria Cattle must be less than 36 months of age Barbados Cattle must be born after Dec. 31, 2003 Egypt Slaughter cattle must be less than 24 months of age European Union Cattle must be born after date of last indigenous BSE case Lebanon Cattle must be under 30 months of age Republic of Croatia Cattle must be born after date of last indigenous BSE case South Korea Cattle must be born two years after effective enforcement

of feed ban Switzerland Cattle must be born after date of last indigenous BSE case Tunisia Cattle must be born after July 1, 2001 Source: Canadian Food Inspection Agency Export Program, Veterinary Health Certificates, Bovine, available at http://www.inspection.gc.ca/english/anima/heasan/export/bovine/bovine.shtml

8

In Return for Having Among the Weakest of Disease Import Standards, the U.S.

Cattle Industry Is:

• Subject to a Scientifically Determined, Increased Risk of Introducing BSE into the U.S. Cattle Herd, which Presents a Hazard to both Livestock and Humans.

– USDA’s risk modeling for its over-30-month rule (OTM Rule) predicts the U.S. would import between 19 and 105 BSE-infected cattle from Canada, which would subsequently produce BSE infections in 2 to 75 U.S.-born cattle over a 20-year period. (See 72 Fed. Reg., 1109, col. 2; 72 Fed. Reg., 53347, col. 1.)

9

In Return for Having Among the Weakest of Disease Import Standards, the U.S.

Cattle Industry Is:

• Suffering from the Continual Reintroduction of Other Dangerous Diseases Into the United States.

– The USDA’s Office of Inspector General (OIG) reported in 2006 that 75 percent of bovine TB cases detected during the previous five years by U.S. slaughter surveillance originated in Mexico and were detected in 12 U.S. states. The OIG explained that because Mexican cattle spend many months on U.S. farms and ranches prior to slaughter, each bovine TB case is potentially spreading the disease in the United States. In addition, the OIG stated, “Until additional controls are added, APHIS cannot reasonably expect to achieve its goal and eradicate TB when it is being imported into the United States each year.(See OIG Report No. 50601-0009-Ch, September 2006, at iii,19, 20.)

10

In Return for Having Among the Weakest of Disease Import Standards, the U.S.

Cattle Industry Is:

• Suffering Significant Financial Losses Resulting from the Importation of Higher-Risk Canadian Cattle.

– USDA estimates that the cost to U.S. cattle producers, for the privilege of being exposed to a heightened risk for BSE from Canadian cattle and beef, would be over $66 million per year (or approx. $1.3 million each week), for which no compensation can be obtained from anyone. (See 72 Fed. Reg. 53,356, col. 1.)

11

Correlation Between U.S. Calf Prices and Canadian Cattle Imports

Relationship Between U.S. Calf Prices and Canadian Live Cattle Imports

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

-Sep

t 10

Nu

mb

er o

f Im

po

rted

Can

adia

n C

attl

e

$90.00

$95.00

$100.00

$105.00

$110.00

$115.00

$120.00

$125.00

$130.00

$135.00

Kan

sas

Ste

er P

rice

Per

Hu

nd

red

wei

gh

t

Slaughter Steers and Heifers Feeder Steers and Heifers Slaughter Cows and Bulls 5-6 cwt. Kansas Steer Price

Data Source: USDA FAS, AMS and K-State Research and Extension R-CALF USA

2011 avg through August: $149.53

12

Consumers Both Here and Abroad Know that Canada Has a Higher BSE Risk

• The U.S. Centers for Disease Control and Prevention (CDC) states:

As of March 2011, 19 BSE cases in Canadian-born cattle have been identified, 18 in Canada and 1 in the U.S. Of these 19 cases, 13 were known to have been born after the implementation of the 1997 Canadian feed ban ; 12 of these 13 were born after March 1, 1999. This latter date is particularly relevant to the U.S. because since a USDA rule went into effect on November 19, 2007, Canadian cattle born on or after March 1, 1999 have been legally imported into this country for any use. One of the 19 Canadian-born BSE cases was reported in an animal that was most likely born before or possibly very shortly after implementation of the 1997 feed ban. Based on the known or most likely year of birth, an average of 1.4 cases of BSE occurred among the group of animals born each year in Canada from 1991 through 2004. The highest reported number of cases by birth year in a single year, 3 BSE cases, occurred in 2000, 2001 and 2002. The most recently reported case extends the period of BSE transmission in Canada through at least the latter half of 2004. (citations omitted)

http://www.cdc.gov/ncidod/dvrd/bse/, downloaded Sept. 21, 2011.

To reduce any risk of acquiring vCJD from food, concerned travelers to Europe or other areas with indigenous cases of BSE may consider either avoiding beef and beef products altogether or selecting beef or beef products, such as solid pieces of muscle meat (rather than brains or beef products like burgers and sausages), that might have a reduced opportunity for contamination with tissues that may harbor the BSE agent.

http://www.cdc.gov/ncidod/dvrd/vcjd/risk_travelers.htm, downloaded Sept. 21, 2011.

13

Incubation Periods Have Not Lengthened in Canada as In Europe, Where BSE Spread Is

Thought to be Under ControlLifespans of Known BSE-Positive Canadian-Born BSE Cases

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Nu

mb

er o

f B

SE

Cas

es

Case # 7

Case # 12

Case # 3

Case # 9

Case # 1

Case # 2

Case # 4

Case # 5

Case # 6

Case # 10

Case # 13

Case # 16

Case # 11

Case #15

Case # 8

Case # 14

Case # 17

Case # 18

Case # 19

14

Canada Has Significantly Reduced Its Annual BSE Testing

Canada's Annual BSE Testing and Results

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

To

tal

Cat

tle

Tes

ted

An

nu

ally

Annual Tests 3710 23550 57768 55420 58177 48808 34618 35655 25445

2003 2004 2005 2006 2007 2008 2009 2010 2011 -Aug

2 BSE Positives

5 BSE Positives

3 BSE Positives

4 BSE Positives

1 BSE Positive

0 BSE Positives

2 BSE Positives(1 Imported to U.S.)

1 BSE Positive

1 BSE Positive

15

Canada Has Significantly Reduced Its Monthly BSE Testing

Canada's Monthly BSE Testing

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Nu

mb

er o

f C

attl

e T

este

d E

ach

Mo

nth

2008 6227 5587 5747 6713 5726 3908 2593 1966 2244 2500 2669 2928

2009 3507 3285 3592 3900 2991 2729 2294 2009 2170 2596 2719 2826

2010 3536 3195 4015 3806 3105 2905 2405 2105 2388 2371 2925 2899

3-Yr Ave (05-07) 5310 5325 6511 6773 5820 4531 2890 2660 3029 3337 5456 5479

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

16

In Return for Having Among the Weakest of Disease Import Standards, the U.S.

Cattle Industry Is:

• Suffering a Global Trade Deficit in the Trade of Cattle, Beef, Beef Variety Meats and Processed Beef.

17

Long-Term Global Trade Deficit in Cattle, Beef, Beef Variety Meat and Processed Beef

($16 Billion Cumulative Cost)U.S. Global Trade Balance

Live Cattle, Beef, Beef Variety Meat, Processed BeefR-CALF USA, Sept. 21, 2011

HS-6 Digit

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Val

ue

in 1

000

Do

llars

Exports 3,637,193 648,298 1,136,658 1,758,309 2,304,207 3,208,976 3,060,897 4,133,409 3,176,308

Imports 3,553,119 4,232,467 4,779,442 4,867,587 5,296,271 4,957,138 4,141,458 4,530,722 2,797,944

Trade Balance 84,074 -3,584,169 -3,642,784 -3,109,278 -2,992,064 -1,748,162 -1,080,561 -397,313 378,364

2003 2004 2005 2006 2007 2008 2009 2010 Jan-Jul 2011

18

Trade With Canada and Mexico Contributes More than Half to the U.S. Trade Deficit

($9.9 Billion Cumulative Cost) U.S. Trade With Canada and Mexico

Live Cattle, Beef, Beef Variety Meat, Processed BeefR-CALF USA, Sept. 21, 2011

HS-6 Digit

-2,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Val

ue

in 1

000

Do

llars

Exports 1,057,030 517,943 870,385 1,315,186 1,461,557 1,686,586 1,533,304 1,558,281 1,149,845

Imports 1,788,316 1,796,693 2,394,262 2,611,919 2,907,845 2,843,198 2,294,563 2,823,453 1,568,873

Trade Balance -731,286 -1,278,750 -1,523,877 -1,296,733 -1,446,288 -1,156,612 -761,259 -1,265,172 -419,028

2003 2004 2005 2006 2007 2008 2009 2010 Jan-Jul 2011

19

Increased Exports 2009-2010

    2009 2010  

Partner Product Value Value Amount of Increased Value

World Total 020230 - Bovine Boneless Froz 719,079 1,146,145 $427,066

World Total 020130 - Bovine Boneless Fr/C 1,502,278 1,724,773 $222,495

World Total 020220 - Bovine Bone In Froz 157,313 369,268 $211,955

World Total 010210 - Bovine Live, Pure 40,048 114,993 $74,945

World Total 020629 - Bovine Offal Froz 142,639 209,149 $66,510

World Total 020621 - Bovine Tongues, Froz 45,155 75,448 $30,293

World Total 020622 - Bovine Livers, Froz 88,227 118,592 $30,365

World Total 160250 - Bovine Meat, Prep 113,052 135,324 $22,272

World Total 020610 - Bovine Offal Fr/Ch 45,931 59,463 $13,532

World Total 020110 - Bovine Carcass Fr/Ch 5,588 13,124 $7,536

World Total 021020 - Bovine Meat, Salted 5,281 7,875 $2,594

World Total 020210 - Bovine Carcass Froz 4,734 4,956 $222

World Total 010290 - Bovine Live 18,745 17,752 -$993

World Total 020120 - Bovine Bone In Fr/Ch 172,827 136,549 -$36,278

Grand Total   3,060,897 4,133,409 $1,072,512

20

Using Weaker U.S. Disease Import Standards to Leverage the Reopening of

Export Markets Is Deplorable

• USDA Has a Duty to Prevent the Introduction of Dangerous Diseases Into the U.S. (see 7 U.S.C. § § 8301 (1), 8303 (a)(1)) and Performance of that Duty Is Essential to Restoring the United States’ Lost Reputation of Maintaining the Healthiest Cattle Herd in the World, which Reputation Was the U.S. Cattle Industry’s Competitive Advantage

21

USDA and the OIE Are Incapable of Accurately Evaluating the Risk of FMD

Outbreaks in Foreign CountriesCountry/Region Date Declared FMD Free Date of FMD Outbreaks

Region within Argentina July 2000 August 2000

March 2001

Region within Uruguay October 2000 April 2001

Region within Republic of South Africa

April 2000 September 2000 November 2000

South Korea December 2009 January 2010

Japan 2001 April 2010

Region within Paraguay May 2011 September 2011

22

USDA has Failed Its Mission to Prevent the Introduction and Spread of TB

• “Each year 1-2 [TB] infected animals per 100,000 animals imported from Mexico are identified through slaughter detection or epidemiologic investigations.” (APHIS’ March 2011 report on TB pathways).

• In 2010, 1,221,111 Mexican Cattle were imported into the U.S. Based on APHIS’ own estimate, we likely introduced between 12 and 24 TB infected cattle in 2010 alone.

• USDA wants U.S. cattle producers to manage these diseased cattle with its new mandatory animal identification scheme.

23

History Shows that Exports Do Not Drive Live Cattle Prices Paid to Farmers and

Ranchers

R-CALF USA

Relationship Between Export Volumes and Fed Cattle Prices

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Exp

ort

s: B

illi

on

s o

f P

ou

nd

s

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

Fed

Cat

tle

Pri

ces

(per

cw

t.)

Imported Canadian CowDetected with BSE

Canadian-U.S. FreeTrade Agreement

Effective Date of NAFTA

Thirteen Years of Depressed Prices

Source: USDA-ERS

24

Long-Run Domestic Price Depression Coincides with Increased Cattle Imports that Have Recently Introduced

TB and Classical BSE into the United States

RELATIONSHIP BETWEEN CATTLE IMPORTS AND FED CATTLE PRICES

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Nu

mb

er o

f C

attl

e Im

po

rts

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

Fed

Cat

tle

Pri

ces

(per

cw

t.)

Canada-U.S. FreeTrade Agreement

Effective Dateof NAFTA

Record Live Cattle Imports from Mexico

BSE Detectedin Canada

Source: USDA-ERS2009 Estimated

R-CALF USA

25

The Solution Is To Address The Problem, Not The Problem’s Symptoms

• The problem’s symptoms include loss of consumer confidence in the health and safety of U.S. cattle and beef products, reduced consumption of U.S. beef, severe restrictions on U.S. beef exports, and depressed prices for U.S. cattle farmers and ranchers.

• The problem is that the U.S. maintains disease import standards that are too weak to prevent the introduction of dangerous diseases, and everyone knows it.

26

The Solution

• USDA Must Restore for U.S. Livestock, Livestock Producers, and the People of the United States Its Previously Weakened Disease Import Restrictions and Endeavor to Achieve the Highest Possible Level of Protection Against the Introduction and Spread of Animal Diseases.

27

Priority Action: In Descending Order of Priority

• Immediately dedicate all available resources to prevent the introduction and spread of foreign animal diseases in the United States.

• Immediately Reverse the OTM Rule that Allows the Importation into the U.S. from Canada of Older Cattle, and Beef from Older Cattle, that Harbor the Highest Risk for BSE.

After the OTM Rule is Reversed:

• Require Canada, and any other country with BSE cases born after their respective feed bans, to test all slaughtered cattle over 30 months of age (OTM) for at least one-year prior to considering the resumption OTM beef.

• Assist U.S. beef packers in the voluntary testing for BSE.

• Cease all efforts to implement a mandatory animal identification system – which is designed to manage other countries’ animal disease problems after they enter the United States – and redirect all resources currently deployed for animal identification to strengthen our disease protections at our borders, including increased testing of imported livestock.

28

Additional Actions• Require all cattle imported into the U.S. from Mexico to be tested for

bovine tuberculosis (TB), directed to designated feedlots, and held in those feedlots until they are ready for slaughter.

• Require all cattle imported into the U.S. from any country with known TB or brucellosis reservoirs, in either livestock or wildlife, to be tested for TB and brucellosis prior to entering the United States.

• Reverse the recently promulgated “regionalization” scheme that allows the importation of cattle or beef from countries with ongoing disease outbreaks by carving out a specific region or zone within those countries and designating products in that region eligible for export to the United States.

29

What’s at Stake? The Disconnect Between Domestic Cattle Prices and Retail Beef

Prices Will Worsen

Source: Dr. Robert Taylor, Auburn University R-CALF USA

Black: Cattle PricesRed: Retail Beef Prices

30

What’s At Stake? The Domestic Cattle Industry Will Continue to Shrink even as

Consumption Increases

Source: USDA FAS, NASS R-CALF USA

Number of Beef Cattle Operations vs Domestic Beef Consumption

700

800

900

1,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

No

of

Bee

f C

attl

e O

per

atio

ns

(Th

ou

san

ds)

24,500

25,000

25,500

26,000

26,500

27,000

27,500

28,000

28,500

Do

mes

tic

Bee

f C

on

sum

pti

on

in

Po

un

ds

(Th

ou

san

ds)

Domestic Beef Consumption No. of Beef Cattle OperationsSource: USDA FAS, NASS R-CALF USA

31

What’s at Stake? The U.S. Cattle Cycle Will Disappear

USDA NASS, Agricultural Statistics Board

Total U.S. Cattle Inventory and Beef Cow Inventory, January 1

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Cat

tle

Nu

mb

ers

(Mil

lio

ns)

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

Total Beef Cow Inventory Total Cattle Inventory

Start 4-Year Liquidation

Start 8-Year Liquidation

Start 14-Year Liquidation

R-CALF USASource: USDA-NASS

32

What’s at Stake? Domestic Beef Producers Will Continue Losing their Share of the Total

Available Beef Supply

Source: USDA ERS R-CALF USA

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Total Domestic Production

0123456789

10111213141516171819202122232425262728293031

Bil

lio

ns

Po

un

ds

Origins of the United States' Beef Supply

Total Available Beef in U.S. Market

14 % of All Available Beef was Imported

in 2010

10 % of All Available Beef was Imported

in 1985 13 % of All Available Beef was Imported

in 1996

Imported Beef

Beef from Imported Cattle

Data Source: USDA-ERS

Beef produced exclusivelyfrom cattle born and raised in the United States

R-CALF USA

33

What’s at Stake? Domestic Beef Production Will Continue to Lag Behind

Domestic Beef Consumption

Source: USDA ERS, FAS R-CALF USA

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

2000

2002

2004

2006

2008

2010

Imported beef and beef from imported cattle

0123456789

101112131415161718192021222324252627282930

Bil

lio

ns

Po

un

ds

Domestic Consumption in Excess of Domestic Production1962-2010

Widest spread in history of industry, 2004-2007

Imported Beef and Beeffrom Imported Cattle

Total Domestic BeefConsumption

Consumption Increasesafter 1993

Source: USDA FAS, ERS

Beef Produced Exclusivelyfrom Cattle Born and Raisedin the United States

R-CALF USA

34

What’s at Stake? The Domestic Cattle Industry Will Continue to Shrink and Hollow Out Rural Communities all Across America

Source: USDA-NASS R-CALF USA

75,000

Loss of U.S. Livestock Operations 1980-2010

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

Type of Livestock Operations

Nu

mb

er o

f U

.S.

live

sto

ck O

per

atio

ns

1980 1,272,950 667,000 335,270 120,000

2010 742,000 60,460 62,500 81,000

>100 Hd 72,000 12,060 16,000 5,022

Beef Cattle Swine Diary Sheep

42% Loss

91% Loss

81% Loss 32% Loss

Source: USDA-NASS R-CALF USA

35

The Present and Future Viability of the U.S. Cattle Industry Is Wholly Dependent on the Ability of U.S.

Cattle Producers to Maintain a Healthy Cattle Herd. This is Fundamental. And, this Is

Fundamentally Impossible if USDA Persists in Its Support of Inadequate Disease Protections that Encourage the Introduction of Cattle Diseases

from Foreign Sources.

We Respectfully Urge USDA to Immediately Change its Present Course and Begin

Aggressively to Protect our Borders from the Introduction and Spread of Avoidable Animal

Diseases

36

R-CALF USAP.O. Box 30715

Billings, MT 59107406-252-2516

[email protected]