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USDA working to reopen border to Canadian cattle
By Lee Mielke

The USDA has renewed efforts to reopen the U.S. border to more Canadian slaughter cattle and breeding stock, a step which could pave the way for importing dairy replacement heifers again, according to Dairy Profit Weekly editor, Dave Natzke in Friday’s broadcast.

You’ll recall it was concern over the discovery of “Mad Cow” disease (bovine spongiform encephalopathy) in Canada that prompted the closure more than three and a half years ago. Since then, the U.S. has allowed imports of some Canadian beef and younger slaughter cattle and earlier this year, the USDA submitted a plan to the Office of Management and Budget (OMB), an office within the White House which evaluates the effectiveness of agency programs.

That proposal to broaden slaughter and breeding cattle imports was withdrawn in July, however, when another case was found in Canada but the USDA has now declared Canada a minimal risk region for Mad Cow disease and resubmitted its plan to OMB, which has 90 days to review the proposal, Natzke reported. If the proposal is approved, it will be subject to a public comment period, followed by further government review, so it would likely be late summer 2007 before the reopening would occur, according to Natzke.

Estimates suggest 60,000-90,000 dairy replacements were imported from Canada annually prior to the import ban, he said, but a couple of potential road blocks have popped up the past couple of weeks to a resumption of open borders.

First, a U.S. Appeals Court ruled a lawsuit by a U.S. beef cattle producer group (R-CALF), blocking USDA’s efforts, can move forward, and the U.S. Ninth Circuit Court is expected to hear arguments on that in December and January.

Second, the Canadian Food Inspection Agency is investigating a case where railcars used to haul meat and bone meal, which is banned as cattle feed, were later used to haul feed to cattle producers in Quebec and Ontario.

Cash dairy product prices remain depressed. Block cheese closed Friday at $1.32 per pound, unchanged on the week, but 11.5 cents below that week a year ago. Barrel closed at $1.28, down 2 cents on the week, and also 11.5 cents below a year ago. Nine cars of block traded hands on the week and five of barrel. The latest NASS-surveyed U.S. average block price hit $1.3737, up 2.7 cents. Barrel averaged $1.4170, up 2.2 cents.

Butter closed Friday at $1.25, down 2.75 cents on the week, 12 cents below a year ago, and the lowest price since late July. Thirty-five cars were sold. Extra Grade nonfat dry milk hit $1.45, up a nickel on the week, while Grade A remained at $1.65. The NASS butter price averaged $1.2644, down 0.6 cent. Nonfat dry milk hit $1.0167, up 1.9 cents, and dry whey averaged 40.13 cents, up 2.6 cents.

Jim Tillison, speaking in Tuesday’s monthly update by the Alliance of Western Milk Producers, said the corn price is starting to have an impact on milk production and, with corn at over $3 a bushel, California producers at least are starting to change their rations and that’s starting to affect milk output.

Demand for milk protein is very strong, he said, and the Super Bowl will help cheese sales. He looks for a low of $1.25 on block cheese and $1.20 on butter.

The CME’s Daily Dairy Report says the market tone is typical for this time of year, with milk volumes and component levels rising and cheese orders mostly complete. Cheese users typically wait until after the first of the year to rebuild inventories and the abundance of cream for butter is pulling prices lower.

The California Department of Food and Agriculture (CDFA) held a hearing on December 4 to consider adjusting Class I milk prices. State law mandates that CDFA, on an annual basis, examine weighted average producer milk prices with those in the contiguous states, according to Tillison, and if they are not in a “reasonable relationship,” they must hold a hearing to consider adjustments.

The price difference the past year has been “pretty substantial,” Tillison said, as was the case in 2005, so the Alliance requested the hearing a year ago. The California and Federal orders are “two very different systems in terms of how Class I milk is priced,” he said, “and that has an influence on the price differential.”

Three proposals were offered at the hearing, according to Tillison, with processors suggesting the addition of a whey factor in the pricing formula.

Nationally, there are plenty of dairy products available. USDA’s Dairy Products report put October butter production at 118.2 million pounds, up 14.4 million pounds or 13.9 percent above September and 9.3 million or 8.5 percent above a year ago. Nonfat dry milk totaled 72.7 million pounds, up 7.8 million pounds or 12 percent from September but 1 million or 1.2 percent below a year ago.

American-type cheese totaled 321 million pounds, down 4.2 million pounds or 1.3 percent from September, but 8.7 million or 2.8 percent above a year ago. Total cheese output, at 800.2 million pounds, was up 15.9 million pounds or 2 percent from September, and 39.8 million or 5.2 percent above a year ago.

Cheddar cheese production in Wisconsin was down 8.4 percent from a year ago, while California was down 11.9 percent. Idaho was up 5.7 percent and Minnesota was down 3.5 percent. California butter production was up 5.9 percent from a year ago, while Wisconsin butter manufacturing was up 7.3 percent.

This farm news was published in the Dec. 13, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.