Guest opinion: Decline in Canadian, Mexican cowherds stabilizes with COOL implementation | TSLN.com

Guest opinion: Decline in Canadian, Mexican cowherds stabilizes with COOL implementation

Leo McDonnell
Columbus, Montana

United States country of origin labeling (COOL) for beef was implemented in 2009. While opponents to such consumer transparency issues have claimed that COOL was supported by those U.S. cattle producers wishing to restrict trade, I can tell you that was never the intent and the facts simply don't support this propagandist tactic.

From 2005 to 2009 the Canadian cow herd declined by 18 percent, from around 5.4 million cows to 4.3 million cows. Interestingly, from 2010 through 2014, after COOL implementation, there has only been a minimal contraction of 1 to 2 perent annually. While I'm not saying COOL had anything to do with these herd stabilizations, what an interesting coincidence.

What has been really impressive is to look at the volume of live cattle and beef imports from Canada as a percentage of the Canadian cow herd. While one would have thought that as the Canadian cow herd was shrinking, the percent of product for export after domestic use in Canada would have dropped. However, it appears the U.S. is taking a larger and larger share of Canadian production (cattle and beef) as a percentage of their cow herd, with 2013 and 2014 representing the highest at somewhere around 55-57 percent and that's figuring a 100 percent calf crop.

When you look at Mexico, it is basically the same. The Mexican cow herd began a steep decline in 1994 when Mexico had about 13 million beef cows. The cow herd shrank to 10 million in 2002 and 6.7 million in 2007. Interestingly, about the time COOL was implemented in 2008 and 2009, those numbers started leveling off and in 2011 and 2012 reached 7 million head. Numbers then fell again to 6.7 in 2013 and 6.8 in 2014 following a severe drought. Interestingly, even though Mexican cow numbers had dropped, 3 of the 5 top cattle import years since 2005 came after COOL was implemented. And yes they had a drought, but one of those years was 2014 and amazingly all this has happened at a time when the Mexican government initiated programs to add more USDA approved packing plants and rapidly worked to expand cattle feeding in Mexico to capture more value for the economy. Under these programs beef exports have increased to the U.S. now making Mexico the 4th largest exporter of beef to the U.S. In fact, we saw live animal equivalents of Mexican beef imports rise from 60,000 in 2008 to about 400,000 in 2014. When you add it all up, 5 of the top 6 years of cattle and beef equivalent have come since COOL was implemented.

If Canada and Mexico were truly being discriminated against, as determined by the WTO panel ruling, we should be taking less of their production, not more; however, a common theme through their market reports is that a strong US market has been driving these exports to the U.S. 2014 will be the 2nd highest year for cattle imports from Mexico and Canada into the U.S. and with the smallest cow herds on record. That's pretty amazing and certainly does not support claims of discrimination.

On another note, with increased liberalization of U.S. health protocols on BSE and FMD to South American countries and the EU, and increased FTA's on the horizon one can only expect increased imports into the U.S. This only makes it more important that U.S. producers have the tools necessary to move from commodity markets to more value based markets with the consumers, and COOL will be critical in allowing both U.S. cattle producers and U.S. consumers to differentiate their beef, as we have already done in many foreign markets. As one looks out on the horizon, one of the highest values consumers will be placing on the food they purchase in the future is 'how and where it is produced.’

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Leo McDonnell ranches in Columbus, Montana and Rhame, N.D., He also sits on various industry association Boards.