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February 11, 2005

Table of Contents
A Look At How NCBA Border Directive Might Fare
2006 Beef Industry Long Range Planning Group Named
Tyson Sets Schedule For Restarting Idled Operations
Agriculture Coalition Supports Expanded Trade
Opening Of Japan Export Market Appears Closer
Cattle-Fax Takes A Look Back At 2004
Certified Hereford Beef Records First Million-Lb. Week
Williamson Family Named Nation's Top 2004 Steward
Jay Truitt To Lead NCBA Government Affairs Office
Keith Gregory, First MARC Director, Passes Away
Texas Beef Producer Earns Industry's Vision Award
President Proposes Big Budget Cuts for Agriculture
USDA Intends To Remove 30-Month-And-Older Provision
Single Case of Bovine TB Discovered in Nebraska
UN Assures Consumers That BSE Testing Works
Wyoming Bill Protects Livestock Owner Identity
Risk Management Strategies Northeast Conference
Arizona Set To Roll Out Voluntary Animal ID Program
NIAA Set To Convene In St. Paul, MN, In April

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Our Perspective
A Look At How NCBA Border Directive Might Fare
The directive that sailed through the cattle industry convention last week and will be sent to the entire National Cattlemens' Beef Association membership on Feb. 17 set forth a laundry list of concerns NCBA wants addressed before it can support a border reopening. The directive's 11 key points include:

Prohibit the importation of cattle and beef products from cattle more than 30 months of age.
Assure all Canadian firewalls to prevent BSE, specifically adherence to their feed ban, are functioning properly.
No feeder cattle imported animal health standards, especially bluetongue and anaplasmosis, are harmonized.
Movement of Canadian cattle into the U.S. must be managed to minimize market disruptions.
Fed cattle imported for immediate slaughter must be certified to be less than 30 months of age at time of importation.
Ban the use of fetal bovine serum from heifers imported for immediate slaughter.
Disallow USDA grades and stamps on any imported beef.
Feeder cattle must be branded with "CAN," individually ID'd with an ear tag, certified to be less than 30 months of age at time of slaughter, shipped in sealed trucks from the border directly to an approved feedlot, then moved directly in sealed trucks to slaughter.
Canadian feeder heifers imported to the U.S. must be spayed.
USDA must work with primary trade partners to ensure expanded access for U.S. beef exports isn't jeopardized in any way by expanded importation of Canadian cattle and beef.
The administration must reach an agreement to re-establish beef and beef byproduct trade with Japan, South Korea and Mexico, and apply economic sanctions if necessary.

USDA has already taken action on Point 1. Point 2 was partially addressed by NCBA's trade delegation, and additional investigations are ongoing with reports expected prior to March 7.

Point 3 isn't only obvious, but doable with little difficulty. The reality is Canada has far more at stake than the U.S., and this non-tariff trade barrier issue has existed for nearly 20 years. It must be resolved and aligned with the science immediately, as the U.S. will never have this much leverage again.

Point 4 is merely a restatement of past NCBA policy but it points out just how complicated implementing this ruling will be and the possible need for more time. It's also an issue difficult to define and adhere to without trade first being established. Nothing in the current rule addresses mitigating negative short-term market effects.

Point 5 is essentially already part of the USDA rule and isn't expected to be a major stumbling block. Point 6 is another difficult-to-resolve issue, while Point 7 is merely a restatement of current NCBA policy that USDA will likely continue to ignore. Point 8 is essentially a part of the current rule.

Point 9 is a major departure from the current rule and would be easy to implement. But, it's not likely to happen as the provisions and tracking of these heifer feeders are considered to be adequate. While inherently obvious, Point 10 isn't expected to carry much weight.

Point 11, however, is critical and the most controversial. USDA seems adamantly opposed to it, feeling the border reopening will lead to reopening of U.S. export markets. This will likely be the most difficult objective to achieve.
-- Troy Marshall

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Industry Structure
2006 Beef Industry Long Range Planning Group Named
The 15 members of the Beef Industry Long Range Planning Group have been appointed. The group, representing industry sectors from cow-calf to retail, will conduct its planning work during 2005 and present a recommended plan at the Annual Cattle Industry Convention in February 2006.

Team members include: Chair Dee Lacey, CA; Paul Avery, FL; Donnell Brown, TX; Brad Graham, NC; John Hayes, IL; Jack Hunt, TX; Steve Hunt, MO.; Troy Marshall, CO; Jackie Moore, MO; Bill O'Brien, TX; Robert Rebholtz, ID; Bill Rupp, KS; Mike Thoren, CO; Richard Waybright, PA; and Roger West, FL.

Jan Lyons, 2004 NCBA president, Manhattan, KS, said, "This plan will be a road map for our industry to a profitable future. Success happens when we focus our vision and our resources around one plan, one vision and one voice."
-- NCBA and Cattlemen's Beef Board

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Tyson Sets Schedule For Restarting Idled Operations
With the anticipated March 7 reopening of the U.S. to imports of Canadian live cattle less than 30 months of age, Tyson said today it will restart several idled beef plants and work shifts in the Upper Midwest and Pacific Northwest over the next two weeks.

Tyson, the world's largest processor and marketer of chicken, beef, and pork and the second-largest food company in the Fortune 500, said it will resume operations according to the following schedule:

Denison, IA -- Feb. 16
Norfolk, NE, A-shift processing -- Feb. 21
West Point, NE -- Feb. 22
Boise, ID -- Feb. 22
Norfolk, NE, B-shift processing -- Feb. 23
Pasco, WA, B-shift processing -- Feb. 24

A total of 2,100 workers had been affected by the Jan. 10 closures, including 275 workers at Denison, 900 at Norfolk, 275 at West Point, 250 at Boise and 400 at Pasco, Tyson reports.

"While cattle numbers remain tight, we believe supplies will improve in the months ahead, especially as the anticipated flow of Canadian cattle resumes," John Tyson, chairman and CEO of Tyson Foods, said in a news release. "Beef demand has been weak, largely because of high beef prices and the attractive value of competing meats. We typically experience seasonal improvements in beef sales as we move into the spring and summer months. We're hopeful cattle prices will moderate, so beef can be priced more competitively with other proteins."
-- Joe Roybal

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Foreign Trade
Agriculture Coalition Supports Expanded Trade
More than 50 producer and farm organizations, agribusinesses and ag trade associations sent a letter to every member of Congress urging the passage of the Central American and Dominican Republic Free Trade Agreement (CAFTA-DR).

According to the coalition letter, "over 99% of food and agricultural products from these countries already receive duty free treatment in the United States, while U.S. farm exports face significant barriers in these markets. Without implementation of the CAFTA-DR, U.S. agriculture will continue to be prejudiced by this non-reciprocal trade, and will be forced to continue to compete for those markets against third countries that currently maintain a competitive advantage."

U.S. products expected to gain under the agreement are corn, wheat, rice, soybeans and meal, poultry, dairy products, pork, apples, and beef. This will be a very difficult trade vote with the strong opposition of labor and sugar. CAFTA-DR covers the countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

Groups signing the letter included: American Farm Bureau Federation, American Meat Institute, American Soybean Association, National Association of Wheat Growers, National Cattlemen's Beef Association, National Corn Growers Association, National Chicken Council, National Milk Producers Federation, National Pork Producers Council, and USA Rice Federation.
-- P. Scott Shearer, Washington, D.C.

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Opening Of Japan Export Market Appears Closer
U.S. officials' frustration over getting the border reopened is growing more and more obvious, as Japan had agreed to the importation of cattle under 20 months of age previously but then stalled over determining how to age these cattle.

However, Japan's technical teams announced this week that Japan would accept the maturity score of "A40 or less," as it's called by USDA graders, to verify age, along with the paper trail methods that have already been established. While it appears the technical issues now have been resolved, Japan is still wrestling with the political issues.

It's safe to say, however, that the U.S. is closer than it ever has been in the past (sarcasm is a good thing when looking at these trade disputes). The Japanese market was $1.7 billion in 2003, and Korea's was $800 million in 2003.
-- Troy Marshall

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Markets
Cattle-Fax Takes A Look Back At 2004
The industry lost $11/cwt. in value due to a negative trade balance in 2004, Cattle-Fax estimates. The net value of beef and variety beef trade since 1995 had been averaging about $1.4 billion/year but went negative in 2004, creating a $3.5-billion swing in the economic impact of prices as the result of lost trade.

Amazingly, net beef supply, which is U.S. beef production plus beef imports minus beef exports, was the second largest in history. Mexico sent a record 1.35 million head of cattle to the U.S. in 2004.

It was consumer demand that led to record prices and profitability. U.S. consumer expenditures on beef took the biggest jump in decades, nearly $7 billion in one year. Retail beef prices were up 9% and increased more than 20% since just three years ago.

In addition to the demand increase, actual numbers were extremely tight. The 2004 number of 27 million head was the smallest steer and heifer slaughter number since 1993.

Instead of sending the U.S. fed cattle, Canada shipped beef, hitting record tonnage levels, as packing capacity in Canada has already grown by 22%.

Even more impressive was the fact that both pork and poultry production hit new all-time highs.

If you ever questioned whether this was a demand-driven market, consider that per-capita, net-meat supplies reached 279 lbs./person in 2004.
-- Troy Marshall

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Beef Marketing
Certified Hereford Beef Records First Million-Lb. Week
Licensed packers of Certified Hereford Beef LLC (CHB LLC) sold more than 1 million lbs. of product to the program's 400 retail locations, as well as foodservice outlets, the third week of January.

This achievement further propels the 10-year-old program toward its goal of creating an annual demand of 1 million head of Hereford-influenced cattle. In week four of 2005, Certified Hereford Beef's packers harvested a record number of cattle, exceeding 10,000. If ranked among the largest U.S. fed-beef packers, CHB LLC would rank ninth based on average weekly harvest.
-- Certified Hereford Beef

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Environment
Williamson Family Named Nation's Top 2004 Steward
Frank "Sonny" W. Williamson Jr. and Frank "Wes" Williamson III of Williamson Cattle Company in Okeechobee, FL, and Faunsdale, AL, were selected as the National Winners of the 2004 National Environmental Stewardship Award Program (ESAP). The award recognizes U.S. cattle producers whose stewardship practices are progressive, cost-effective and contribute to environmental conservation. The announcement occurred last week during the Cattle Industry Annual Convention and Trade Show in San Antonio, TX.

"The Williamsons' operation is an exemplary picture of environmental stewardship, while demonstrating the ability and willingness to work with the public to help promote the overall goals established by the ESAP," says Dave Petty, Iowa cattle producer and chairman of the award selection committee. "They will certainly continue the impressive legacy established by the other national winners, and they are an outstanding example for all cattle producers to emulate."

In its 14th year, the awards program is sponsored by Dow AgroSciences LLC and the Natural Resources Conservation Service of USDA and administered by NCBA. The Williamsons were this year's regional winners from NCBA Region II, which consists of eight states in the Southeast.

"This family has put forth an outstanding effort to conserve, maintain and improve natural resources," Petty says. "They have taken a proactive approach to working with the public and are successful in helping others better understand how the cattle industry, conservation and the environment fit together."

For vignettes on Williamson Cattle Company and the six other regional honorees, see the February issue of BEEF magazine ("America's Top Stewards," page 30), or go online to www.beef-mag.com.
-- Joe Roybal

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Industry News
Jay Truitt To Lead NCBA Government Affairs Office
Jay Truitt is NCBA's new vice president of government affairs, heading up NCBA's Washington, D.C., office. Truitt has served as NCBA's executive director of legislative affairs since March 2001.

"Truitt brings exceptional leadership, lobbying and management experience to his new role," says NCBA CEO Terry Stokes. "His ranching heritage from his family's cow-calf operation in Missouri, his experience at the Missouri Cattlemen's Association and his previous role at NCBA provide a depth of industry knowledge."

During his tenure at NCBA, Truitt served as NCBA's top lobbyist and managed NCBA's policy directives on issues such as tax reform, ag policy and animal ID. He's a graduate of the U.S. Air Force and University of Maryland with degrees in business and public relations.

Stokes also announced the promotion of Bryan Dierlam to executive director, government affairs. Dierlam served as NCBA's director of legislative affairs since March 1999. He holds a BS degree in animal science and an MBA in finance from Texas A&M University.
-- NCBA

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Keith Gregory, First MARC Director, Passes Away
Keith E. Gregory, the first director of USDA's Meat Animal Research Center (MARC), Clay Center, NE, and a researcher of world renown in beef cattle breeding, passed away Feb. 6 at the age of 80.

Gregory was a leading world research figure in the areas of breed and heterosis evaluation, crossbreeding and composite populations, selection for twinning, and multidisciplinary approaches, says Jim Gosey, University of Nebraska-Lincoln beef cattle specialist.

Gregory was honored for his lifetime contributions to animal breeding and genetics by being named to the USDA/ARS Hall of Fame in September 2004. He was also cited twice in BEEF magazine, along with fellow MARC researchers Larry Cundiff and Robert Koch, as among "The 25 Who Made A Difference" in 1989 and "The BEEF Top 40" in 2004. Both BEEF magazine features honored the industry's top contributors to its progress.

Gregory served 43 years with USDA's Agricultural Research Service, where his research helped shape the selection procedures and breeding systems used to capitalize on the benefits of crossbreeding in the U.S. beef cattle industry. He became the first director of MARC in 1966, a position in which he served until 1977. Through his leadership and vision, a multi-disciplinary research program was established that is now internationally recognized.

Our condolences to the Gregory family. Condolences can be sent to Gregory's wife, Wanda, at 1834 Home Street, Hastings, NE 68901.
-- Joe Roybal

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Texas Beef Producer Earns Industry's Vision Award
Jim Schwertner, Capital Land and Livestock, Schwertner, TX, received the Beef Industry Vision Award. Presented by the National Cattlemen's Foundation (NCF), the award is given annually to the best beef innovator of the year.

Involved in cattle feeding and stocker cattle, as well as being one of the largest U.S. livestock dealers, Schwertner helped develop industry-leading programs, such as the Vac 45 program known as Schwertner Select, Beef Advantage and Consolidated Beef Producers, that have left a particularly indelible mark on the cattle industry.

"The industry needs vertically integrated information," Schwertner says. "The current technology, combined with individual ID, could evolve this industry into a vertical marketplace focused on quality and consistency. From the rancher to the retailer, we can evaluate the quality of the product being produced, striving to represent a better and more wholesome center of the plate for the consumer."

NCF is devoted to preserving the rich heritage and promoting the future of the beef industry through research and education.
-- National Cattlemen's Foundation

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Government
President Proposes Big Budget Cuts for Agriculture
President Bush sent his $2.5-trillion fiscal year (FY) 2006 budget to Congress this week. It proposes cutting farm programs and ag discretionary spending. Four noteworthy areas include:

Farm programs. The budget proposes cutting farm programs $5.7 billion over a 10-year period, with $587 million coming in FY 2006.

Conservation. $2 billion is proposed for the Conservation Reserve Program and $274 million for the Conservation Security Program, which will extend it into an additional 200 watersheds.

Livestock and food safety. The budget provides a $144-million increase for the Food and Ag Defense Initiative, designed to protect the food supply from accidental or terrorist threats; $7.3-million increase for BSE research; $37-million increase to assist livestock producers develop nutrient-management plans and comply with environmental regulations; and $59 million to finish building USDA's animal disease research and diagnostic facility in Ames, IA.

User fees. The budget proposes $139 million in user fees for meat and poultry plants for the cost of "providing inspection services beyond a single primary approved shift." The proposal doesn't affect current user fees for overtime and holiday inspection.

-- P. Scott Shearer, Washington, D.C.

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USDA Intends To Remove 30-Month-And-Older Provision
Ag Secretary Mike Johanns says he intends to strike the provision allowing importation of beef from Canadian cattle 30 months of age and older from USDA's rule published in the Jan. 4 Federal Register. He added, however, that USDA will likely stay with the original March 7 reinstatement date for trade with Canada in live cattle less than 30 months of age. Johanns also left the door open to importation of beef from cattle more than 30 months of age once USDA's investigations are complete.

NCBA pushed hard for the provision's removal from the rule. It was among key elements of a membership directive developed last week that laid out 11 provisions NCBA said had to be met. See article, "A Look At How NCBA Border Directive Might Fare," elsewhere in today's newsletter.

Otherwise, USDA appears committed to its March 7 timetable for resuming trade in Canadian cattle less than 30 months of age. The agency maintains Canada is a minimal-risk country and presents no food safety or herd health risks, that reopening the border to Canada is crucial to re-establishing trade with Korea and Japan, and that the U.S. treating the Canada situation as the U.S. would want to be treated by other countries.

NCBA is continuing to push hard on all 11 points of their directive. The current focus, however, seems to be centering on the provision that calls for delaying the reopening until trade with Japan, Korea and Mexico is re-established.
-- Troy Marshall

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Animal Health
Single Case of Bovine TB Discovered in Nebraska
State and federal animal health officials are investigating a slaughter positive bovine tuberculosis (TB) case recently discovered in Nebraska. Southwest Nebraska News says TB in an older cow was diagnosed by a USDA inspector at slaughter. Nebraska's Deputy State Veterinarian Del Wilmot reports there's no danger to the public and the carcass did not enter the human food supply.

Nebraska Department of Agriculture and USDA veterinarians are testing two probable source herds, which are under quarantine. Final test results will not be known for several weeks.
-- Joe Roybal

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UN Assures Consumers That BSE Testing Works
BSE testing is effective, the United Nation's Food and Agriculture Organization (FAO) said this week. Aimed at allaying consumer fears, the FAO report was made in the aftermath of two BSE discoveries in Canada in early January, Japan's first death of variant Creutzfeldt-Jakob Disease, and recent news that the brain-wasting disorder had been discovered for the first time in a goat.

"The three cases in Canada and the one case in the US from an imported animal are isolated incidents," said FAO animal production expert Andrew Speedy. "These cases were detected because of the testing procedures that are now in place."

FAO also said the BSE-infected goat was "one example in millions" and pointed out that it was born before Europe imposed a total ban on feeding of meat and bone meal to livestock in January 2001.
-- Reuters

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Wyoming Bill Protects Livestock Owner Identity
The Wyoming State Senate approved a bill this week that would permit only the state veterinarian and state health officer to release the identities of livestock owners with diseased cattle - either suspected or confirmed. The rule stems from last year's experience of a widely identified Campbell County herd suspected of brucellosis infection but later found to be clean, the Associated Press reports. A provision of the bill, however, does allow release of the information to adjacent landowners.
-- Joe Roybal

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Tips for Profit
Risk Management Strategies Northeast Conference
USDA's Risk Management Agency is hosting a March 2-3 seminar focusing on risk management strategies for smaller and limited resources producers and service providers in the Northeast. Slated for the Sturbridge Host Hotel and Conference Center in Sturbridge, MA, public and private ag organizations and small and limited resource farmers are encouraged to attend.

This conference will provide info on:

Financial record keeping tools to help increase profit.
Identifying and protecting your farm from risks.
Preparing and pinpointing tax savings.
Protecting your farm through appropriate business structures.
Increasing marketing strategies.
Organizing a community ag commission.
Leasing and transferring farmland.
The programs and services available from USDA.

For more on program details, lodging and registration, go to www.comteam.org/rmneconf.pdf, or call 617/636-3788, Ext. 2; or email hughjoseph@comcast.net.
-- Cornell University Beef Cattle Comments

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Animal ID
Arizona Set To Roll Out Voluntary Animal ID Program
Arizona will soon join the list of states with voluntary animal ID programs. The Yuma Sun reports state ag officials say the Tri-National Livestock Health and Identification Consortium will roll out in Arizona in two weeks.

The initiative was created by the USDA and is a pilot program involving Arizona, Colorado, New Mexico, two Mexico states and three Indian tribes in the Grand Canyon state, says Katie Decker, Arizona Department of Ag spokeswoman.

The Colorado Department of Agriculture is spearheading the program, and Arizona agriculture officials within the next two weeks will sign a participation agreement, she said. The objective is to get at least 20% of Arizona food animal producers to have a premise ID by the end of 2005.
-- Joe Roybal

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Industry Meetings
NIAA Set To Convene In St. Paul, MN, In April
The 2005 annual meeting of the National Institute for Animal Ag (NIAA) is April 3-7 at the Radisson Riverfront Hotel in St. Paul, MN.

NIAA's annual meeting brings together producers, veterinarians, business executives, scientists, academics, state and federal regulatory officials and other stakeholders in the animal food and fiber industry to discuss the latest issues in animal ag. NIAA provides forums for building consensus and advancing solutions for animal ag while providing continuing education and communication linkages for animal ag professionals.

For more info, visit www.animalagriculture.org or call 270/782-9798.
-- National Institute for Animal Ag

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