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Angus Journal

ILC–USA 2012
Regulatory Impact on Global Supply

by Kasey Miller for Angus Productions Inc.


DENVER (Jan. 10, 2012) — Next year, cattle producers can expect higher costs and uncertainty, said Mike Miller of Denver-based CattleFax during the 2012 International Livestock Congress (ILC). This year's event, hosted Jan. 10 at the Renaissance Denver Hotel, explored "Beef's Greatest Challenge: Feeding the World."


Mike Miller
Mike Miller    photos by Kasey Miller

In a panel moderated by Mitch Bowling of the U.S. Dairy Export Council, Arlington, Va., Miller and Ross Wilson of the Texas Cattle Feeders Association (TCFA), Amarillo, Texas, discussed regulatory and policy factors affecting the ability of beef producers to meet global demand.


Ethanol is a large policy that directly affects beef producers, Miller noted. With the Renewable Fuels Standard, corn usage for ethanol is steady. Miller said he did not anticipate a decrease in corn used for ethanol, although he did anticipate an increase in renewable fuels, with quite a bit of growth coming from cellulosic sources.


Miller illustrated with past trends that corn prices tend to spike very high and then settle to about half of that. He said he was hopefull that current high corn prices were in the spike stage and would settle relatively soon.


Ethanol exports have risen, as the Unitied States is overproducing relative to domestic demand, Miller noted. “Corn has an impact on our ability to grow our industry.”


The corn industry hasn’t had a problem crop, Miller observed. Until that would happen, he said, he anticipates ethanol production at similar levels as the past couple of years.


U.S. beef exports have risen in tonnage, though he mentioned that other countries' policies could prove problematic, introducing a new level of uncertainty. On the bright side, he predicted that the United States would export more tonnage than it imported for the next few years due to the low valuation of the dollar.


Other policies that could affect the U.S. beef industry include Australia’s carbon tax on methane emissions and the European Union's ban on gestation crates by 2013. Said Miller, “We’ve traded quotas and tariffs for sanitary and specfic compound issues.”


Wilson brought up a few regulations that were proposed or are changing, including changes proposed by the Grain Inspection, Packers and Stockyards Administration (GIPSA) and mandatory country-of-origin labeling (mCOOL). Citing a 2010 Informa Economics study, he said that the total supply chain loss that would have been attributed to the legislation was $879.9 million and 2,889 jobs in the cattle ranching and farming sector, the most in any production sector.


Ross Wilson Ross Wilson    photos by Kasey Miller

He said that another 2010 Informa Economics Cost/Benefit study reported that mCOOL has $1.1-$1.3 billion worth of supply chain costs vs. the $1.6-$1.7 billion estimated in 2003. This would include lower identification and traceability costs for producers and packer/processors, but higher costs to retailers.


Wilson mentioned that the new Animal Disease Traceability (ADT) program would cost about $5.5-$7.3 million, compared to the annual cost estimate of $176 million with 90% participation in the National Animal Identification System (NAIS) from 2009. However, ADT is a largely scaled-back version of the NAIS. The benefits of retaining U.S. and international markets would cost $1.32 billion per year if access were lost. It would also cost $27 billion to control and eradicate foot-and-mouth disease (FMD), if FMD were ever to strike the U.S. livestock industry.


Wilson predicted that ADT would fall short and have very minor benefits. He suggested finding out what the customer wants from traceability.


For additional coverage of ILC–USA 2012, return to the ILC index page.


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