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R-CALF USA’s Message to Cattle Industry:
"We Don’t Have a Lot of Time Left"

"This is your industry, your communities, and your responsibility. There’s a big difference between what U.S. and international beef industries are pursuing and what will be meaningful to U.S. cattle producers," said R-CALF United Stockgrowers of America President Leo McDonnell during a weeklong speaking tour across Washington, Oregon and Idaho in late September.

Following passage of Trade Promotion Authority (TPA), the President announced this authority would speed up Free Trade Agreements (FTAs) with South America, Australia, and New Zealand. In addition TPA will be used to expedite the WTO negotiations. McDonnell explained that negotiations are well underway for some of these agreements and each will have a tremendous impact on the cattle industry. He said President Bush and other hemispheric leaders have agreed to work to implement the Free Trade Area of the America’s (FTAA) by 2005. "There simply is not a lot of time left to ensure that issues important to cattle producers are on the table," McDonnell said.

McDonnell discussed other FTA’s under negotiation including one with Chile, a country with which the U.S. has a growing agriculture trade deficit, Singapore, and Central America. "These negotiations will go on with or without the U.S. cattle industry," McDonnell explained. "Whether your concerns are addressed will depend on how engaged you are and how supportive the U.S. cattle industry is in backing R-CALF USA’s efforts to make sure our trade laws are not used as bargaining chips in these or any other trade agreements," he said.

Speaking about the World Trade Organization’s (WTO’s) Doha agriculture negotiations, McDonnell said the U.S. cattle industry has been noticeably absent in advancing cattle producer issues. "Our industry has a tremendous opportunity in these negotiations to ensure their supply-sensitive industry is afforded safety mechanisms that reflect the perishable and cyclical nature of our product," McDonnell said.

McDonnell used a recent WTO decision to reinforce the need for cattle producers to be involved, "There’s something very wrong with international trade laws when the WTO can throw out the U.S. sheep industry’s case because it ruled that lamb and mutton have nothing to do with sheep prices. McDonnell said, "The cattle industry cannot afford to allow this dangerous precedent to prevent cattle producers from seeking a meaningful remedy if importers engage in unfair trading practices involving beef."

McDonnell’s audiences were surprised to learn that the United States Trade Representative (USTR) does not support the domestic standard for determining the origin of beef. The U.S. passed a country of origin labeling standard requiring animals to be born, raised, and slaughtered in the U.S. before receiving a USA label. However, McDonnell said the USTR supports the beef industry’s definition, which basically says origin is where the animal was slaughtered. "We need to work together as an industry if we are to change this standard," he said.

McDonnell spent considerable time explaining the new dynamics influencing today’s cattle industry. He explained the cattle industry is a supply sensitive industry that produces a perishable product. Historically, both cattle supplies and prices operated cyclically in what was known as the cattle cycle. "Unfortunately," he said, "Beef and cattle imports during the past 5 years increased faster than the decline of the U.S. cow herd. This has interfered with the operation of the cattle cycle and has taken away the cattle industry’s ability to reach a new high cycle, quite possibly exposing U.S. cattle producers to only extended lows."

McDonnell continued, "Because nearly 18 percent of the U.S. beef market has been lost to imported cattle and beef, the beef industry is using these imports to manipulate domestic market prices, much in the same way they use captive supplies to suppress market prices. Since live cattle prices have lost their relationship to beef prices, the cattle industry can no longer rely on competitive supply/demand fundamentals to explain cattle prices, our industry must begin looking at the new, non-competitive forces impacting our markets to both explain and predict our prices. We’re operating under a new dynamic, a new demand model, and we’re rapidly losing our share of the consumer beef dollar."

McDonnell concluded his remarks by encouraging producers to get involved with their industry. "The most important first step is to start supporting an organization that best represents your interests and your values," he said.

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