News Releases

Canadian cattle producers have already lost an estimated $5 billion since the discovery of a single BSE-infected cow in Canada, according to a new report from BMO's Economics Department.

The U.S. border has been shut to live Canadian cattle since May 2003, when a single cow with bovine spongiform encephalopathy was discovered in Alberta. That animal was condemned at slaughter, so no meat from the carcass entered the food system.

"In economic terms, the closing of the border has been devastating to Canadian ranchers and their families," says Rick Egelton, Senior Vice-President and Deputy Chief Economist, BMO Financial Group. "Cattle producers have been hit by lower output, weaker prices, and narrowing margins."

"Canada's ranchers are good, hard-working people of strong character," added Ted McCarron, Senior Vice-President, Prairies Division, BMO Bank of Montreal. "They are adjusting their business practices and doing everything they possibly can, but what they really need is to have the U.S. Office of Management and Budget complete its final review quickly and allow for the importation of live cattle - in weeks, not months."

The report goes on to note that although cattle prices have risen from their lows immediately following the May 2003 announcement, they remain weak today. Moreover, the large increase in the number of cattle on farms suggests that prices could remain soft during the next year, even if cross-border markets are reopened. Cattle producers, therefore, have continued to face poor market conditions in 2004, with cash receipts through the first six months close to 30 per cent lower than the average for the five years ending in 2002.

The report adds that the longer-term viability of the sector will be dependent on the degree to which consumers remain confident in the beef supply. Unlike earlier episodes where domestic consumption plummeted (e.g. in the United Kingdom), demand in Canada and the United States has held up well. This was likely due to greater awareness about the disease along with the perception that Canadian and US risk mitigation systems are reliable.

The full report is available at www.bmo.com/economic.

Background on BMO Bank of Montreal's BSE Disaster Assistance Program

First launched in 2003 to help the beef and agricultural sector cope with the BSE-imposed crisis, the Program is designed to help support affected agricultural businesses with their ongoing financial needs through a combination of payment deferrals and interest rate reductions. The Program has been extended until May 2005.

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