A newly discovered parasite in the U.S. could add further strain to North America’s already tight cattle market, potentially pushing beef prices higher, says an agricultural economist.
The Canadian and U.S. beef industries are deeply integrated, explains Ellen Goddard, an agricultural economist at the University of Alberta.
She says disruptions on either side of the border are significant for producers and consumers alike.
“There’s a lot of uncertainty,” says Goddard following the threat of the New World screwworm, a parasitic fly recently detected in a Texas calf that lays eggs in wounds on warm-blooded animals.
The threat comes at a time when the industry is already grappling with high production costs, drought conditions and trade ambiguity, she says. The U.S. cattle herd has also fallen to its lowest level in 75 years, according to the U.S. Department of Agriculture.
Canadian authorities recently restricted imports of certain cattle products and livestock from affected regions after detections of the parasite in the southern United States.
Why beef prices remain high
Canada has traditionally been a net exporter of beef to the United States, and beef remains protected under the Canada-United States-Mexico Agreement (CUSMA), says Goddard.
“The last thing we want to see is that market closed to us permanently,” she says, adding that animals routinely move across the border for feeding and processing.
She says recent drought conditions in parts of North America have increased production costs.
Cattle are initially raised on grasslands and rangelands, but when drought reduces available pasture, producers must purchase additional feed for their animals, she says.
“If the grass isn’t there, and those producers need to bring in feed to feed their animals, then that increases the cost of production considerably,” says Goddard.
Higher feed and fertilizer costs linked to global conflicts have added further pressure on producers.
“If there’s international demand, that puts the price up, and everybody pays it, whether you’re in Canada or not,” she says.
How screwworm threatens supply
While the parasite does not pose a significant food-safety risk, Goddard says it could disrupt cattle movement throughout the supply chain.
“Those animals have to be inspected and they do not go anywhere near the human food supply chain if there is any evidence,” she says.
The larger concern is that restrictions aimed at preventing the spread of the parasite could limit the movement of cattle between different stages of production.
Goddard explains that beef cattle in North America move through multiple operations, beginning at cow-calf farms before being transferred elsewhere for backgrounding, then to feedlots for fattening and eventually to slaughter plants.
Under U.S. Department of Agriculture New World screwworm response protocols, infected premises are placed under quarantine and animal movement is restricted until treatment is completed and authorities determine there has been no reinfestation.
Those restrictions can create bottlenecks throughout the supply chain, says Goddard.
“If you can’t move the animals, and they can’t get anywhere near feedlots or slaughter plants, then there’s going to be less beef around, for sure. And that will raise the price.”
Why Canada faces less risk
Historically, Canada has been relatively protected from major screwworm outbreaks because cold winters help suppress insect populations.
“Winter is one of the good things that happens in Canada and in the northern United States, which kills off a lot of insects and stops outbreaks to a considerable extent,” says Goddard.
Warmer regions such as Texas do not benefit from the same natural control, allowing the insects to survive and spread more easily.
While the parasite does not threaten food safety, Goddard says it could affect public perceptions of food safety, even though infected animals are removed from the food supply.
Long-term challenges remain
Even if producers wanted to rapidly increase beef supplies, rebuilding herds takes years.
Goddard says producers must first breed cows and then wait roughly two years before cattle are ready for slaughter.
If producers remain hesitant to expand because of uncertainty surrounding trade, weather and disease outbreaks, beef supplies could remain constrained for years to come.
“If you’re facing uncertainty and you’re not breeding cows, then that means for a couple of years that beef supplies are going to be low,” she says.
