Tyson has halted purchases of Canadian cattle shipped directly to their beef plants to reduce costs, the company announced. The change is due to the U.S. country-of-origin labeling rules which require labels on meat packages to show where an animal was born, raised and slaughtered, said Tyson spokesman Worth Sparkman in an e-mail to Bloomberg Businessweek.
“These new rules significantly increase costs because they require additional product codes, production breaks and product segregation, including a separate category for cattle shipped directly from Canada to U.S. beef plants without providing any incremental value to our customers,” Sparkman said in response to questions from Bloomberg News.
The Canadian Cattlemen’s Association says Tyson is the third-largest buyer of Canadian cattle. The company will continue to buy Canadian-born animals sent to U.S. feedlots. Sparkman declined to say how many animals were bought for U.S. beef plants for processing.
Tyson bought about 3,000 cattle weekly from Canada, and the nation’s exports probably will decline more than 150,000 head a year, Brian Perillat, a senior analyst at Calgary-based Canfax, a market-research unit of the cattlemen’s group, said in a telephone interview.
Tyson’s Pasco plant in Washington state is a large buyer of animals from British Columbia and Alberta, and producers in parts of the Prairies will have to pay more to ship animals elsewhere, Dennis Laycraft, the executive vice president of the cattlemen’s association, said in a telephone interview from Calgary.
For U.S. processors, “the best way to avoid extra costs is simply to avoid the product,” Laycraft said in a telephone interview from Calgary. “This is precisely what we were afraid was going to happen.”
Source: Bloomberg Businessweek