I'll start by giving a mild example. I was just at a cattle conference on Monday and was one of the speakers. One of the other speakers was a well-known analyst. She used to work for CanFax, which is the price-recording mechanism we have in Canada. She presented a report and gave projected prices for cattle in Canada.
I found it very interesting, because she showed that if we were relying on the export market to the U.S. packers to establish our price today--the discount you talked about--our market would have to be $75 a head lower than it currently is. She said that right now the Canadian packers are well above export level on their cattle, and that's why we're not seeing a lot of cattle being exported. The cattle that are currently going have been under contract for many months. The cash cattle are not going. So I would say that this discount isn't to the level you would forward.
Since our purchase of Lakeside, we have been very aggressive in bringing the level of processing up in that plant. We believe it's best for the Canadian industry that we process these animals here, ship the meat into the United States, and service our domestic marketplace. If you wish, they are a witness you could call to clarify some of this.
I think there was a concern, when country-of-origin labelling initially came in, that U.S. packers would be able to discount the cattle in Canada, and that the Canadian industry would have an ability to do that. It just isn't the case. We're going through a natural reduction in the herd in the cattle industry right now. The truth is that we will probably get to a level where we have hardly enough cattle to satisfy our own industry, and no extra to export.
I'll lightly touch on the segregation in the U.S., if it's okay, and draw on my experience, because we do have some Canadian plants. I think there are two parts to segregation. This is a rigid segregation, in a sense, but the biggest thing that came out of segregation that people aren't necessarily talking about is that the U.S. packers started to segregate Canadian cattle because of the COOL legislation. They found they weren't receiving the same value for their meat, because they could not export part of that meat to Korea. In Canada we do not have an ability to export to Korea, and the U.S. packers then identified a lack of revenue from the Canadian cattle. So sometimes we will confuse part of this discount that's attributed to segregation to not having the revenue.
This is the same problem we currently have in Canada with our fed cattle. We don't have access to the Korean market, and we've lived with this $25 a head for many years. I think this was the first time the U.S. plants truly were able to identify that. The balance of it is in their segregation cost. There are efficiencies in plants. Like building a car or anything, it's all based on continuous flow, and every time you have to change that flow there's a big cost. So I think that's part of it.
We have seen some retailers in the States that have preferential programs, but that's not a major issue with this.