Thank you very much.
I've been struck by some of the comments by certain producers in Canada that it's costing them x dollars a head, whereas you get feedback from some of the COOL proponents in Washington that it's not the case. As usually turns out to be the case, I think the truth is somewhere in the middle.
There are a lot of variables that go into price discovery, particularly imported livestock price discovery. The exchange rates are one we've talked about. Another is freight costs, depending upon the distance you bring livestock in from a foreign country. There are also quality and yield, which apply to all cattle and hogs we process in the United States, regardless of origin.
But post-COOL, there are other variables that come into play, including the segregation costs we referred to, and any diminution or devaluation in the wholesale price of that commodity, depending upon its origin.
Retailers want one consistent label; they don't want to manage multiple-origin labels in their retail grocery stores. That's because most of the beef and a fair amount of fresh pork today is still shipped to them in primals and subprimals. It's cut and traded and wrapped in the backroom, and if they're not getting one consistent U.S.-labelled product day after day, then they have to start segregating it as well. They have to start managing their inventory, just as we have to manage it at the packing level.
So there have been instances where large packers have decided they're going to use only U.S. beef in their premium product lines, because they can get a good return from their retail customers, not just because of the quality of the product but also because of the uniformity of the label, the ease with which they can manage their retail meat case. To the extent that is not particularly attractive to a product that's labelled “Product of U.S. and Canada” or “Product of the U.S. and Mexico” from a retailer's perspective, there is a diminution in the wholesale value.
So all of those normal historical variables and the two post-COOL variables go into the value of the livestock that we purchase.
I'm not an economist, but economics 101 will suggest that there would be some downward pressure on the livestock price related to imported animals, because of those two added variables.