Canadian cattle producers have lost about $5 billion since the outbreak of mad cow disease in the spring of 2003, according to a report released today 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. “In economic terms, the closing of the border has been devastating to Canadian ranchers and their families,” said Rick Egelton, deputy chief economist at BMO Financial Group.

“Cattle producers have been hit by lower output, weaker prices and narrowing margins.”

The report says the longer-term viability of the sector will be dependent on the degree to which consumers are confident in the beef supply.

The report notes that although cattle prices have risen from their lows immediately following the May 2003 announcement, they remain weak. 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 re-opened.

Cattle producers have continued to face poor market conditions in 2004, with cash receipts through the first six months close to 30% lower than the average for the five years ending in 2002.

Canada is trying to end the 18-month ban on U.S. imports of Canadian beef. It had been estimated that ban alone amounted to more than $2 billion in lost exports.