MODERATOR: "Good afternoon. I'm Larry Quinn speaking to you from the broadcast center at the U.S. Department of Agriculture in Washington. Welcome to today's news conference with Secretary of Agriculture Mike Johanns to discuss the impact of BSE on the beef industry.

"A reminder for reporters if you have questions for the Secretary please press 1 on your telephone touchpad to alert us.

"Now joining us by live audio connection from Hyrum, Utah, here is Agriculture Secretary Mike Johanns."

SEC. JOHANNS: "Larry, thank you very much. It is great to be here in Utah, and let me start out with greetings to all of you who join us via telephone or those who are here in person.

"I am very pleased to have the opportunity to be here at the E.A. Miller Beef Processing Facility today. The purpose is to learn firsthand about the impact of the closed Canadian border and the impact it has on operations here but also across the industry.

"I must admit that I wish I had better news to report about the situation today. I am deeply concerned about the changes that are occurring in this great industry. While I'm a lawyer myself, I have ultimate respect for the judicial system; but I must acknowledge I am very, very concerned about the fate of our producers and our small packers like this one. My concern is that their fate lies with the courts.

"At this plant, 66 workers have been let go, and the number of cattle processed has dropped about 20 percent. We just came out of a luncheon where we visited with the mayor, and one of the things that he pointed out is the snowball effect that this has on the community.

"It was actually a conversation with a cattle producer from this area that led me here today. A gentleman by the name of Monty Weston came to DC with some other folks several months ago, and he urged me to do everything I could to reopen the border.

You see the cutbacks here at this plant are forcing people like Monty and others to look for alternatives when it comes to their livestock. That may ultimately involve shipping costs into the Midwest, and that makes it very impossible to turn a profit.

"The stories from other local producers are equally as troubling, and unfortunately they are not unique. I'm hearing similar reports from processors and producers across this country.

That brings me to an announcement I'd like to make. It is time I believe for us to come together and present the cold, hard facts about the beef industry and talk about the safety of beef, both in Canada and the U.S., and to examine the economic impact of the closed borders on the U.S. beef industry.

"So today I'm announcing that we are going to do just that on June 9 when I host a roundtable discussion on BSE in North America and the economic effect on the U.S. beef industry.

"The roundtable will bring together experts from the USDA, producers, packers, academia and others, to discuss the safety of North American beef and the economic impact of border closings. The topics of the roundtable will include current science behind the safety of the beef supply, economic activity including markets and job losses, and the shifting infrastructure with an eye toward the long-term effects on the global beef and cattle market.

"Now the details of the roundtable are this. It will take place on Thursday June 9 from 9:30 to noon at the Andrew Boss Laboratory on University of Minnesota's St. Paul campus. We are sending invitations to representatives from a broad sector of the cattle industry to participate in the roundtable. The discussion will be held before an open audience, so anyone is welcome to attend. In fact we encourage it.

"It is important that we bring together the science behind the safety in one place clearly and concisely so there can be no doubt. USDA's enhanced BSE surveillance program provides significant data and it proves beyond a doubt that beef is safe. And as you know, USDA stepped up surveillance in June.

"Ladies and gentlemen, I'm pleased to report today that we've now tested about 354,000 cattle, and we have not found a single case of BSE, not a single new case of BSE out of almost 350,000 tests.

"As countries like ours have taken key proactive steps to deal with BSE, and that includes Canada, the most important being the implementation of a ruminant-to-ruminant feed ban, we have seen an obvious and dramatic decline in the number of BSE cases worldwide.

"We have reason to be proud of the steps we've taken and the results that have been achieved. We can't sit back though. We still have a responsibility I believe at USDA to be an advocate for the little guy and right now the little guy in this industry is in trouble.

"That's why I'm eager to bring the science together with information about the industry changes.

"Some refuse to look beyond the short-term economic benefits of keeping the Canadian border closed. They don't see the long-term harm to this industry. We cannot ignore the fact that Canada is expanding its capacity. Canadian cattle inventory as of April 1 jumped more than 2 million head compared with January 1, 2003. The number of federally inspected slaughters in Canada rose 24 percent last year and climbed another 5 percent this year compared with the same period in 2004.

"By comparison, slaughter in the U.S. is down 8 percent in 2004.

"The market is restructuring before our eyes. American producers and processors will be left out in the cold if the border is not reopened soon. My concern is that as more and more processing moves to Canada, production follows. Those same folks will then be asking why we didn't do more to get the border open.

"Well, on June 9 we're going to do everything we can to bring publicity to this very difficult situation. We will present irrefutable evidence about the safety of the beef supply, the North American beef supply and the devastating effects of border closures on the mom and pop cattle ranchers and processors in our country.

"With that, we do have some individuals here from this plant. I'd like to invite them over to the podium. They gave me some great information, and I'm going to ask them to come over here, introduce themselves, and talk a little bit about the impact that they're seeing."

MR. MILLER: "Thank you, Mr. Secretary. First off, I'd be remiss if I didn't express our appreciation for Secretary Johanns to come out here to Utah and visit us. We're really honored for this.

"My name is Ted Miller. I'm the president here of E.A. Miller. I happen to be a third generation Miller involved in this business. As I was sitting here listening it made me just think about the fact that as I've watched this business grow for 20 or 30 years and we realize that the beef business, the cattle feeding business, the cow/calf business, all these businesses in the beef industry are tough businesses. And we just don't need other issues that are unjustified hurting our business and causing it to be tougher than it is.

"We've had to lay off employees. Our hours are cut. It's hard to keep employees when we don't have the hours and the pay for them. We see that every day. We struggle with that every day. We struggle to buy cattle, you know, constantly. It's hard to bring them from a long distance because of the freight costs. And so it's had a big economic impact, and we really appreciate all the support that we're getting in trying to get this resolved.

"Thank you."

MR. HERRON: "Good afternoon. I'm Danny Herron. I'm the co-CEO for Swift and Company. Really pleased to have the Secretary out here to tour our Hyrum, Utah, facility today.

"I think the main thing that concerns me most about the Canadian border closure right now is it's forcing Canada to do what they have to do to survive, and that's build additional capacity. And in the North American beef industry, we currently only run at about 80 percent of our built capacity currently. So additional capacity is not going to help any of us long-term, but they don't have a choice at this point.

"The sooner we can get the borders open, the better off we're going to be. With this excess capacity in the U.S we're extremely concerned that they're offering incentives to build up there. Certainly Swift like other packers have been approached by the Canadian government in several provinces to build capacity. And we would rather see the equalization of the borders instead of adding capacity to an industry that already has too much. Thank you."

SEC. JOHANNS: "All right. We would be happy to take questions. I think first we're going to start with the telephone, and then I'll take questions from media that are here in the audience."

MODERATOR: "Thank you, Mr. Secretary. We do have a question for you. And before I call on that first questioner, I'll remind reporters on the telephone line to push 1 on your telephone touchpad to indicate that you wish to ask a question.

"And our first question comes today comes from Steve Kay with Cattle Buyers Weekly. Go ahead, Steve."

REPORTER: "Secretary Johanns, I hope you can hear me clearly. But in April RCALF in one of its filings to the Ninth Circuit Court of Appeals made the admission that RCALF USA has never argued that there was a great risk to human health from resumed imports of cattle and beef from Canada.

"Now given that statement and given the pressure that you talked about on U.S. beef processors, can I ask you why USDA has not already requested that the Department of Justice immediately ask the Ninth Circuit to lift the U.S. District Court's preliminary injunction as soon as possible before any hearings occur?

"And failing that, does USDA have any other plans to persuade the court to expedite its hearing of your appeal?"

SEC. JOHANNS: "It's a great question. Let me first if I might just offer a comment on that statement by RCALF and then I'll address the procedural piece of this which you've raised in the second part of your question.

"I saw that statement by RCALF, and I just admit I was stunned when I read it because I remember the newspaper ad that they took out in a Washington newspaper that literally said thank you to the senators who voted to continue to block the Canadian border for in effect standing up for human health.

"In the petition, the complaint that they filed in the federal court, they made all kinds of claims, unsubstantiated, about issues relative to human health. And then lo and behold in a filing to the court they say, well we've never maintained that there's an issue here with human health.

"They're having a tough time getting their message straight, in my personal opinion. But they have finally come around to what I believe is the right message. And that is that there is no risk to human health.

"Our risk analysis showed that over and over again. We have proven that there is not a risk to human health. And I'm glad RCALF has finally recognized that.

"Now in terms of the process to get to a decision, I can assure you that the Justice Department is working as aggressively and as fast as they can to bring this to a conclusion before the Ninth Circuit. But there is process involved.

"Now I must admit, even as a lawyer I'm frustrated at times because you do have to step through these hoops. But even if you made a request based upon what you've said the court probably is going to say, well great, you've made that statement, and we need to hear from the other side. And all of a sudden, you're caught up in this.

"So they, the process that the Justice Department has chosen is the most expeditious way to bring this to a resolution and in my judgment to get that border reopened.

"And you know, having practiced for a lot of years before I started in this current life, personally I believe they're headed in the right direction in a very expeditious way."

MODERATOR: "Our next question comes from Peter Shinn who is with the National Association of Farm Broadcasters. Standing by should be Chris Clayton.. Go ahead, Peter."

REPORTER: "Yes. I have just a very basic question. Thank you for taking my question, which is, is there indeed a shortage of U.S. cattle for processing?

"And what are the impacts on the small cattle producer from that shortage?"

SEC. JOHANNS: "The answer is, yes. I mean you can come to Hyrum and you can see that the problem is, they just do not have the supply of cattle. And it's pretty predictable what happens. All of a sudden hours are cut back, and then people are laid off, and it's a compounding impact. As the mayor points out, it has an impact on the community.

"Now in terms of the small processor and the small producer, let me address that. Those who filed the lawsuit maintained that they're protecting the little guy. They aren't protecting any little guy I know. And I come from a state that was a very large producer and processor of cattle; now I represent the United States. They are not representing any little guy I know.

"What do I mean by that? Well, plants cannot operate at a loss for very long. That's obvious. So if we lose a plant out here in the northwest part of the country, all of a sudden your cow-calf people have to find a market for their calves when they are weaned.

"If they don't have the capacity to feed those calves out here and get them processed, then they're going to pay the cost of shipping those animals into the midwest where they'll be fed out and processed. So they'll pay the cost of that shipping.

"The other thing that I will tell you is that what is happening in the restructuring of the Canadian industry I worry is permanent. Now what do I mean by that? Once they have made the investment to expand the processing, once they have convinced processors in the United States to relocate in Canada, it's not likely that that's going to change even with the reopening of the border. And that hurts the little guy.

"And ultimately even though there is some short-term gain for the cow-calf people, the long-term price that will be paid here by the restructuring of the industry is not good."

MODERATOR: "Our next question comes from Chris Clayton of the Omaha World Herald. And he'll be followed by Jackie Fatka.

"Go ahead, Chris."

REPORTER: "Secretary, I got a couple of quick questions. One, what do you expect to happen to the BSE surveillance coming up on June 1? Do you expect to continue an enhanced surveillance?

"And also, you talk about a roundtable and addressing more. How difficult is it right now when the cattlemen are clearly very divided on this, even in your home state. There are a great many producers who prefer things right now the way they are and don't want to see that border open."

SEC. JOHANNS: "On your first question, in terms of processing, the question about -- oh, the enhanced surveillance program. We have not made a final decision on the enhanced surveillance. As I pointed out, we've now tested about 354,000 animals. With that increased testing, and we're testing high-risk animals, we haven't found another BSE case.

"What we want to do is make sure that we've got all the testing in place from the various parts of the country, that we've touched all the bases. So we'll make a decision on that at some point, but that's going to be a ways down the road.

"Then in terms of the industry itself, I have to tell you I see less and less division. As we are moving through this process, one of the things I see is the cow-calf people are beginning to ask themselves, what's the impact on me? Well if you're out in the northwest part of the United States, the impact is huge if we lose a plant out here.

"All of a sudden, that cow-calf person, that little guy that I described, is going to have to find a place to ship their cattle and pay the shipping cost to do that.

"Now if you're a fat cattle guy, all of a sudden you're in a very, very high-risk market. What do I mean by that? To break even these days is probably about $85, maybe as high as $90 depending on where you bought your feeder cattle. Who gets hurt when that market corrects itself? Again, it's the little guy.

"You know, the large operation will survive. They have the liquidity, they have the capital. But again, your smaller operator out there, when that correction occurs and it will occur, has a huge downside impact.

"So in an industry that is very consolidated already, I worry that we just see more and more consolidation, fewer and fewer processors, larger and larger feeder operations, and all of a sudden this industry which has prided itself on you know kind of the average guy being a part of the industry, is all of a sudden under huge stress.

"And I see that, and I see that in this part of the country.

"You pay a price for this kind of problem, and like I said it's the little guy that pays the price more often than not."

MODERATOR: "And Mr. Secretary, we have time for one more question. Jackie Fatka from Farm Progress Publications. Jackie?"

REPORTER: "Hi. Thank you for taking my question. My question is, how do you see this roundtable event coinciding with the hearing dates and in potential border reopening?"

SEC. JOHANNS: "Well, my hope is that we get that border reopened quickly. But I will tell you, that is very much in legal process. And we're just going to have to work our way through that, and again the Justice Department I believe is doing a tremendous job there.

"But I believe it is time to get the facts out about the impact on the beef industry and what the distortion in trade is causing. And so this roundtable is an opportunity for us to gather up that information, and I think it's going to be very helpful and very well-received by the industry."

MODERATOR: "Thanks, Reporters, for your questions.

"Mr. Secretary, any closing thoughts?

"Secretary of Agriculture, Mike Johanns.

"I'm Larry Quinn bidding you a good afternoon from Washington."