"The beef industry is in a relatively fragile position," said Len Penner of Cargill Ltd, Canada's top beef processor, in an interview. "The returns are not healthy at this point in time," he said.

Canada's export-dependent beef sector has struggled since the country uncovered its first case of mad cow disease in 2003, which shut down trade.

After a few months, the United States, Canada's main market for beef, began to allow imports of beef from cattle under the age of 30 months, which are too young to develop bovine spongiform encephalopathy (BSE) or mad cow disease.

Packers, including Cargill, boosted capacity to handle the glut of cattle that had nowhere to go. But after the U.S. border opened to young live cattle two years ago, much of that new capacity was idled.

Cargill is handling about 3,800 head per day at its High River, Alberta, plant that it had expanded to handle 5,000 a day, a company spokesman said.

Source: Reuters