The Canadian cattle industry is losing business from a major purchaser as Tyson Foods won’t accept cattle directly from the country to avoid added expenses associated with country-of-origin labeling rules.

The decision is likely to increase feeder-cattle exports. Tyson will continue to purchase Canadian-born cattle sent to U.S. feedlots, however the decision removes the third largest buyer from the Canadian fed cattle market.

Tyson says it doesn’t have the space necessary to separate, categorize and label products in line with COOL requirements. The added process would also raise costs.

“These new rules significantly increase costs because they require additional product codes, production breaks and product segregation, including a separate category for cattle shipped directly from Canada to U.S. beef plants without providing any incremental value to our customers,” Worth Sparkman, a spokesman for Tyson, told Businessweek.

U.S. meat packers have voiced opposition to the rule with claims that it will drive up costs and pose a bookkeeping nightmare. Mexico and Canada are challenging COOL before the World Trade Organization which isn’t expected to be resolved until 2015.