TORONTO, Jan. 6— The discovery of two cases of mad cow disease on North American farms in the last nine months has sent ripples through more than Canada's beef industry, creating a surplus of milk because dairy cows can no longer be exported to the United States and a shortage of pet food because American animal parts are banned in Canada.

Beyond that, a range of farm businesses, from trucking companies to auctioneers, are adjusting to the loss of what had been both a huge export market and a valued supplier. Canadian exports of cattle and beef products came to a halt last May when a case of mad cow disease, as bovine spongiform encephalopathy is known, was found on a ranch in northern Alberta. In late December, the northbound trade in these products was curbed as well, after the discovery of a case on a dairy farm in Washington State.

Agriculture makes up only 1.2 percent of Canada's economy, and cattle about half of that. The direct impact of mad cow disease is concentrated in Alberta and Saskatchewan, the two main cattle-raising provinces, but the restrictions on Canadian cattle are creating difficulties in other areas. ''As the length of the ban increases in time, it's going to take a heavier toll,'' Derek Burleton, a senior economist at the Toronto-Dominion Bank here, said.

According to Statistics Canada, 1.69 million Canadian cattle were shipped to the United States in 2002, almost a third more than in 2001. Close to 95 percent of those animals came from beef herds.

But the closing of the border has also been hard on dairy farmers, who exported 68,200 dairy cows in 2002. The dairy animals shipped across the border, mostly Holsteins, fell into three categories: breeding stock, calves to be reared as milk cows, and older animals that produce less milk -- so-called cull cows that are typically slaughtered for hamburger. Before the border was closed, the lives of 7 of every 10 Canadian dairy cows ended in either the United States or Mexico.

Despite the loss of the American market, herds in Canada have not been pared to reflect the changed circumstances; in fact, cattle numbers have increased sharply and are expected to continue rising for at least another few months. Many farmers are holding back animals; some have continued to breed in the hope that the border will reopen by spring.

Reducing the numbers of cattle would be difficult in any case, because the number of slaughterhouses in Canada has shrunk over the last decade. Several abattoirs in Ontario and Quebec closed in the 1990's as the export trade grew and they were unable to compete with bigger plants in the United States.

''We're putting more cows into the dairy system than we really need,'' said Gordon Coukell, chairman of the Dairy Farmers of Ontario in Mississauga, a suburb of Toronto. The organization is a private regulatory group that helps oversee production and import quotas intended to keep Canadian milk prices and dairy farm incomes on an even keel.

Dairy farmers are considering several options to contain the milk surplus. As one effort, animal feed manufacturers are increasingly using more milk-based products. Mr. Coukell said the industry was also examining the possibility of replacing dairy imports with local products. And a new slaughterhouse is on the drawing board, to be built near Kitchener, Ontario.

On another front, the mad cow outbreak has resulted in a pet food shortage in Canada. About half of the pet food sold in Canada, including some of the most popular brands, like Iams and Science Diet, are imported from the United States. But Canada, like many other countries, has banned the American products, including those made from the remnants of pigs, chicken or fish.

''We're running low on those products, but that's not to say that pets go hungry,'' said Morris Manna, president of Can-Pet Distributors of Concord, Ontario, which supplies independent pet stores. Mr. Manna is advising dog and cat owners to turn to locally made food.

Prospects for a return to familiar trading patterns are cloudy. In August, the United States lifted the ban on imported beef from animals younger than 30 months. These products made up about 40 percent of the value of Canadian beef and cattle sales to the United States before the mad cow problem. Trade in semen and embryos has also resumed.

The United States Department of Agriculture had set a Jan. 5 deadline for comments on a proposal to allow imports of young cattle from countries like Canada, judged to be at minimal risk for mad cow disease. But the process is now likely to take considerably longer, in light of the department's belief that the diseased cow discovered in Washington State came from a Canadian herd, and its outcome is not certain.

Dr. Ron DeHaven, the chief veterinarian at the Agriculture Department, said on Monday that ''there's been no limit in terms of the options that might be considered or at what point we would make those determinations.''

The Canadian authorities have come to the aid of farmers with several assistance programs. Most recently, the federal government said that it would encourage farmers to reduce their herds by paying 320 Canadian dollars (about $250) for each older animal slaughtered. Before the mad cow bans, an animal would typically fetch $600 to $700. Now, the same animal is worth less than $100.

''We recognize that if you can't sell the older cows, that may cause some trouble,'' said Pierre Doyle, assistant director in the dairy section of Canada's agriculture department.

Mr. Burleton, the Toronto-Dominion economist, said that while government budgets have been pinched by slow economic growth, the federal government and the province of Alberta were ''probably the two governments in the best shape'' to afford such assistance.

Photos: Cowboys drove cattle to market last month on a road northwest of Calgary in Alberta, one of Canada's prime beef-raising provinces. (Photo by Reuters)(pg. W1); A day-old calf gets an ear tag on an Ontario dairy farm, as required by a Canadian system to track cattle. (Photo by Andrew Sacks for The New York Times)(pg. W7)