Government funding, check-off dollars down | The organization could see its promotion budget cut by $4.5 million by 2015
Chuck MacLean wears two hats when he comes to the Canada Beef Inc. board table.
He is chair of the beef promotion company but is also a successful rancher and feedlot operator from southern Alberta who upholds a business philosophy of constant improvement.
“In my world, your biggest competitor is yourself. We challenge ourselves to be better than we were yesterday,” he said.
Canada Beef has been operating since July 2011, following a merger of the Beef Information Centre and the Canada Beef Export Federation. It collects the $1 per head producer checkoff as well as additional private and government support.
The money is split between Canada Beef and the Beef Cattle Research Council.
The organization’s mandate is to promote beef and encourage more sales domestically and globally. It does not handle policy matters.
“At Canada Beef, our mandate is to sell to the highest value customer who is loyal to our product. We look to loyalty and quality and quantity,” MacLean said.
The organization has 31 projects and leverages $3.2 million of partner funding to obtain extra value from selling beef to Canada, the United States, Mexico, Hong Kong, China, Japan, European Union and Middle East.
The U.S. remains the best customer next to the domestic market, but exports have fallen slightly because of country-of-origin labelling rules, food safety scares and too few cattle to fill the orders.
U.S. exports of beef to Canada have grown by 15 percent in the last year, which frustrates Canadian producers.
Markets tend to flow north and south rather than east and west. More American beef is moving into the east because retailers and the food service cannot get enough Canadian beef to fill demand for certain higher value products.
As well, feedlots and packing plants are not running at capacity because there are not enough cattle to keep them full and they cannot get enough qualified workers.
Canada Beef’s financial shortfalls could worsen over time. It wrote a business plan that promises lean operations with a smaller staff, less travel and more work done over the telephone and through webinars and conference calls.
“It is a struggle,” he said.
“Right from the time Canada Beef was formed, the two previous organizations, which were BIC and CBEF, our budget became short $5 million overnight from what those two companies combined were getting.”
Less government funding is available, and checkoffs paid by the provinces are declining because fewer cattle are sold. Ontario and Quebec claw back some of the money for internal programs.
“It appears we could be a million and change short next year, and the following year under Growing Forward 2 we could be $4 to $4.5 million short. There is no way in my humble opinion that we can function unless we come up with another source,” he said.
This year’s budget is around $12 million.
A regulatory change in July allowed Canada to collect a levy on imported products, but it is not designated for marketing Canadian beef.
It will bring in $600,000 to $800,000 annually. Importers will be expected to collect and pay the levy starting in the first quarter of January 2014.
“That import levy is not going to make up for what we need to do,” he said.
The controversy over the clawback was addressed at Canada Beef’s annual forum held in Calgary Sept. 19-20.The provinces are not eligible for additional federal funding that would benefit the entire industry because they use the money for local promotion programs.
In the future, those provinces must provide detailed reports of what the money was used for and what the results were, said Jennifer MacDonald of Canada Beef’s governance committee.
“The provinces that are clawing back are responsible for reporting back on how that money was spent,” she said.
Even though there will be less money, the organization will continue to seek value with the resources it has.
One initiative is forming a centre of excellence for product development and testing.
Beef demonstrations at the site will show potential customers the benefits of Canadian beef rather than taking them on tours of processing plants.
The concept will be similar to the Canadian International Grains Institute program in Winnipeg.