Last week’s reopening of the South Korea market to Canadian beef likely pleased Charlie Gracey.
The livestock industry consultant told a Lethbridge crowd just hours before the trade announcement that South Korea, Japan, China and Europe are the most important opportunities for Canadian beef exports.
Speaking to the sold out Tiffin Conference at Lethbridge College, Gracey said Canada’s cattle future lies in beef exports and the industry must shape itself to respond to demand rather than push supply.
“My argument is that almost all of our effort should be concentrated on fed beef. That’s our specialty, that’s our niche, that’s what we do best,” he said.
“Unless we can somehow stop the decline in consumption that’s been going on, all of our future opportunities lie in export markets.”
Gracey said the United States will always be Canada’s most important market, but for competitive purposes, the national industry must seek and maintain other markets.
Productive capacity, which is the annual tonnage of fed and non-fed beef produced in the national beef and dairy herd, peaked in Canada in 2002 at 1.6 million tonnes.
The discovery of BSE drastically affected production and exports. Now, with productive capacity around 1.3 million tonnes and Canadian consumption dropping, exports are the way of the future.
“The United States may export, but Canada must,” Gracey said.
As a small producer relative to the U.S., Canada must choose its markets carefully and then ensure continuity of supply. That means attention to market signals.
Gracey cautioned producers against expansion for the sake of expansion.
He said the idea of overtaking Alberta in beef production may be seductive in Saskatchewan, but market signals should take priority.
The Canadian herd appears to be starting a slow rebuilding phase after years of reduction, which Gracey said makes cow-calf producers the most important people in the industry because they make the decisions to expand the herd.
Better dialogue is needed within the industry to make those decisions,, he added.
The U.S. cow herd hasn’t grown in the last 15 years and expansion doesn’t look likely. Yet it is the biggest fed beef exporter in the world, even though U.S. consumption has historically been greater than supply.
That’s only possible because the U.S. is backfilling its supply with cattle and beef from Canada. In effect, Canada is stocking U.S. shelves, Gracey said.
“We have to now make a decision here whether or not we’re comfortable with merely exporting our surplus supply to the United States … or whether we need to do this ourselves, whether we need to plan our own strategy.”
Gracey said he’s heard some producers advocate supply management in the beef industry so that it supplies only the domestic market.
According to his figures, that would mean reducing the cow herd by 50 to 60 percent and reducing the number of cow-calf producers by 70 percent.