This could well be the year that Canada becomes a net importer of beef. We had only a meagre trade surplus in 2011. With the situation at XL Foods, there’s a good chance the balance has been tipped.
A comprehensive report released in early September by the Canadian Agri-Food Policy Institute (CAPI) sounded alarm bells for the Canadian beef industry.
As everyone knows, the industry is extremely reliant on the U.S. market. The Americans account for 85 per cent of our export sales. In 2011, we sent them nearly $1 billion worth of beef and nearly $800 million worth of cattle.
Trouble is, we’re now importing almost as much as we’re exporting. In some cases, Canadian cattle are going to the U.S. and we’re buying back the beef from those animals. In 2002, our overall trade balance was $1.4 billion. In 2011, it was a mere $42 million.
With the XL Foods plant at Brooks, Alta., closed, we’re sending more cattle to the United States for slaughter, and we’re no doubt importing more American beef. Cargill in High River, Alta., has picked up some of the slack, but plants south of the border will be the big benefactors.
The beef we’re importing is worth a lot more than the cattle we’re sending south.
There are other troubling statistics in the CAPI report. Canada supplies 75 per cent of the beef for its own market. This has fallen from 87 per cent in 2005 as imports from the U.S. have risen. The beef on your plate is more likely than ever to have come from the U.S.
The Canadian cow herd is declining: down by a million head, 20 percent, since 2005. As well, per capita consumption of beef continues to decline, dropping more than 10 percent since 2001. We now consume only 61 pounds per person per year. If you’re old enough, you’ll remember when consumption was close to 100 lb. a year.
If it’s any consolation, pork consumption has declined by more than 28 percent since 2001, while poultry consumption has dropped a mere 3.4 percent.
Canadian beef consumption actually increased during the BSE crisis in 2003 as consumers rallied around the industry. The massive beef recall from XL Foods will create a different consumer reaction.
The number of people confirmed ill as a result of the XL problems is relatively small. More people than that could get food poisoning from a single restaurant on a single night. But all the publicity has probably had an impact on beef consumption.
So why aren’t we selling more beef to developing nations where beef consumption is rising? Why are American exports beyond Canada up 280 percent on a value basis since 2005, while Canadian exports beyond the U.S. are up only 45 percent over the same period? The CAPI report says opportunities are being eroded by a failure to work together.
Federal agriculture minister Gerry Ritz is criticized for many policies, but everyone agrees that he has worked tirelessly to re-open foreign markets for Canadian beef. Why haven’t we been able to capitalize on this, particularly since our cattle identification system is light-years ahead of the Americans?
It appears likely that XL Foods will be taken over by Brazilian based JBS, the largest beef packing company in the world. Then both of our major packers will be foreign owned. Is it the beginning of a different approach or more beef industry decline?