Canada’s beef sector is at a tipping point. Although the sector generates $6 billion in farmgate sales and represents 15 percent of the country’s total agricultural production, we are at risk of becoming a net importer of beef from the United States.
Our beef and cattle trade with the U.S. is vital, but our trade balance is worsening. In 2002, Canada’s balance of trade with the U.S. was worth $1.4 billion. By 2011, it was just $42 million.
Eighty-five percent of Canada’s beef and cattle exports go to the U.S. After processing south of the border, higher-value beef is then exported back to Canada.
In 2011, our exports of beef to the U.S. averaged $3.74 per kilogram while average beef imports from the U.S. were $6.55 per kg.
Moreover, the Americans are using Canadian supply, known as backfilling, to expand their own beef exports. Canada is aggressively opening up new export markets but the U.S. is recording triple-digit beef export growth, in part because of Canada’s supply.
There is a growing recognition here that we can’t optimize the domestic, American and other foreign markets at the rate we are shipping cattle and beef to the U.S. This is made more challenging by the fact that Canada’s national herd size has declined 20 percent since 2005.
While the data can fluctuate, beef is also facing declining consumption in Canada: 10 percent over the past decade. The trend affects many countries, although, importantly, Asia is consuming more beef.
Consumers are choosing other proteins. Responding to changing consumer preferences is pressing. Consumers want to know more about the food they eat. Price is important.
But consumers are making protein choices on the basis of perceived healthfulness, environmental considerations and animal handling practices.
Canada’s beef sector has a choice to make: remain primarily a commodity beef player or strive to be more of a value-added supplier driven by consumer demand.
A new collaborative strategy is needed. From producers to retailers, each link in the beef supply chain needs to better use and share information on beef performance, grade and yield, market characteristics and consumer preferences.
Other players are integral to support this pursuit, such as the feed sector, information technologies, veterinarians and nutritionists.
This also involves demonstrating trustworthiness. Consumer expectations are rising. People want to know more about the origin of the beef they eat, what the cattle were fed and whether antibiotics were used.
Canada’s reputation for safety, care and quality is saleable, and we need to fully exploit these aspects.
The question is whether we are being systematic enough about it so we can beat out our competitors and achieve premium prices for the effort.
Agrifood players in other countries are showing the way. The Australians have reorganized their meat and livestock sector to better respond to consumer and market opportunities.
The U.S. dairy industry has launched a major effort to lower carbon emissions and improve productivity by working better together on sustainability objectives.
The Canadian beef sector has also been taking steps to better position itself in this changing marketplace.
For instance, the Canadian Angus Program and the Ontario Corn-Fed Beef Program are expanding their reach by relying on cattle identification practices and protocols to promote quality attributes with packers and retailers who, in turn, can assure consumers of the source and quality of their respective beef products.
These examples show that targeting opportunities requires collaboration and a clear focus on strategy. Beef supply chain leaders and their partners need to come together to assess what they can achieve together.
A robust dialogue on the objectives is needed. The sector’s future prosperity depends on it.
David McInnes is the president and chief executive officer of the Canadian Agri-Food Policy Institute. For a copy of CAPI’s new report, Canada’s Beef Food System, visit www.capi-icpa.ca.