This country’s cattle industry should be in an upbeat mood and ready to expand, considering lower feed grain prices, a small cattle herd, record strong beef prices, a falling Canadian dollar and new trade agreements.
However, that is not the case yet, and although economics will ultimately determine the path of Canada’s beef industry, government can help by providing the right policy environment and efficient and effective inspection services.
The Canadian breeding cow herd is already the smallest since the early 1990s. The cow cull rate was 15 percent last year, indicating continued liquidation.
The key reason for lagging herd rebuilding optimism is the country-of-origin labelling law in the United States, which limits access to Canadian fed cattle. This makes Canadian cattle prices lower than what they should be relative to American prices.
However, Canadian cow-calf producers might also be exhausted and perhaps a bit depressed, which is a factor that is harder to quantify.
The industry had once ridden a wave of optimism and herd expansion sparked by the end of the Crow Benefit and a weak Canadian dollar, but it has since been staggered by a series of punches.
First, BSE closed access to world markets, and then COOL limited access to the U.S., high feed costs sapped profits, the loonie rose to parity and last year a major food safety issue occurred at a major Alberta packing plant.
The result is not only a smaller herd but also a producer population that is older than the norm in agriculture, has faced financial hardship and might need time and mounting profitability to build confidence and begin expansion.
However, producers and other industry players are examining their strengths and weaknesses to reorient for success.
The recently released Straw Man Feed Industry Strategy was “based on the belief that there is a window of opportunity to propel the beef industry in Canada to a new era of prosperity if the industry is prepared to work together to seize it.”
It is on the right track with its focus on marshaling and co-ordinating information, performance measurements, re-search, marketing and communications within the industry to meet the needs and desires of consumers.
However, two key issues are outside the direct control of the industry — COOL and the Canadian food inspection system. Here the federal government takes the lead position.
It has shown a commitment to persuading the U.S. government to end COOL. The tools it has through the World Trade Agreement are frustratingly slow, but it has posted progress. The joint government-industry effort to illuminate how bad COOL is for the U.S. is also showing results as more American groups formerly in favour of the law now shift against it.
Less praiseworthy is the government’s recent record on meat inspection and food safety. An independent panel and the federal auditor general investigated the former XL Foods E. coli contamination incident, which sickened 18 people, and found weaknesses in Canada’s food inspection system.
An American audit released last week gave the Canadian Food Inspection Agency an uninspiring “adequate” rating, the minimum grade that still allows a country to export to the U.S.
To address shortcomings, the federal government late last year transferred responsibility for the CFIA to health from agriculture. It also announced initiatives to improve oversight and penalize safety violations. The government must closely monitor these changes to ensure they provide the desired result.
Canada’s beef producers will eventually cast off their funk and start rebuilding.
However, they rely on their government to uphold its role in delivering a beef product that consumers at home and abroad can trust for safety.