Hormone-free beef sales to the European Union are only viable if a
substantial price premium is awarded to producers.
Now producers know how much of a premium.
A University of Alberta graduate student has concluded that Canadian
and American beef producers pursuing a hormone-free program would
require a $14 per hundredweight premium to make it pay.
“The system seems viable but you have to work harder in terms of
economics,” said Ronald Volpi.
Volpi presented calculations based on an American natural beef program
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at an Alberta agricultural economics meeting in Red Deer.
Quebec veal processor Andrea Gennari received a first-hand education in
the European market for hormone-free beef.
Working with 10 Alberta and Manitoba beef producers, he eventually
abandoned his hormone-free beef export program two years ago as costs
escalated and production rules became too restrictive.
“It is a very difficult situation with Europe because their regulations
are so strict,” said Gennari. His company, Walcovit Inc. of Beauport,
Que., shipped 600 tonnes per year to European customers.
At the end of the day, bureaucratic impediments rather than food safety
issues pushed the ranch-raised beef out of the market.
“This is more political than sanitary restrictions,” he said.
He is writing a new business plan, but said it is five years from
fruition.
He does not expect the EU to relent.
“It is the only way to keep North American beef out of the market,” he
said.
“Quality-wise, we are a much better product.”
He said his beef was sold to high-end restaurants and retailers.
Cattle entering a hormone-free program must be tagged at birth with dam
and farm identification. Comprehensive records must be maintained on
care and feeding. The animals must be kept separate from
hormone-treated cattle. The packing plant must provide trace-back
records.
“Everything you do that affects the quality of the product is written
on paper,” Volpi said.
His research focused on an American natural beef program where the meat
is sold as a natural product in the domestic market.
“A farmer engaged in this program would have to be big enough to retain
his calves and absorb the costs,” he said.
Further costs are incurred because calves take longer to reach an
acceptable slaughter weight than those receiving implants. An implanted
steer could reach finished weight in 147 days on a feeding program
compared to 190 days for a non-implanted animal.
Other than a quota of between 50,000 and 70,000 tonnes per year, North
American beef has been effectively shut out of European markets since
1989.
“Canada and the U.S. get 20 percent of this quota, but they are not
fulfilling it,” Volpi said.
According to American figures, the two were eligible to ship a total of
11,500 tonnes in 1999, but exported less than 5,000 tonnes.
The EU exports 600,000 tonnes and imports about 450,000 tonnes of beef
per year from non-EU countries. Most imports come from South America,
New Zealand and Australia. Imports above the quota carry a 20 percent
tariff.
Identity-preserved programs for beef, pork and poultry are an emerging
European trend.
Owned mostly by farmer-run co-operatives, strict specifications for
animal welfare, livestock care and processing must be obeyed to gain
specialty labels.
Randy Westgren of the University of Illinois said these labels carry
bar codes that trace individual chickens, hams or beef cuts back to the
herd of origin. He has been studying these quality assurance programs
for 10 years.
“They have gotten ahead of us in quality assurance,” he said.
Business plans are drawn up that adhere to a hazard analysis critical
control points system. All branded programs are audited by independent
third-party inspectors, including feed mills.
Animals are raised in open environments without hormones or
antibiotics. The meat sells for about double the price of unbranded
goods at the retail level.
For example, chicken carrying the Rouge Label in France sells for 5.55
euros compared to 2.5 euros for generic poultry.
However, not all Europeans are willing to pay such a high price for
these specialty items.
“Don’t think of these as targeted to the entire consumer,” Westgren
said.
He estimated 12 percent of North American consumers might be willing to
pay more for branded, natural meat.
