Price may pressure beef consumption

Canadian beef consumption per capita has been gradually declining for the past decade and economic effects of the pandemic might further pressure consumer purchases, an agricultural economist suggests.

Craig Klemmer, principal ag economist with Farm Credit Canada, said the price of beef could become an issue due to high unemployment and escalating credit card debt. However, Canadian beef is a strong brand, which may help the industry ride out those effects.

“Although beef consumption has been declining from 2010 through 2015-16 … what we do see is that if you strip out the impacts of price … beef remains a strongly demanded product in Canada. It is one of the proteins of choice, arguably ‘the’ product of choice,” Klemmer told a recent webinar organized by the Canadian Round Table for Sustainable Beef.

The labour market is weakening in all sectors during the pandemic. The Canadian unemployment rate was 13.7 percent in May and higher in Alberta at 15.5 percent.

Those rates are significant given that every type of farm, regardless of size, extracts at least a portion of income from off-farm sources. If jobs are scarce, it could bring further financial challenges, said Klemmer.

He advised beef producers to consider what high credit card debt and economic strain might mean for their product. So far, he said statistics show beef is trending well against other meats.

“People continue to choose beef and I think that’s a really good news story,” he said, considering the country’s aging population and the different dietary habits of an increased immigrant population.

“Canada has done such an incredible job of establishing (beef) as a strong brand.”

The last three months have shown increased consumer interest in buying local when it comes to food but it is unclear how that will play out in terms of beef purchase. However, Klemmer said there is a clear preference for Canadian product.

There are also opportunities related to the rapid rise in online shopping that includes food.

He predicted that food service in restaurants will ramp up quicker than many might think, which is generally good for beef, particularly hamburger demand at fast-food outlets.

In the same webinar, Rabobank global protein strategist Justin Sherrard said supply chain disruptions in Canada and the United States, coupled with changes in food service and food retail, combined with a general economic downturn will see beef production decline this year.

That is true for other countries as well, he said, including China, Europe and Brazil.

Expenses incurred by meat processors, likely to involve safer conditions for workers but also more automation, are likely to squeeze margins, said Sherrard.

He suggested this is a time for the beef industry to talk more about the benefits of cattle production and beef consumption and use this pandemic-ridden period to further engage consumers.

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