U.S. sales at a discount | Alberta Livestock and Meat Agency says Canada must secure markets in Asia and Europe
EDMONTON — The United States is Canada’s largest beef customer, but the Alberta Livestock and Meat Agency questions whether it is the best destination.
“We are importing high quality beef from the United States, averaging $5.50 a kilogram, and we are selling them beef at $3.33. You have got to ask if there is an alternative,” said ALMA board member John Weekes.
Added board member Ted Bilyea: “You are backfilling the U.S. market and that means at a discount.”
The U.S. accounts for 73 percent of Canada’s beef exports, and packing plants cannot afford to continue selling the product at a discount, said Bilyea.
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The cattle and beef trade balance dropped by $2 billion in a decade as exports fell and imports rose. Canada is still in a positive trade balance, but it is slipping. Canada could end up in a trade deficit on beef.
“That is a strange situation for a country that has so much grass,” Bilyea said, whose experience lies in the pork and beef processing industries.
There is no growth in the North American food industry, while expansion is apparent in emerging markets such as Asia where pork is popular.
One of the agency’s mandates when it started in 2009 was finding more markets for Canadian meat products.
That is in line with the federal government’s ambitious trade policy, said Weekes, former chief negotiator in North American Free Trade Agreement talks.
He said the country needs to pursue agreements with South Korea and the European Union before Canadian beef and pork sales de-cline further.
Canada has been negotiating with South Korea since 1998. The auto industry resisted the deal and negotiations further stalled when BSE was discovered in 2003. Weekes said the Canadian Cattlemen’s Association was partly to blame for negotiations dragging.
“CCA helped the auto industry out by saying that they wanted the negotiations with South Korea to slow down until the BSE issue was re-solved,” he said.
The recent free trade deal between South Korea and the U.S. may leave Canada out in the cold. There is a 40 percent duty on meat, which shuts out any supplier without a free trade agreement.
These duties will fall incrementally for the next 15 years until it hits zero, which gives the U.S a greater advantage each year unless Canada can come up with a similar deal such as a duty free quota.
“You can already see the order books closing up on Canadian pork exports right now,” he said.
A deal is also needed with Japan because the beef tariff is 38.5 percent, which can increase to 50 percent under certain conditions.
Weekes said the CCA has not helped because it does not promote the national cattle traceability scheme to importers.
He appreciates it has not received widespread acceptance among producers, but it should have been used as a promotional tool when selling beef.
Studies show consumers are interested in it and the European Union will ask for rules of origin in any upcoming free trade negotiations.
The EU wants beef free of administered hormones, and using traceability could provide assurances the product is clear of growth promotants.
“We seem to have something right, but we seem reluctant to capitalize on it,” he said. “The system doesn’t need to be perfect to sell well.”
Bilyea said more consumers are interested in the source of their food, and traceability could provide those answers. Full traceability can also be useful during a food recall, he added.
“Out of the BSE crisis came one good thing,” Bilyea said. “We got cattle ID and a premise ID.”
Dave Solverson, an Alberta rancher and CCA vice-president, said traceability is just one part of success in the international trade arena.
“I think it is a bit of a naïve position to take, saying tracking of animals will enhance our sales,” he said.
Canada is developing an individual animal identification system, but it also needs a national movement document and premise ID to make it fully work.
“Unless there is a clearly demonstrated benefit, we know the costs, but we don’t know the benefits,” he said.
He agreed that Canada’s traceability system is better than most of its competitors, but said other economic factors, such as the weaker U.S. dollar, are more responsible for its success as an exporter.
“The U.S. has tripled their exports partly because of the low dollar.”
