Canadian beef sales have been surprisingly brisk in the post-BSE environment, says the president of the Canada Beef Export Federation.
“Our exports over the first five months of this year surprisingly haven’t been suppressed as much as one might assume it to be,” said Ted Haney.
A comparison of January-May sales in 2004 to the same period in 2003, shows an 8.7 percent decline in quantity shipped and an 8.3 percent decline in dollar value. Those are impressive numbers for an industry decimated by disease 15 months ago.
When June is factored in, there is actually an increase in both categories but that’s because sales of beef came to a grinding halt immediately following the May 20, 2003, announcement that BSE was found in an Alberta cow, and didn’t resume until September.
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One reason for the rebound is that Canada’s beef processing capacity increased by 20 percent during that stretch, so there is simply more beef to be exported.
Another is that while countries like Japan, South Korea and Taiwan have closed their borders to Canadian product, exporters have made strides in the United States, Mexico, the Philippines and Macau, where sales are up dramatically.
According to Statistics Canada, exports to the U.S. during the first five months of 2004 amounted to $633 million, down slightly from $711 million during the same period of 2003. That’s a strong performance considering the country is only purchasing boneless beef and liver from cattle younger than 30 months.
Sales to Mexico have more than doubled to $155 million from $69 million over that same time frame.
Macau, a new destination for Canadian beef, has taken in more than 1,000 tonnes of all types of cuts in the first six months, worth about $3.3 million.
“We have had essential recovery in our ability to trade Canadian beef internationally,” Haney said.
When Japan, South Korea, Taiwan, Hong Kong and China come back into the mix, the industry will be generating 105-110 percent of pre-BSE export values because Asia is short approximately 800,000 tonnes of beef product.
Because beef exports are not as vulnerable to political and regulatory risks as live cattle, the future looks bright for the Canadian industry, they said.
“But since we still have an imbalance in cattle supply against capacity, cattle prices remain mired at crisis levels.”
That dichotomy of potential strong beef exports and slumping prices paid to producers underscores the industry priority to expand slaughter capacity in Canada.
“That’s the frustration, is that had we have been self-sufficient in processing capacity coming into this, Canada would by-and-large have recovered from its BSE cattle price crisis,” said Haney.
Brian Ross, president of the Saskatchewan Stock Growers Association, said the “tremendous backlog” of live cattle is indeed the crux of the problem.
“The (packing) plants can basically set their price about anywhere they want to because they know they’re going to get product because we have no place else to go with it.”
Major packers have announced expansion plans that will accommodate existing production levels by late 2005, but the post-BSE backlog of live cattle won’t be consumed until new plants are built in 2006, said Ross.
He said there have been some positives stemming from the BSE crisis. Canadian cattle producers will eventually benefit from the traceback systems that have been implemented and the new markets that have been opened around the world.
“The problem is to get through the interim for a lot of producers. There’s a lot of hurt out there in the country right now and governments need to come up with programs to keep those producers on the land.”
