OTTAWA — The Canadian livestock and meat industries are strong and well-positioned to compete under free trade, a federal agency says.
“We have concluded that, for the most part, the future of the Canadian cattle and beef industries is bright,” members of the Canadian International Trade Tribunal (CITT) said in a report tabled in the House of Commons last week.
The tribunal was particularly bullish about the cattle and beef-packing sectors in Alberta and the feedlot industry throughout Western Canada. It held out less hope for the Ontario packing industry, which has gradually lost ground to the West during the past decade.
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But the CITT also warned industry players not to become complacent.
It called on all sectors to work to keep costs down and to ally themselves with other players in Canada and in foreign markets. One possibility is a form of vertical integration that would see packers, feedlots and farmers sign contracts to guarantee volumes, sales and prices.
Must keep competitive edge
It called on governments to continue deregulation and other policies that will give the industry a competitive edge, including changing grain supports that increase the cost of feed.
And it called on Ottawa to continue to insist that the United States live up to “open border” commitments on access and destination inspection that it made in 1992 but never fully implemented.
Officials from the cattle and packing industries gathered in Quebec City for the annual Canadian Meat Council meeting had little detailed comment on the report because they had not yet received their final copies.
However, the council’s president John Lauer said he was not surprised by the favorable report.
“We think our industry is competitive,” he said in a Feb. 3 interview.
He warned, though, that competitiveness and profitability are not necessarily the same thing: “I don’t think the industry is profitable enough to make the investments that are necessary.”
Among the tribunal’s conclusions were that:
- Western Canadian feedlots are the most profitable in North America because of access to reasonably priced and plentiful feed grains, lower costs for animal’s weight gain and access to Canadian and U.S. packing plants.
nCanadian packing plants continue to lag behind many of their U.S. counterparts in efficiency and profitability because of higher Canadian wage rates and smaller volumes.
nGovernment involvement in the sector, while often much-maligned, actually is a net positive in Canada and the U.S., but a drag in Mexico. The study concluded that government services and regulations, including grading, inspection and research, are more important to the industry than any financial contributions.
- While increased sales to Mexico and Asian markets are important to pursue, “the tribunal believes that the focus of the industries’ export strategy should remain squarely targeted on the United States.”
nCattlemen and packers should be more active in working with grocery chains and distributors to promote the quality and value of their product.
nDespite a demand from retail customers for smaller carcasses to accommodate consumer demand for smaller beef portions, the tribunal says this is one case where the customer is not always right. The efficiency and economics of the cattle industry require continued production of large cattle.
“The best hope for a solution to this problem would seem to be for the cattle and beef industries to work with the retail sector to find ways of utilizing larger cuts.”
The report suggested the cattle and beef industries continue to seek out genetic improvements, larger and more efficient facilities and government regulation and trade policies that reduce their costs and allow the marketplace to work for them.
