QUEBEC CITY — The Canadian meat industry, on both the producer and packer sides, should step up efforts to counter ethanol industry lobbying for stronger government support, says a prominent industry analyst.
Kevin Grier, senior market analyst at the George Morris Centre, told the Canadian Meat Council annual conference June 1 that a biofuel industry push to have the mandate for ethanol in gasoline increased to 10 percent from five percent would inflict severe damage on the livestock industry.
Grier said despite biofuel industry and government denials, the increased demand for grain as a feedstock has increased costs for the meat industry and reduced its profit margin.
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He estimated it has added $130 million annually in feed costs for cattle and hog producers.
He said the livestock industry in Ontario is particularly vulnerable.
“Ethanol is the strongest threat to Ontario hog and livestock sectors,” said Grier.
“If it goes to 10 percent, it will be devastating. This industry has to dig in to stop the mandate at five percent.”
The GMC livestock specialist offered a mixed message about the health of the industry.
He began on a positive note.
“I want to convey the message that it is hard not to be optimistic about the Canadian livestock and meat industry,” he said.
While domestic per capita meat consumption has been declining, world demand is growing and Canada is a major exporter.
“We’re in a whole new world when it comes to pricing,” said Grier. “Export demand is supporting soaring price levels.”
He said a report for the Canadian Pork Council on the impact of industry exports shows a $3.2 billion benefit for the industry, significantly higher prices per head for producers and $9.3 billion in added economic activity in Canada.
That includes $2 billion in wages in the livestock and meat industry.
It also contributes $318 million in tax dollars to government.
However, the domestic scene is less promising.
Demand already is falling and as production costs rise and retail price levels rise with them, it could stifle demand even more, he said.
Farmgate prices have been strong because of growing foreign demand.
“Processed food prices haven’t kept up but they will, and when it happens, will that cut demand even more?” he asked.
