Canada’s Beef Industry at “Profound Tipping Point” Report Says

Sep 10, 2012

Agri-Food Policy Institute Releases New Study Evaluating Canada’s Beef Industry

Canada’s beef industry is at risk of becoming a net importer of beef according to a new study released by the Canadian Agri-Food Policy Institute (CAPI). The study says that the beef industry is at a “profound tipping point” and concluded that corrective action is needed in order for the industry to become a leading provider for a much needed protein – beef for a growing world population.

"Canada's beef industry is falling behind and opportunities are being eroded by a failure to work together," says CAPI President and CEO, David McInnes. "The data and interviews show our beef industry lacks a comprehensive strategy to address challenges and take advantages of the significant opportunities that the future offers."

The biggest issue that the report points out is the relationship between Canada and the United States, explaining how Canada is shipping more cattle and lower value beef cuts to the U.S. while importing higher value beef. Often, Canadians are buying cattle that are raised domestically but are processed in the U.S. The report also offers some of the causal factors of the industry’s struggles, including more competition from foreign suppliers, high value of the Canadian dollar, higher input costs such as feed, U.S. country-of-origin labelling laws and the declining consumption of beef.

The study comes to the defense of governments and says that the government has been very supportive of the industry, especially with opening new export markets. The good news is that the report doesn’t just point out all of the flaws within the beef cattle industry as it also provides a blueprint for which the industry could put into action. One of their calls to action is an industry-created strategy that would bring together all of the key stakeholders of the sector representative of the entire beef supply chain. The report stresses the need to engage stakeholders who may not traditionally have played a role in decision making to be a part of the process; some of those include health, environment, research, innovation.

"In the past, when presented with a challenge, Canada's beef industry rallied, collaborated and addressed the challenge head-on," says McInnes. "Our report suggests, and many industry stakeholders agree, that with a solid strategy, a commitment to work together, and the discipline to execute effectively - then Canada's beef industry will once again rise to the occasion and deliver the benefits that producers, stakeholders and consumers in Canada and around the world desire. The industry needs to imagine what is possible and then design a strategy to achieve that destination."

Key data from the report:

Selected key data in CAPI's report

1.	Importance of beef sector	The Canadian beef industry generates over $6 billion in farm gate sales (2011) and represents some 15% of the value of agricultural production.
2.	Declining beef trade balance	In 2011, Canada's trade balance in terms of value was $42 million, falling from $1.4 billion in 2002.
3.	Domestic beef supply	Canada supplies some 75% of its own market's beef. This number has fallen from 87% in 2005 as imports - from the US - have risen.
4.	Differences in the value of the Canada-US beef trade	Canada's beef exports to the US are only 60% of the value of US beef exports to Canada. In 2011, Canadian exports of beef to the US averaged $3.74/kg whereas average beef imports from the US were $6.55/kg.
5.	US beef exports beyondCanada vs. Canada beef exports beyond US	US beef exports beyond Canada are up 280% on a value basis since 2005; whereas Canadian exports beyond the US are up 45%. Since 2002, Canada's exports to international markets other than the US were down 3.5% while the US beef industry increased exports to the international market by 51% (excluding shipments to Canada).
6.	Importance of US market	On average, 85% of Canada's beef and live cattle exports are destined to one country, the US. On a five year average (2007-2011), Canadian beef and cattle sales to the US were some $2.2 billion (and a combined total of $1.8 billion in 2011).
7.	Diversifying export markets	In 2011, 74% of Canada's beef exports (quantity) went to the United States, representing 72% of the total value of Canadian beef exports. In 2002, 78% of Canadian beef exports (quantity) went to the US, representing 83% of the total value.
8.	Canada's cow herd	Canada's cow herd has declined by 1 million head or 20% since 2005.
9.	Beef consumption (Canada)	Per capita beef consumption has declined 10.7% since 2001 and now totals 27.5 kg/capita (carcass equivalent). Pork consumption over that time period has declined by 28% while poultry (chicken, hen and turkey) consumption has increased 3.4%.
10.	Beef consumption (globally)	Global poultry consumption has increased 10.3% over the last three years (2008-2011) while beef consumption has declined 3.5%. Among OECD countries, beef consumption is declining. But, among non-OECD countries, consumption is rising.