OTTAWA, Sept. 10, 2012 /CNW/ - A new study released by CAPI, the
Canadian Agri-Food Policy Institute, indicates that Canada's beef
industry is at a profound tipping point and corrective action is needed
if it is going to deliver maximum benefits to producers and industry
stakeholders and deliver on its potential of being a reliable
contributor to a protein hungry world.
"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 study shows that Canada with all its natural, quality and production
benefits is at risk of becoming a net importer of beef. The cattle
cycle is presently experiencing lower production numbers but there is
also no apparent strategy to regain valuable domestic market share.
On the export stage, the Canadian industry is extremely reliant on one
market — the US, a market that accounts for 85% of Canada's beef and
cattle trade. The good news is the US generates $1.8 billion in total
sales for Canada (nearly $1 billion in beef exports and over $800
million in cattle exports). The bad news is Canada is "backfilling" the
US market; that is, by relying on Canadian cattle and beef supply, the
US beef industry is expanding its exports and taking advantage of
higher value and margins. And the Canadian industry appears to be
content to let that happen.
But don't blame the government, the study says. When beef producers and
the beef industry needed support, like after the BSE crisis, the
federal and provincial governments have been there. And the Government
of Canada is doing an admirable job of opening new foreign markets yet
the beef industry is not doing enough to capture new sales, enhanced
prices and greater margins. Ultimately, industry must develop its
strategy. Governments can then support genuine strategy development and
effectively align its investments behind the priorities.
"There now appears to be a growing appetite in the beef sector to
embrace a new approach," says McInnes. "There is an emerging view that
we can't optimize the domestic, American and other foreign markets at
the rate we are shipping cattle and beef to the US. We either accept
that we will remain a primary 'backfill' supplier of beef and cattle to
the US — with its consequences and benefits — or we need to make a
conscious strategic decision about the markets where we can perform at
our best. This includes increasing the share of Canadian-beef in our
own domestic market, taking fuller advantage of key high value foreign
markets where we have or can develop competitive advantage, and
deciding how we can better extract more value from the important US
The study also outlines that response to consumer desires is below
expectations. Today's consumers want more information including
greater knowledge of production practices, the healthfulness of beef
and its environmental footprint. Yet the Canadian beef industry is not
effectively conveying messages that address issues and concerns or
encourage beef consumption.
The CAPI report outlines a directional blueprint that will put the
Canadian industry on a path towards progressive success. The report
calls for the industry to build a comprehensive and robust strategy
involving active engagement from all sectors of the beef supply chain.
The report states information - including market intelligence,
production and quality information that easily flows from producers to
processors, to retailers and consumers, and information that
differentiates Canadian beef from its global competitors - can play an
important role in the strategy. CAPI's report also emphasizes the need
to engage other players in the food system, such as those in health,
environment, research, innovation, and others to help meet consumer
needs. And the report states a successful strategy will be
best-implemented by champions who galvanize key players and set clear
"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."
CAPI interviewed over 80 beef sector stakeholders and a broad variety of
support players in the fall of 2011 and conducted extensive outreach in
2012. CAPI initiated this case study with financial support from the
Alberta Livestock and Meat Agency (ALMA), the Royal Bank of Canada
(RBC) and the Saskatchewan Ministry of Agriculture.
The Canadian Agri-Food Policy Institute (CAPI) is an independent,
unbiased policy forum that is dedicated to the success of Canada's
agriculture and agri-food sector. CAPI is a catalyst. It identifies
emerging issues, promotes dialogue and advances alternative solutions
to issues with stakeholders across diverse agri-food supply chains and
among other food stakeholders. Based in Ottawa, CAPI was established as
a not-for-profit corporation in 2004 by the federal government and is
guided by a diverse Board of Directors and an Advisory Committee.
Selected key data in CAPI's report
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.
Declining beef trade balance
In 2011, Canada's trade balance in terms of value was $42 million,
falling from $1.4 billion in 2002.
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.
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.
US beef exports beyond Canada 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).
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).
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.
Canada's cow herd
Canada's cow herd has declined by 1 million head or 20% since 2005.
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%.
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.
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New Study Suggests Canada's Beef Industry at a Tipping Point
MONDAY, SEPTEMBER 10, 2012 at 1 pm - 2 pm ET / 11 am - 12 pm MT
SOURCE: Canadian Agri-Food Policy Institute
For further information:
President and Chief Executive Officer
Canadian Agri-Food Policy Institute
(613) 232-8008 x. 221 / (866) 534-7593