Whear's the beef

As per capita beef consumption in Canada dropped from 38.6 kg to 26.5 kg from 1980 to 2014, Jumped from 16.8 kg of chicken to 30.9 kg. The more carnivorous Americans ate 21.5 kg pounds of chicken per capita in 1980 and upped the ante to 38.5 kg in 2014. Where did the beef go? It took a nose dive from 34.7 kg to 24.6 kg, losing almost a third of its share of belly.

The reduced North American cattle herd, now at a point just slightly above the lows of the early 1950s, responded to the loss of market oddly. Even with that historically small herd, cattle ranchers are producing almost as much meat as they did in the heydays of the meat-eating Marlboro man when a steak, a shot and a cigarette were the norm. Sure, some of that still high production was consumed by growing populations on both sides of the border but most of us have been adamant in not needing or wanting more beef.

Instead, we've taken that Sunday chicken dinner and transformed it into lunchtime chicken strips, breakfast biscuit sandwiches, and late night chicken and waffles. If Zane Grey were writing his tales of the old West today, the cowboy would have to be replaced with the chicken farmer.

Fortunately for North American cattlemen, the worldwide beef markets are changing. The dinner plates that are demanding to be filled with more beef are increasingly located in Asia. A modern version of Clara would have to be looking in Beijing, Seoul, and Tokyo; not in suburban Ottawa or outside the Washington, D. C. Beltway.

The Trans Pacific Partnership

Erin Borror. U.S. Meat Export Federation economist, acknowledged the importance of those far eastern markets and the role the Trans Pacific Partnership will play in gaining market share. In the early days when the TPP was just a conversation between a few Asian countries, U.S. and Canadian interests ignored it. The turning point was “when Japan joined the TPP. The agreement all of a sudden became very interesting to the U.S.”

“The real win for U.S. beef was Japan and, to a lesser degree, Viet Nam, she said. “With everyone else in the TPP, we already had free trade agreements.
Borror acknowledged the US. is still locked out of the Chinese market, a country not participating in the Partnership, anyway. Canada and all other major beef producing countries have access and China is Canada’s second largest market, behind the U.S.

The key to expanding exports, though, is home market consumption. Borror said U.S. consumption might increase by half a pound this year as the herd continues to expand and outpace demand putting downward pressure on the price of a steak dinner. Canada’s expansion should easily outpace Canadian demand, too, putting a lot more North American beef on the trading table. A still shrinking Australian herd, stumbling badly under the same drought conditions that effect North America, will open some new doors throughout the Pacific basin.

Trade Killers

In spite of the opportunity, there are trade killers haunting the potential expansion of the Canadian cattle business. Meatingplace magazine, quoting an unnamed industry official, warned of an impending workplace problem for Canadian cattle. "Canadian meat processors will miss out on export opportunities under new trade pacts as a result of quotas on temporary foreign workers that are creating labor shortages in plants."

Canadian Meat Council official Ron Davidson also warned that an opportunity for Canadian cattlemen could be missed. In an interview with Farmscape.ca, he said, “The Trans-Pacific Partnership and Canadian Europe trade agreement will open new export markets for value-added products from Canada, but plants are operating with as many as 200 empty positions.”
The Canadian government plans to review the temporary foreign workers program, which limits foreign workers to 10 percent of a company’s work force in low-paying jobs, according to the Globe and Mail. Davidson stressed that the timing of the government’s review is important as the new trade agreements come into effect.

Brenna Grant of Canfax did the numbers and said, “On January 1, 2016 Canadian beef cow inventories are projected to be steady to up 2% to 3.9 million head. An additional 500,000 head of beef cows could be added over the next 5-7 years at a rate of 70-100 thousand head or 2-2.5% per year. This is steady to slightly faster than what the U.S. market is expecting.

Faster growth would be supported by a lower Canadian dollar keeping the price signal to producers strong and cushioning the decline in price as production increases. In addition, Canada has greater market access - direct to mainland China - compared to the U.S. which could prove to be advantageous as access through grey channels is unpredictable.”

Although Grant sees expansion efforts slowing in 2018 as increased production pushes prices lower, “International demand in particular could take a significant portion of the additional production,” she said.

As a distant early warning, though, she also cautioned, “As the Chinese Gross Domestic Product (GDP) slows, there are concerns about softer demand. However, all indications are that disposable income is expected to continue to grow and that is what will continue to drive beef demand within the country.”

Source: MeatBusiness