Trade once again dominated the headlines since our last issue of Canadian Cattlemen arrived in your mailbox.
In June we had the president of Mexico dropping in to announce his country would be willing to import a full range of Canadian beef products starting October 1. Canada Beef president Rob Meijer thinks this addition will produce a modest increase in the 19,400 tonnes we sold to Mexico last year for $155 million, but it does send a positive message to the rest of the world about the quality and safety of Canada’s beef supply.
That same message was reinforced just a week later when Taiwan agreed to begin importing boneless and bone-in beef and other specified meat products from cattle under 30 months of age. Considering Taiwan has been closed to us since 2014 when they bought 1,776 tonnes for $13 million, every new order will be a bonus.
These two announcements added some further impetus to a market-opening trend that started back in January when South Korea and the Ukraine reopened to Canadian beef.
Federal ag minister Lawrence MacAulay took the next step in July committing $6.4 million spread over three years to co-fund Beef Canada’s marketing efforts in Asia, Europe and Latin America.
Given the turmoil in Europe over the U.K.’s plan to pull out of the EU and the rather specialized nature of the beef that will be eligible for that market, I suspect the biggest share of this money should be aimed at Asia, and China in particular.
Canadian Cattlemen’s Association president Dan Darling says China’s ban on all but boneless under-30-month beef is the most significant BSE-related market restriction that remains to be addressed.
The fact that even with that restriction China jumped from fifth in our list of export customers to second last year has given exporters just a taste of what might be available with full access. Tapping it, however, is far from a sure thing.
There is no doubt that the appetite for beef is rising among China’s exploding middle class. According to Rabobank, China’s beef imports jumped 60 per cent in 2015 after the government launched a crackdown of quasi-legal gray market meat imports. Obviously Canada enjoyed some of that growth, but Brazil, Argentina and New Zealand took up the lion’s share of the new business.
The Australians are also well established in China but their shipments have been tailing off of late with the sharp decline in their cattle population. Meat and Livestock Australia says their national beef herd is expected to fall over the next two years to levels not seen in more than 20 years.
Another factor is China’s ban on U.S. beef which was expected to disappear by this summer. Perhaps that, like many other U.S. trade matters, may have to wait until the next president is elected.
Not all of the competition will come from fellow exporters, however. The Chinese government is encouraging growth in domestic beef production to satisfy the middle-class demand for higher quality meat products.
University of Saskatchewan nutritionist John McKinnon got a taste of what is happening there this summer and he writes about it his nutrition column in the August 2016 issue of Canadian Cattlemen.
One company he visited in western China, partly owned by government, runs 21 farms housing collectively 40,000 dairy cows, 5,000 beef cows and 5,000 ewes. An expansion is planned for the primarily Angus-based beef herd that has been built with Australian seed stock.
What was fascinating to McKinnon was their very intensive style of management for the beef herd. In an area that reminded him of Western Canada, the beef cattle are housed indoors, with separate barns for different classes of cattle.
A second operation in a more temperate region of eastern China runs a smaller 200-head cow herd and a 1,500-head indoor feeding operation. Market-ready cattle are sold to the Hong Kong market. The calves are sold at four months of age, and the feeder cattle are purchased.
Another 800-head barn was under construction when McKinnon visited this farm where even corn silage bunkers are housed under roof.
At first blush this doesn’t seem like a very economical system but McKinnon says the high infrastructure costs are offset in part by cheap labour. The other X factor, of course, is the Chinese government’s desire to expand their domestic industry.
Whatever the difficulties involved, greater access to China is a worthy goal for the industry. If nothing else it may inject some needed confidence in the minds of producers.
As Charlie Gracey points out in our August 2016 issue, the Canadian industry appears to be stalled, as if producers are waiting for some sign that it is time to start increasing the national herd.
As of now we won’t see any major increase in production, besides larger carcass weights, until 2020.
Unlocking more of China to Canadian beef won’t turn that scenario around but right now we can use all the good news we can get.