What will it take for cow-calf producers to start expanding the herd?
That was the question that kept popping into my head as I read through the recently released 2013-14 results report of the Canadian Cattlemen Market Development Council.
If that name doesn’t ring a bell, I’m not surprised. It isn’t well known outside of the power circles within the cattle industry. It is the industry- (read producer) run body set up by the Canadian Cattlemen’s Association to administer the $80-million Legacy Fund. That name is probably more familiar. The fund was established in 2005 when Ottawa kicked in $50 million and Alberta another $30 million in matching funds to backstop a 10-year marketing program to help the industry dig its way out of the beef glut caused by the discovery of BSE in 2003.
This government money, matched by money from producer checkoffs and industry partners should add up to a $120-million investment in marketing Canadian beef by the time the fund wraps up in March 2015.
Most of the money as you might expect went to fund the activities of the Beef Information Centre and Canada Beef Export Federation and more recently their replacement, Canada Beef Inc. Some also went to support the marketing of Canadian beef genetics by the Canadian Beef Breeds Council.
The results as you can imagine have been mixed, although there is no denying that we’ve gotten rid of the glut of unwanted cows that populated the herd after BSE was discovered. Cattle inventories have now reached the point where Canada Beef’s marketing plans must of necessity be targeted at getting the most value from a diminishing beef supply rather than simply moving volume.
One interesting chart in the report tracks some of the indicators of the industry’s progress from 2006 to 2013 and in some cases compares it to 2002, the last year of the pre-BSE period.
- More ‘Comment’ from the editor: Two-faced tories
On the genetics end, live breeding cattle exports initially jumped from 4,803 to 16,606 in 2008, when borders opened and prices were low, but they’ve settled into an annual range between 4,900 and 3,600 head since then. Semen sales started out with 553,306 lots worth $8 million in ’06 but have bounced around since then. In 2012 the volume jumped to 917,738 but the total return sank to $6.64 million. 2013 wasn’t much better.
On the beef side, Canadians came through and kept eating beef in the years after BSE. Total Canadian beef consumption jumped from 958,000 tonnes in 2002 to 972,000 tonnes in 2006, and one billion tonnes in 2007. Most of it was Canadian beef too, with domestic disappearance running over the 800,000-tonne mark up to 2008.
Our exports, of course, were down in those early years: 372,000 tonnes in 2006 compared to 521,000 tonnes in 2003. In fact total beef exports have still not regained that pre-BSE level. Just the reverse, the numbers have been dropping steadily since peaking at 407,000 tonnes in 2010, down to less than 280,000 tonnes in each of the last two full years.
Consumption of Canadian beef at home has been slipping as well over time, although it has stabilized around the 690,000-tonne mark over the past three years.
It seems like we’ve been talking about tight cattle numbers for years now but these numbers really drove it home for me. We are shrinking, and that brings me back to my original question. When will we see some heifer retention?
This is a question of some urgency for Canada, according to a recent agri-benchmark analysis of our competitive position in the world. Agri-benchmarking is the bright idea of ag economists in 29 countries who are attempting to realistically rank the competitiveness of their various countries in the international beef market. CanFax publishes the Canadian version of the analysis.
Worldwide demand is growing, especially in China and Middle East and tight supplies have doubled global beef prices in the past decade. Unfortunately most of the growth in this market has been going to the countries set up to produce cheaper grass-fed beef. The time looks ripe for Canada to expand. As a bonus we are still small enough that any increased production here won’t have any impact on world markets, but is bound to have positive implications for Canada.
“Cow-calf margins in 2014 are projected to surpass anything seen during the expansion phase of the 1990s,” says the CanFax report. Whether this will tempt many cow-calf producers is still to be seen.
The evidence so far isn’t persuasive. Heifer slaughter to date is up 10 per cent, and to mid-July feeder exports were up 41 per cent, as well, with heifers now making up 70 per cent of the total.
The Americans can smell the way of the future.