While the beef industry has been focused on fighting for its COOL rights and attempting to pull together an overall strategy, there are things happening outside of the circle that could be game changers for the industry.
Australia and Indonesia had only just gotten their playground rules settled when an alleged spying incident spurred Indonesia to look further afield for beef imports. After their disastrous attempt at beef sovereignty, the Indonesian government retracted and is looking for strong import ties. The game changer here is that Indonesia is considering buying from regions within countries for beef. In short that means that although a country may have a disease status, they are willing to go into a disease-free region within that country and buy beef from that region. They are currently considering India, the world’s largest producer of beef to procure product. This has a dramatic effect on Australia with whom they annually import more than 500,000 head of live cattle and 70,000 tonnes of beef. Beef is produced on 57 per cent of all Australian farms and any loss in the largest live and beef market, that being Indonesia, forces Australia back to the marketing table and that may have an impact on Canada. Setting precedent by going into disease-free zones will be a game changer on the trade table.
Australian beef does come into Canada and it does not all go into A&W burgers. The fact that a global program now feeds a national chain in Canada as highlighted in the A&W Our Beef campaign indicates that there is more of this to come. Even though it was a shocker to the old Canadian way of thinking the marketing move was brilliant in capturing market share and outmanoeuvering the competition. Look for more contracts in food service and retail that are global in context as the competition heats up.
Competition is healthy but severely lacking on the export front. Food processing in Canada, especially in value-added meats is dwindling and adding pressure to our $6-billion processed food trade deficit. There are two points within the food-processing arena to address. First, we fall short on processed meats but more importantly, we no longer have a fed-cattle value that is based on live exports which takes Canadians further away from the board price. With the roadblocks caused by COOL and the refusal of cattle fed beta-agonists, we now have a dependency on value adding to product. The game changer is the potentially permanently wide basis on live fed cattle and the loss of food processing to add value.
When it comes to the value of beef product it is important to note that China is not the only game in town and may actually be the least profitable export market. On a per-kilogram basis the value of beef to China is $5.93 less than the value of exports to the EU. (Exports to the U.S. on a per-kilogram basis are $3.50 less in value that exports to Europe.) CETA could change the game in Canada’s favour yet in pursuing trade agreements there will be continued pressure on the dairy industry, which may result in additional spent cows and dairy calves in the system. Regardless, the landscape has shifted and will continue to evolve leaving the Canadian industry with an opportunity of sending processed beef into value-driven markets.
Consumer tolerance is getting thin and the move by Cargill to ban cattle fed Zilmax is just the starting point. Ask yourself this — why is it that we punish an athlete when taking muscle-enhancing drugs and allow the same principle to be applied to the production of food? This is a game changer for the industry and the transparency of production practices will dictate the outcome. Social licence will move to the top of the list and dominate auditable production practices.
Society as a whole has been far removed from agriculture and few Canadians in densely populated centres are born here. Today, more than 50 per cent of Toronto’s population is foreign born and Toronto, like many major cities has developed its own food policy. Ontario Premier Wynne recently urged manufacturing workers to seek out jobs and opportunities in food processing. Today, nearly 70 Canadian cities and municipalities have developed a food systems approach to economic development or a firm food policy. The density of the voters and the fact that they have cemented core beliefs in regional food policy will be a game changer for the Canadian beef industry. Future food policy and related job opportunities will be dictated strongly through urban centres.
The foundation of the beef industry is grain and the value of the fifth quarter (the credit value). From a production point of view, feeding cattle is about adding value to grain. From a processing point of view it is about capturing the credit value. The challenge for the beef industry is to partner or add value to those key areas without compromising their social licence while capturing the greatest value market. This takes some thought outside the current discussions and most certainly challenges the status quo.
Who will it be that leads us through the shifting landscape? The absence of youth on farms, urbanization and smaller farm families may result in further consolidation resulting in a small, transparent consultation table that reflects countries and cultures.
The game has changed.
Brenda Schoepp is a Nuffield Scholar who travels extensively exploring agriculture and meeting the people, who feed, clothe and educate our world. A motivating speaker and mentor she works with young entrepreneurs across Canada and is the founder of Women in Search of Excellence. She can be contacted through her website www.brendaschoepp.com. All rights reserved. Brenda Schoepp 2013