Canada: beef trade balance with US is worsening

By Nicholas Robinson

- Last updated on GMT

Canada: beef trade balance with US is worsening

Related tags: Beef, International trade, Export, Livestock

The beef sector in Canada is reported to be at a tipping point and still at risk of becoming a net importer, according to industry leaders.

Although the sector generates CA$6bn in farm gate sales and represents 15% of the country’s total agricultural production, Canadian Agri-Food Policy Institute (CAPI) president David McInnes said the country is at risk of becoming a net importer with the US.

McInnes explained that the beef and cattle trade Canada has with the US is important, but the balance is worsening. He said: “In 2002, Canada’s balance of trade with the US was CA$1.4bn in value. By 2011, it was just CA$42m. Eighty-five per cent of Canada’s beef and cattle exports go to the US. After processing south of the border, higher-value beef is then exported back to Canada. In 2011, our exports of beef to the US averaged CA$3.74/kg whereas average beef imports from US were CA$6.55/kg.”

Also, the US is reported to be using Canadian cattle to “backfill”​ and expand its own beef exports and McInnes highlighted this as detrimental to Canada’s export market. “Canada is aggressively opening up new export markets, but the US is recording triple-digit beef export growth – in part because of Canada’s supply,”​ he said.

According to CAPI this matters because the country needs to make sure there is a foundation to create economic opportunities in the future. And McInnes said there was a “growing recognition”​ that the domestic, US and other overseas markets cannot be optimised. “This is made more challenging given that Canada’s national herd size has declined some 20% since 2005,”​ he added.

The situation has faced more trouble since data showed that beef consumption in Canada had declined by more than 10% in the last decade, which is reflected in many countries, apart from Asia, which is consuming more beef, said McInnes.

Declining domestic beef consumption is down to consumers choosing to eat other proteins and the beef sector not reacting to changing consumer preferences. According to McInnes, consumers want to know more about where their food comes from and how much it is. “Consumers are making protein choices on the basis of perceived healthfulness, environmental considerations and animal handling practices. Canada’s beef sector has a choice. Remain primarily a commodity beef player or strive to be more of a value-added supplier driven by consumer demand,”​ said McInnes.

“A new strategy, centred around collaboration, is needed. From producers to retailers, each beef supply chain needs to better utilise and share information on beef performance, grade and yield, market characteristics and consumer preferences. Other players are integral to support this pursuit, such as in the feed sector, information-technologies, veterinarians and nutritionists,”​ he added.

McInnes also explained that the Canadian beef sector had taken steps to position itself better in the changing marketplace. Steps include the Canadian Angus Programme and the Ontario Corn-Fed Beef Programme, which have an expanding reach through their quality assurance.

McInnes said: “These examples show that targeting opportunities requires collaboration and a clear focus on strategy. Beef supply chain leaders and their partners need to come together to assess what they can achieve together. A robust dialogue on the objectives is needed. The sector’s future prosperity depends on it.”

Related topics: Meat

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