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How protectionist policies for dairy and poultry could harm Canada’s beef producers 

As NAFTA negotiations continue, Canada’s 60,000 beef producers are anxious to see a continuation of free and open trade within North America. Mexico and the U.S. currently import 80 per cent of our beef, and any impediment to that trade would severely impact the industry.

Ironically, North American trade for our beef is in jeopardy due to a Canadian protectionist policy involving a different sector. Supply management agreements protecting dairy and poultry producers are a source of serious contention in the negotiations.

What is supply management?

Supply management is a system whereby production quotas and import restrictions in the form of tariffs limit the availability of dairy, poultry and eggs. This helps keep prices at an artificially inflated level. 

Critics of the system argue that the system eliminates competition and raises prices for the consumer.

“The two planks of the system are quotas (producers need to purchase a licence to produce these commodities) and tariffs (taxes for incoming imports),” said Casey Vander Ploeg, vice-president of the Alberta Cattle Feeders’ Association (ACFA). “Both planks are needed to make the system work.” 

Why beef producers could be negatively impacted by dairy and poultry supply management

President Trump’s complaint with the supply management system is that it negatively impacts the ability of U.S. dairy, poultry and egg producers to export to Canada. To date, this has been a serious stumbling block in the negotiations, and officials are insisting that Canada dismantle the system.

Many of Canada’s beef producers are concerned that the supply management system protects a sector representing only seven per cent of our agricultural output, while putting the majority of Canadian agricultural exports at risk.

The role of the federal government in building agri-trade

The federal government has set a goal of reaching $75 billion in agriculture exports by 2025. “To achieve that goal, government needs to help us make our agriculture and agri-food products as competitive as possible within the international marketplace,” said Casey. “It’s important that supply management does not impede our ability to access those markets.”  

For a full explanation of why NAFTA matters to Canada’s beef producers, read ‘Cattle feeders head to Ottawa to support NAFTA negotiations’.

4 reasons the National Beef Strategy is important to Canada

These are interesting times in the beef industry. Our producers face numerous challenges such as declining cattle numbers across the world and consumer concerns about environmental impacts and animal welfare. At the same time, new markets, including those in Asia and the Pacific region, are providing opportunities for industry expansion.

To ensure Canada’s beef producers are positioned to make the most of these opportunities — and overcome the challenges — industry organizations, including the National Cattle Feeders’ Association, came together to develop a National Beef Strategy. 

The goal of the strategy is to position Canadian beef producers for greater profitability and growth and to support their reputation for superior quality, safety, value, innovation and sustainable production methods.

The National Beef Strategy is based on four main pillars and goals:

#1 Beef Demand

To increase the value generated from each animal by 15 per cent. Recommendations include:

  • Product development and the use of under-valued cuts to maximize competitiveness
  • Building recognition and loyalty for the Canadian Beef Advantage brand
  • Pursuit of an ambitious international trade agenda
  • Increasing consumer confidence in food safety, quality and production practices
  • Communication of the sustainability message

 

#2 Competitiveness

To reduce cost disadvantages compared to main competitors by seven per cent:

  • Working with regulators to develop a supportive regulatory environment
  • Improving access to affordable resources such as skilled labour, animal health products, feed grains and forages and new technologies
  • Maintaining and enhancing research capacity
  • Continuous improvement in sustainability and efficient use of resources

 

#3 Productivity

To increase production efficiencies by 15 per cent through improvements in the following:

  • Genetic selection
  • Research and development
  • Enhanced information flow along the production chain through information technology and verification

 

#4 Connectivity

To improve communication within the industry and connect positively with consumers, the public, government and partner industries through:

  • Development of an industry communication strategy
  • Engagement with industry partners and stakeholders
  • Engagement with government, consumers, domestic and international organizations

 

“This strategy is something all stakeholders in the industry can buy into,” said Martin Unrau, co-chair of the National Beef Strategic Planning Group. “There’s strength in numbers and by working together we will build a stronger and more robust industry capable of meeting and responding to the opportunities now and into the future.”

You can read more about some of the challenges facing cattle feeders in ‘Pressing cattle feeders issues discussed with politicians during Ottawa trip’.

Why graded beef is good for producers and consumers

Canadian beef is known across the world for its consistently high quality. Here in Alberta, the factors that contribute to great beef production include not only our high standards of animal care, but also our unique weather and farming conditions.

Thanks to a stringent grading system, it’s not only possible to rely on the quality of Canadian beef, but it’s also possible to quantify it.

The Canadian Beef Grading Agency, (CBGA), assesses and grades beef at federally inspected packing plants, based on standards set by the federal government. The five grading criteria are:

  • Maturity (age), as this affects the tenderness of the meat
  • Gender, as the hormone levels in some bulls affects meat colour and tenderness
  • Muscling
  • Fat, including the amount of fat and colour
  • Meat colour, texture and marbling

A top grade will only be assigned if the carcass meets all five quality attributes. The amount of visible marbling will determine the segmentation within Canada’s top grades – Canada Prime, AAA, AA or A. The CBGA also assesses meat yield using a specialized grading ruler and assigns a yield grade. Canada currently has 3 yield grade classes Canada 1, 2 or 3.

Why grading matters to beef producers

Cindy Delaloye, general manager at CBGA, says more than 99 per cent of the meat coming from federally inspected processing plants is graded, even though grading is voluntary.

“The livestock industry sees the value in having their beef graded because it provides a guarantee to their customers that the product in the box is what it says it is,” she said. “In Canada, we’re barbecue demons, so it’s important for us to have the quality and consistency to know that we’re going to have a good eating experience.”

Feedlot operators pay a portion of the grading fee in conjunction with the processor, and grading provides them with an opportunity to command a premium price for a premium product.

What Canadian beef grading means to consumers

Marty Carpenter, CBGA’s board chair, said consumers have learned to trust the grade because the beef they purchase consistently meets expectations.

“We have an exacting grading standard in Canada, whereby if the product doesn’t reach a particular standard in all criteria it doesn’t make the grade,” he said.

Restaurateurs – and retailers particularly – are buying based on quality and want to have confidence that whenever they buy Canadian beef it will have the attributes they expect.

Marty also explained that different cultures value different aspects of the product. “Hispanic buyers in the U.S., for instance, value the fact that Canadian beef is graded on colour as that is an important indicator of freshness to them. Canadians like red meat and white fat. People buy with their eyes,” he said.

Beef grading and exports

Grading is one more way of helping Canadian beef stand out in the global marketplace , helping cement Canada’s reputation as a producer of world-class beef.

Can Canada’s beef producers benefit from online sales?

This is the second post in our Spotlight on the Speakers series, featuring speakers from February’s Alberta Beef Industry Conference.

In our first post, we looked at the changing faces, places and consumption patterns of the Canadian beef market. This week, we’re learning how the retail trend toward online sales will affect beef producers.

Don Close, vice-president of food and agribusiness research at Rabo AgriFinance, explained that brick and mortar sales are flat, while online sales are growing and evolving. “I don’t think it’s necessarily detrimental to the beef industry,” he said. “It’s more that it provides an opportunity to access consumers via a different channel.”

“The biggest change,” Don said, “will be experienced by beef processors. They should expect changes in where they are delivering, servicing and distributing products to consumers. For most individual producers there will likely not be any meaningful change.”

Online opportunities

For those beef producers keen to take advantage of the trend, the online market offers a unique opportunity to establish their own branded products. “It opens up a new marketplace for individual producers, particularly if they have cattle with an exceptional set of genetics and want to capture a premium price for their premium product,” said Don.

Online sales could potentially provide beef producers with the ability to promote beef to consumers who are more typically non-consumers, or light-consumers, of beef. It could also provide an opportunity to persuade beef eaters to try different cuts or products.

Don explained that the biggest hurdle to creating meaningful sales via the online market is the investment required in branding, marketing and online sales tools.

“The tendency of the consumer is to choose large, national brands with a known identity,” said Don. “They have a high level of trust with those providers and they know what to expect. They are less likely to try the smaller, lesser-known brand.”

The sales and marketing resources necessary to make an impact on the online food market could potentially be more accessible to groups or collectives, rather than individual producers, he added.

You can hear more from Don in this video entitled ‘From the cart to the keyboard: how food purchasing habits will impact the beef industry’.

 

Why water management is vital to rural and urban residents

We all rely on the health of our water systems for survival. Every day we use water for drinking, cooking and cleaning and to grow the foods we eat and nourish the plants and wildlife around us.

The Oldman Watershed is a large water system that covers 23,000 square kilometres in southwest Alberta and 2,100 square kilometres in Montana. Given Alberta’s semi-arid climate, the management and maintenance of this huge water system is crucial for the 230,000 people who live in the region, for agricultural and industry, and to keep the rivers healthy.

The Oldman Watershed Council

The Oldman Watershed Council (OWC) is a not-for-profit organization dedicated to encouraging watershed management under the province’s Water for Life Strategy.

Shannon Frank, executive director of OWC, explained that the watershed supplies all the water the residents of the region use at home, at work and on the farm, so it is critical that we protect it.

Urban and rural residents can adopt many best practices to lessen their impact on the watershed.

“For urban people, their biggest impact is in storm water runoff and being careful what they do in their yards – things like picking up pet waste, using fertilizers and pesticides carefully so they don’t run off,” said Shannon.

She added that some people believe storm water is treated but that’s a myth, and it goes directly into our rivers and creeks. 

“For rural people and agricultural producers in particular, the key is leaving buffer zones around water bodies. Keeping cattle away from water bodies and leaving or seeding vegetated buffer zones between water and crops is also important. These practices keep bacteria, nutrients and pesticides from running off and into our water.”

One of the ways the Council encourages investment in best practices is by offering grants.

The Watershed Legacy Program

Through the legacy program, agricultural producers can apply for a grant to cover up to 50 per cent of the cost to buy materials like fencing, watering units or biocontrol bugs.

“Those are the types of projects we typically see, although we accept any projects that benefit the watershed,” said Shannon. “We have had a couple of applications for bridges or rig mats to create a hard surface for cattle crossings over water.”

The legacy program has been in effect since 2009, and since that time has funded 55 projects, each of which has helped improve water quality and fish and wildlife habitat.

Watershed Legacy Program

“This year we aim to expand the program to include outreach, and provide education on what the best practices are,” said Shannon. “We want to celebrate those using them and share success stories to encourage further adoption.” 

Over the last few decades, Canada’s beef producers have made it a priority to reduce their water footprint. Between 1981 and 2011, they were able to reduce the amount of water required to produce one kilogram of beef by 17 per cent, primarily through the use of more efficient feeds and enhanced cattle rearing practices.

New partnership gives a boost to transpacific trade

Canada’s beef producers rely on international trade to keep their industry growing in a global economy. That’s why the National Cattle Feeders’ Association (NCFA) was thrilled when the Government of Canada announced it has reached a trade deal with ten of Asia-Pacific’s fastest growing economies.

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will provide tariff-free and/or competitive access to key markets in the Asia-Pacific region. It is to be signed in March and must then be ratified by the Canadian Parliament and by the governments of the ten other member countries.

We spoke with Claire Citeau, executive director of the Canadian Agri-Food Trade Alliance (CAFTA), to learn why the agreement is so important for Canada’s agri-foods producers, including beef producers.

“Overall the CPTPP will reduce tariffs and non-tariff barriers, open new, growing markets for Canadian agri-food products, and support jobs and prosperity here at home,” said Claire. “It will provide the sector with unprecedented access to the important Japanese market and rapidly growing Asian markets like Vietnam and Malaysia.

“The 11 countries in the CPTPP region include some of our main export markets, including Japan and Mexico, as well as seven new countries,” continued Claire. “Japan in particular is the big prize as it is our third export market and a high value market for Canadian agriculture and agrifood  – it is the largest economy in the CPTPP region, and the third largest in the world. Vietnam and Malaysia are other countries that could represent expanding markets.”

Some of Canada’s main competitors, such as Australia, have free trade agreements with countries in this region, which has given them a huge advantage over Canada when it comes to exports. The CPTPP will help to level the playing field.

Since the U.S. dropped out of the Trans-Pacific Partnership, and does not have free trade agreements with Japan, CPTPP will give Canadian producers a distinct advantage over the U.S. in the Japanese market.

Why speedy ratification is crucial

John Weekes, senior business advisor at Bennett Jones, former ambassador to the WTO and Canada’s chief negotiator for NAFTA, said he attributes Japanese leadership to TPP coming back to life again as the CPTPP – because they saw it as an important way to fill the vacuum that was left in the Asia-Pacific area when the U.S. retreated from the original TPP negotiations early in 2017. The Japanese came to the conclusion that it would be important to have a trade agreement with the sort of provisions that are in the CPTPP, in that part of the world. If Canada had turned its back on CPTPP, we could have faced not having a trade agreement with the Japanese for at least a decade.

John Weekes speaking at a Canadian International Council event in Ottawa on February 12, 2018.

When addressing attendees at the Alberta Beef Industry Conference in Red Deer on February 23, 2018 John stated,

Canada should approve CPTPP in parliament as soon as possible so we get in on the ground floor on tariff reductions and secure lower tariffs as quickly as possible.

Claire Citeau explained that the CPTPP will enter into force 60 days after at least six members ratify it. “We may lose the ‘first mover advantage’ if Canada is not among the first countries to ratify,” she said. “If our competitors ratify and implement the CPTPP before Canada, they will benefit from the initial rounds of tariff cuts and we won’t, putting us at a further disadvantage.”

“Having better and more competitive access to markets like Japan will create further growth and help create jobs in urban and rural areas in Canada,” concluded Claire.

Stay tuned for future blog posts, in which we will keep you updated on the ratification process.

How population changes are driving the beef industry

This is the first in our Spotlight on the Speakers series, featuring speakers from February’s Alberta Beef Industry Conference. This week, Andrew Ramlo, executive director of Urban Futures, spoke with us about the changing faces, places and consumption patterns of the Canadian beef market.

How age, ethnicity and lifestyles are changing the domestic market

Andrew, whose company, Urban Futures, specializes in demographics, explained that the domestic market for beef, and indeed all agricultural products, is undergoing a significant change on three major fronts:

Age: For the first time in decades, the baby boomers are no longer the dominant generation in terms of numbers. There are now more Millennials and Generation Xers than post-war boomers. This shift is having an impact on all factors of the market, including  what people consume and how they consume it.

“This younger generation demands to know where their food comes from, and how it was produced, giving rise to the popularity of niche products such as hormone-free, grass-fed and organic,” Andrew said. They are also increasingly in tune with diet and health, and this affects their food choices.

Lifestyle: “One of the major drivers of the market will be convenience,” Andrew said. “People have busy lives and kids to feed, so they need to have convenience in the ways things are prepared and packaged.”

Ethnicity: With a population that is increasingly ethnically diverse, the types of food eaten by Canadians is changing, and so is the way it is purchased and prepared. Canadian food producers must pay attention to the ethnicities of their consumers, and their eating habits or preferences.

An export market driven by growth

While the domestic market is being driven more by change than by the potential for significant growth, growth can be expected in the export market.

“The Asia-Pacific markets are going to be very significant,” said Andrew. “Particularly in China, there are a lot of consumers who have not historically eaten beef, but who are starting to be able to afford it.”

How immigration could affect beef production

We know immigration is affecting what Canadians eat, and how they prepare their food. But there is also the potential for more immigrants to be employed in the beef production industry.

“The Canadian government has increased their immigration targets from what it has historically been – between 275,000 and 300,000 – to about 340,000 by 2021,” said Andrew. “This is being done by and large in response to our aging population; to give us the ability to fill in the labour force as the baby boomers head toward retirement.”

“The government really needs to look at aspects of our labour market and do more targeted recruitment among potential immigrants.”

You can read more about the impact of demographics on the beef industry in Changing demographics mean changes at the dinner table.

Watch for future ‘Spotlight on the speakers’ posts.

6 issues cattle feeders will discuss at the Alberta Beef Industry Conference

Beef producers from all over Alberta will convene in Red Deer next week for the Alberta Beef Industry Conference.

This annual event is a chance for industry members to find out what’s new and network with others in the industry. As the event approaches, here’s a look at some of the pressing issues ACFA has been following, and that industry members will likely discuss.

#1 The Canadian Agricultural Partnership (CAP)

The government has allocated $3 billion to invest, over the course of five years, in five areas: innovation and research; environmental sustainability; risk management; product and market development and diversification; and public trust. ACFA will look at devising projects and programs to advance the cattle feeding industry, which could attract funding under CAP.

#2 Labour

The Federal Department of Employment and Social Development Canada (ESDC) is currently reviewing the Temporary Foreign Worker Program. This program is a life-saver for cattle feeders when they are unable to find workers from within the Canadian workforce. Past government reviews have accepted ACFA recommendations but there is still room for improvement.  ACFA will continue to be engaged in this file.

#3 Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)

Last month the government announced it will sign onto the new CPTPP trade agreement. This is good news for the beef industry and should result in reduced tariffs in a number of export markets, especially Japan. ACFA will continue communicating with government to stress the importance of the agreement for Canada’s beef industry until it is fully approved and ratified by Parliament.

#4 Other trade issues

NAFTA and trade with China are two other pressing trade issues of great importance to cattle feeders. In June 2016, the U.S. secured approval from China for greater access to that market. Canadian producers need the same access. A new pilot program to export fresh and chilled Canadian beef to China is expected in 2018, but ACFA will continue to press for the same access given to the U.S.

#5 Competitiveness

About 10 years ago, ACFA commissioned a study to assess the competitiveness of cattle feeding in Alberta. The industry’s ability to compete effectively in the international market will continue to be a priority and there will be discussions about whether it is time to update this study.

#6 Industry governance and financing

The mandatory levy on beef sales, known as the check-off, is used to fund research and marketing activities on behalf of the entire industry. ACFA and the Alberta Beef Producers (ABP) have come together to devise a new governance and funding model for the provincial beef industry, and its use of check-off dollars. A plebiscite may be required later in 2018 for a final decision.

As well as conversation and networking, the conference also features a full program of speakers, including former Prime Minister Stephen Harper.

For anyone interested in Alberta’s beef industry, its challenges and opportunities, this is a must-attend event.

Excellent reasons to attend this year’s Alberta Beef Industry Conference

On Feb 21-28, members of Alberta’s beef producing industry and their suppliers will gather at the Sheraton Red Deer Hotel, along with journalists, politicians and others interested in beef and the people who bring it to our tables.

The 15th annual Alberta Beef Industry Conference is a chance to find out what’s new, learn about the industry’s achievements and challenges, and make connections.

As always, the conference is packed with a great lineup of speakers. Here are a few highlights:

Andrew Ramlo: This strategic management consultant specializes in helping organizations develop strategies to address industry challenges and opportunities. He will be sharing his insights into everything from the changing consumption patterns of domestic and export markets, to issues of production and labour force trends.

Mark Sheridan: The president of Hester Creek Estate Winery will speak about the evolution of B.C.’s wine industry and the value the Vintners Quality Alliance has brought to wine producers in British Columbia.

John Weekes: As a senior adviser with Bennett Jones, John has worked with the National Cattle Feeders’ Association on many trade files, providing business and strategic advice. He will comment on NAFTA, Canada’s trade agreement with the United States and Mexico; the EU and the implementation of the Comprehensive Economic and Trade Agreement (CETA); efforts to bring the Trans-Pacific Partnership (TPP) into force without the U.S.; and trade relations with China and India.

Bruce Cameron: This veteran pollster will explore the challenges our democracy faces in a world where truth is relative. Using timely examples, he will show how integrating new social media metrics with established polling techniques offers a way to reduce margins of error and restore truth in politics.

The conference promises to be packed with great information. To learn more about these and other speakers, visit the conference program page.

Canadian beef trade with China takes a serious blow

Recent trade developments between China and the U.S. have some Canadian beef producers seriously worried.

Their concern stems from the disparity between the types of product China will now accept from the U.S. and those accepted from Canada:

    • Currently, Canadian producers are only allowed to ship boneless, Under Thirty Months (UTM) frozen beef and only from individual processing plants that have been audited and approved by Chinese officials and certified for export to China by the Canadian Food Inspection Agency.
    • China’s trade deal with the U.S. allows American producers to ship boneless beef, bone-in beef, chilled beef, and certain offals from any federally-inspected and approved processor.

Canadian beef producers already suffering the impacts

Producers and industry associations have written letters to Agriculture Minister MacAulay, as well as trade officials, to inform them of the impacts this has on the Canadian beef market. Producers are trading directly into China and have met all the requirements necessary for sale of beef into China – and this is a tremendous opportunity that may fail without similar access to that achieved by the U.S.

Some Canadian producers are selling their product under the branded ‘Farm Gate to Chinese Plate’ program, and have a custom processing contract with a large processing plant here in Alberta. These producers have invested substantial time and capital over the past four years to build a strong relationship with their Chinese partners. In 2016, 10,000 head of Canadian cattle were exported to China. Producers were looking forward to increasing that to 15,000 head in 2017, but their Chinese customers have informed them they may change the order, and want it for a lower price.

Canadian producers are selling product into China for high-end retail and restaurants, but they can only ship frozen, boneless product. The fact that the U.S. is now allowed to ship fresh or chilled bone-in beef puts Canadian producers at a distinct disadvantage in this marketplace. This may end trade with the Chinese for Canadian beef producers as a result.

Canadian trade with China

To date, China has expanded its acceptance of Canadian product in stages, where additional product lines are allowed access over time. For instance, China agreed to accept Canadian bone-in beef back in September 2016, but the agreement has not yet been finalized, so currently, no bone-in product is being shipped. However, the recent agreement with the U.S. shows that China can work on opening many beef product lines at the same time. The hope is that Canadian negotiators can secure the same treatment for Canada.

Canadian beef producers have expressed concerns over the fact that their industry depends on global trade – they need to be competitive for the growth and sustainability of their industry. China is a market where producers need the Canadian government to step up its efforts to gain access similar to that achieved by the U.S.

Learn more about Canada’s beef trade with China from Agriculture and Agri-Food Canada.