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US beef exports put Canada’s domestic supply at risk

By NIcholas Robinson , 13-Sep-2012
Last updated on 13-Sep-2012 at 12:44 GMT

US beef exports put Canada’s domestic supply at risk

High exports to the US have left Canadian beef producers less able to deliver beef on their own doorstep, according to a new report by the Canadian Agri-Food Policy Institute (CAPI).

The report concluded that Canada’s beef industry is at a “profound tipping point” and in desperate need of corrective action. It warned that despite an abundance of natural quality resources and an ability to produce high amounts of beef, Canada could eventually become a net importer of the red meat.

According to the report, part of the problem is Canada’s reliance on the US market, which accounts for 85% of Canada’s beef and cattle trade and generates nearly $1bn in beef exports and over $800m in cattle exports. Although this market is valuable, it means that Canada is “backfilling” the US market, leaving the US beef industry able to expand its exports and take advantage of higher value and margin

CAPI president and CEO David McInnes said that high exports were an example of the market working and not down to producers “sitting back and letting it happen”. However, the report concluded that the industry needed to come up with a strategy for change.

“There now appears to be a growing appetite in the beef sector to embrace a new approach. There is an emerging view that we can’t optimise the domestic, American and other foreign markets at the rate we are shipping cattle and beef to the US,” said McInnes.

“We either accept that we will remain a primary ‘backfill’ supplier of beef and cattle to the US — with its consequences and benefits — or we need to make a conscious strategic decision about the markets where we can perform at our best.”

Strategy for success

McInnes outlined two approaches to the Canadian beef market, one of which he described as the “status quo”, which would see Canada accepting its role of a primary exporter to the US. The second approach involved increasing the country’s share of beef in its own domestic market as well as putting more into “high value” foreign markets.

With this in mind, the report outlined a “directional blueprint” to put the Canadian industry on the path to success. McInnes said he was confident that, with a strategy in place, Canada’s beef industry would rise to the occasion.

“In the past, when presented with a challenge, Canada’s beef industry rallied, collaborated and addressed the challenge head-on,” he said.

“Our report suggests, and many industry stakeholders agree, that with a solid strategy, a commitment to work together, and the discipline to execute effectively – then Canada’s beef industry will once again rise to the occasion and deliver the benefits that producers, stakeholders and consumers in Canada and around the world desire.”

In addition to addressing exports, the strategy includes plans to regain dominance of Canada’s domestic beef market and grow it from the current 75% to the 2005 levels of 87%.

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