How a little-known export boosts returns in livestock

When I think about export opportunities for Canadian agriculture, the raw or processed commodities Canada’s famous for - like grains, oilseeds, livestock and red meat - come to mind. I seldom think about livestock by-products.

However, by-products like swine and bovine edible offal and hides contributed more than C$1 billion to Canadian ag export values in 2015. And they, like everything else in agriculture, are driven by factors often beyond the industry’s control.

International markets determine the value of by-products

Hides are the single most valuable component of beef by-products. Used to make leather furniture and clothing, their markets have slowed while regions such as the EU, Japan and Russia continue to struggle.

According to analysis from the Livestock Marketing Information Center (LMIC), China’s economic slowdown and the increased value of the USD have a negative impact on the global processing sector’s demand for leather. However, the high USD provides a competitive advantage for the Canadian industry.

Prices trending below 5-year average

Lowered demand for hides has helped produce current U.S. by-product values:

  • Beef - $11.49/cwt compared to the 5-year average of $13 - 14/cwt
  • Pork - $3.61/cwt compared to the 5-year average of $5 - 6/cwt
 
Canadian hide exports account for nearly 40% of all by-product exports; they’ve grown 10.5% over the last 10 years. Exports of offal respond to different market conditions around the world, and have increased 72% since 2006.

Canada’s 2015 National Beef Strategy
highlighted the role of offal in boosting exports to markets where the products command higher prices than in North America. Developing these markets will add value to each animal.