Two great opportunities awaiting Canada’s beef industry… can we capitalize on them?
Beef demand growing globally
Canada and the rest of the world want Canadian beef. It’s just going to take some strategic finesse to ensure they get it.
A lot of that demand will come from emerging markets. Joint OECD-FAO projections call for the world export market for beef to grow from 9.9 million metric tonnes (MMT) in 2014 to 11.9 MMT in 2023.
Canada currently supplies 5.8% of global exports as the world’s 11th largest producer and seventh largest exporter of beef. There’s the chance to grow that share as demand throughout the world continues to grow.
Beef demand also growing domestically
Beef demand in Canada is also growing. Earlier, we explained how Canadians still prefer beef, even though consumption has been falling. The high beef prices facing Canadians lately have helped to depress consumption but that doesn’t mean they don’t want or demand it.
The point is that market conditions and not a weakening taste for beef have dampened consumption. We can expect Canadians to buy more beef, not just want more beef, once beef supplies increase and current high prices return to more normal levels.
Can Canadian supply meet the new demand?
Simply to maintain in 2019 what share Canada currently has in the global market (5.8%) and to meet the growing domestic demand, production will have to grow by 88 thousand metric tonnes (TMT) from estimated 2014 levels.
Carcass weight increases can contribute 41.3 TMT of that total, assuming that the average annual weight gain, a healthy.062 per cent, of the last five years holds. The remaining 47 TMT will have to come from an increased herd size.
Again, assuming that the average slaughter of three-quarters of farm production that occurred in 2009-2013 will also occur until 2019, producers will have to expand production by less than one per cent annually.
It seems reasonable and do-able… with caveats. Challenges to building the herd remain.
- Some producers are taking the opportunity to pay down debt instead of growing their herd
- There are cattle to be bought from producers now exiting the industry, but consolidation doesn’t equal expansion
- Grazing land was re-allocated to crops or forage, given the good markets for grains and oilseeds recently
- Labour, labour, labour… a shortage of qualified labour in both cattle and processing operations challenges investment in the industry
A strategy to ensure the opportunity isn’t lost
The recent National Beef Strategy details key initiatives to move beyond the challenges. Focusing on domestic and global marketing, increasing production efficiency and connecting with consumers are just three of the identified ways that Canada’s beef sector can take advantage of the growing opportunities.
For more on the Canadian beef sector, look to FCC Ag Economics: 2015 Beef Sector Report at FCC-FAC.ca.
Martha Roberts, Economic Research Specialist