The New Future of Canadian Beef Exports

Exports to 50 countries
Canada made great progress in 2004 in regaining international beef sales. Canadian beef was exported to over 50 countries around the world, and the Federation expects total beef exports for the year to exceed 450,000 tonnes or $1.7 billion - representing a 90% recovery of pre-BSE sales.

Many markets are currently open to a restricted range of products, and more will open. Macau has set the benchmark for re-establishing access, opening to all edible beef products derived from all ages of cattle - from January to October 2004, Macau imported 7,400 tonnes. Hong Kong opened in December 2004, and recent developments in our key markets indicate that most will open to Canadian beef in 2005.

In Canada beef prices have recovered to approximately 90% of pre-BSE levels. This is due to strong domestic demand in Canada and the essential recovery of our industry's ability to export processed beef products. The reopening of our key Asian markets will allow for beef price levels to exceed pre-BSE levels and provide new volume growth opportunities as well.

Made in Canada solution
Echoing the words of Ministers of Agriculture across Canada, we are now undertaking a Made-in-Canada solution to the cattle price crisis. Central to this strategy is facilitating expanded beef processing capacity in Canada while providing transition assistance to Canadian cattle producers. It appears that Canadian beef processors, both established and new, will increase our capacity from 3.5 million head per year (prior to BSE) to 5.0 million head per year by the end of 2006. Achieving this self-sufficiency capacity goal will create a new and competitive market for Canadian cattle in Canada - effectively bringing to an end the cattle price crisis.

One solution typically leads to another challenge. The challenge we face today is the profitable export diversification of a vastly increased supply of Canadian beef. Our industry will annually produce approximately 600,000 tonnes more processed beef in 2007 than we did prior to BSE. Assuming that we will be able to maintain the higher consumption of Canadian beef in Canada, we will still need to increase our beef exports by an additional 500,000 tonnes in less than three years.

Our challenge today is to ensure that Canadian beef exports are profitably diversified as we move ahead. Simply replacing our former 1 - 1.5 million head of live cattle exports to the USA with an additional 400,000 to 600,000 tonnes of beef is not a reasonable solution. More than doubling our beef exports to the USA in such a short period of time will likely trigger some form of trade action such as anti-dumping, countervail or border harassment. We can not afford to replace one form of American trade dependence with another - continuing to put our industry at financial risk.

500,000 tonnes outside of the U.S. by 2007
The industry's goal of increasing exports outside the US to 300,000 tonnes by 2010 must be revised. The Canada Beef Export Federation must now consider facilitating the growth in beef exports outside the United States to 500,000 tonnes by 2007. This will require the normalization of trade in those markets that today accept a restricted range of products, reestablishment of trade in our key Asian markets, and development of new regional markets. The Federation will also be challenged to provide massive new merchandising support to international retail and food service clients who will be expected to surrender higher shares of their meat cases and menus to our product.

There is a daunting challenge ahead, to rebuild our export base and re-establish Canadian beef in export markets outside the U.S. We are, however, strongly position to move forward and meet that challenge. We are a dedicated industry. We have a safe and wholesome product. We have committed exporters.

The CBEF team assures you that, with our shared experience, we have the energy and commitment to support the re-establishment of our beef trade at pre May 20 levels.