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Where's the (Canadian) Beef?

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    Where's the (Canadian) Beef?

    Where's the (Canadian) Beef?
    Will Verboven - Monday,23 October 2006
    WESTERN Standard

    One of the most aggravating export markets for North American beef must be Europe. A recent trip there once again revealed incredibly high beef prices in retail stores, like the large French grocery chain that featured hamburger at $7 to $14 a pound and roasts as high as $40. This was all local product--imports were nowhere to be seen.

    Granted, production and processing costs for beef are high in Europe. Feedlots are virtually non-existent, and a 1,500-head-per-day processing plant is considered large. Economies of scale and feeding efficiencies just don't exist in European beef production.

    Some upscale retail meat counters feature a picture of the animal and the farmer who raised it. I fail to comprehend how a picture of the live animal makes the beef better, but perhaps it distracts the consumer's attention from the French butcher's lousy meat cutting.

    Sky-high European prices serve only to reduce consumer beef demand. In contrast, pork is very cheap, being imported from two world-class efficient producers, Denmark and the Netherlands. The French can't restrict their imports, because they're part of the European Union trading block. So pork consumption outstrips beef by a considerable margin.

    Interestingly, chicken prices are dependent on the yellowness of the skin-- the yellower, the higher the price. I expect crafty French growers select chicken breeds for skin colour, then feed them corn and beta carotene supplements. Once the skin is off, and thick French sauces are applied to gourmet dishes, skin colour probably becomes a moot point. Ditto for eggs--French consumers overwhelmingly buy brown eggs. But I digress.

    From a pricing perspective, it's clear that American or Canadian beef would easily compete with European products. It would probably dominate the market and even compete with European pork. But that's the core problem: it would devastate European beef production, much of it concentrated on small farms in France and Ireland.

    The EU protects inefficient producers by enforcing high tariffs and quotas on North American beef imports. But as beef producers know, it has an even better protectionist tool: the bogus issue of hormones. Some Canadian beef exports enter the EU, but must pass a hormone-free certification process, which seems dubious, given the difficulty in distinguishing natural hormones.

    European consumers have a misguided fixation on hormones in beef, which is exploited by environmental groups and duplicitous governments. However, marketers well know that consumer attitudes can change abruptly if the price is right--which is why I believe North American beef could make significant inroads into the European market.

    Beef imports remain a powerful, highly politicized issue in Europe and can even scuttle World Trade Organization trade negotiations. After the recent WTO talks in Geneva, U.S. Secretary of Agriculture Mike Johanns noted that the bullheaded EU position on beef tariffs and quotas, and their absurd negotiating offers, ultimately forced suspension of the talks. The power of beef knows no boundaries, the only loser being the European consumer.

    The beef imports that are seen in Europe come not from North America, but from Argentina and Brazil. And they're advertised prominently in restaurants. Imported beef is sold at a premium simply because of its origin. Nowhere is it said that this imported beef is hormone-free, grass-fed, free-range or otherwise virtuous. But at its price range, it doesn't compete with the domestic product.

    Europeans do practise a double standard for beef imports from Argentina and Brazil, versus North America. Outbreaks of foot-and-mouth disease are not unusual in either of those countries, yet the EU is slow to restrict those imports, claiming the problem is localized. And they claim traditional trading practices with both.

    The EU would take draconian measures against Canada and the U.S. if FMD broke out here. They would be universal and long-lasting. BSE is a sticky issue, because it spread to the continent from the U.K., but if North American imports had already been high, I suspect they would have moved quickly on all of them. Beef is the most political food in the world, and we'll have to live with that for a long time.

    #2
    I read this piece a month ago in the Alberta Beef Mag was it? I thought it a rather pompous piece of nonsense that failed to address some real issues. Oh yes we are real "efficient" in North America with our feedlots and huge numbers - read the comment in another thread that mentions again that the average feedlot profit in the last 20 years was $0 per head and tell me how smart the feedlots are. Europe can already get as much cheap beef as they want from South America and they won't displace their home grown quality product with that of North American beef - why should they, believe it or not most consumers have a pride and dedication to their own nationalities beef. Taking a stroll through the meat store whilst on holiday may prove interesting but it isn't very scientific. Do you think the EU beef farmer gets a large chunk of the retail beef price the consumer pays? Of course he doesn't - there is a retailing cartel in Europe just as powerful as your packer cartel in Canada. Instead of dreaming about all the high price market places we could sell our super efficiently produced beef into we should concentrate on getting a fair return for the beef producer from our current marketplace. If the "industry" was to be successful and get more Canadian beef into Europe how would it help Canadian ranchers and feedlot owners with the current packer cartel setting prices where they want them? It would no doubt be heralded as a great success by the ABP though.

    Comment


      #3
      How right you are grassfarmer, about the meat cartels in Europe.. And if you look many of those corporations and companies that make up that cartel are just subsidiaries or subdivisions of the same ones that are operating in the US and Canada...The Tysons, Cargils, Hormels, etal...

      Comment


        #4
        Er.. no, in my experience the cartels in Europe are largely at the retailing level rather than the processing one. Cargil and Tyson are unknown to the average EU beef producer... mention Tesco though and you will learn all about a ruthless player.

        Comment


          #5
          Well in many of the cases, if you dig a little the owners/corporation behind many of of the British and European companies are the same as the US/Canadian..Just operate under different company names..

          Just like both Swift and Cargill own many slaughter houses in Australia- but not all under eithers Corporate name...

          Comment


            #6
            Check out:

            http://www.corporatewatch.org.uk/?lid=253#shareholder

            Tesco is a publicly traded company with widely held shares. Yes big business, whether Cargill, Swifts, Tesco or others will use their market power to extract a profit on both the supply and the market side whenever and wherever they can. The problem comes in when they gain so much power that they operate as monopolies. The free enterprise system cannot and does function with monopolies. Cargill, Tesco and their ilk are just doing what government is allowing them to do.

            Efficient....It is not a matter of producers being efficient any more, maybe in the 1950s but not today. Today it is a question of whether the primary producer can extract a fair return from the marketplace or will all the benefits of food production go to others further up the supply chain. Today it is a matter of being competitive and by that I mean being able to extract a profit from the marketplace, not just producing the product cheaper.

            The EU is a major importer of beef. Mostly from South America as Grassfarmer pointed out. However the U.S. is the world's number one importer of beef and Canada will remain the supplier of choice to the U.S. market. Industry officials are predicting that rule 2 will come into effect mid 2007.

            I do agree that beef is the most political food in the world. The real beef sales take place in the halls of government.

            Comment

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