Canada: Food Process Firms Cry 'Where's the Beef' Despite Glut of Older Canadian Cows
Canadian Press, October 09, 2004
EDMONTON (CP) - Food processing firms are crying 'where's the beef' at the same time that Canadian farms are jammed with growing herds of older cattle.
The supply and demand disconnect is an example of how the mad cow crisis has contorted the marketplace, causing headaches for businesses and governments trying to help solve the problem.
"It's the biggest challenge we face," said Ted Yan, vice-president of Ginger Beef Choice Ltd.
The growing Calgary-based food products company has contracts with supermarket and restaurant chains throughout Western Canada and is trying to crack the Ontario market.
Yan said despite the glut of older cattle, his company can't get enough of the cheaper beef it uses for its Chinese food products. It has to buy more expensive cuts to help meet its demands.
"The slaughterhouses are not slaughtering enough so there is limited supply," Yan said.
"Our margins are getting tighter and for us to really grow we need to expand our plant and hire more people."
The dilemma is a result of the U.S. decision in May 2003 to shut its border to Canadian beef when a single case of bovine spongiform encephalopathy was found in an Alberta cow.
While Washington has since allowed trade to resume in boneless cuts from animals under 30 months of age, the border remains closed to live cattle and older beef.
Since Canada was exporting almost 80 per cent of those older cattle to the U.S. before BSE, the animals remain on farms and feedlots.
The impasse has the beef industry and Ottawa scrambling to absorb hundreds of thousands of older cattle from beef and dairy herds into the Canadian domestic market.
The industry would have to boost its slaughter rate from 8,000 animals per week to 13,000 per week to deal with all the older cattle that need to be culled this year, said Glenn Brand, director of the Beef Information Centre, a division of the Canadian Cattlemen's Association.
Expanding slaughter capacity can be risky when companies must consider unknown market factors in their business plans, such as when the U.S. border might finally reopen to all Canadian beef.
Canadian meat packers also face other hurdles, including not being able to use beef from younger and older animals in the same plant if they want to export to the States.
"Canadian packers and producers are working hard to do a better job of meeting the needs of the processing sector. We are trying to work through these issues, but it isn't easy," Brand said.
Recently, meat packing firms have announced new or expanded slaughter facilities for older cattle in Saskatchewan, Ontario and Quebec.
Brand said a new federal program developed with the industry is also in the works to develop Canadian markets for beef from older cattle.
"The objectives of it are to increase our market share, expand the overall size of this market, and add value long-term through product development," he said.
The federal government is also poised to announce details later this month of a loan guarantee program to expand or build small-and medium-sized slaughter facilities.
Under the $37.5 million Loan Loss Reserve program, Ottawa will look at helping backstop proposals with sound business plans that meet bank approval, said John Ross, assistant director of Agriculture Canada's red meat division.
"These expansions are all critical," Ross said from Ottawa. "It is almost like the two markets have become segregated."
Cattle producers also stand to benefit from increasing slaughter capacity.
Manitoba, with about 11 per cent of Canada's beef herd, doesn't have a major beef facility. Before BSE, older cattle in the province were shipped to the United States.
A group of 2,500 farmers and supporters in the province have formed the Rancher's Choice Beef Co-op in hopes of changing that.
The Co-op has a $16-million proposal to buy a slaughter plant in Washington State, dismantle it, and ship it north to Dauphin, Man.
The farmers are trying to raise equity and have requested $10 million from the Manitoba government for the project.
Co-op spokesman David Reykdal said they are also knocking on Ottawa's door. He said they already have interest from prospective buyers for the beef the plant would produce.
"We have a letter of intent to purchase most of our product already," Reykdal said from his 500-head cattle operation near Ashern, Man., northwest of Winnipeg.
"The letter is from a broker, and the broker sells to food processors. It will create jobs, and all the spinoffs that come with it."
© The Canadian Press, 2004
Canadian Press, October 09, 2004
EDMONTON (CP) - Food processing firms are crying 'where's the beef' at the same time that Canadian farms are jammed with growing herds of older cattle.
The supply and demand disconnect is an example of how the mad cow crisis has contorted the marketplace, causing headaches for businesses and governments trying to help solve the problem.
"It's the biggest challenge we face," said Ted Yan, vice-president of Ginger Beef Choice Ltd.
The growing Calgary-based food products company has contracts with supermarket and restaurant chains throughout Western Canada and is trying to crack the Ontario market.
Yan said despite the glut of older cattle, his company can't get enough of the cheaper beef it uses for its Chinese food products. It has to buy more expensive cuts to help meet its demands.
"The slaughterhouses are not slaughtering enough so there is limited supply," Yan said.
"Our margins are getting tighter and for us to really grow we need to expand our plant and hire more people."
The dilemma is a result of the U.S. decision in May 2003 to shut its border to Canadian beef when a single case of bovine spongiform encephalopathy was found in an Alberta cow.
While Washington has since allowed trade to resume in boneless cuts from animals under 30 months of age, the border remains closed to live cattle and older beef.
Since Canada was exporting almost 80 per cent of those older cattle to the U.S. before BSE, the animals remain on farms and feedlots.
The impasse has the beef industry and Ottawa scrambling to absorb hundreds of thousands of older cattle from beef and dairy herds into the Canadian domestic market.
The industry would have to boost its slaughter rate from 8,000 animals per week to 13,000 per week to deal with all the older cattle that need to be culled this year, said Glenn Brand, director of the Beef Information Centre, a division of the Canadian Cattlemen's Association.
Expanding slaughter capacity can be risky when companies must consider unknown market factors in their business plans, such as when the U.S. border might finally reopen to all Canadian beef.
Canadian meat packers also face other hurdles, including not being able to use beef from younger and older animals in the same plant if they want to export to the States.
"Canadian packers and producers are working hard to do a better job of meeting the needs of the processing sector. We are trying to work through these issues, but it isn't easy," Brand said.
Recently, meat packing firms have announced new or expanded slaughter facilities for older cattle in Saskatchewan, Ontario and Quebec.
Brand said a new federal program developed with the industry is also in the works to develop Canadian markets for beef from older cattle.
"The objectives of it are to increase our market share, expand the overall size of this market, and add value long-term through product development," he said.
The federal government is also poised to announce details later this month of a loan guarantee program to expand or build small-and medium-sized slaughter facilities.
Under the $37.5 million Loan Loss Reserve program, Ottawa will look at helping backstop proposals with sound business plans that meet bank approval, said John Ross, assistant director of Agriculture Canada's red meat division.
"These expansions are all critical," Ross said from Ottawa. "It is almost like the two markets have become segregated."
Cattle producers also stand to benefit from increasing slaughter capacity.
Manitoba, with about 11 per cent of Canada's beef herd, doesn't have a major beef facility. Before BSE, older cattle in the province were shipped to the United States.
A group of 2,500 farmers and supporters in the province have formed the Rancher's Choice Beef Co-op in hopes of changing that.
The Co-op has a $16-million proposal to buy a slaughter plant in Washington State, dismantle it, and ship it north to Dauphin, Man.
The farmers are trying to raise equity and have requested $10 million from the Manitoba government for the project.
Co-op spokesman David Reykdal said they are also knocking on Ottawa's door. He said they already have interest from prospective buyers for the beef the plant would produce.
"We have a letter of intent to purchase most of our product already," Reykdal said from his 500-head cattle operation near Ashern, Man., northwest of Winnipeg.
"The letter is from a broker, and the broker sells to food processors. It will create jobs, and all the spinoffs that come with it."
© The Canadian Press, 2004
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