Canada's False Depedency on the US market

[pr_fire]

All the latest uproar is total over reaction. We have managed to brign our markets back up to a break even point in the commercial industry and 2004 saw some of the hgihest averages in purebred sales in a number of years. Canadian ranchers have built a false dependency on the US market. The only reason the US is still going to open the border after the recent findings is that they need our cattle to fill domestic markets so they can meet export demands. US profits will grow even greater once the border opens because our prices will take a year plus to reach those that they are getting south of the border. I think the smartest thing the Canadian government could do is if the border opens march 7, slam it shut on 8th. We don't need the US markets, its just a false perception.

[Horse]

I agree tell them we are puting atarrif on all live cattle leaving the province what the hell they can only ruin us once.

[kpb]

It's fine to say we don't need the U.S. market but unless you have an alternate source for all the beef produced in this country, you're bound to find prices trending lower over time. In 2002, prior to BSE, 45% of the beef and/or cattle produced in this country went to the U.S. Where do you guys think this oversupply, which given the growth of our herd is even larger now, is going to go?
Unless you're in favor of a mass cull and then working to fill our domestic market alone (with a few small foreign markets thrown in)I just think you're whistling past the graveyard. Purebred prices may have been strong in 2004 but they sure won't stay that way if the commercial guy isn't getting a decent price for his calves. And with the current over-supply in this country, there is no way the commercial guy can continue to get a decent price without our largest market opening up.
Calf prices have held up remarkably well recently because of hopes that the U.S. border will open. But if all hope of that is dashed you can count on feeders this fall being worth half what they are now. Remember, without U.S. buyers bidding on our cattle, there's really only a couple of buyers domestically--do you guys think they're going to bid your calves up? I don't think so.

[cakadu]

Canada has had a problem with dependency on the US market, from what I understand, but it hasn't been a false one. For far too long we have been dependent on one market, which has proven to be to our significant detriment. KPB is right - if we don't find new markets - and large ones at that - then who knows what the future is going to bring.

Are we really sure of what this open border is really going to be costing us? Are we willing to pay that price only to once again be so dependent on one market?
Sometimes the price of poker just gets too high to stay in the game.

[pr_fire]

You have to remeber that Canadian beef imports exceed that 45% surplus from our own herd. If we cut our imports of beef by only 30%, that surplus is taken care of. We do not need the US bidders. Our gaining price is not in anticipation of the border opening but because of a domestic demand. Its all False perception.

[intr3est]

I'm still wondering what would happen if Canada tested everything. Would we gain the Japanese market back and some of the amount that the US had been selling into Japan. Of course the US would not be far behind. We could then almost guarantee a safe supply of beef and create new markets in process. We also wouldn't need a mass cull. Correct me if I'm wrong, but I've heard it said that the amount of beef (live and boxed) that we export to the states is a about equal to total US exports. I haven't been able to find accurate numbers for 2002

[pr_fire]

If Canada were to test everything, I do believe we would acquire some of the Japanese import market. Japan imports are 14% of the total World beef trade, US is 32%. All we have to do to sustain our own market is reduce imports.

Beef imports represent a substantial proportion of the Canadian domestic meat supply. Over the past three years, bovine meat imports represented almost 30% of the beef consumed in Canada. Imports are largely prime cuts of boneless beef and veal or portion-packed products for the hotel and restaurant industry.

Notwithstanding the export ban, Canada was obliged under international regulations to continue to allow red meat and livestock imports into the country. This meant that Canada was unable to introduce an import ban policy on these products to help address the domestic oversupply.

Under the North American Free Trade Agreement (NAFTA), there is no restriction on the import of red meat and livestock from the United States, Mexico and Chile. As a member of the World Trade Organization (WTO), Canada is also obliged to accept negotiated quantities of beef from WTO countries.
Under the WTO obligations, Canada has a tariff rate quota (TRQ) of 76,409 tonnes for non-NAFTA fresh, chilled and frozen beef per annum. Imports entering Canada within this TRQ quantity are duty-free, while imports above this quota are subject to duty. The tariffs are punitive and very little beef enters Canada unless it is duty-free. The Minister of Foreign Affairs and International Trade, however, may authorize supplemental duty-free imports of non-NAFTA beef over the TRQ level.

By the end of July 2003,duty-free imports for non-NAFTA beef had already exceeded the annual quota by almost 30%. The primary sources of these high imports were beef products from the European Union, Uruguay, Argentina and Brazil—countries all subject to the TRQ. At the end of July 2003, the Canadian government announced that it would not authorize any further supplemental duty-free imports of non-NAFTA beef, but still continues to do so.

[pr_fire]

Canada's exports to the US accounted for 65% of total US imports to cover domestic demand.

[intr3est]

pr-fire, I agree with you that we have to keep our domestic consumption up and our imports down, but with the all the news lately, I'm still wondering if testing everything might not be a bad idea. I think these last two cases are getting the consumer paying a little more concern. a recent poll on on news website
http://www.canada.com/news/agriculture/index.html

How concerned are you about BSE in the food system?
47.00 %
Not concerned
27.86 %
Moderately concerned
25.13 %
Very concerned

[rkaiser]

Wow pr_fire, some pretty interesting ares to explore.

Randy Kaiser here, Beef Initiative Group Area rep, and also a marketer of my own beef, albeit on a smaller scale than you. 210 purebred cows with all nonbreeding stock going to a vertically integrated market in Calgary, and bull customers tied in to the program as well. Our group currently markets about 15 head of fats a week through restaurants and specialty meat shops.
I would agree that the fat cattle sold are fetching better prices than we ever have, but what the hell are you doing with your cull cows?

Anyway, I would like to discuss this unlimited import of American beef thing with you. Are you saying that we are selling cheap prime Canadian fats in a box to the USA through Tyson and Cargil, only to turn around and buy it back in a different box, less the low end cuts? What kind of tonnage are we talking here? How can this be with pricing etc.?

I am all for keeping the border closed and changing policy in this country, but we certainly need the policy changed NOW.

Beef Initiative Group Canada has always supported BSE testing to unlock export potential, but we have run into a wall called the ABP/CCA. What is you position or influence with these guys?

Beef Initiative Group has also continually harped that we are far too dependent on the American consumer, and have tried with all of our might to convince government to bridge finance a project to build 1 or 2 huge packing plants that would be owned and paid for by the producers of this country by way of a levy on every animal sold. This levy would become a share in the plant once paid down.These plants would be set up with BSE testing, and be prepared to ship all, or most of their product to offshore markets.

I would imagine that with the sheer numbers of animals you have, and the success you have acheived, you must be involved in some type of packing initiative. Do you see merit in producer ownership, or do you beleive Canadians with money are the ones who need to step up to the plate and put a boat in the water beside Cargil and Tyson?

[intr3est]

Just thought I'd through some numbers out here: Canfax #'s. (#'s are metric tonnes)

Canadian Consumption 2003: 748mil (23.4 kg. per capita x 30 million)
Canadian Production 2003: 1,145 mil.
Canadian TRQ's: 76 mil
(If I've made any mistakes in the numbers or my calculations, let me know.)

So, if we did not import or export anything we would need the consumer to eat about 13.2kg more per person! Put another way it would be an additional 57% of what they are eating now. I don't think we can eat our way out of this problem, unless the immigration department has a busy year!

[Smithy]

There is another poll this morning at the Globe and Mail:


Do you consider Canadian beef safe to eat?


Yes
7210 votes (77 %)

No
2196 votes (23 %)


Total Votes: 9406


It is at: www.theglobeandmail.com

[intr3est]

Just wanted to add a few more stats concerning beef trade.

Canadian trade surplus in Beef 2002:
$3.2 Billion 2002
US trade surplus in Beef 1998:
$900 million (haven't found more recent number for the US, yet)

Links to these numbers:
http://www.statcan.ca/english/research/11-621-MIE/11-621-MIE2003005.pdf

http://www.fas.usda.gov/dlp/Canada/questions.htm

[intr3est]

Found a more recent number for US trade surplus in 2001

2001 Imports $2.5 Billion
2001 Exports $2.5 Billion

No trade surplus or deficit!

[Freesaw]

beef should only leave canada in a box.