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.
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.
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