Kicking our collective butts...

[smcgrath76]

Several of the posts over the last few weeks have talked about our Canadian beef, and while it is very good, I don't believe that barley fed is enough of a distinction in the new world order of things.
Barley finishing lots are one of the fastest growing sectors of Australian agriculture for example.
I think we really need to step back and take a look at the people that are kicking our butts in world trade and maybe emulate some of what they are doing. Australia is a good case in point with huge research investment (their beef crc projects are tremendous) and significant investment in market development and product differentiation.
As well, there are some good examples out of NZ and south america marketing into the wider world. Cost advantage and processes that are relatively easy to duplicate (eg: barley fed) are not going to be enough to differentiate our Canadian product into the future.
Thoughts? Comments?

[grassfarmer]

I quite agree that we can not be complacent in thinking we have the best beef in the world - every beef producing country I know of thinks they produce the worlds best! I have looked back at a lot of UK literature from the late 1940s when we were deciding how to produce enough good beef to feed the country - Argentina was the shining example of success, and in reality I don't think that has changed much. Recent editions of Stockmangrassfarmer are full of US grassfed producers being taught the production methods and management by Argentinians. I actually think Canada could grab the niche market pole position for grassfed beef though, good grassfed beef, if we learnt how to produce it. Much of the world's grassfed beef is currently produced in the southern hemisphere, in dry countries, or with boss indicus cattle, or countries without the regulalatory control of animal disease, or politically or financially unstable countries.
We can grow good grass in the Aspen parkland zone in a climate that doesn't have significant heat or pest issues. We could produce the traceability and health standards people want - I think only NZ has a possible advantage over us and they are on a lot smaller scale.

[rkaiser]

Okay Sean, I'll bite. How are we going to differentiate when Canada truly does not sell beef? Producers raise cattle and then we surrender these beast live on the hoof to mainly two "American" packers.

I would also argue that Canadian Barley fattened beef animals are unique due to our genetic base and climate. Genetics may be easy to duplicate, but the natural will of cattle born in the northern climes of Canada to lay down fat for warmth is unique. Not many -30C days in Australia or many parts of South America. When I started in the purebred cattle biz 25 years ago, a fellow breeder told me that Canada will always have an advantage even in the purebred sector because of this unique environmental situation.

Grass finished beef is gaining popularity as the customer base for grass finished beef continues to grow, however the taste of a youthful barley fattened bos taurus is arguably the best meat taste experience in the world. Our surveys in the Calgary area continue to show us that, along with my own palate.

That being said, I still want to go back to my first comment and say that the best thing that Canada can do to expand or add value to the industry is to own it ourselves, and start to brag about it and promote it for ourselves. All the advertising that our beef industry organisations like Beef Information Center and CBEF do helps move product for Cargill and Tyson and supposedly trickles down to the producer in a minor way. The picture of the Rockies does us good until the package in Japan says product of Cargill or Tyson foods. Do you think the retailers in Japan or any other country in the world tell their customers about that? Hell no - American multinationals are seen as bullies in most parts of the world and rightly so. These multinational companies have few ethics and the world is becoming more aware of that on a daily basis. We're kicking our butts all right Sean - but most of us will deny that Cargill and Tyson are lending us the steel toed boot.

The ideas of Beef Initiative Group to take back our industry have been laughed at and called socialist by the leadership of ABP but reality says we can continue to pad the pockets of American shareholders and wealthy families, or we can stand up like the producers in New Zealand who own a majority of the packing industry in that country.

Has anyone seen any announcements of donations to Universities in Canada by one of the two companies who pulled multimillion's out of Canadian producers and taxpayers pockets. One "Scottish" Canadian Cattleman donated something in the neighborhood of 8 million this past month. Just think of the potential for more of that if more Canadian producers had made the money that Cargill and Tyson have in the past three years.

[Willowcreek]

Picking on the poor American elititists investors again -eh rkaiser LOL

Canada can't get an identity for its meat until both countries have labeling laws requiring people to be honestly told what they are eating...As long as the Packer/retailer can get away with passing off the cheap Uruguain, Brazilian, or Mexican cattle as US beef they will do it--because just like you said kaiser- they have no ethics and will make a buck any way they can...

Once you see all meat have to be "honestly" labeled and folks actually see where what they been eating came from- then we have a chance for branded beef and the premium quality beef products to thrive...Until then the Packer thieves just pass anything they want to off as quality product in their effort to reducate a new generation of beef eaters, many of which don't even know what high quality beef is anymore...

[farmers_son]

Smcgrath76: I too look to Australia when it comes to innovation and great marketing of beef. And regarding barley fed, it is not a distinguishing feature of even Alberta beef as Alberta feedlots will import corn if price favours corn and a lot of corn silage is fed as well as silage from cereals other than barley. The development of the ethanol industry will mean that our feedlots will be switching to feeding non traditional diets.

Canada is not a world trader in beef. Never will be. Canada does export beef within the NAFTA market but that market is an overall net importer of beef. If you think of the North American beef market as one market than Canada merely supplies beef within that market. Even in the midst of our BSE crisis and record low cow prices Canada continues to import significant quantities of beef from non-NAFTA countries as well as the United States.

Beef is the most political commodity in the world. There will always be a beef industry in Canada despite the best efforts of Willowcreek and R-Calf but the size of that industry and our ability to ship beef beyond our national borders will depend how successful our politicians are in lobbying for access for our beef internationally. What really sells Australian beef is the fact that beef exports are a foreign policy priority for that government. Now once Australia gains access to a country’s market they do a first rate job of marketing but the key is not the marketing it is gaining that market access.

Now the Americans are about to implement MCOOL. That is a very significant artificial political impediment to our access within our own NAFTA market. Our politicians are leading us down the garden path if they lead us to believe we can market our way through that. What we really need is political pressure from our Canadian government to challenge MCOOL. But I do not see that happening.

Canada does not have a marketing problem, we have a politician problem. Our low cattle prices are not our fault, the fault lies in Ottawa.

[cowman]

Now I'm no authority on Australian beef, but they do seem to be doing some things right. I would suggest most of the Australian beef we get in this country is "manufacturing beef" and their better beef goes to Asia? I often wonder how you can kill an old cow in Australia, ship her halfway around the world, and still compete with our 25 cent cows?...Like what are their cow prices...ten cents!
This sort of makes me question how they can do it? I wonder if it the same kind of deal like Irish beef coming into Canada in the 70's? When the CCA complained about the flood of Irish beef the Liberal government gave them a lecture about the necessity of being competitive....well at least until the CCA found out the Irish taxpayer was subsidizing the Irish cow by more than the actual price! I think the Irish producer was getting 70 cents/pound subsidy....after the cow was sold at market price! Not too hard to "compete" when you get a sweetheart deal like that!
A little aside...my nephew owns a bar/restaurant in Thailand. This is a resort area where 100% of the clientele are Europeans, Americans, Canadians, Japanese? They cannot get American or Canadian beef. The local domestic beef and Australian beef are all that is available. He tells me the domestic beef isn't fit to feed to a dog and the Australian beef is NOT a good eating experience! He said pork and chicken outsell beef ten to one! He said if he could import Canadian barley fed beef he could do a rocking business!

[smcgrath76]

I have been thinking about this issue for some time (longer than the period of this thread). Certainly the comments tax my brain.
I think we will continue to have a commodity beef sector and we will have some (not sure how many) producers that do OK in that scenario. Some of these producers will not care about their cost of production.
I think to capture the value of what producers do to differentiate/add quality/etc. we (myself included) are going to have to step up and own cattle longer and even commit to long term relationships with further processors.
I am pretty sure that Cargill may play this game to some degree and that Tyson probably won't. There are some new processors that are very interested in this.
As far as quality goes, beauty is in the eye of the beholder. Some people like blue cheese and some like cheddar. Barley fed beef will certainly continue to be a prime product of Western Canada, however there is also a market for grassfed (not the same market). Look at the success of OBE Beef in downtown New York.
I guess I look at what we have spent on BSE and related and think we may have been better to invest the money in production, product and market research, testing programs for export clientelle (without changes to import rules under NAFTA), processing/value added plants, enhancing market infrastructure overseas, etc.
I really struggle with our current industry as I don't see it value adding for the most part. I think for a lot of people it is just swapping the commodity of grain into the commodity of feeder calves and boxed beef. Based on current industry structure it appears that boxes are the most valuable part of the process (LOL).
Currently I think we support the status quo, make ad hoc payments, don't pursue markets very well, and cut research.

[farmers_son]

smcgrath76: I read your post very carefully. When you say “we” who are you referring to?
“we will continue to have a commodity beef sector”
“we (myself included) are going to have to step up and own cattle longer”
“I look at what we have spent on BSE”
“think we may have been better to invest the money in production, product and market research, testing programs for export clientele”
“I think we support the status quo”

It is my impression that “we” need to figure out who “we” is. Is “we” your family, Alberta producers, Canadian or North American producers? Does “we” include the packers or not? Could “we” include Australia, and New Zealand? Is there even a Canada in “we” as our packing industry is really American owned?

Hope I am building on your discussion and not taking it off on a tangent. I was most interested by your comments.

[smcgrath76]

I think at this point "we" refers to the fuzzy thing that is the industry as a whole. I think "we" is represented by the ABP / CCA, traditionalist approach to agriculture.

[smcgrath76]

I also think that as we develop our industry that we becomes more smaller groups.
In other words, broad based groups like ABP become less important and marketing group X or alliance Y becomes more important to individual operators and the representation of their views with government and the public.
In some respects industry could become more fragmented (but maybe with more in common).

[farmers_son]

I am a fan of alliances. Difficult to do though, our mindset is not there yet. Ed Miller, Terry Schetzle and some others have formed an alliance to attempt to get a better price from the packers. Hope it works for them and certainly they are trying.

How can small alliances work in Canada with our packer structure? To be sold interprovincially or internationally all beef must be slaughtered in a federally inspected plant and there are not very many of those and even fewer, if any, that do custom slaughter.

I tend to think in terms of larger alliances, at least a North American alliance. Have you heard of the Five Nations Conference? Maybe Australia is kicking our butts but their production system is more similar to ours than say South America. At some point cattle producers need to stop thinking of each other as competition and instead work together, form alliances if you will, to extract more profit from the value chain. In that respect it becomes very important when we are thinking of what we can do who “we” is. We presently have a few global packing plants pitting country against country, producer against producer in effect driving down the price of live cattle everywhere. Meanwhile they are laughing all the way to the bank. I think producers need to start forming global alliances but try to get that past the R-Calf boys and others like them who have a much narrower focus. Unfortunately they end up serving the packers interests who seek to keep producers divided and thereby weak.

What point is there in market development and product differentiation if none of the benefits of those efforts make it back to the men and women actually on the land?

[smcgrath76]

Amen to that. I think you are pretty close to right on an industry scale.

[farmers_son]

You said you had given this considerable thought. Any thoughts on smaller scale alliances that individual producers could actually form? It has been my opinion that the challenge for this generation of producers is to learn how to work with others, to form alliances, even simple alliances with family members as farms get bigger and there may be quite a few people involved with a farm. And of course alliances with people beyond your family.

[farmers_son]

Along the lines of value chains this story in the last Western Producer may be on interest.

It is entitled Value Chain Could Raise Cattle Profits.

http://www.producer.com/free/editorial/news.php?iss=2007-01-11&sec=news&sto=83

Grassfarmer might be interested as the story mentions grass fed beef.

Although I have reservations about these small value chains the story does mention one point that I whole heartedly agree with:

Begin of paste:

"Farmers have one advantage over the industry giants, he said.

Farmers are widely trusted and held in high regard by consumers. When you go to form a value chain and tell a story on a product, the farmer always needs to be a key part of that story."

End of paste

If farmers need to be key part of that story then we need to make sure we get paid accordingly and not just a token premium for a specialty product.

[grassfarmer]

That was interesting farmers_son, how can we better control the product than by direct marketing it ourselves though? Any time you build a bigger organisation there is a bigger chance of being taken advantage of. My biggest weakness is the processor I have to use - because I don't know how to process/have a plant. Thus far it has been manageable - we are netting over $1.20 per pound for our fats after processing and delivery costs.