Beef commodity markets

[ValueChainFX]

What is a beef commodity market? In the packinghouse we see beef commodity product as anything that is in a primal state. Primals are the main cuts from an assembly line system. Trim, Hips, Loins, knuckles (sirloin Tips) Shank meat, flank meat (loose meats), Tenderloin or butt tenders. Chucks, ribs, plates, briskets, clods and a few odds and sods. They are defined in the American Meat procurement Guide, a sort of world meat manual. The customer knows the manual as well as the packers do and sometimes better.

The world market demands has increasingly gone to specialized cuts as in Japan, and other Asian countries or Mexico and yes the EU. Surprise to us all Canada has a tremendous untapped market for specialty cuts that is being called niche markets! They are only niche markets because we do not have the system to fill them. Ask yourself this simple question what would happen if this country had one Federally approved processing unit for every 25 provincial plants? Hmmmmmmmm with Federal approvals and a slight possibility of moving away from the assembly line cutting perhaps meeting the customer needs would not be so challenging.

Oh just to confirm, I have personally sat a the table with customers when they have been told they can not get the product to their requested specs, so they would have to take the next best thing. HAVE to take!!!! The worst part is that is true. You beef guys with your feed lots full, wouldn't it be nice to have the option to move into a more secure local market with our own Canadian product and have customers from outside Canada coming to us because we can meet their need!

We are Canadians and should be recognized as such! Brand the product, put the labels on, feed the world, build a sustainable industry, and keep our rural communities alive. Be the agriculture corporation that has owners that can profit because they love the land their fathers got from their grandfathers who got it from their grandfathers.

Is this a dream.... only if YOU see it that way? This plan is on the table now and ready to go! No more debates, no fighting, no flies in the ointment! The nice thing is we have discussions with several beef groups that see we have the ability to track from the farm to the retail that has got their interest (especially now) but when they study the whole plan and see the marketing, plans and possibilities they can see how this will work for them!

Your thoughts! Positive thoughts are good!

[charliep]

It would seem from your comments Canada/Alberta would need smaller sized abattoirs. Your comments are we should convert/upgrade some of our provincial abattoirs to meet these standards. Another alternative would be to have special runs in the larger packing plants.

What other types of issues do these markets requires (eg. no hormones, humane treatment, no anti biotics, etc)? What documentation is required? What kinds of premiums are these markets prepared to pay if Canada/Alberta achieves these standards?

[ValueChainFX]

charliep:

Yes Charlie I do believe we need smaller plants. The big plants are just not capable of anything but large runs of product. Export product (off the continent) had to be individually pulled from the regular runs to achieve conformance to standards. A special team is used to ensure product met these standards. The large packers try to run as much product on the regular lines, but this method caused to many claims. A claim from this type of export product is not only more costly, but your customers in these markets are less tolerant.

The market premiums are usually very good $.30 plus on relatively standard product and much higher on products that have no market anywhere but off the continent.

Documentation is basically laid out by CFIA although some countries may have some special requirements (e.g. the hormone free example you gave for EU) Also each country may have some requirements or documentation to ensure those requires will be assured.

The question of humane treatment is interesting to see you bring this up as you probably know that new export requirements are expected from several countries including the EU for feed trace back, meat trace back, and the United States with their Homeland Security Threat Condition Response, Food Security Monitoring Procedures, FSIS Directive issued 3/17/03. Which has several conspicuous blank reserved spaces in it but directs the monitoring of basically everything in the processing?

Looking at the market place of today and recognizing that provincial plants across Canada all have their own system of inspection in each province (as well as a few federal similarities)but no standardized consistency, we can soon see the inequities of this system. An obvious one is the inability to ship provincially inspected product across provincial boarders.

But this situation also limits the producers ability to enter into value added markets (no federal plants to kill custom kill product means his market is limited to the province he kills in) In a province like Alberta our market becomes flooded with product. As in the case of specialty livestock, like bison which has markets outside the province, but presently the market in Alberta is flooded and the meat is worth less than the input costs.

The large plants also used labor that has fewer skills than a decade ago and the industry has recognized this short fall. The small plants have the ability to retain workers and train them better (with a consistent program) The small plants have the ability to stimulate rural development, and enter the so called niche markets that may be niche markets only because we have not grown them!

I believe the provincial plants should up grade to a consistent standard across the country. Is food safety any less important in one province to the next? I think Alberta should take the lead in this initiative and provide industry tools as well as receive the benefits that come with being the first to move in this direction as stated in the new agriculture policy!

This is a win/win situation and a long term solution. The producers, processors, marketers, retails and consumers all win and if the government leads the way.... as they should to stimulate this collaborative type effort they get the brownie points, feathers in the hat and political fuel!

Any thoughts Charlie, look outside the box and share what you think some of the possibilities are!

[TOM4CWB]

ValueChainFX;

I am concerned that the short term view of the issues you bring up are lost in the issue of Alberta being "competitive".

The "commodity" mentality is a hard one to overcome, quick and easy, the least path of resistance is where most folks end up going.

This time around, it will be interesting to see if Alberta leadership will take the opportunity to make this problem we have into a competitive advantage!

[ValueChainFX]

TOM4CWB

You are right on the money Tom, in the past we have let others come up with band-aids and short term fixes for us! We are all smart enough to sit in the coffee shops and make holes in the air with our fingers pointing out well this should have been done or that should have been done, or why isn't someone doing this, that or the other thing!

Well at the moment I do believe it is very very clear who is paying the price for a regulatory challenge. We have the chance to fix these challenges NOW with these costs as the motivation to do the long-term fix!

For years many of us have said we need to overhaul the system ... well ... today is the day! For those of us left standing we best do something that is going to make it right! Keep your eyes open for new rules coming our way from the US, the EU and Japan. More dirty water coming our way so we best get the bucket brigade ready!

To be honest with you TOM this mess has really opened a lot of people’s eyes and our phones have never been so active. I believe we are seeing people that are just sick and tired of being sick and tired, and they want to take a little more control of their own future.

The guys that stay in the old system will stay in the old system and get in the dirt kickin position when the next crisis hits! The guys that build the new system will have established markets, with established consistencies, trace back and checks and balances throughout. Will a new system be free of challenges.... NO! But we will have the ability to deal with them in a very timely fashion!

Some times TOM the path of lest resistance is to just do the job right!