Tough Times In Canada

While Canada is often thought of as an extension of the U.S. due to the numerous similarities, it’s still

While Canada is often thought of as an extension of the U.S. due to the numerous similarities, it’s still eye opening to get a perspective from outside our boundaries.

We’re struggling in the U.S. with market access issues, exploding input costs and the like, but whatever difficulties we’re facing pale in comparison to what the Canadian industry is facing.

  • Canada, of course, was dealt a much heavier blow relative to BSE than the U.S., if for no other reason than that Canada exports half of its national production. That makes its loss of export markets much more dramatic and devastating.

  • Canada has also experienced much more difficulty than the U.S. in recovering its access to foreign markets. For one thing, Canada lacks the leverage the U.S. can wield, such as the free-trade agreement pending between the U.S. and South Korea.

  • The Canadian industry has also experienced a rapid appreciation of its dollar, as well as the same escalation in prices relative to ethanol, and exploding labor costs.
But the Canadian industry has accomplished something dubiously unique in that all three of the major segments of the business – cow-calf, feeding and packing segments – are all losing money at the same time. Plus, in its bid to reduce packing capacity, the major players shrunk from three to just two.

Kee Jim, who chairs the Canadian Beef Export Federation, talked during this week’s Beef Improvement Federation meeting in Calgary about Canada's difficulties, not only in regaining access but the timing. He says Canada's industry can have a bright future by offsetting these competitive issues with economically meaningful access to the Pacific Rim (Japan, Korea, China), the EU and Russia, but he believes that regaining that access will best be accomplished by doing so in incremental steps rather than an “all or nothing” stance.

The Canadian beef industry will survive, he says, because it has the "git r done" attitude of all cattlemen. The only question is what size the industry will be when it again finds equilibrium.