Friday October 24, 2014

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Canadian beef producers urged to step up exports to emerging markets

CALGARY - Canadian beef producers should increase exports to emerging markets if they want to grow their businesses, an economist says.

Aaron Goertzen of BMO Capital Markets said Thursday that rising feed costs and flat demand in traditional markets such as the United States are biting into profits.

He said there is more potential sizzle in such developing countries as Brazil, India and China, where beef consumption, populations and economic growth are on the rise.

"These are the types of markets that offer potential for growth, the types of markets that the industry should be thinking about if it hopes to expand significantly."

For example, total domestic consumption of beef and veal in India was more than two million tonnes last year up 73 per cent since 2000, Goertzen said.

In Brazil, consumption was nearly eight million tonnes up 29 per cent.

In contrast, Canadians ate just over one million tonnes last year.

Canada currently exports about 75 per cent of its beef products to the United States, along with 97 per cent of live cattle.

The industry, which includes 63,500 farms with beef cows, estimates it contributes $23 billion each year to the Canadian economy

"It is a matter of looking beyond traditional markets. More of the same isn't going to work as it has in the past," Goertzen said. "It is a matter of being open to new ideas, trying new things and taking some risks."

He acknowledged that increasing overseas exports won't be easy and that the industry would have to deal with foreign regulatory factors beyond its direct control. But he said that if countries such as Australia and New Zealand can bolster their beef exports, Canada can as well.

He said only efficient producers will thrive in the coming years because of upward-trending feed costs.

Success will depend on improving productivity, keeping a lid on costs and innovation.

Goertzen made these points to producers attending the International Livestock Congress in Calgary, where the theme this year is "What's Next?"

"I got the sense that they are aware of the challenges and that maybe a new approach needs to be taken," he said.

By John Cotter in Edmonton


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