Wanted: more R&D dollars for Canada's beef industry expansion

Friday, January 9, 2015

by JIM ALGIE

Canadian cattle farmers must boost investment in research and development to seize current opportunities for expansion, a new National Beef Strategy argues.

The 28-page strategy, published Wednesday, calls for increased, national check-off revenue to finance a variety of initiatives. They include: research projects and policy adjustments aimed at production efficiencies and improved communications as well as production cost savings and increased carcass cutout values between now and 2020.

Available on line at www.beefstrategy.com, along with a collection of supporting documents, the five-year strategy followed about 18 months of talks among representatives of nine provincial cattle-farming associations. As well, representatives of the Canadian Cattlemen’s Association and national beef research and marketing groups participated in the continuing project.

Co-chaired by Manitoba rancher Trevor Atchison and Canadian Cattlemen’s Association Past-President Martin Unruh, who runs a 600-cow, beef farming and cash cropping operation near McGregor, Man., the strategy group has proposed four “pillars” for growth: beef demand, national competitiveness, productivity and “connectivity.”

Failure to act risks stagnation at a time of “unprecedented opportunity,” Unruh said in an interview, Thursday. Rising global demand for protein as world population and incomes rise encourage increased beef consumption, the report says.

“It is believed that the Canadian beef industry has moved into a new price range that can and needs to be sustained in order to create the returns necessary to stabilize and grow our cattle numbers,” the report says.

“As it stands now, with the numbers we have, our infrastructure is at risk,” Unruh said, making reference to potential business challenges from Canada’s current, low cattle population. “We have to do some things to ensure that our industry doesn’t just stagnate but grows,” he said.

Northumberland County cow-calf producer Dan Darling, who represented Ontario beef farmers on the strategy planning group, said the industry’s future depends on renewed self-confidence and expansion. The proposals come at a time of shrunken cattle herds and record high prices for beef cattle. Current low numbers create challenges for most industry participants, including meat packers, product suppliers, even feedlots, Darling said in an interview. He runs a 250-cow/calf and cash cropping farm near Castleton, Ont.

“You can go right from the packers being challenged to keep their lines in full production, right down to product suppliers for the cattle industry to the feed lots who are challenged to pay the prices that are being asked for these cattle . . . and to find the cattle,” he said.

Strategy proposals create a platform for herd expansion, Darling said. He is Beef Farmers of Ontario past-president and current vice-president of the Canadian Cattlemen’s Association.

“We’ve been waiting for these good prices and everything to be rolling and trade and what not to be regenerated,” Darling said. “Now we finally have it and the biggest thing that’s challenging us is not enough cattle.”

“Things are better for producers than I can remember in my 30-plus years of raising cattle,” Darling said. “The option is there . . . people are open for new ideas.”

“We want to position ourselves in the world where we’ve got every avenue open that we can open to make sure our producers are looked after when cattle numbers are up and maybe prices are off a little bit,” Darling said.

Canada’s cattle population declined sharply following 2003 and disruptive trade impacts from the discovery of Bovine Spongiform Encephalopathy (BSE) in an aged, Alberta cow and subsequent years of cattle market weakness. The strategy report describes a 25 per cent reduction in cow numbers between 2003 and 2013 as farmers responded to weak cattle prices when compared with high prices for most field crop commodities.

Low cattle numbers have also meant less revenue for the research, marketing and communications initiatives delivered by cattle farming associations and financed by time of sale fees, known as “check-offs.”

Increased check-off revenue is essential to finance industry expansion and to reinforce Canada’s place in the world as a supplier of premium-quality beef, both Darling and Unruh said. Neither was prepared to say how much the check-off should rise, although Unruh did say he expects it will be on the agenda of the national planning group’s next meeting in late January.

Because of low beef cattle numbers, current check off revenue is lower than at any time since the early 1990s, the report says. A current national check-off established in 1994 charges $1 per head.

Achieving strategy goals could require more than doubling the national check off to $2.50, the report says. Even that, together with existing provincial check-offs at $3 per head, would leave beef producers well behind dairy and poultry farmers who also make payments for research and marketing, figures published with the report show.

Although Quebec has not formally endorsed the strategy, Quebec representatives did participate in the planning process. As well, dairy farmers participated in the strategy, Unruh said, defending it as a consensus of the country’s beef cattle industry.

Farmers have been slow to respond to currently high cattle prices, taking profits and biding their time rather ramping up production. However, Unruh said he’s seeing signs in his part of Manitoba that growth preparations may have begun.

“There are new corrals being put up in a couple of yards,” Unruh said. “I think it’s starting in my area and a little farther north.”

“I know there are a lot of young guys who have bought 30 or 40 cows . . . I think people can see the potential,” he said.

“We have to have a discussion and firm up what it will cost to achieve our goals,” Unruh said. “We have to make sure our members, our provinces, are in favour of the check-off if that is going to be an increase,” he said.

“We have to make sure we market a superior product and make sure our customers are satisfied regardless of whether they’re next door or in Japan or China,” Unruh said. BF