For those closely following Canada-Europe beef trade under the Comprehensive and Economic Trade Agreement (CETA), you will know that our Canadian beef exports have been growing steadily, but well below expectations of the potential. It is welcomed news that efforts undertaken by the Canadian Cattlemen’s Association (CCA) and Canada Beef have recently resulted in the introduction of Canadian beef at Costco in Madrid, Spain.
The initial contact on this development came during a CCA advocacy mission to Spain in late 2018 (reported in Action News on November 26, 2018). To view the article, click here.
We primarily undertake advocacy missions in Europe to highlight the potential for beef trade in both directions and seek European champions for supporting policies, regulations and requirements to facilitate trade. To put it more bluntly, we point out to European groups and officials that might otherwise tend toward protectionist policies that beef trade is also beneficial for them and that they should actively support trade so that their positions will not appear unfair to Canadian producers.
We depend heavily on the Trade Commissioners in the Canadian Embassies across Europe to set up meetings for us with influential officials and industry representatives. Although we are primarily undertaking advocacy work, these Trade Commissioners are also often able to put us in contact with local companies who might be interested in importing Canadian beef. This was the case in Spain, where we were introduced to a company that expressed a strong interest to come to Canada to meet Canadian beef producers and processors with a view to establishing supplier relationships.
After several months of planning, an incoming mission of Spanish buyers was hosted by CCA and Canada Beef in September 2019. They visited several ranches and processors as well as presentations at the CCA office, Canadian Beef Centre of Excellence and the University of Calgary Veterinary Research Station. They left very impressed and expressed intentions to pursue commercial relationships.
Despite the challenges of the global COVID-19 pandemic, business proceeded between buyers and suppliers through 2020, culminating in the first shipment of Canadian beef to Spain in November. Canadian Trade Commissioners Karen and Max proudly reported its introduction in the Costco Madrid meat displays and sent us photos showing off their purchases.
One of the things we know is that there are still many requirements resulting in increased costs of producing beef eligible for export to Europe. However, when we see the retail prices that beef commands in Europe, we realize that there is a viable return for those production costs. In the photos, we can see the Canada AAA rib-eye steaks retailing for 40 Euros/kg (about C$62/kg) and the tenderloins for 50 Euros/kg (about C$78/kg). While these are unheard of retail prices in Canada, they are quite reasonable in Europe. The Trade Commissioners reported the price for the Canadian AAA is a bit more than the Irish Angus, a bit less than the U.S. and Argentinian and a lot less than the Japanese Wagyu.
All looks promising for Spanish consumer acceptance of Canadian beef from both a price and quality perspective and we believe that Costco and other retailers will want to offer it as a regular item. We understand this particular buyer is projecting needing 1000 tonnes in the coming year, which would be roughly 40 per cent of this year’s total beef exports to the EU & U.K. The concern is whether Canadian producers will produce sufficient quantities of EU eligible cattle to meet the demand.
And there is the Catch-22 - the prices are high enough to justify the cost of producing for the EU, yet the costs continue to discourage Canadian producers from taking the risk. Even though CCA continues to press the Government of Canada to make EU certification more accessible for producers and gain EU approval of meat safety practices such as use of peroxyacetic acid during processing, regulatory results remain elusive.
If the Canadian government cannot deliver the beef access to the EU that was expected in the CETA, then we must switch to demanding compensation for the import access that has been conceded with little in return.
Using beef trade data from Agriculture and Agri-food Canada, the Canada-EU beef trade deficit was $0.5 million in 2018, $17.3 million in 2019 and an astounding $83.3 million for the first 10 months of 2020. The total running deficit through October 2020 stands at $101.1 million and climbing.
We are aware that other sectors have demanded compensation for inequitable treatment under the CETA and the Government has already paid billions of dollars to them. That we must now follow the same path is regrettable. Our objective has always been to make the CETA work for Canadian beef producers. Until Canadian beef producers receive fair treatment from the EU, the Government must acknowledge the running total deficit of $101.1 million and compensate the Canadian beef sector accordingly.