As Grant said, when we first looked at these numbers we anticipated that we'd done something wrong, because we did not perceive 1989 as being a turning point in our economic well-being, but indeed, that's what it shows.
What happened in 1989? There were some major events that we think are related. First of all, Cargill came to Canada and opened its large plant in Alberta. With Cargill's entry into the beef-packing industry in Canada, it rearranged the whole industry into a whole different structure. There were things happening immediately. Companies started to fold in this new regime. Companies that were there pre-1989 were gone. We lost Burns, we lost Swift Canadian, we lost Intercontinental, and so on. And in Alberta alone, where we had 17 federally inspected plants, we've ended up today where we're down to just three. We had plants that previously were killing a maximum of 2,800 cattle in a week, and now they kill 28,000. This is the way the industry was restructuring itself at the processing level.
Today, in Ontario alone, the restructuring during the past three decades has moved Ontario from 17 medium-sized federally inspected plants in 1974 down to seven plants, and now down to even fewer.
We also had Iowa Beef Packers move into the system, and they took over a plant that was later sold to Tyson.
So that whole structure changed.
We also had the Canada-United States Free Trade Agreement come in, which reorganized the way cattle were traded in North America. Rather than an east-west Canadian supply system, they went to a continental, integrated system. Exports became the buzzword of the time. We had to ramp up production to meet exports, which was coupled with the corporate concentration that was massively effective during that time.
Another thing that was introduced during the same timeframe, of course, that hadn't been here before, was the U.S. captive supply, where packers owned or controlled large volumes of cattle. It has doubled since 1989, and this also happened in Canada.
If you turn to page 7 in the pamphlet we have given you, what you see in that graph is what the Canadian packing industry looked like on Friday morning of last week. We had three major players: Tyson, Cargill, and XL Foods. XL Foods is owned by Nilsson Bros. Group. These three companies had 80% of Canada's overall slaughter capacity, but they had 95% or better of the finished cattle slaughter capacity.
On page 8, it shows what that graph looked like at three o'clock on Friday afternoon, with the decision of the Canadian Competition Bureau. We now have two packers, Cargill and XL, that control 80% of the overall capacity and somewhere between 95% and 98% of the fat cattle slaughter in Canada.
If you look at page 9, you'll see a similar situation has developed in the United States. You see that back in 1969, the four main packers in the United States controlled 30% of the overall slaughter capacity. Moving to 2007, you see they have 84%, and the lines of dots indicate the producer return as the concentration in packer ownership increases. Those have consequences, and Grant will show you some of the consequences of that change on page 10.