My name is Ted Haney. I'm president of Canada Beef Export Federation, and with me is Gib Drury, our board chair and a producer from the province of Quebec.
Mr. Chairman, honourable members, thank you for giving us the opportunity to present to you today.
The Canada Beef Export Federation is an independent, non-profit association established in 1989 to build export demand for Canadian beef in the global marketplace. Since then, we've established local representation in the markets of Japan, South Korea, Taiwan, Hong Kong, mainland China, and Mexico. Today, the federation's 48 members represent over 90% of the Canadian cattle and beef industry, from Quebec through British Columbia. Our stability of membership through the last five and a half difficult years clearly speaks to our industry's unwavering commitment to the international export marketplace.
The competitive advantage of Canada beef is created through the entire industry's working together to increase worldwide recognition and demand for Canadian beef and veal products, long-standing under the Canadian beef advantage brand. Its role is to coordinate strategies and fund export initiatives. The federation delivers the following primary services: market identification and competitive intelligence, market access and trade advocacy, local representation and international market services, and beef promotion in strategic and emerging markets.
The federation delivered 404 individual export development projects during our last fiscal year, averaging more than one completion every single day. These projects are grouped under the following primary programs: partner programs, where we work cooperatively with individual exporters, 41 projects; member information and liaison,16 projects; 10 pieces of market research; 7 incoming VIP beef buyers missions; 31 Canadian beef seminars; 108 retail and food service promotions for Canadian beef in international markets; 20 food shows; 85 unique pieces of promotional material; 10 newsletters; and 76 specific projects in advertising and public relations.
We know that these programs are vital and relevant, as Canadian beef and veal exporters attribute 23% of their total trade to Asia and Mexico to the federation's programs and services.
The federation, backed with private and public sector resources, invested almost $8 million in export programs last year. The federation was able to leverage $20 million of additional export-oriented capital and marketing investments from its export members over the past five years, creating almost 200 new high-quality manufacturing jobs and protecting thousands of jobs.
The measure of success of the federation's market development program is the export growth our industry was enjoying prior to the closure of world markets in May of 2003. Canadian beef exports to the world rose from 94,000 tonnes, or $260 million, in 1990 to 521,000 tonnes, or $2.2 billion, in 2002. From its first full year of operations in 1990 to the last complete pre-BSE year of 2002, exports of Canadian beef to markets outside the United States increased from just 9,000 tonnes, under $30 million, to 158,000 tonnes, $540 million. This represents an annual rate of increase of 28% in each and every one of those 12 years. That saw us outpace all our international competition and establish an enviable track record of economic and trade success. Our beef export dependence on the United States during that period dropped from 90% to less than 70%.
Commercially viable access to our major markets in Asia and Mexico has the ability to add $85 per head in value over what can be generated here in Canada for beef derived from animals under 30 months of age. Further, these markets have the ability to add $100 in additional value over what can be generated for these same products in the United States. It is this export premium that must be accessible to us for our industry to prosper—really, to survive.
Canada's beef and dairy cow herd is estimated at 5.6 million head, with production this year estimated at 1.5 million tonnes. It takes the production from about 3 million cows to meet the beef consumption needs of our domestic market, which is about 1 million tonnes. The Canadian market is an excellent one, but it's simply not large enough to absorb the beef production from our 6-million-head national cow herd. We have to remain focused on deriving full value from international markets. The extent to which we're successful in creating commercially viable access, not only to Asia and Mexico, but to Europe, Russia, Middle East, and South America, will determine the eventual size of our industry.
What lies in the balance is the difference between an industry maintaining some six million cows and one maintaining three million cows. Our industry cannot promote itself through market access barriers.
The mood of our industry is reflected in export goals set each year by our export members. Their view of the achievable is a reflection of market realities. In 2006 our export members set the export goal for the year 2015 at 800,000 tonnes, with 354,000 tonnes going to Asia and Mexico. In 2007, after very little incremental access being earned in the previous year, those export goals were decreased to 650,000 tonnes, with 258,000 tonnes going to Asia and Mexico. And in 2008, after, again, another year with very little new access being earned by our country, export goals were lowered to less than 500,000 tonnes, with just 168,000 tonnes destined for Asia and Mexico. The federation’s members stabilized their 2015 goals at 521,000 tonnes in 2009, with 210,000 tonnes going to all markets outside of the U.S.A.--some possible glimmer of hope being reflected in their long-term plans.
What our export members are telling us with these lowered expectations to 2015 is that, all other things being equal, they're going to process 300,000 fewer tonnes of beef for export. This means that 750,000 fewer head of cattle will be processed in Canada, and either these extra cattle will be exported to the U.S. or our cow herd must drop by 825,000 head. Our members are indicating that it likely will be a combination of both—we'll export more live cattle than anticipated and have a smaller herd.
There is cause for optimism. The federation believes we have reached a turning point and are now on the slow road to recovery. In 2008, world markets for Canadian beef increased 8.4% over the previous year, at 393,000 tonnes. Exports to the federation’s key markets in Asia and Mexico increased 10%, to about 80,000 tonnes, or $300 million, during the same year. Exports to markets outside of the United States again now represent 23% of worldwide beef exports. Our dependency on the U.S. has decreased to 77%.
With the Government of Canada’s announcement on January 9, 2009, that it was acting upon two key recommendations of industry, the outlook for the Canadian cattle and beef industry has become yet more promising. These actions are to create the Agriculture and Agri-Food Canada Market Access Secretariat, and to pursue incremental access that is commercially significant to the industry. Already this new approach to market access is delivering results, with market expansions in Hong Kong and Saudi Arabia. The federation believes that utilizing the Canadian government’s new approach of pursuing incremental access, independent of the timing and terms of U.S. negotiations, in key export markets such as South Korea, mainland China, and Japan, would be of tremendous value to our industry.
I am an optimist. I believe we must do the following: champion a new focus on Canada’s international trading life; modernize Canada’s trade negotiation strategies and philosophies; stimulate the development of a deeply rooted export culture in our industry and governments; rebuild the optimism necessary to process 4.5 million cattle in Canada, with 1.4 million just for Asia and Mexico; and export 800,000 tonnes of beef out of Canada by 2015, with half of that total imported by markets outside the U.S.
It's high time for the Canadian cattle and beef industry to turn its attention from survival to the continued pursuit of growth and prosperity. Trade is a big part of that solution.
Thank you very much.