Evidence of meeting #29 for International Trade in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was beef.
A recording is available from Parliament.
Director, Government and International Relations, Canadian Cattlemen's Association
Have we shipped any beef to Jordan? I asked around, and so far we're not seeing any statistics indicating that we've shipped any beef into Jordan.
Director, Government and International Relations, Canadian Cattlemen's Association
You've got me. I think it comes down to the issue of the differential tariff. That's one thing. A 5% tariff is not insurmountable, but when you are a 5% tariff and your competitor is free, it makes a difference.
Conservative
Ed Holder Conservative London West, ON
If I could just build on that, it's rather interesting that you mentioned in earlier testimony that in the last 10 years beef producers have exported about one tonne of beef, give or take, to Jordan. Not a lot, and yet you opined that it could be as much as 200 tonnes. I'm thinking about it—I look at the 5% tariff on beef cuts, the 10% on embryos and semen, the 21% to 28% tariff on processed meats. It strikes me that if there was a choice between, say, a duty-free United States and a tariff-based Canada, and if you were the person who was doing the organization's purchasing of beef from North America, where might you go?
For that matter, the EU has a free trade agreement with Jordan, as we know, and they're a lot closer. So then the question becomes, if the choice was to be able to buy from a tariff-free country or trading group, where would you go? Would you go with the tariff-free organization or with the group that has the tariffs, like Canada? What are your thoughts?
Director, Government and International Relations, Canadian Cattlemen's Association
I think if all things were equal, you'd obviously go to the place where you could get it at 5% extra into your pocket. But I guess in the world, not all things are equal. I think out there, if you're a meat buyer, if you're a grocery chain purchaser in Jordan, who's at the top of your mind? You don't lie awake and think, “What more can I buy from Canada this week?” That's where we need to be able to take advantage of things like free trade agreements that help to raise awareness of the market. They help to make people say, “Okay, if there's a new agreement over here, maybe there's a new opportunity over there. Maybe I'm going to invest a little bit of my company's money in going to that market and looking around and try to do a little business development.”
That's why we think Jordan probably fits well in the region, that if you're going to go over to the Middle East first, you're probably not going to go first to Jordan. You're probably going to go somewhere that's maybe a bit of a larger population. I don't want to get into income levels; they're all pretty impressive in that area. You're probably going to start in Saudi Arabia, maybe the UAE, in some of those markets, and then get some success there and work your way out.
I don't think we thought that a market that really hasn't been on the radar screen was going to suddenly take off and go into the stratosphere. But I think with time and with other things that are going on in the region, it can present some opportunity.
Conservative
Ed Holder Conservative London West, ON
I think there is enough broad support that if you look at Jordan as it is, albeit not the largest market, and I think we've all acknowledged that...but from the standpoint of your capacity to be able to take advantage once the free trade deal has been put in place, how prepared do you think you or your producers would be to take advantage to make some entrees beyond what's already in place now?
I think certainly the tariffs don't help, and I accept that. Having the BSE restriction removed does help. So now that you have the BSE restriction removed, and ultimately, if you can plan from a forecasting standpoint the notion that you're not going to have these tariffs to deal with...I'm wondering, is there a capacity issue from the standpoint of your producers? Is there a willingness issue from the standpoint of your producers? What's going to get them if they don't have a reason not to export to Jordan because of BSE restrictions or ultimately tariffs? What would stop them from exporting to Jordan?
Director, Government and International Relations, Canadian Cattlemen's Association
I think from a capacity point of view of having product to go over there, it's not an issue. We're not talking about a large volume of product. But what we do tend to see in the Middle East is the value per kilo is usually higher than in many markets. So it's small quantity, but it's usually high-end product that goes in there.
Capacity in terms of business development personnel and investing human resources to go to Jordan, that would be weighed in terms of what are we doing in Asia, in Latin America, in Europe, in Russia, in all of those markets, and weighing the relative priorities of whether it is worth not going to Russia to go to Jordan. Probably not. I think there are some other areas of the world that are probably a higher priority from that standpoint, but that's where it comes in as a region.
We definitely do have some companies, particularly companies that specialize in halal production, that have identified the Middle East because that is the major area to send halal production. If they're going to be in Saudi Arabia and some others, they'd like to be in Jordan as well.
Conservative
Ed Holder Conservative London West, ON
Would you imagine that you'd have any challenge--your producers I'm speaking of now--in producing halal beef for Jordan? Would that be an issue?
Director, Government and International Relations, Canadian Cattlemen's Association
No, that production is available.
Conservative
Director, Government and International Relations, Canadian Cattlemen's Association
No.
Conservative
Ed Holder Conservative London West, ON
You mentioned earlier in your testimony the notion of looking at Saudi Arabia's potential market. There are ultimately 15 countries, when I think of the Middle East, that we trade with now. To what extent would you imagine having an entree into Jordan, then becoming an opportunity for you to provide better export opportunities into some of these other Middle Eastern countries?
Director, Government and International Relations, Canadian Cattlemen's Association
I think these guys who are actually involved in developing the business think of all these angles. If there's an advantage to doing that, they'll certainly try to do it.
I personally haven't heard of anybody talking about, well, you know, if we could get into Jordan, then we could use that as a distribution point for Syria or Lebanon or anywhere else. I haven't heard any of that discussion yet. What I have heard is, yes, Jordan is interesting; we're interested in Saudi Arabia, and let's see if we can branch out into Jordan. That's not to say that what you're suggesting couldn't happen, but I think maybe that's a couple of steps ahead.
Conservative
Ed Holder Conservative London West, ON
I would imagine there would be some economies of scale--I'm sure--if one was associated with exporting to one country in the region.
Director, Government and International Relations, Canadian Cattlemen's Association
These are creative guys who are involved in this business and they want to have every opportunity they can. If that's something they can make work, then they'll make it work.
Conservative
Ed Holder Conservative London West, ON
Mr. Chair, there's just another moment, I know, but Mr. Trost had a question.
October 20th, 2010 / 4:30 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Ed actually covered my questions, the last couple of ones.
Conservative
Conservative
Ed Holder Conservative London West, ON
Thank you.
It seems, from what you've said, if we've got the BSE issue done right, and the appropriate leadership has been clearly taken on that and the appropriate result is there, what we need to do now is take it to the next step for the sake of our beef producers, not just because of Jordan but because of what it represents in the region.
Mr. Masswohl, thank you.
Conservative
The Chair Conservative Lee Richardson
Thank you.
Are there any further questions of the witness?
Mr. Julian.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Just a follow-up to a question already asked, Mr. Chair, about the value of the 200 tonnes that would be the estimated penetration into the market.
Director, Government and International Relations, Canadian Cattlemen's Association
I'm just going to do some mental math here. I think the value of the Canadian market, on average, is somewhere around $3.70 or $3.80 per kilo, so $3,700 or $3,800 per tonne. The Asian market is somewhere between $4 and $5 a kilo, so $4,000 to $5,000 a tonne. What I've seen from the Middle East on a dollar per kilo basis, it's even a little bit higher.
I don't know if you could extrapolate that average out if the volume started increasing. I think it's fair to say between $4,000 and $5,000 a tonne, so take that in the middle, $4,500 times 200. What is that, $9 million...or $900,000?