Competitor watch: Canada

23 May 2018

As at 1 January, the cattle herd in Canada was reported at 11.6 million head, up 0.9% on the previous year. At 3.7 million head, the beef cow herd recorded a second year of consecutive growth, albeit up only 0.8% on the previous year.

Prior to these two years, beef cow numbers underwent 11 consecutive years of contraction but are now considered to be in a period of consolidation.

Canadian beef production is projected to be around 1.4 million tonnes this year, reflecting a modest 0.2% increase from last year. However, through the first quarter of 2018, domestic beef production was up 7% year-on-year, supported by the flow-on effect of reduced feeder exports to the US in 2017, which are now underpinning a lift in domestic beef production.

Canada exports

In 2017, Canadian beef exports totalled 380,000 tonnes (30% of total production) and exports in the first quarter increased 7% compared with the same period last year.

Throughout the last the five years, on average, 72% of all Canadian beef exports have been destined for the US and that trend has continued so far this year, with 76% (or 65,000 tonnes swt) of beef exported across the border (January–March). However, the remainder of Canadian beef exports are shipped around the world to a further 40 countries, competing with Australian product for market share in some key destinations.

Notable Canada calendar year-to-March beef exports (shipped weight) include:

  • United States at 65,349 tonnes, up 14%
  • Hong Kong at 4,953 tonnes, up 2%
  • Japan at 4,909 tonnes, up 6%
  • Mexico at 3,492 tonnes, back 11%
  • South Korea at 1,000 tonnes, back 28%
  • China at 964 tonnes, back 56%
  • Philippines at 882 tonnes, back 4%

Market access

Like Australia and the US, Canada is a producer of high quality beef that will continue to benefit from robust global beef demand. However, with a relatively small beef cow herd and large domestic market, growth in exportable high quality beef will remain limited. 

Nevertheless, benefits for Canadian beef exports are on the horizon with the negotiation of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Currently, Canada is subject to a 38.5% tariff on both chilled and frozen beef exported to Japan. However, under the CPTPP Canada will benefit from phased tariff elimination on beef products along with other participating countries, with tariffs reducing to 9% over a 15-year period. Notably, Canada will enjoy a competitive advantage over the US who will not be a part of the agreement and remain at the aforementioned higher tariff rate.

However, with close to 80% of Canadian beef exports destined for North America, any renegotiation or US withdrawal from the North America Free Trade Agreement (NAFTA) would likely heavily impact the Canadian beef industry and have flow-on effects in beef markets around the world.

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