Town Hall Meeting February 9 th , 2012 Pipestone, MB CCA Town Hall - - PowerPoint PPT Presentation

Town Hall Meeting

February 9th, 2012 Pipestone, MB

CCA Town Hall Meeting initiative sponsored by

• 1. President’s Report

Martin Unrau, Vice President

CCA Priorities

• 1. Restoring Industry Profitability
• Competitiveness
• Market Access
• Value creation
• Innovation
• 2. Advocacy - Positive Public Attitudes
• Positively positioning the importance of cattle producers

and the beef cattle industry: and protecting against numerous threats and disparagement

• 3. Crisis Management Preparedness

Legal-trade 9% US Trade Advocacy 31% Foreign Trade/5 Nation 4% Animal Care 2% Value Creation 4% Animal Health 5% Environment 5% Ottawa Advocacy/Domestic Ag Policy 14% Communication/Issues /Crisis management 5% Executive 6% Market Services 4% Admin - 7% Annual Meetings 4%

CCA Expenses By Activity

$1 National Check-off Allocations

Canada

CBI 70% BCRC 15% Provincial 13% Administration 2%

2010-2011 Successes

• Canadian supply/demand
• Canada Beef Inc. (CBI)
• Beef Cattle Research Science Cluster
• Mandatory Country of Origin Labelling (mCOOL)
• South Korea
• Beef InfoXchange System (BIXS)
• Verified Beef Production (VBP) participation
• Cattlemen’s Young Leaders (CYL) National Launch

• 2. Canfax Market Review &

Outlook

Andrea Brocklebank, Research Manager

‘10 cow marketings ↓ 6.5%, 797,000 head ’11 cow marketings ↓ 18%, 652,000 head

200 400 600 800 1000 1200 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Thousand Head

Canadian Slaughter Cow Marketings

Exports Slaughter

Source: CBGA, AAFC, Statistics Canada

Cow prices ↑ $16 to average $70/cwt – $0.26

• ver the U.S.

$0 $20 $40 $60 $80 $100 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Cdn $ per cwt Alberta vs US Slaughter Cow Prices (Cdn $) AB D1,2 Cows US Utility Cow

Source: CanFax, Cattle-fax

‘10 fed marketings ↑ 5% to 3.4 mill head ’11p marketings ↓ 14% to 2.9 mill head

500 1000 1500 2000 2500 3000 3500 4000 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Thousand Head

Canadian Fed Cattle Marketings

Exports Slaughter

Source: CBGA, AAFC, Statistics Canada

‘10 Prod ↑ 3% with larger fed marketings ’11p Prod ↓14% lower fed and non-fed marketings

500 1000 1500 2000 2500 3000 3500 4000 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Carcass weight (Mil lbs)

Canadian Beef Production

Live Slaughter Exports Domestic Slaughter

Source: Canfax Research

Cattle

July ’11 Beef cow inventories ↓ 2% to 4.2 million Total inventories ↓ 0.8% to 13.8 million

2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Million Head

Canadian Beef Cow Inventory July 1

Source: Statistics Canada

Heifer retention up 6.7% but still 12% below the historic average of 752,000 head

0.50 0.60 0.70 0.80 0.90 1.00 1.10 76 79 82 85 88 91 94 97 00 03 06 09 Million Head

Canadian Beef Heifers (Breeding) July 1

Source: Statistics Canada

2011 culling rates at 9.6%, supporting expectations

• f herd stabilization and consolidation

0% 5% 10% 15% 20% 80 83 86 89 92 95 98 01 04 07 10

Canadian Beef Cow Culling Rate

Source: CanFax

15 yr average = 10%

U.S. cattle herd continues to contract with drought and high feed costs driving reductions

25 30 35 40 45 50 72 75 78 81 84 87 90 93 96 99 02 05 08 11 Million Head

U.S. Beef Cow Inventory January 1

Source: USDA, Cattlefax

COF number’s similar to year ago However, placements will change marketings

500 600 700 800 900 1000 1100 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Thousand Head

Alberta and Saskatchewan Cattle on Feed

5yr avg 2011 2012

Source: CanFax COF

Reduction in cattle supplies has resulted in reduced fed (↓30%), non-fed (-36%) and feeder (↓56%) cattle exports

200 400 600 800 1000 1200 1400 1600 1800 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Thousand Head

Canadian Cattle Exports

Feeder Slaughter

Source: Statistics Canada, AAFC, CanFaz

2011 Avg $106/cwt, up $17 from 2010 Surpassed previous annual peak of $103/cwt

$70 $80 $90 $100 $110 $120 $130 1 6 11 16 21 26 31 36 41 46 51 Cdn $ per cwt

Alberta Weekly Fed Steer Price

4 yr avg 2011 2012 2001

Source: Canfax

Changing Seasonality 2011 average basis $7.70/cwt

($20) ($15) ($10) ($5) $0 $5 1 5 9 13 17 21 25 29 33 37 41 45 49 Cdn $ per cwt

Alberta Fed Steer Basis Alberta/Nebraska in Cdn $ (Cash to Cash)

5 yr avg (98-02) 3 yr avg 2011 2012

Source: Canfax

The dollar dropped below par in Sept 2011 but is expected to continue to trade within the range of $0.95 - $1.00

$0.85 $0.90 $0.95 $1.00 $1.05 $1.10 1 6 11 16 21 26 31 36 41 46 51 Cdn $ - US terms

Weekly Canadian Dollar

4 yr avg 2011 2012

Source: Bank of Canada

Oil prices have stabilized between $100- 115/barrel.

Feed grain price volatility! Competition for acres will see prices rally this spring

$50 $100 $150 $200 $250 $300 $350 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Cdn $/tonne

FEED GRAIN PRICES

Lethbridge and Omaha in barley equivalents Lethbridge Barley Omaha Corn

Source: Alberta Ag, Cattle-Fax

Calf prices in 2011 averaged $151.50/cwt up $30 from 2010 and just below ‘00 & ‘01 levels

$100 $115 $130 $145 $160 $175 $190 1 5 9 13 17 21 25 29 33 37 41 45 49 Cdn $ per cwt

Central Alberta Weekly 550 lb Steer Price

4 yr avg 2011 2012 2001

Source: CanFax

Feeders in 2011 avg $123/cwt up $11 from 2010

$90 $100 $110 $120 $130 $140 $150 $160 1 5 9 13 17 21 25 29 33 37 41 45 49 Cdn $ per cwt

Central Alberta Weekly 850 lb Steer Price

4 yr avg 2000 2011 2012

Source: CanFax

Demand

Domestic Consumption & Demand

• Per capita beef consumption

declining since 2003 at new low

• f 20 kgs/capita

– Poultry consumption has leveled off; pork consumption falling

• Beef Demand Index relatively

steady

• Consumer resilience being

tested by higher protein prices

• Market share at 22% still below

historic 27%

200 400 600 800 1,000 1,200 90 92 94 96 98 00 02 04 06 08 10 Thousand Tonnes

Canadian Beef Consumption

Canada Import

10 20 30 40 80 83 86 89 92 95 98 01 04 07 10 kgs/person

Canadian per Capita Meat Consumption

Beef Pork Chicken

Cutouts are recovering slowly with improved demand and tighter supplies

130 150 170 190 210 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Can $/cwt

Canadian AAA vs. U.S. Choice Cutout Value

AAA Choice

Source: CMC, USDA

‘10 Imports ↓ 2.5% - 178,000 tonnes ’11 Imports ↑ 16% - non-NAFTA imports ↓13%

50 100 150 200 250 300 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11p Thousand Tonnes

Canadian Beef Imports

Other Uruguay Argentina N.Zealand Aust U.S.

Source: Statistics Canada

Export market share reached 50% in 2010 the 4th highest on record before falling in 2011 to 45%

11% 15% 14% 13% 13% 19% 20% 26% 26% 36% 40% 41% 43% 47% 49% 49% 48% 50% 57% 58% 39% 39% 43% 45% 47% 49% 48% 50% 45% 0% 10% 20% 30% 40% 50% 60% 70% 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p

% Total Beef Production Exported (incl slaughter cattle exports)

Source: CanFax, AAFC, Statistics Canada

’10 exports ↑ 8% 407,500 tonnes $1.42 billion ’11p ↓ 22% volume, ↓ 13% in value

100 200 300 400 500 600 90 92 94 96 98 00 02 04 06 08 10 Thousand Tonnes

Canadian Beef Exports

Other Russia HK&M Taiwan

• S. Korea

Japan Mexico U.S.

Source: Statistics Canada, AAFC, CFIA - Product Weight

• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 10 11 12 13 14 15 16 17 18 19 Million Tonne

Global Beef Consumption 2010-2019 Estimates

Non-OECD OECD

Global Opportunities

• Emerging Countries
• Growing disposable incomes - increase consumption of food
• Growing populations
• Smaller beef supplies are seeing prices respond

7,642 652 99

• 247

103 27 92 229 8,597 7,000 7,200 7,400 7,600 7,800 8,000 8,200 8,400 8,600 8,800 9,000 2010 EU* MENA USA Japan S.Korea Russia Others 2020 1,000 tonnes, CWE

Beef Import growth by Country/Region 2010-2020

The Competition …

• Major volume exporters - Brazil, Australia, USA, & Canada
• High reliance on trade - New Zealand, Uruguay, Australia & Canada

In a global marketplace everyone is responding to the same market signals - Brazil, Australia, Argentina and Canada all entering a growth phase.

40 42 44 46 48 50 52 54 56 58 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Million Tonnes

Global Beef Production

Source: USDA, FAS

1.56 1.57 1.62 1.63 1.63 1.64 1.71 1.99 2.27 11.19 0.00 1.00 2.00 3.00 New Zealand Bull Brazil, Campo Grande Argentina Export Australia Trade Steer Australia Japanese Ox Uruguay best Brazil Sao Paulo US Fed Steer EU Steer Japan Wagyu A5 US $/lb

Global Steer Carcass Price

(US$/lb equivalent)

Source: World Beef Report, Week of Jan 27, 2012

Demand Outlook

Global Demand Dynamics

• Poultry is winner in tough economic times but…
• GIRA is projecting beef import growth over the next ten years in:
• EU (652,000 tonne)

Japan (103,000 tonne)

• MENA (99,000 tonnes)

Russia (92,000 tonnes)

• International beef trade should continue growth trend

7,642 652 99

• 247

103 27 92 229 8,597 7,000 7,200 7,400 7,600 7,800 8,000 8,200 8,400 8,600 8,800 9,000 2010 EU* MENA USA Japan S.Korea Russia Others 2020 1,000 tonnes, CWE

Beef Import growth by Country/Region 2010-2020

Source: GIRA

20 40 60 80 100 120 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 Million Tonnes

Global Meat Consumption

Beef Pork Broiler Meat

International Currencies are an indication of a countries economic strength – Implications for Trade (purchasing power, value received) – A 1% increase in the Cdn $ decreases Cdn cattle and beef prices by ~1% US $ is being used as a safe haven when risk increases (i.e. EU debt issues) – US $ is generally weak with large debt & loss of AAA rating - supporting exports

$0.60 $0.70 $0.80 $0.90 $1.00 $1.10 90 92 94 96 98 00 02 04 06 08 10 Cdn $ - US Terms

Monthly Canadian Dollar

The Cdn dollar is not as strong compared to other currencies (ie. Yen & AUD) but will continue to trade close to par given weakness of US $

International Markets

• U.S. – declining domestic production,

largest beef importer in the world.

• Mexico – growing consumption by

272,000 tonnes by 2020, 79% of exports are boneless cuts, no OTM access

• Mainland China & HK & Macau –

consumption to grow by 686,000 tonnes by 2020

• Japan – imports to grow by 103,000

tonnes by 2020. Does not want to be US dependent again. Looking for highly marbled beef.

• Russia – beef imports to grow by

92,000 tonnes by 2020

• South Korea – strong consumption

growth since 1990, imports are expected to continue to grow

• Taiwan – stable consumption,

ractopamine challenges, high quality market that prefers NA grain fed beef

• Europe – consumption declining, net

exporter in 2011, with production declining imports are projected to increase by 652,000 tonnes by 2020, 53% of beef consumption is ground beef.

Canadian Beef Outlook

• Reduced global cattle inventories supporting beef & cattle prices
• Weather conditions in the US & other regions will be the major

factor in production growth

• Relative Cost of Gain Advantage in Canada

– Reduction in fed supplies will be more modest in 2012 than what was seen in 2011 – Wildcard: Heifer Retention impact on fed supplies?

• Smaller Canadian (-3%) and US (-4.7%) beef production
• Packer utilization levels increasingly challenged
• Consumer confidence improving but resilience to higher prices is

a concern

• Longer-term Canada is in a position to respond to global export

growth in light of reduced global supplies and favorable production conditions

• 3. Foreign Trade & the Canadian

Beef Industry

Martin Unrau, Vice President Dennis Laycraft, Executive Vice President

And

WHAT WE PRODUCE

Top Foreign Trade Priorities

• Access to European Union

– CETA – MFN TRQ increase and administration – Livestock production and harvesting protocols

• Access to Korea

– FTA to regain parity with US beef – UTM obtained, WTO case remains suspended

• Access to Japan

– Increase age from 21 to 30 months – Bilateral FTA or TPP

Top Foreign Trade Priorities

• China

– Facilities approvals, ractopamine, cotton gloves – Need compliant shipments to get bone-in UTM

• Full UTM access to Taiwan and ractopamine issue
• OTM access to Mexico
• Full access to Russia, including facilities approvals
• US mCOOL

US mCOOL

• The resolution Canada and Mexico are seeking is to

allow for beef and pork processed in the USA from imported cattle and hogs to be labeled in the same way as meat from US born animals, whether through a mandatory, voluntary or a combination of mandatory and voluntary labeling schemes.

• FSIS Processing
• Place of Harvest
• Voluntary origin labelling when slaughtered in US

• Panel ruling published November 2011
• CCA working with US allies on advocacy
• Appeal deadline March 23, 2012

US Packer Procurement of US Packer Procurement of “ “C C” ” Cattle Under COOL Final Rule Cattle Under COOL Final Rule

US mCOOL

• 4. Animal Health

Martin Unrau, Vice President Rob McNabb, General Manager Operations

Animal Health

• Leadership on research for validating a TB Blood

Test – rapid and less intrusive

• Advocate for RMEA TB Coordinator
• Advocating for stronger Federal and Provincial

Government collaboration in the eradication of infectious diseases (TB, Br) from wildlife

• Development of a National Beef Cattle On Farm

Biosecurity Standard

• Leadership on the development and advocacy of

policy and the regulatory framework for beef cattle traceability

Animal Health

• Leadership on the Canadian Animal Health

Coalition (CAHC)

– West Hawk Lake Zoning Project – Codes of Practice development via NFACC

• Leadership on the development of the National

Farmed Animal Health and Welfare Strategy

• Leadership on the NFAH&W Council

Animal Care

• National Farm Animal Care Council

– A collaborative non-government body leading the animal care discussion – Overseeing the renewal of the Codes of Practice for beef and seven other species

• Animal care threatens to become a new trade barrier
• Transport is the most common subject of letters to the
• fed. Ag. minister
• Code of Practice for Beef Cattle (1991) being renewed

– Committee of producers, scientists, government, processors, and animal welfare proponents

• Certified Livestock Transporter Course

Animal Transport

• Revisions to CFIA’s animal transport regulations

have been expected for 10+ years

• CCA has consistently said that regulatory changes

(if needed) should be based on sound science

• Lack of reliable research reflecting current industry

practice, so industry funded some

• Led by Dr. Karen Genswein (AAFC Lethbridge), Dr.

Tina Widowski (UofGuelph)

Industry Funded Transport Research

• Data on over 10,000 loads in Ontario and Alberta
• 95% of trips under 32 hours (AB) 98% in ON
• Most (77%) transport delays were at the border
• 99.9 % of cattle reached their destination with no

problems (dead, downer, lame, panting, sweating).

• Weaned calves and cull cows were the highest risk
• Further research is focused on alternative transport

practice to improve weaned calf health

• 5. Traceability and BIXS

Dennis Laycraft, Executive Vice President

Traceability

• Disease control, response & eradication
• Market access
• Consumer confidence
• Production & genetic improvement

– BIXS

Traceability Summit

KEY COMMUNICATIONS MESSAGES

• 1. Traceability for cattle is very important and is a key

part of the industry’s ongoing development. This is no longer “if”, but “when” and “how”;

• 2. Premises ID is essential and must be uniformly

applied across the nation;

• 3. Funding must be sorted out: Public good vs. private

good;

• 4. Movement recording will take place at move in by
• wner of the cattle, as a starting point;

Continued…

• 5. The national cattle movement document under

development will be a key component of how we move forward in developing regulations;

• 6. Industry standards will monitor progress before

regulation development;

• 7. Enable and administer regulations with a common

sense approach;

• 8. Unified communications messages will be

developed- “one voice, one position”.

• A voluntary national cattle and beef information exchange

system based on RFID.

• Data or information flows into and out of the database

across the chain linked to the animal’s RFID tag identifier.

• It will complement, through plat forming/hosting options,

many other programs securely, including existing genetic improvement, EU and branded beef initiatives.

• Introducing instrument carcass assessment

technology in mid and large plants

• www.bixs.cattle.ca

Beef InfoXchange System

Value Chain Report

• 6. Federal Issues at Play

Dennis Laycraft, Executive Vice President

Growing Forward 2

• Growing Forward expires in March 2013
• Program detail negotiations for GF 2 in early 2012
• CCA’s current position can be found at

www.cattle.ca

• Key priorities include:

– Investing in R&D, market development and regulatory improvements – BRM programs and policy improvements – National environment, food safety and animal health programs

Regulatory Burden

The issues:

• Approvals and access to inputs
• BSE’s long cost shadow
• Transport
• Environment
• Export approval and market access
• Product of Labeling

Possible solutions:

• Regulatory Modernization consultations
• U.S. Canada Regulatory Cooperation Council

US/Canada Border Harmonization

• 1. Remove the Requirement for Re-inspection
• 2. Eliminate Microbial Testing of Meat Products at

the Border

• 3. Implement Electronic Export Certification
• 4. Build on the Established Equivalency of the Food

Safety Systems

• 5. Harmonize Approval Processes
• 6. Harmonize the Approval Process for Veterinary

Drugs

• 7. Establish Equivalency Agreements for Label

Claims and Quality Related Specifications

BRM and Price Insurance

• AgriStability, A..Invest, A..Insurance, and A..Recovery

have all worked to different degrees of success. CCA is focused on improvements:

– Better AgriStability margin calculations – Formalizing AgriRecovery triggers – Improved forage insurance – National price insurance program to manage price risk

• Some provincial programs exist –

– Alberta’s Cattle Price Insurance Program – Ontario’s Risk Management Program – Quebec’s ASRA program

• Goal is a national market based program to offer coverage

for price risk for all cattle producers

Environmental Issues

Environmental Issues

What are we working on right now?

• Canadian Forage and Grasslands Association
• Five Nations Beef Alliance Sustainability/USA Sustainability Action Plan
• International Meat Secretariat/Food and Agriculture Organization

Partnership Proposal

• Masters of Beef Advocacy
• Foundation
• Carnivores and Cattle
• Ducks Unlimited
• SARAC
• Cows and Fish
• Environment Strategy

• 7. CCA Communications

Rob McNabb, General Manager Operations

CCA Communications

• Keep producers up to date on industry news
• Educate consumers about cattle production
• Inform other industry groups of CCA’s position

– NCBA, CMC, …

• Work with media proactively and reactively

– Provide current fact-based information – Attract attention to issues

• Educate and collaborate with Government

– Voluntary Beef Biosecurity Standard – Traceability

• Assist/advise associated industry organizations

– BIXS – CYL

Auction Mart Screens

• Initiative began with provincial pilot in Alberta in 2009

(24 screens)

• National pilot live in mid-September, 2011
• B.C. first province in

national pilot to have all systems go (Williams Lake)

• AMS now in B.C., Alberta,

Manitoba and Atlantic Canada

CCA Action News

• The CCA’s free bi-weekly

newsletter

• Distributed to about 3,000

subscribers

• Contains:

– CCA updates – Industry news – Research updates from BCRC – Canfax market briefs

• Sign up at www.cattle.ca

Events

• Annual General Meeting (March in Ottawa)
• VIP Reception (March in Ottawa)
• Semi-Annual Meeting and Convention (August in

Calgary)

• Fall picnic (September in Ottawa)
• Food-Aid Day (June in Ottawa)
• Steaks for soldiers (CFB Shilo,

Petawawa, Edmonton, Valcartier)

• News events with Agriculture & Agri-Food Canada
• Town Hall Meetings (3 per year across Canada)

• 8. Cattlemen’s Young Leaders

(CYL) Development Program

Rob McNabb, General Manager Operations

Cattlemen’s Young Leaders (CYL)

• Provides industry-specific training and mentorship to

beef enthusiasts between, the ages 18-35

• Explore a potential fulfilling career choice or

involvement with an industry leader within a provincial/national producer or affiliate organization

• Grooming beef advocates

Events

• National

– BVCRT – BBQ on Parliament Hill – CYL Fall Forum

• International

– FNBA – ILC Denver – NCBA Convention

www.cattlemensyoungleaders.com

CYL Supporters

• Foundation Partners

– ALMA – Cargill – CCA

• Official Supporters

– Canadian Cattlemen

• Other supporters

– FCC, MNP, 4-H, ILC, CYFF, Summer Synergy

Young Cattlemen’s Advisory Council

• Mission Statement: To represent the views and

concerns of 18-35 year old stakeholders in the Canadian Beef industry to the Canadian Cattlemen’s Association while promoting our industry to the public in Canada and around the

• world. The experience we gain while doing this

will develop future leaders and enhance the long term success of our industry.

Keeping you informed... For the latest news in the Canadian beef cattle industry, sign up to the CCA’s biweekly newsletter Action News on our website at www.cattle.ca

Questions?

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