Muscling into the Mexican meat market
By DON STONEMAN
Mexico remains an untapped market for Canadian beef producers, according to a study conducted by business consultants Deloitte & Touche.But it's a market where Americans dominate and Canada is hampered because American beef grades set the standards and Canadian equivalents are unknown.
The Mexican economy is getting back on its feet after the peso devaluation in 1995, says Guelph-based consultant Rick Andrews. He thinks that beef producers have reasons to be cautiously optimistic about the possibility of future sales in the south.
Beef consumption is rising again after falling during the currency crisis. Per capita consumption is predicted to be an annual 19 kg per capita by the year 2000. But Canada has a relatively small share of Mexico's beef imports.
The lion's share goes to the U.S., with more than 95 per cent of the market. Canada is number two with 2.8 per cent of imports into Mexico. Volumes totalled about 77,537 tonnes in 1995.
Andrews says with an aggressive strategy Canadian beef exports to Mexico could easily double or triple current levels. A crucial weakness in Canada's export efforts is that Canadian beef and veal are virtually unknown by importers and consumers. Most of the beef sold there now is offal meats and consumers usually think they are from the U.S.
U.S. products currently have a six-cent-a-pound advantage over Canada, on average, because Canadian products are discounted in relation to American beef.
Canada expects to have its own "Prime" grade in place next year. It will be the equivalent of the U.S. Prime grade, which commands respect in export markets. Cam Daniels, marketing manager for the Canada Beef Export Federation, says it is likely that only 1.5 to two per cent of carcasses now coming out of Canadian packing plants would meet that Prime grade. If there isn't enough supply to meet demand, then there may be a premium for those carcasses.
The Prime grade would be aimed strictly at export markets, he says.
Andrews, a partner in Deloitte & Touche, says Mexican importers "don't understand triple A. There is a lot of debate."
Most of the Canadian exports to Mexico so far are fancy meats and offals; the organ meats and cuts from the head that are used to make things like tacos. But Mexican consumption of higher quality products is increasing. "We have an opportunity for offal meats. But the opportunity for incremental growth is for middle cuts through the supermarkets and restaurants." Dennis Laycraft, executive director, Canadian Cattlemen's Association (CCA), says it will likely be April before the Canada Prime grade is introduced into packing plants. Even then, the grade won't be officially accepted as being the equivalent of U.S. Prime, Laycraft says. Discussions on grade equivalency with the U.S. are at a standstill while the American industry's lobby group reorganizes itself. Discussions with the U.S. will focus on the other grades, double A-select and Triple A-Choice. "You are talking about 70 to 75 per cent of our production in those two grades, " Laycraft says.
A memorandum of understanding between the two governments is necessary to bring the grade standards into line, he says. An independent study conducted for Cargill, IBP and the CCA showed there was potential for a one to 1.5-per-cent improvement in the overall price for beef with the implementation of equivalent grades shared between the two countries.
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Food fears zapped Pacific markets
Food fears took a high toll on Canadian beef exports to the Pacific Rim in 1996.The Bovine Spongiform Encephalopathy (BSE) debacle in Europe last spring wreaked havoc on sales the first half of this year, officials of the Calgary-based Canadian Beef Export Federation (CBEF) reports. In the summer, Japan experienced a fatal e. coli epidemic, further fanning the flames in Canada's major offshore beef market. Its effects are still being felt. Canada wasn't involved in the BSE scare last spring. But because a single animal had been found with the disease in 1993, the Japanese government did not consider Canada to be totally disease-free, says Yasuo Ono, CBEF's director for Japan.
Korea was also concerned about imported beef, says Amos Kim, a marketing representative at CBEF. In the first half of 1996, beef consumption fell 20 per cent, partly because of concern about BSE and partly because of a lacklustre economy. Canadian sales were also hindered by domestic Korean beef production, up 12 per cent. And the government is trying to protect producers there from lower-priced imports.
Ted Haney, general manager, CBEF, thinks that while dollar sales were less than expected, Canada won some market share points.
It was the major players in the Pacific Rim, the U.S. and Australia, who took the biggest hits when beef consumption fell, Haney says.
Sales increased for Canada, a niche-market player, but not nearly as much as expected. Canadian exporters were looking at an 80-per-cent increase in sales this last year, but only got a 12-per-cent increase instead in the first six months. Haney expects that overall beef sales will be up 20 to 25 per cent for this year as food safety concerns ease.
"For strategic or relationship building reasons exports will increase" to Japan, he says.
Canada took a hit in Japan because its department of health distributed a poster in stores naming countries that never had a BSE outbreak. Those countries included Australia and the U.S., but not Canada.
"Because of one animal, we couldn't be on that poster." There was an opportunity to explain about the single animal on the bottom quarter of the poster, but CBEF decided against that. "We decided that anonymity would be better," Haney says. To understand concerns in Japan, "you have to crawl into the Japanese consumer's head," he says.
"They have a European-like fixation with food security because of their experiences after the war" with near starvation. "It is a gut reaction. It is not necessarily intellectual."
Haney says that, by August, concern about BSE had been replaced with fears about e. coli, as more than 50 people died from eating contaminated food. At first, imported meat was suspect; later, uncooked vegetables were blamed.
All meat consumption dropped, but seafood took a beating in particular. "It has just been routed in Japan," Haney says. Family restaurants have taken up the slack, he says. So have Japanese and Chinese noodle houses "where everything is steaming hot" and the e. coli bacteria is perceived to have been killed. - DS
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Canada seeks end to ban
Canada has asked the World Trade Organization (WTO) to rule on the legality of a European ban on beef that blocks this country from exporting to its former second-largest trading partner.It will likely be six or eight months before the WTO trade panel renders a decision on Canada's request to end a ban on exports of beef to the European Union (EU) dating back to 1989.
Seven years ago, in the wake of widespread concerns about growth promotants, the EU banned beef imports from countries which use them to raise beef. Those countries include Canada, the U.S., Australia and New Zealand.
David Andrews, Olds, Alberta rancher and president of the Canadian Cattlemen's Association as well as chairman of its trade committee, says the panel is based on one of the tenets of the last GATT agreement: that bans against imports because of food safety concerns must be based on sound science. A European scientific committee found that there was no basis for the ban. But the EU has kept it in place anyway.
The Americans have already made a similar trade challenge, Andrews says. Canada, Australia and New Zealand have joined in. The Canadian challenge is likely a mirror image of the American's concerns. Andrews says Canada launched its own challenge so that it can take legal retaliatory measures if the EU refuses to deal with the issue.
"Retaliation may take a form that has nothing to do with beef," Andrews says. Canada could block imports of other commodities from the EU and apply political pressure. The EU commissioner for agriculture has said he won't remove the beef ban even if required by the WTO. "It's a very political issue in Europe," Andrews says.
There's no relationship between the push to export beef to Europe and the recent opening up of imports from that continent.
Canada is trying to sell prime cuts into Europe, Andrews says. The Europeans are sending Canada up to 5,000 tonnes of manufacturing beef. - DS
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Dairy tiestalls dropped for comfort's sake
By JOHN PHILLIPS
Once, the dairy producer's main reference books were Newman Turner's Herdsmanship and Kenneth Russell's The Herdsman's Book. They were a mine of information when it came to feed values, the milk board's quality payment schemes or maintaining herd health, but there was no mention of cow comfort.The industry now knows a comfortable and contented cow is a healthy animal providing high milk production. Some dairy producers forget this. Others, however, put themselves momentarily in the cow's place, on a concrete surface, damp surroundings and perhaps near a drafty door or cracked window pane.
Lanark county farmer Stu Hammond is one of the latter. Having decided to follow in his father Mel's footsteps, the two realized that major changes were needed if their partnership were to prosper over the coming decades. Their 52-cow tiestall barns had to go, and they set their sights on double this number.
The Hammonds' naturally ventilated, open-concept, 212-foot barn has become Sunol Farms' hub, with a 160-foot, window-lined front to ensure cows get the maximum amount of sunlight. Temperatures are thermostatically controlled, with windows closing at five degrees C and opening at seven. The roof's peak also disengages eight inches and a clear plastic cover gives protection against rain and snow.
Now home to 100 milking cows plus pens for open heifers and an area for 70 Holstein steers, the barn was designed to ensure the utmost comfort and efficiency for family members and cattle alike. With a double-16 parlour, he and Mel handle 90 cows in 90 minutes in a relaxing environment.
Their barn ranks among the most advanced of its type in eastern Ontario. Neither Stu nor Mel will discuss the price, but an estimate suggests at least $500,000 for the basic building.
Animal behaviourists assert that cows respond well to pleasing living conditions. Properly controlled fresh air and an abundance of light ensure this but the Hammonds advance one step further.
Stu noticed that a local tire dealer seemed to have an abundance of well-used truck tires. He had the tires chipped up in the retread shop, and the resulting black fragments trucked to his farm.
The first trial started four years ago and its success led to extending the idea to all milking females. Chipped rubber is spread evenly over a stall's slightly sloping floor, covered with six mm plastic, followed by a layer of heavy felt. Slatted floors to the rear take care of urination and defecation, which drop into flow gutters which are pumped three times a week into a 1.25-million-gallon tank.
The Hammonds haven't gathered any statistics to prove the chipped rubber bedding increase milk output. But their cows are happy and productive. When they next expand their operation, chipped rubber bedding will be part of the project. The Hammonds, while strong supporters of supply management, feel that U.S. dairy corporation pressures will force a continent-wide market on Canada. When, rather than if, this takes place, doubling their herd to 175 milking cows will likely be necessary. Neither shrinks from this prospect, provided dairy farmers on both sides of the border meet the same health, production and testing regulations.
When it comes to competitors in New York state and Michigan, "hundreds of them are not in our league...and they've still got to learn that a happy, contented cow in clean and comfortable surroundings is the key to profits," Stu says.
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Cows will tell you if they like their barn
By DON STONEMAN
How do you know if your cows are comfortable? A group of Western Canadian dairy researchers suggest the following test: Go into the freestall barn in mid-morning, when cows have settled down after milking. Count the number of cows that are still standing.During a December test of 70 cows in a loose-house barn, 10 were eating, two were standing for no apparent reason, and 58 were lying down.
Those are comfortable cows, says University of Alberta-based agricultural engineer John Feddes. If half of the cows were standing for no apparent reason, a herd manager should be concerned.
Why do cows stand instead of lying down? Feddes says its likely that the stall itself is more important than the curb height. While eight inches is considered the ideal height, cows will step up 14 inches into comfortable free stalls. Watch the cows lying down, Feddes says. Do they bang into anything? Are they hesitant or confident?
Try standing in a typical stall and free-fall to your knees, he suggests - that's what a cow does. If it is painful, cows won't lie down as often as they might on a more comfortable surface. Also, watch cows standing up. Is there enough lunge space, or do they bang into anything?
Swollen knees, abraded hocks, and bruised rumps and hocks are signs that the stalls need modifications.
Bed surface and length are critical to the acceptance of the stalls, Feddes says. If forward and sideways lunging space is restricted, the ability to stand is restricted. And there must be 'psychological' space between the wall and the forward position during lunging.
A study of 5,000 cows showed that a stall 48 inches wide is adequate for cow comfort and minimizing injuries. A lateral slope of three per cent across the width encourages the cows to lie in the same direction. Curbs should be eight to 12 inches high to prevent manure overflowing onto the bedding when alleys are scraped.
Feddes recommends that either super comfort or Dutch cantilever freestall dividers be used in short stalls to allow cow to lunge to the side as they stand up.
Harold House, an Ontario agriculture ministry engineer, found that resting times on concrete, insulated concrete, rubber mats, straw on concrete and mattresses were 7.2 hours, 8.1 hours, 9.8 hours, 14.1 hours and 14.4 hours respectively per day.
Mattresses made of tough interwoven material and sewn into longitudinal segments and filled with an inert material such as ground rubber, cost between $90 and $100 per stall, says Feddes.
Both earthen and sand freestalls have disadvantages, Feddes says. Earthen freestalls require more bedding and tend to deform and must be reworked by hand. Sand beds are good for cattle but high quality sand is essential, since clay contamination will turn it into muck. Sand also causes grief for liquid manure handling systems.
Deep-bedding systems are becoming popular on the Prairies as big round balers and straw shredders bring costs down. Milking cows need five to 7.2 square meters, about 50 to 75 square feet, per cow. The floors in the resting area can be level or sloped. Cows need between eight and 13 kg of straw per day. In sloped floor systems, an alternative to deep bedding, only 2.5 kg of straw are required per head per day and the space allocation per cow is about seven square meters, or 75 square feet.
In Denmark, researchers used a five-degree-slope floor and did not remove the straw bed for 30 months. But feed with a high moisture content requires as much as twice the bedding. High salt levels in feed increase water intake and lead to increased urination.
The costs of a deep-bedded system were a little cheaper than in a free stall. (See Table One.) But pencil pushers note there is a greater variation between the cost of freestall systems than there is between the costs of the deep bed and the freestall systems that were examined.
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