Aproposed free trade deal with Korea is good news for Canadian cattle producers, says the president of the Canadian Cattlemen’s Association.
“We were unable to compete at all these last two years because the U.S. has achieved their free trade achievement and has a tariff advantage over us,” said Dave Solverson.
“It’s not going to be huge tonnage but it might be some of the cuts that add value to our carcass. Korea is the best market in the world for short ribs. I think it’s still a market that’s worth working on.”
Korea was once one of the top buyers of Canadian beef. In 2002, it bought $40 million worth — which made it our fourth-largest customer — but by last year, beef exports had fallen to less than one-fifth of that. Tariffs were a big part of that story, but the proposed Canada-Korea Free Trade Agreement would see the 40 per cent tariff on fresh and frozen Canadian beef eliminated in 15 equal annual steps. As well, an 18 per cent tariff on offal will be eliminated in 11 equal annual steps.
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But the U.S. has a head start on that score, as its free trade deal with Korea was implemented in 2012. Australia also finalized a free trade agreement with Korea in 2013, and will be implementing it as soon as possible.
But there’s significant interest in buying Canadian beef, said Solverson.
“When I was in Korea with the prime minister this spring, I talked to some of the people who were interested in importing,” he said. “It wasn’t only the free trade agreement that kept us out; we were out of the market because of BSE until two years ago. We had to sort of rebuild from there.”
But even though the U.S. and Australia have captured the lion’s share of Korean imports, there’s been an upside for Canada, he said.
“Sometimes when there’s strong North American demand, we’ve been flooded with offshore beef, like beef from Australia, New Zealand and South America. That’s not happening this time because of the demand in Asia. Australia is exporting a lot of beef to China, while it historically would have sent more to the U.S. and Canada. Even if it isn’t us exporting, we’re benefiting because our competitors are exporting to them and not us.”
Still, it’s important to go after market share in countries such as Korea, especially as the sharp rise in beef prices might affect domestic demand, he added.
“High prices are often the cure for high prices,” he said. “I think it’s important to have a lot of outlets all over the world, and a lot of places where beef can go.”
And while Canadian prices are high by historical yardsticks, our beef is cheap by Korean standards. Locally produced beef sells for about 60 per cent more than imported beef, said Solverson.
“I’m guessing that that will change. In Canada, about 11 per cent of our income goes to food. In Korea, it’s about 24 per cent. They’ll be looking for alternatives to high-priced protein.”