Quick payoff from trade deal for beef producers

That didn’t take long.

Hot on the heels of a new trade partnership, sales of Canadian beef to Japan skyrocketed in January, tripling the amount sold to the country compared to a month earlier.

Japanese buyers snapped up 3,545 tonnes of Canadian beef in January — versus 1,282 tonnes in December and about 58 per cent more than the monthly average for all of last year, CanFax reported.

Bob Lowe.
photo: Supplied

“It’s huge for the Alberta beef industry,” said Bob Lowe, past chair of Alberta Beef Producers and now vice-chair of the Canadian Cattlemen’s Association.

“Alberta finishes 70 per cent of the cattle in Canada. So basically every pound of beef that gets exported, seven-tenths of that pound comes from Alberta one way or the other.”

The jump in sales to Japan came right after the new Trans-Pacific trade deal came into effect on Dec. 30. The agreement triggered Japanese tariff reductions on Canadian beef, reducing them to 27.5 per cent on fresh beef (from 38.5 per cent previously) and to 26.9 per cent on frozen beef.

Both will inch down to 26.6 per cent on April 1 but more importantly, the new agreement did away with a Japanese “safeguard” mechanism that automatically boosted tariffs to 50 per cent when beef exports from individual countries rose quickly.

The surge in sales is no mere blip on the radar, said Lowe, adding he expects to see Canada gain a long-term advantage from the deal, which is officially called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“If we can get a jump into the markets ahead of the U.S., there’s no reason why it can’t be sustainable,” he said.

Sales to Japan are up across the board for all the beef-exporting countries that have ratified the deal (and are therefore eligible for tariff reductions), said Lowe.

“The CPTPP countries have made bigger advances than other countries,” he said. “If we’ve already established our sales (in Japan) it will be harder for our competitors to take that away once (they’ve ratified the agreement).”

Long effort pays off

And there’s more to come — the trade deal will eventually see Japanese tariffs reduced to nine per cent (over 15 years) for beef-exporting countries that are part of the Trans-Pacific agreement.

Along with Japan and Canada, Mexico, Australia, New Zealand, Singapore, and Vietnam have all ratified the deal. (The remaining signatories — Chile, Peru, Malaysia, and Brunei — are going through the ratification process.) Together, these 11 countries have 495 million consumers and account for 13.5 per cent of global GDP. The U.S. was also set to be a member until President Donald Trump, in one of his first acts of office, pulled out of it.

But Japan’s interest in buying Canadian beef didn’t just materialize with the trade agreement, added Lowe.

Rather, it’s the result of years of marketing efforts by Canadian organizations, such as the cattlemen’s association and Canada Beef.

“They want good-quality, grain-fed beef, and they’re willing to pay for it,” he said. “They have a well-off economy and they want the more valuable, higher cuts. They don’t want the cheaper cuts.”

Canada’s high standards and rigorous monitoring by the Canadian Food Inspection Agency also plays a role in attracting Japanese consumers, he added.

“Japan recognizes our food safety standards. Through the CFIA we have some of the highest standards in the world, in my opinion.”

Getting the deal ratified last fall also took a bipartisan political effort, with the two main federal parties working together, Lowe added.

“I can’t say enough about how all the federal parties came together to make sure this happened by the end of October last year so we could get in on two tariff reductions in one calendar year. That is really huge for the beef industry.”