You might expect to pay $30 for a steak at a restaurant. But at the supermarket meat counter? Not so much.
However, Costco customers in Madrid haven’t balked at paying those sorts of prices since the chain began carrying Canada AAA rib-eyes in November.
“As a Canadian consumer walking into the grocery store, I don’t think we’d expect to pay prices that high,” said John Masswohl of the Canadian Cattlemen’s Association. “But over there, it compares very favourably on the pricing, which is hard to believe.
“It’s right next to the Japanese, which is a lot more expensive, and the USDA beef, which is a little bit more expensive. Our beef fits in nicely.”
The road this beef had to travel to get to the Spanish market was a long one, said Masswohl.
It began with Canada’s Trade Commissioner Service in Madrid doing a study looking at the potential market in Spain (which found there was one for higher-end, well-marbled beef). That was followed by a chance meeting of trade commissioner Maximo Hurtado with a meat buyer at a food show. He set up a meeting with the buyer and with a trade delegation from Canada that travelled to Europe in the fall of 2018 (in a bid to hash out technical issues that are still largely blocking free trade for Canadian beef products). That buyer shared some of their quality concerns while hosting a tour of a Spanish meat-packing plant, and the day ended with an invitation to come to Canada to visit some ranches and packing plants, and see for themselves how cattle are raised and processed here.
A year later, the buyers came, and meeting producers and seeing their operations was one of their top priorities, said Masswohl, who recently retired from the CCA but is still working on European market access for the organization.
“To them, it was very important that they actually have that first-hand knowledge so that they can go to their customers and say that they’ve been here and that they know that farmer,” he said. “They have the first-hand knowledge to be able to promote it and to sell it.”
The pandemic delayed things a bit, but the first shipment of Canadian beef arrived in Spain in November.
This new market is a “pretty important” foot in the door for Canadian beef products, said Doug Sawyer, a Pine Lake cow-calf producer who co-chairs the Canadian Cattlemen’s Association’s trade committee.
“To me personally on our ranch, it will definitely increase our bottom line,” said Sawyer. “When we get into these solid markets that are drawing our product, putting it onto their counter, and advertising it as Canadian beef, that’s pretty big for us.”
But it’s also “a pride thing” for the longtime cow-calf producer.
“It really shows me as a producer that the work we’re doing on our animal welfare, our environment, and our audits is really paying off for us,” he said. “All this investment we’ve made is paying off.”
This sort of win has been a long time coming for Canadian cattle producers, who have faced non-tariff trade barriers in the four-plus years since the signing of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
“If you look at the hoops we have to jump through just to get our end product from my cow-calf operation into the EU, it’s significant,” said Sawyer. “As producers, we’ve stepped up big time, and each of these steps tends to cost me money.”
He’s had to weigh whether it’s worth it to have his cattle certified — a process that involves being enrolled through a CFIA approved veterinarian, adhering to traceability requirements, additional record-keeping, submitting to CFIA inspections, and not using growth-enhancing products, among other things.
“All this costs me, whether it’s time or money,” said Sawyer, who hasn’t yet become certified even though his cattle would qualify for the program.
“Our margins are small. You don’t throw a thousand bucks here and a thousand bucks there unless you see it coming back. I’m sure there are lots of producers who are in the same boat I am.”
But he’s decided to take the plunge and go through the certification process this year.
“I see significant value in that market, but am I going to get a return on my investment? I believe now that I will,” he said.
“But I’ve been following this from Day 1, and only now am I stepping into the fray.”
As other cattle producers weigh the benefits and drawbacks, though, this new market will still require a steady supply of beef. Right now, the EU imports less than 3,000 tonnes of Canadian beef, and the Spanish importer plans to add another 1,000 tonnes a year to that.
That could lead to some supply issues, said Masswohl.
“Once the Spanish consumer gets to know the product and like it — as we’re confident they will — are they going to be able to get enough of it? That really is the concern,” he said.
It won’t take a large number of certified animals to fill that gap, but cow-calf producers require some lead time to get those animals ready “and you want to know that by the time you do all that, you’re going to get a premium for it,” said Masswohl.
“It is a bit of a leap of faith for producers to do it without knowing that there’s a buyer.”
New market opportunities
The Canadian beef industry has been working through the regulatory issues to make it easier to certify their cattle, but until that happens — or another deal is negotiated — cow-calf producers may just continue to wait and see where the market goes.
“We’d need a signal that the non-tariff trade barriers are being dealt with,” said Sawyer, who sees the new Canadian trade deal with the United Kingdom as an opportunity to address some of these barriers.
“At present, we’re sitting at the same non-tariff trade barriers as the CETA deal and our quota over there is very low. But we have the ability for the Canadian government to negotiate — and we hope it will do that very soon — a free trade agreement that will be beneficial to both countries.”
An agreement with the U.K. that eliminates the non-tariff trade barriers that have plagued the deal with Europe would be huge, said Sawyer.
“That would send a huge signal to me as a cow-calf producer that, hey, this is really starting to work.”
And each of these new markets is another opportunity for Canadian cattle producers to get a premium for their product, Masswohl added.
“That’s really what it’s about — having more markets and more options,” he said. “Access to international markets is unpredictable. We don’t know what’s going to happen in this market or that market from one year to the next.
“The more of them you have, the more insurance you have by being diversified.”
For Sawyer, it’s not about Canadian beef “taking over the world” but ensuring each of the 300 different products that come from a cattle carcass go to the highest-priced market.
“If we can do that a little bit in Spain, a little bit in Japan, a little bit here, a little bit there, it increases the value of our carcass cut-out significantly, which trickles down to me as a cow-calf guy,” he said.
“The value add per cut-out on a carcass is anywhere from $300 to $600 for export. You can see the value there. The money is on the table.
“We just need strong signals to producers to say, ‘You can partake in this market if you want to, and you will lift our industry if you do.’”