Beef industry eyes big prize: full access to EU market

Most Canadians probably paid little attention this week when federal Trade Minister Peter Van Loan discussed the likelihood of a comprehensive trade deal between Canada and the European Union.

Workers process meat at the Canadian Premium Meats plant in Lacombe Thursday.

Workers process meat at the Canadian Premium Meats plant in Lacombe Thursday.

Most Canadians probably paid little attention this week when federal Trade Minister Peter Van Loan discussed the likelihood of a comprehensive trade deal between Canada and the European Union.

Werner Siegrist, Armin Mueller and Yvo Schmucki were likely among those who did take note.

The three men are partners in Canadian Premium Meats, a Lacombe packing plant that’s one of only a few EU-certified processors in Western Canada.

“The bigger plants have never looked at Europe because we only have a small quota,” said Siegrist. “There’s no volume there.”

That could change.

Last month, Canada gained a share of the EU’s 20,000-tonne duty-free beef export quota that was previously only available to the United States and Australia. That quota is slated to increase to 23,200 tonnes to resolve a World Trade Organization dispute concerning the EU’s ban on growth hormones, and another 25,000 tonnes are expected to be added in 2012.

But the big prize for Canada’s beef industry is full access to the EU market — one Canadian Cattlemen’s Association government and international relations director John Masswohl recently told the Advocate consists of about eight million tonnes of beef a year.

Van Loan and EU commissioner Karel De Gucht said Wednesday that they hope to conclude a trade agreement by late next year.

“Our conclusion today is that it is more likely than not we’ll get an agreement,” said Van Loan.

Improved access to the European market that Canadian beef producers already have should make a difference, said Siegrist.

“Even if it’s for the ones that are already doing it, if you’re able to ship 20 per cent cheaper than before, then obviously that puts you in a pretty good position,” he said, referring to the regular EU tariff on beef imports.

Canadian Premium Meats, which has been operating since 2007, currently processes more than 100 tonnes of meat per week, including bison, elk, horse and beef.

Approximately one-quarter of its production is for one customer — Prairie Heritage Beef.

An association of 20 Alberta and British Columbia ranches, Prairie Heritage Beef produces Angus beef without growth hormones or feed antibiotics.

Founded seven years ago by Christoph Weder of Rycroft, it expects to generate 7,500 to 10,000 animals in 2011 — all of which will be processed at Canadian Premium Meats.

Weder speaks enthusiastically about the new opportunities in Europe.

“We’re obviously very excited about it,” he said, suggesting that other cow-calf producers might now be more interested in raising EU-eligible beef.

“Before, nobody really wanted to talk to us because we were at a 20 per cent disadvantage even if we were priced the same as U.S. beef.”

Weder doesn’t want to speculate about the potential of the EU market opening up to Canadian producers. Even taking advantage of the limited access available now will require a lot of work, he said.

“It’s all about marketing.”

Prairie Heritage Beef has been shipping to Switzerland for the past two years, with its other foreign markets including Hong Kong and Dubai.

“We actually supply about 180 retailers across Canada now,” added Weder, explaining that some domestic consumers are willing to pay a premium for hormone- and antibiotic-free beef.

In addition to forgoing the use of those chemicals, members of Prairie Heritage Beef feed their calves forage longer than most traditional producers. And all their cattle are finished at the same feedlot near Three Hills.

“None of our cattle go through auction marts and things like that,” said Weder.

He said this and other low-stress handling practices reduce illness levels.

“Our sickness rates are next to nil at the feedlot level.”

Not only is raising cattle to EU standards more difficult and costly, so is processing those animals.

They must be segregated from others before and after slaughter, said Siegrist, and there are a variety of protocols that must be followed — from inspecting to labelling.

“There is a higher cost, there’s no doubt about it.”

Canadian Premium Meats is already near capacity, said Siegrist, but he and his partners are unlikely to expand their plant on the basis of market potential alone.

“There’s got to be a lot of demand in order to even think about something like getting bigger.”

hrichards@bprda.wpengine.com