The World In 30 Minutes
Published: 16 August 2014
While in Calgary a while back, I attended the International Livestock Congress. We have attended and reported on similar livestock congresses from the National Western Stock Show, and they always have great speakers who present a worldwide view on beef and their markets.
The competition in the beef markets is huge worldwide with countries positioning themselves to sell beef and other ag products, mainly food, to a growing middle class all around the world. The ideal world has free trade and no tariffs, but that doesn’t seem to happen very often. Countries have to be very aggressive in marketing beef, and that means being aggressive also with funds to promote beef worldwide.
At the Livestock Congress, one of the best speakers was Glen Hodgson, senior vice-president and chief economist of The Conference Board of Canada. Now, we were in Canada, and it was a Canadian conference. On the topic of beef, there are issues between us, as we all know. But they were very courteous to the four of us from the U.S. and even introduced us at the start of the conference. I was wondering then if they were identifying us for a bull’s eye, but the truth is, all were very polite and respectful. We were among fellow ranchers and feeders.
The demand for beef is growing worldwide, and the supply is going down. That is the downside. The upside is many countries want different cuts of beef and organs that we don’t eat. Whether it is short ribs, tongue, liver or whatever, someone around the world wants it, and in growing economies, they now can afford those products.
It was interesting to hear about how other country’s economies are viewed. China’s economy has grown by seven percent, and everybody wants to sell beef to them. South Korea is growing, and the U.S. has won the beef market there. Canada knows they goofed up in South Korea. Russia has no growth and lots of corruption, but there is a market for beef and beef products there. India and Mexico are growing around three to four percent. They say Mexico is too dependent on the U.S. Japan is really hurting. Energy and electricity are very expensive after they shut down 51 of their 52 nuclear power plants.
The U.S. economy should grow 2.5 percent this year and three percent next year. The cold first six months of this year is what hurt us. Hodgson figured that the U.S. Congress and President fighting amongst themselves cost our gross domestic product one percent last year. That’s something we can all be proud of, isn’t it? The U.S. credit rating is down, so it costs us more to borrow money. The good news is, by next year, the U.S. will produce 11 million barrels of oil a day. That hurts Canadian oil, and they will have to find other markets. Canada is somewhat like us. They produce lots of oil but don’t have the delivery systems to move the product, so they put it on trains, too.
An interesting note is that Canada is targeting the Hispanic beef markets in the U.S. It has been proved that Hispanics eat three times as much meat as Canadians, so California is the biggest importer of Canadian beef and their value-added products. It is a tough world out there, isn’t it?