Editor’s Note: This is part one of a three-part series by Alberta rancher and consultant Sean McGrath with his vision for the Canadian beef industry.
A vision statement can be one of the most powerful tools available to a company. It sets the big-picture goal for a business and provides a framework for communication. A well-crafted vision can provide the fuel to empower those in the business to assess their own performance and apply their creativity towards a common goal. On a personal note, coming up with the right vision statement for our ranching operation has probably been the biggest transformational change we have made in the last 20 years, and maybe in the last 112.
I think this can also be true of visioning for an entire industry. We need to step back and figure out where we want to be in 20 years or we can get buried tilting with the windmills of today. The most important aspect of a vision is that it is aspirational (geared toward success). Once the vision is clear, solving the problems and charting the path forward become the challenge. I am far from capable of visioning the entire beef industry, but I have put together a few thoughts that I would like to leave open for discussion. Rather obviously, each topic could be a long discussion in its own right, so consider this a brief summary as food for thought.
Over the last 15 or so years, our cow numbers have dropped. The July 1, 2018 Canfax cattle inventory showed the Canadian beef cow herd at 3,726,000 cows and 670,000 breeding heifers. Part of the vision would be to grow the Canadian beef cow herd to at least 7,000,000 mother cows. This can be done, and this critical mass of cows would enable the Canadian industry to access new markets, increase processing capacity, explore niche markets and drive economies of scale to encourage new investment in technology. For example, drug companies require a certain population of animals in order to recoup costs of development of new products. I hope some of my logic and how to is outlined in the next few steps.
I learned recently that the forage industry is the third-largest crop in Canada behind wheat and canola. This could be somewhat disheartening when you consider that we are probably only humming along at 50 per cent. On the other hand, it also means we could double production easily by employing some basic management such as managed grazing, better forage mixes or pasture renovations. As well, if we open our minds a bit, we can see forage everywhere (wheat straw anyone?) and cows have the potential to start those nutrients cycling through the system. If you look at the advances our canola-and grain-farming neighbours have made in the last decade, there is absolutely no reason we should not be demanding that kind of performance from ourselves as forage managers. Better yet, I believe we are the largely undiscovered link in modern crop production to really kickstart the soil-health complex.
Genetics and production
Part of this relies on the R&D/marketing vision discussed later, but the goal is to be a world leader in science-based genetic selection and management targeted to specific management systems, environments and markets. Canada already punches well above its weight in the field of genomics, but we lag behind in critical areas like assessing carcass trait genetics and planned mating programs. A lot of the infrastructure is present, but the vision would be to have industry and seedstock data pooled into a structure that allows for selection targeted to match environmental conditions and end market specifications.
Thanks to some help from Kevin Grier (he has a good newsletter/market report if you don’t already subscribe), a rough estimate of federally inspected capacity in Canada is 12,500 per day. If we kill every day of the year (we don’t) that gives a total federal capacity of 4.56 million head. Add the provincial slaughter capacity of 2,500 per week and we might add another 130,000 per year.
This is nowhere near enough capacity to kill seven million head of beef cattle, so there will need to be a significant investment in processing capacity. This would be a good thing as investment in new technology can improve efficiency, food safety, traceability and ability to market into specific niches. Additionally, interprovincial trade in beef, and harmonization of regulations could allow for expansion of local niche processors as well.
Just based on a straight mathematical calculation we would need to add an additional 50 per cent to our processing capacity, or the equivalent of another Cargill and a half. Ideally these might be suited to smaller scale and more numerous plants, however there are definite economies of scale in the packing business. I think there would have to be a combination of small/moderate scale plants as well as upgrades and expansions to existing plants. The key is to foster an environment that promotes smart investment in facilities.
A good vision would be that 95 per cent-plus of all beef operations are marketing and participating on a standards and source verification-based system. An example that many of us would be familiar with would be Verified Beef Production and the VBP+ brand. Further, 85 per cent-plus of the beef marketed should be process verified. In my vision of the industry there are several types/categories in the beef space. This includes conventional grain-finished, but also grass-finished, organic and other market-specific niches that may not even have been considered yet. I would like all primary producers to receive feedback on their cattle specific to their end market. This would allow for increased efficiency in meeting these niche or product specific markets. In this vision of the industry, live calves would be worth a specific amount and premiums would be allocated back on the cattle from end use profits. There are different ways to structure and/or achieve this type of goal, but it is one that I believe should be on our list.
A simple way to state the goal here would be that every producer would be able to state what market their cattle are targeted towards and how they meet that target.
R&D and beef marketing
I think we need at least a $10 investment per cow, with a case easily made to garner matching funding. We know the funding model is a declining contribution from government over time, but let’s realistically target a 50:50 contribution. With seven million beef cows that gives us a $70 million annual pot that would be matched up to $140 million. This is a lot of money, but if we are going to be serious about driving things forward, we need to think big. To be honest, I am not sure this is even a high enough number. I would argue that half of this should go for marketing and half for research. Potentially with provincial investments/universities/other industry funds the R & D budget could be boosted to $105 million and I think that should be a goal. Some help from the great folks at the Beef Cattle Research Council shows a conservative estimate of the current R&D budget in Canada of roughly $21.2 million per year. Again, we punch well above our weight in this area, but if we want to be serious we need to grow this budget dramatically.
A good target for research is earmarking at least 12.5 per cent of these funds for “pure research” and the remainder on applied/practical research. “Pure research” would be those things that may not have a direct practical application, but answer many of the why/how questions about parts of the production system. For example, examining the action of a specific gene may not directly result in an applied technology at the producer level, but may lead to advancements in beef production science.
These are exploratory types of questions that we need to continue to ask. I think that we need to have at least four world-class meat scientists in Canada, a serious effort on forage production, investment in system research, ecology work and a big component of genetic work both quantitative and qualitative. Don’t worry economists, we also need a good infrastructure around systems, market and economic analysis.
I am not sure what percentage needs to be used for extension/education and technology adoption, but I think 12.5 per cent is a good starting point, that could be leveraged into industry service/product suppliers. As an industry I believe we need to target at least a $50 per cow per year reduction in the cost of production at the cow-calf level.
Recent work shows the cost of weaning a calf at nearly $1,000 per cow per year. A $50 reduction equates to 2.5 per cent of the cost of production. Basically, we require that dramatic impact just to keep pace with inflation at the cow-calf level. That requires research, extension and a willingness to receive and deploy the research at farm level. We need this type of efficiency gain on the feeding side as well with new techniques, technologies, varieties and the list goes on.
On the marketing side, I believe that part of this investment is being serious about trade. If anyone has had a chance to visit the Beef Centre of Excellence in Calgary, it is a fabulous investment. I think that this is a good model to have in the country of every major trading partner. Marketing and trade investments are often “soft” and difficult to quantify, but part of an aggressive trade strategy is being aggressive marketers. This also ties back to having enough of a cow-processing capacity to meet these markets if/when they are secured.
As well, these funds would help to secure domestic marketing and advertising to ensure that the Canadian public gets a clear message about the power of cows to protect grasslands and convert unusable forages and acreage into high-quality protein.
(Editor’s Note: Stay tuned for Part 2)