Oct. 18 (Bloomberg) -- Ranchers in Canada will raise more cattle without hormones under a new trade agreement because beef exports to the European Union may sell for three times the price of domestic meat, said Rob Meijer, the president of industry group Canada Beef Inc.
The Comprehensive Economic and Trade Agreement with the 28-nation trading bloc, announced today, will allow as much as 64,940 metric tons of Canadian beef and veal valued at C$600 million ($582.8 million) to be exported to the EU, which bans the use of growth hormones in meat, Canada Beef said in a statement.
Raising livestock without hormones, which can speed growth and requires less feed, costs C$25 to C$50 more per head, Meijer said. The expense will be profitable because the premium for EU sales may exceed those in China and Japan, where the meat fetches about twice the price in Canada, he said.
“The premium will be there to justify this transition,” Meijer said in a telephone interview from Calgary. “Over the next year and a half, we will start ramping up the supply chain.”
Early on, Canada probably will only be able to produce about 25 percent of the maximum allowed under the trade agreement, he said. There are no statistics on how much of the nation’s meat output is hormone free.
The trade agreement will provide a boost for Canadian beef and pork producers that have lost sales in the U.S. because of new rules that require labels to show a country of origin, Alberta Agriculture Minister Verlyn Olson said in a telephone interview from Edmonton.
Alberta accounts for 40 percent of Canada’s cattle herd and is the second-largest grower of canola and wheat, government data show. Canola exporters may boost sales by C$90 million a year because of tariffs eliminated under the trade agreement, the Canada Canola Council said in a statement. EU tariffs on wheat will be reduced to zero over a seven-year period.
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