Will Verboven

European Consumers Need Our Beef

One of the most aggravating export markets for North American beef has to be Europe. A recent trip to Europe once again saw very high prices for beef in retail stores. A large-chain grocery store in France featured hamburger at $7 to $14 a pound, with roast as high as $40 a pound. This was for the local product – imports were not to be seen.

Granted, production and processing costs for beef are high in Europe. Feedlots are virtually non-existent and a 1,500 head per day facility is considered a “large” cattle processing plant. Economies of scale and feeding efficiencies just don’t exist in European beef production.

Some upscale retail outlets feature a picture of the animal and the farmer who raised it at the meat counter. I fail to comprehend how a picture of the live animal makes the beef any better – perhaps it takes away the consumer’s attention from the lousy meat cutting practices of French butchers.

In my view, sky high beef prices in Europe serve only to reduce consumer beef demand. In comparison, pork is very cheap because it is imported from Denmark and the Netherlands – two world-class, efficient pork producers. The French can’t restrict those imports because they are part of the European Union (EU) trading block. As expected, pork consumption exceeds beef consumption by a considerable margin in many European countries.

Interestingly chicken prices are dependent on the yellowness of the skin – the more yellow, the higher the price. I expect crafty French growers have selected chicken breeds for skin color and then feed them corn and beta-carotene supplements. Once the skin is off and thick French cuisine sauces are applied to chicken dishes, I expect skin color becomes a moot point. Ditto for eggs – French consumers overwhelmingly buy brown eggs. But I digress.

It’s clear from a pricing perspective that beef from either the U.S. or Canada would compete very easily with the European beef product. In fact, it would probably take over the market and compete well with European pork. But that is of course the core of the problem – it would devastate European beef production, much of it concentrated on small farms in France and Ireland.

The EU protects itself from that happening by enforcing high tariffs and quotas on beef imports from North America. But as most beef producers know, the EU has an even better protectionist tool – the completely bogus hormones in beef issue. I should say there are some beef exports from Canada into the EU, but it has to go through a hormone-free certification process, which by itself seems dubious considering hormone differentiation would be difficult, particularly with natural hormones.

European consumers do have a misguided fixation with hormones in beef, which are exploited by environmental groups and duplicitous governments. However, marketers are well aware that consumer principles and attitudes can be abruptly changed if the price is right – which is why I believe North American beef could make significant inroads into the European market.

Having said that, beef imports remain a highly political and powerful issue in Europe and can even scuttle WTO trade negotiations. In a statement after the recent WTO trade talks in Geneva, U.S. Secretary of Agriculture Johanns noted that it was the bullheaded EU position on beef tariffs and quotas and the absurd EU negotiating offers that helped suspend the talks. It seems the power of beef knows no boundaries – the only loser being the European consumer.

Yet some beef imports are seen in Europe, but they are not from North America. It is not uncommon to see imported beef from Argentina and Brazil advertised in restaurants across Europe. From my observation, that imported beef is sold at a premium simply because of the origin. Nowhere did it say that this beef was hormone-free, grass-fed, free range or some other dubious marketing claim. But then at that price range, it didn’t compete with the domestic product either.

The Europeans do seem to practice a double standard between beef imports from North America and Argentina and Brazil. It is not unusual to have outbreaks of Foot and Mouth Disease (FMD) in parts of either of those countries, yet EU countries are slow to restrict imports, claiming the problem is localized. Besides, they claim to have traditional trading practices with both those countries.

You can well imagine the draconian measures the EU would take against Canada and the U.S. if FMD broke out on this continent – it would be universal and last for years. BSE is a sticky situation for the EU, particularly after it spread to the continent from the UK. However, I suspect had beef exports from North America been extensive they would have moved quickly against imports. But then beef is the most political food product in the world. We will have to live with that for a long time.