The True Value of Beef to Ontario's Economy

Ontario's beef industry is characterized by diverse primary production systems, a variety of end product specifications, and a host of wholesale and retail market segments. No wonder industry wide consensus on most topics is difficult to achieve! But one thing that all participants can agree on is that our beef industry is very important to the provincial economy. But how can we best measure that value?

Traditionally, the economic value of agricultural sectors has been equated to their total farm gate sales. For beef in Ontario, that figure has averaged an impressive one billion dollars annually for calf and cattle and sales, for a number of years. However, we know that the beef industry extends well beyond the farm gate - to slaughter plants, further processing, distribution and retailing. When all of these parts of the supply chain are counted in, the total value of sales increases dramatically, to about 13 billion dollars per year! (Table 1).

And the number of jobs which are directly related to beef production, processing and retailing are equally impressive

Primary production 11,000
Processing 8,000
Retail 42,000
Total 61,000 jobs

Wow - over 60,000 people are employed in raising beef animals, carcass fabrication and further processing, and getting the product into the hands of the end user! (Table 3). And these jobs not only represent economic value, but also social value. Farmers typically rate their job satisfaction as very high - they love what they do. Beef farm families are strong participants in the rural community infrastructure, and create jobs in local towns in the service and supply sectors. Processing and retailing jobs are concentrated in cities, amplifying the impact of beef farming on employment well beyond the farm. The transportation industry also benefits from domestic beef production, as cattle are typically trucked several times between pasture and packer, and the distribution of products to wholesalers, retail chains and food service locations keeps drivers on the go.

However, simply using revenue or jobs by themselves is not the best way to evaluate an industry's overall economic contribution. According to OMAFRA Senior Economist Steve Duff, there is a more accurate way to determine the true contribution an industry makes to our fiscal well-being - Gross Domestic Product (GDP). Gross Domestic Product is a superior method, in part because it is based on the sum of the economic value added at each step in the supply chain. This total value added is made up of direct, indirect and induced effects. Direct effects include the increase in value of an animal being fed home grown feeds - what our beef farm operations excel at - and is the base of the value chain. The industry also purchases materials and services from supplier firms, who in turn make further purchases from their suppliers. These contribute to the indirect effects on GDP. As well, people employed in the industry and in firms supplying related services earn incomes, part of which they spend on consuming goods and services - this contributes to the induced effect on GDP.

Beyond the Dollars
The non-economic benefits of beef farming also have to be recognized. Beef farms grow large amounts of soil building forages, which replenish organic matter in crop rotations and stabilize fragile erodible soil in permanent stands. Beef pasture lands provide nesting habitat for grassland bird species and other ecosystem services. And in the case of shallow soils or steep slopes, permanent pasture creates the means to produce a high quality protein source for humans from land which is not capable of human edible crop production. Against the back drop of steadily increasing world population, shrinking global supply of arable land and environmental degradation, these are attributes which should not be taken lightly.

The annual contribution of beef to Ontario's GDP averages $2.70 billion (Table 2), a significant part of the powerful agricultural economic engine which is an important driver of the province's economy. Maintaining this amount is key to the province's well-being. If production is lost from the province (for example, replacing homegrown feeder cattle with more western imports, or fed cattle slaughter with boxed beef from the US), our economy undergoes a significant setback. Jobs are lost and GDP goes down.

But the converse is also true - increasing the provincial production of calves, and thus increasing the total number of cattle on feed and the total number of head flowing through our packing plants with 'born in Ontario' animals should pay big dividends. It would allow Ontario to fully accrue the benefits of a re-tooled and vibrant beef sector by capturing all of the new added value at the cow-calf level and most of the added value at the feedlot level; since currently idle feedlot capacity would be brought back into production, without displacing current feedlot activity. As well, there is underutilized capacity in Ontario's processing sector, and a strong demand on these plants to produce more product. So if the increased feedlot output was absorbed by processing plants and was added to their current output, the province would benefit from the high marginal value added at that level as well.

But It all starts with the cow herd - those ladies are the foundation of any sustainable beef industry!

Table 1. Ontario Agriculture Total Sales Revenue from Primary, Processing and Retail, by Commodity, Adjusted for Product Imports
. ($Cdn Billion)*

  2007 2008 2009 2010 2011 5 Yr Avg
Grains & Oilseed 25.83 30.85 31.39 34.54 36.27
31.77
Potato 0.90 1.12 1.29 1.29 1.15
1.15
Greenhouse Vegetables 6.23 6.53 7.82 8.32 8.28
7.44
Field Vegetables 5.99 5.83 6.34 6.37 6.38
6.18
Fruits 2.99 2.87 2.79 2.59 2.60
2.77
Nursery & Floriculture 8.32 7.71 8.98 8.53 8.23
8.36
Maple 0.13 0.16 0.28 0.21 0.33
0.22
Tobacco 0.66 0.50 0.55 0.63 0.54
0.58
Cattle 12.46 13.62 12.36 13.10 13.21
12.95
Hogs 11.27 10.64 9.84 10.40 12.06
10.84
Sheep 0.61 0.62 0.71 0.76 0.77
0.69
Dairy 22.70 22.28 23.61 23.57 23.88
23.21
Poultry & Eggs 12.59 13.66 14.57 13.99 14.71
13.90
Honey 0.11 0.10 0.12 0.19 0.22
0.15
Other Domestic 4.64 4.74 4.84 5.42 4.90
4.91
Total Domestic 115.42 121.23 125.50 129.92 133.54
125.12
Other Sourcing 17.27 18.66 19.41 19.48 21.06
19.18
Beverages 4.05 3.96 4.05 4.02 3.96
4.01
Total 136.73 143.85 148.96 153.41 158.56
148.30

*Adapted from James, Staciwa and Duff. 2013. A Statistic for Ontario Agri-Food Contribution by Primary Sector.
OMAFRA.

Table 2. Ontario Gross Domestic Product from Primary, Processing and Retail Sectors by Agricultural Commodity, Adjusted for Product Imports ($Cdn Billion)*

  2007 2008 2009 2010 2011 2012 6 Yr. Avg.
Grains & Oilseed 6.72 7.68 7.53 8.09 8.14 8.68
7.81
Potato 0.23 0.28 0.31 0.3 0.25 0.22
0.27
Greenhouse Vegetables 1.67 1.71 1.9 1.96 1.88 1.76
1.81
Field Vegetables 1.56 1.48 1.51 1.46 1.38 1.35
1.46
Fruits 0.78 0.73 0.67 0.59 0.56 0.46
0.63
Nursery & Floriculture 1.99 1.8 1.94 1.81 1.72 1.66
1.82
Maple 0.03 0.04 0.06 0.04 0.07 0.03
0.05
Tobacco 0.38 0.28 0.29 0.32 0.32 0.33
0.32
Cattle 2.81 3.00 2.55 2.69 2.68 2.49
2.70
Hogs 2.51 2.31 2.00 2.09 2.39 2.29
2.27
Sheep 0.14 0.14 0.15 0.15 0.15 0.13
0.14
Dairy 4.55 4.4 4.45 4.33 4.29 4.17
4.37
Poultry & Eggs 2.76 2.91 2.92 2.76 2.84 2.9
2.85
Honey 0.02 0.02 0.02 0.03 0.04 0.04
0.03
Other Domestic 1.04 1.01 1.01 1.13 0.94 1.07
1.03
Total Domestic 27.19 27.77 27.31 27.74 27.65 27.57
27.54
Other Sourcing 3.74 3.96 3.73 3.69 3.91 4.08
3.85
Beverages 2.34 2.21 2.14 2.07 1.98 2.13
2.15
Total 33.27 33.94 33.18 33.51 33.54 33.78
33.54

*Adapted from James, Staciwa and Duff. 2013. A Statistic for Ontario Agri-Food Contribution by Primary Sector.
OMAFRA.

Table 3. Ontario Agriculture, Total Employment from Primary, Processing and Retail by Commodity, Adjusted for Product Imports (# of jobs)*

  2007 2008 2009 2010 2011 2012 6 Yr. Avg.
Grains & Oilseed
115,974
133,727
132,515
141,444
145,035
164,257
138,825
Potato
4,713
5,804
6,176
5,990
5,065
4,880
5,438
Greenhouse Vegetables
37,621
36,329
41,113
43,209
41,390
39,728
39,898
Field Vegetables
31,699
30,221
30,259
29,475
28,122
29,666
29,907
Fruits
16,499
17,655
16,131
13,284
13,974
10,605
14,691
Nursery & Floriculture
52,944
44,799
49,718
45,885
42,302
42,371
46,337
Maple
1,033
1,318
2,256
1,480
2,726
1,002
1,636
Tobacco
4,570
3,759
4,209
4,664
6,092
4,927
4,704
Cattle
62,650
66,862
58,784
59,869
61,207
56,908
61,047
Hogs
52,203
49,107
43,241
43,828
49,693
47,011
47,514
Sheep
4,645
4,213
4,356
4,752
4,364
4,081
4,402
Dairy
110,311
104,027
109,793
106,289
108,844
107,231
107,749
Poultry & Eggs
62,588
65,936
65,466
60,968
63,351
64,984
63,882
Honey
1,496
1,353
1,755
2,240
2,285
2,630
1,960
Other Domestic
38,186
42,192
41,149
39,489
35,621
41,926
39,761
Total Domestic
597,135
607,303
606,921
602,867
610,070
622,207
607,751
Other Sourcing
94,010
101,440
98,389
93,020
96,900
105,326
98,181
Beverages
10,151
10,204
10,587
10,670
10,419
12,198
10,705
Total
701,295
718,948
715,897
706,556
717,389
739,731
716,636

*Adapted from James, Staciwa and Duff. 2013. A Statistic for Ontario Agri-Food Contribution by Primary Sector.
OMAFRA

Table 4. Ontario Agriculture, Comparative Measures of Economic Output by Commodity for 2011, Adjusted for Imports*

 
Revenue ($Cdn billion)
GDP ($Cdn billion)
Employment
 
Primary
Processing
Retail
Primary
Processing
Retail
Primary
Processing
Retail
Grains & Oilseed
2.79
9.14
24.34
1.28
2.9
3.96
3,333
28,130
113,573
Potato
0.10
0.21
0.84
0.04
0.07
0.14
341
773
3,950
Greenhouse Vegetables
0.70
1.47
6.11
0.39
0.49
1
7,228
5,606
28,556
Field Vegetables
0.54
1.15
4.69
0.25
0.37
0.76
1,898
4,303
21,920
Fruits
0.22
0.48
1.9
0.1
0.15
0.31
3,351
1,743
8,880
Nursery & Floriculture
0.81
0.4
7.03
0.45
0.12
1.15
8,315
1,112
32,875
Maple
0.03
0.01
0.28
0.01
0
0.05
1,367
45
1,315
Tobacco
0.11
0.43
0.05
0.27
-
4,686
1,406
-
Cattle
1.01
3.26
8.94
0.25
0.9
1.54
11,066
7,999
42,142
Hogs
0.94
2.95
8.17
0.23
0.83
1.33
4,242
7,408
38,043
Sheep
0.06
0.19
0.52
0.01
0.05
0.08
1,460
472
2,432
Dairy
1.90
5.43
16.55
0.47
1.13
2.7
20,760
10,788
77,296
Poultry & Eggs
1.20
3.02
10.48
0.3
0.84
1.71
6,909
7,535
48,908
Honey
0.02
0.01
0.19
0.01
0
0.03
1,349
31
905
Other Domestic
0.48
0.23
4.19
0.22
0.07
0.65
15,794
662
19,165
Other Sourcing
2.77
18.3
-
0.82
3.1
-
5,582
91,318
Beverages
3.96
-
1.98
-
-
10,419
-
Total
10.90
35.11
112.55
4.06
10.99
18.49
92,100
94,013
531,276

*Adapted from James, Staciwa and Duff. 2013. A Statistic for Ontario Agri-Food Contribution by Primary Sector. OMAFRA

References
http://www.omafra.gov.on.ca/english/stats/welcome.html


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