Ministry of Agriculture, Food and Rural Affairs

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