01/20/2012 06:58 EST | Updated 03/21/2012 05:12 EDT

South Korea resuming imports of Canadian beef means $30M by 2015: Ritz

SPRUCE GROVE, Alta. - The end of a ban on Canadian beef exports to South Korea restores almost all markets lost due to the scare over mad cow disease more than eight years ago, but industry leaders say there's still work to do.

"It certainly moves us along the road to closure but we haven't experienced closure yet," said Travis Toews of the Canadian Cattlemen's Association. "There's still a number of key markets where we need expanded access in order to return to pre-2003 market access levels."

The federal government announced Friday that South Korea — the last remaining Asian market still closed to Canadian beef — is reopening its borders to shipments of boneless beef from cattle under 30 months old.

The $30-million-a-year value of that trade will be a small part of overall exports, but Toews said the agreement means that 90 per cent of Canada's market access has been restored.

"That's been critical in the recovery of our industry," he said. "The cattle industry is really beginning to get its economic legs under it."

In 2002, Canada exported 518,000 tonnes of beef worth $2.1 billion. But in 2003, after a handful of cattle with bovine spongiform encephalopathy, or BSE, were found in Alberta, markets slammed shut around the world.

Cattle herds shrank drastically and Canada still hasn't caught up. In 2010, exports were at 422,000 tonnes worth $1.5 billion.

Still, cattle prices for producers have recovered and are now at healthy levels, Toews said.

Brian Nilsson, CEO of XL Foods, warned that Canadian beef still faces tough competition from the United States, which has a free-trade agreement with South Korea that makes American beef cheaper.

"We need to move forward with a free-trade agreement with South Korea," he said. "Without it, the U.S. industry will continue to gain as their tariffs decrease and our tariffs remain the same."

Toews added that Friday's announcement doesn't restore complete market access around the world nor does Canada have full access to some countries such as Mexico and Japan.

Agriculture Minister Gerry Ritz said the South Korean agreement is the latest milestone in restoring the industry.

"Step by step, we're opening, reopening and expanding markets for our beef producers and processors."

Exports to Hong Kong have more than doubled and Russian exports have tripled, Ritz said.

International Trade Minister Ed Fast said the cattle agreement removed a major irritant toward completing a free-trade agreement with South Korea.

"That bodes well as we move forward to explore new opportunities to actually deepen our trading relationship with South Korea," he said.

Fast plans to discuss the agreement with his South Korean counterpart when the two meet next week in Davos, Switzerland.

Nilsson said the importance of Friday's announcement goes beyond its relatively small value. Korean customers buy beef cuts unwanted in other markets, so processors can now get value from cattle parts they couldn't before.

Toews acknowledged that Canadian cattle will face tough competition from the U.S. and other producers such as Australia, which moved aggressively into the South Korean market in Canada's enforced absence. Still, he said, the quality of Canada's beef will win back consumers.

"We're fully confident we can regain our market share."

Both Alberta and Manitoba welcomed the announcement.

Alberta Agriculture Minister Evan Berger pointed out his province alone exported nearly $43 million worth of beef to South Korea before markets closed in 2003. Alberta has 40 per cent of Canada's cattle and calf population.

His Manitoba counterpart, Ron Kostyshyn, said the deal will give producers another option for marketing their beef and help rebuild shrunken herds in the province.

— By Bob Weber in Edmonton