AMEG PRESENTATION

Mexico City, April 28, 2010

Trading Partnerships

and the

Canadian Cattle & Beef Industry

Ted Haney

President

Canada Beef Export Federation

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▀ Canada Beef Export Federation

Established in 1989 to expand and diversify export

sales of Canadian beef in the global marketplace

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CBEF Membership represents approx. 95%

of Canada’s cattle and beef industry

Head Office

Calgary, Alberta Canada

Head Office

Calgary, Alberta Canada

Mexico Office

Monterey, Mexico

Mexico Office

Monterey, Mexico

Hong Kong Office

Hong Kong Office

Shanghai OfficePRC

Shanghai OfficePRC

Japan OfficeTokyo, Japan

Japan OfficeTokyo, Japan

Korea OfficeSeoul, Korea

Korea OfficeSeoul, Korea

Taiwan OfficeTaipei, Taiwan

Taiwan OfficeTaipei, Taiwan

CBEF Fast Facts• Established in 1989• 7 offices world wide• 23 Export Members• 11 Affiliate Members• 11 Associate Members• 7 Government Members

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Market development programs – generate recognition and drive demand for Canadian beef

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Foster exporter-client relationships …

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Working in pursuit of market access …

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Current 2009-2010 fiscal year:

Federation delivered over 500 individual export development projects

Canadian beef and veal exporters have attributed 41% of their total outside USA to Federation programs and services.

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Canadian Beef & Veal Exports 1990 – 2002 - tonnes

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

US Asia & Mexico Other

Market share: 1990 20020.7% 6.9%

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The Canadian Beef Advantage

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Canadian beef industry- more than 80,000 farms and ranches raise beef cattle- 2008 income from cattle production - $6.6 billion

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Canadian Beef Herd Genetics

▀ Canada has 100% Bos Taurus Genetics

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Canadian Beef Herd Genetics

▀Bos Indicus influence in southern USA

▀Studies completed in Australia and USA found meat from Bos Indicus less tender than from Bos Taurus

▀Canada only has Bos Taurus

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Specializing in grain finishing

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Dynamic Processing Sector

•Focus on international competitiveness

•Positioned to serve our clients’ needs – commodity boxed beef to valued-added, further processed products

•Processing capacity of 4.4 million head per year

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▀Confidence of international clients in Canadian beef is facilitating our steady return to the marketplace

▀Canada’s science-based food safety systems and measures considered among the best in the world

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Canadian Food Inspection Agency (CFIA)

▀ Empowered by Government of Canada under federal law to safeguard Canada’s food supply and animal health

▀ Monitors all establishments exporting beef and beef product

▀ Authorized for administration and enforcement of Canada’s Meat Inspection Act under federal law

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Canada’s Food Safety Systems

•Govern every aspect of production from importation of livestock genetics &

safety systems at the farm – to slaughter fabrication, packing and shipping

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Hazard Analysis and Critical Control Point (HACCP) system

▀ Each establishment –and each process of that individual establishment – is under supervision of CFIA

▀ CFIA employs over 7,000 highly-trained professionals, including veterinarians, research scientists and inspectors, who operated from 600 field offices across Canada.

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▀ Canada’s food safety system includes disease control and prevention systems, which have been developed over many years in accordance with recommendations of the OIE.

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The Canadian Cattle Identification System

Plays important role in containment and eradicationof animal diseases through trace-back capabilities

Enforced by federal law, requires all cattle permanently leaving herd of origin be tagged with RFID tag

Canada first country in North America to have this system

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The Canadian Cattle Identification System

• 2005 – database enhanced to enable registration and documentation of cattle birth dates

• Provides effective and internationally-recognized Age-Verification Program

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Canada’s Beef Grading System

▀▀ Regulated by Federal lawRegulated by Federal law

▀▀ Canadian Beef Grading Agency Canadian Beef Grading Agency accredited by CFIA to assign grades accredited by CFIA to assign grades in accordance with national in accordance with national standardsstandards

▀▀ Canada A, Canada AA, Canada Canada A, Canada AA, Canada AAA and Prime grades reserved for AAA and Prime grades reserved for high quality Canadian beefhigh quality Canadian beef

▀▀ Each quality standard must be Each quality standard must be satisfiedsatisfied

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▀ 2006 – Federation commissioned independent Beef Quality Perceptions Survey (BQPS) in key markets

▀ Determine importance of individual beef quality attributes to retail and food service leaders

▀ 734 participants in Japan, Korea, Taiwan, Hong Kong and Macao and Mexico were interviewed

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94% agreed:

Grading standards designed to consistently deliver beef with white/amber fat, bright red meat color and firm muscle texture would provide their company with

a quality advantage in the marketplace

THESE ARE THE ATTRIBUTES OF HIGH

QUALITY CANADIAN BEEF

Source: CBEF BQPA, BIC BQPASource: CBEF BQPA, BIC BQPA

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2009 Domestic Production & Consumption

Canada’s beef and dairy cow herd: 5.6 million head

Beef production: estimated 1.5 million tonnes

Domestic market

Requires production from about 3 million cows –

approx. 1 million tonnes

Canadian market not large enough to absorb beef production from our 6-million-head national cow herd

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Deriving full value from international markets

Our success in creating commercially viable access not only to Asia and Mexico but to Europe, Russia, Middle East and South America will determine eventual size of our industry

difference between an industry maintaining 6 million cows – and one maintaining 3 million cows

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Beef Export Premiums

▀ Commercially-viable access to major markets in Asia and Mexico has the ability to add $85 per head in value for beef derived from Under-30-Month (U30M) cattle over what can be generated in Canada.

▀ Further, these markets have the ability to add $100 per head in value over what can be generated for these same products in the US.

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Increases in Fed Cattle Prices

▀Expanded market access has direct impact on fed cattle prices

▀Recent CANFAX study indicates:� export market openings outside of US since

2004 have increased Canadian fed cattle prices by $270 per head

�increases in markets yet to open = $130 per head

▀Total value received & coming of expanded market access outside of US:

$400 PER HEAD

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2015 Export Goal Forecasts

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2000 2002 2004 2006 2008 2010

Markets Outside US Total Exports

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Lowered expectations for 2015:

Our industry going to process 300,000 fewer tonnes of beef for export

Meaning 750,000 fewer head of cattle will be processed in Canada

These extra cattle will either be exported to US; or

Canada’s cow herd drops by 825,000 head

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Canada is one of the top beef producing &

exporting nations

12.2%

1.2%2.4%

3.1%

3.1%

4.0%

5.2%

5.8%

11.7%

13.7%

15.0%

22.6%

0% 5% 10% 15% 20% 25%

USA

EU 27

Brazil

China

Argentina

India

Australia

Mexico

Russia

Canada

New Zealand

Rest of the World

% of Total Global Production % of Total Global Exports

Top Beef Producing Nations 2008 Top Beef Exporting Nations 2008

Source: GIRA

< Tenth Largest

7%

1%

2%

5%

7%

6%

8%

11%

12%

20%

22%

0% 5% 10% 15% 20% 25%

Brazil

Australia

Canada

USA

India

Argentina

New Zealand

Uruguay

EU 27

Mexico

Rest of the World

< Third Largest

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Canada is the largest grain-fed beef exporter in

the world

876

464

1,762

1,298

526440

940

0

500

1000

1500

2000

2500

Canada

USA

Australia

Brazil

Australia*

New Zealand

Argentina

Grain-Fed Exports Grass-Fed Exports

Top Grain- and Grass-Fed Beef Exporters 2008

Key markets

North America, Japan & South Korea

Key marketsEU, Russia, S.E. Asia, Africa & Middle East

Note: *Assumes 30% of Australian exportsAre fed-beef. Source GIRA

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Markets Open to Canadian Beef

▀Pre-BSE – product exported to over 100 markets

▀Currently – 72 markets effectively open to Canadian beef

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Comprehensive Market Access

16 Markets

• Bahrain• Barbados• Bermuda• Cuba• Colombia• European Union (27) • Jordan• Macau • Mongolia• New Zealand• Panama• Philippines• Russia• St Pierre et Miquelon • Switzerland• USA

• Antigua & Barbuda• Cayman Islands• Dominican Republic• Egypt• El Salvador• Guatemala• Honduras• Lebanon• Macedonia• Mexico

Countries which Accept U30M

Canadian Beef 19 Markets

• Russia• St. Kitts and Nevis• Saudi Arabia• Taiwan• Thailand• Trinidad and Tobago• Tunisia• United Arab Emirates• Vietnam

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Markets that Accept only U21M

▀Japan

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Commercial Risk Markets –

No Formal Protocol 36 markets

• Albania

• Angola• Anguilla

• Armenia

• Aruba• Azerbaijan

• Br India Overseas

Ter.• Br Virgin Islands

• Comoros Islands

• Cote d’Ivore• Dominica

• Dutch Antilles

• French Polynesia• Gabon

• Georgia

• Ghana • Greenland

• Grenada

• Guinea• Guyana

• Iceland

• Iran• Kazakhstan• Kyrgyzstan

• Moldova• Mozambique

• Nigeria

• North Korea

• Senegal

• Surinam

• St. Vincent & the

Grenadines

• Togo

• Turkmenistan

• Turks & Caicos Is.

• US Outlying Is.

• Uzbekistan

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Major Markets Closed to

Canadian Beef

▀South Korea

▀Mainland China

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CANADIAN BEEF & VEAL EXPORTS – Asia & Mexico

1990: 7,000 tonnes $24 million2002: 133,000 tonnes $500 million2009: 84,000 tonnes $322 million

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Asia & Mexico Estimated

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In closing ….