Kill and Chill: Restructuring Canada’s Beef Commodity Chain

Published by EH.NET (May 2002)

Ian MacLachlan, Kill and Chill: Restructuring Canada’s Beef Commodity

Chain. Toronto: University of Toronto Press, 2002. xxxii + 378 pp. $70

(cloth), ISBN: 0-8020-0847-x; $27.95 (paperback), ISBN: 0-8020-7832-x.

Reviewed for EH.NET by Daniel V. Gordon, Department of Economics, University of

Calgary.

Every thing you wanted to know about the Canadian “Beef Commodity Chain” and

more. Ian MacLachlan has written an in-depth and detailed account of the

history and development of the production, distribution, processing and

marketing of beef in Canada from the beginning to the present period. The

contribution of the book is both in the careful attention shown to detail and

in the breadth of the exposition in covering all aspects of the “Beef Commodity

Chain.” Interspersed throughout the book are brief comments by farmers,

processors, butchers and others that provide a personal view of the problems

and issues involved in the Canadian cattle and beef sectors.

The book is organized into three sections; Producing Cattle, Processing Beef,

and Marketing Beef. In the first section, the book describes the cow-calf

industry. This industry, located primarily in western Canada, is the

fundamental unit in beef production. The author describes in detail the

production choices available and the decisions required of the cow-calf

producer. From this narrative it is clear that the farmer in order to survive

and profit must understand well both the biology that defines the production

process and the markets that dictate farm economics.

The basic production process on the cow-calf farm has changed little over time.

Cows are bred, calves are produced and animals are sold off the farm. But

within the production process much has changed. The author makes clear that

change and the ability to adapt to change are defining characteristics of the

cow-calf sector. The problems as presented show that the producer must respond

not only to standard production shocks and health concerns but also price

shocks that originate domestically and internationally. The major innovation in

the cow-calf industry is the finishing of cattle for slaughter. At one time

beef animals were kept on the farm and grass fed for about four years before

slaughter. Now, animals less than a year old are placed in a confined feedlot

and finished on grain. The total time from birth to slaughter is about sixteen

months. The author argues that the feedlot finishing system allowed for large

efficiency gains in the cattle production sector.

The second section of the book describes the development of the Canadian

beef-processing sector. This is a story about industrialization. The early

slaughterhouses were labor intensive and low output. Many factors, particularly

lack of refrigeration, limited development of this sector in the early years.

Over time three major slaughterhouses emerged — Harris Abattoir Company, P.

Burns and Company and Swift Canadian. These firms sought ways to improve

efficiency in the slaughter and preparation of beef. The development of

refrigeration allowed for chilled beef to be transported efficiently to distant

retail markets with minimum spoilage. But the big gains in efficiency came from

the development of kill floor conveyors, which the author notes “became the

inspiration for Henry Ford’s automobile assembly line.” The conveyor system

allowed the animal once stunned in the “knocker box” to be hoisted up by a hind

leg and slowly moved around the floor by mechanical means at just the correct

height for workers to remove the hide and disassemble the carcass. This

eliminated the stooping and lifting of large heavy carcasses by workers. With

the hide removed, beheaded and eviscerated the carcass is moved to

refrigeration and chilled. The book examines the many changes that have taken

place on the kill floor including the more humane treatment of animals, changes

to the kill process, improvements to the work environment and many other items.

The book takes the reader through many interesting developments and changes to

the business side of the beef-processing sector. In the first half of the

1990s, there was much activity in terms of buyouts, mergers and failures in

this industry but the structure of the market remained heavily concentrated in

the hands of a few key players — The Big Three. The author describes an

interesting buyout where the Eastern-based Harris Company was saved from

failure by the Western-based Burns Company. The author argues that the reason

for the buyout was solely to block American ownership of a major Canadian

beef-processing firm. But even more interesting, the Burns Company sold its

interest in Harris and the resulting company, Canada Packers, became a major

player and competitor in the eastern Canadian markets.

The book talks at length about price fixing and monopoly power that may have

existed in the beef processing industry and government efforts to scrutinize

and identify abuse of this power. MacLachlan points out that although the

margin on any one carcass has been very low — one or two percent — high

throughput of cattle has resulted in substantial aggregate profits for the Big

Three. On the other hand, the media and government have presented the cow-calf

producer as somehow being shortchanged in their dealings with the powerful

processors. Although a number of commissions and court cases have been carried

out, little or nothing has been done to penalize the firms or reduce market

power.

The technological change and growth in the beef-processing sector demanded a

large work force. The author reports at length efforts by organized labor to

represent workers and the resulting confrontation with owners. The industry saw

many strikes and plant closures as the confrontation process slowly worked

itself towards a negotiated settlement. The unions can claim some success in

that wage differentials on a regional basis were eliminated and master

agreements across the industry were implemented. However, technological change

worked against the unions by reducing the need for semiskilled workers and

increasing the demand for unskilled workers on the kill floor. In addition, and

perhaps more importantly, the unions were never completely successful in

organizing the small independent packers and eventually union authority in the

industry was eroded.

The final section of the book looks at beef marketing. In this section, the

author describes the grading of beef and the development of boxed beef for

shipment to food retailers. Boxed beef allows for prepackaged portions of meat

to be centrally manufactured with resulting scale and efficiency gains and then

shipped for retail sale. This practice eliminated the need to transport and

lift large heavy carcasses and reduced the demand for skilled meat cutters at

the retail level. The real story at the retail level is the decline in meat

consumption over the last thirty years. The author notes that in the 1970s,

Canadians were consuming about 50 kg of beef per year and this declined

drastically to just over 30 kg per year by the 1990s. Apparently, Canadians

switched to a diet that includes greater quantities of poultry products. The

author notes that meat consumption has stabilized in recent years and the

health concerns raised by mad cow disease have not unduly impacted meat

consumption.

This is a well-written book from both the historical and economic points of

view and well worth the read. If it is missing anything, the author offers no

conjectures or speculations as to the future path of the industry. The reader

is left to wonder about these issues.