Economic Overview
The Canadian economy started 2025 on stable ground with a steady unemployment rate (6.6%) and inflation within the Bank of Canada’s 1–3% target range (1.9% in January). However, consumer confidence is weakening due to tariff-related uncertainty and inflationary pressure. In response, the Bank of Canada lowered its key interest rate to 2.75% in March—its seventh consecutive cut—to help support spending.
Cattle Supply and Herd Trends
Canada’s national cattle herd has dropped to its lowest level since 1988. According to Canada Beef’s Q1 2025 Domestic Market Report, beef cow inventories were down 1.2%, with beef breeding heifers up only slightly from historically low levels. While market prices are encouraging herd stabilization, long-term challenges such as aging producers, weather risks, and land competition continue to limit growth.
Domestic beef production in 2024 was 2% lower than the year prior, largely due to a 16% drop in non-fed cattle production. Fed production remained steady year-over-year but fell below the five-year average.
Tariff and Trade Impacts
Tariff tensions between Canada and the U.S. intensified in early 2025. While beef remains exempt under the CUSMA agreement, the imposition of a 25% tariff on other Canadian goods caused short-term price volatility. Canada responded with tariffs on C$30 billion worth of U.S. goods, aiming to protect domestic consumers while placing pressure on U.S. producers.
Retail and Consumer Trends
Canadian shoppers are increasingly turning to locally produced goods. Grocery chains have begun highlighting “Product of Canada” items, while U.S. imports subject to tariffs are being flagged.
Retail beef prices in 2024 rose 6% year-over-year and 21% above the five-year average, driven primarily by a 12% increase in ground beef prices. Retail pork remained stable, while chicken prices declined.
Canada Beef’s report highlights that price competitiveness remains a challenge. In 2024, beef was significantly more expensive than pork and chicken, with price ratios at their widest point in September. These narrowed by December, easing some pressure on beef demand.
Wholesale Market Snapshot
In early 2025, domestic beef production is down 12% year-to-date, with both fed and non-fed cattle volumes lower and carcass weights trending lighter. Lean trim prices rebounded early in the year after ending 2024 at levels 23% higher than 2023 and 44% above the five-year average. While U.S. cutout values rose across most categories, demand appears to be shifting slightly toward more affordable cuts.
Food Service Sector Rebound
Restaurant sales totaled $96 billion in 2024, a 25% increase over the previous year. A temporary GST/HST holiday boosted spending, with average transaction sizes rising more than 5%. The restaurant sector now employs over one million Canadians and contributes $120 billion annually to the economy.
Imports and Global Supply
Beef import volumes reached 208,300 tonnes in 2024—up 12% from the year before and the highest since 2013. Non-CUSMA imports saw the sharpest rise (+36%), with volumes exceeding quota limits, signaling continued global demand for access to Canadian consumers despite trade barriers.
The U.S. remains the largest import source (45%), followed by Australia, New Zealand, and the EU/UK. Mexico and Uruguay each held a 6% market share.
Key Takeaway
Canada Beef’s Q1 2025 market analysis paints a picture of strong prices but constrained supply. Trade uncertainty, high input costs, and herd contraction continue to challenge the beef sector. However, consumer loyalty to Canadian products and ongoing demand in retail and food service channels offer reasons for cautious optimism moving into the rest of the year.
