What is it about Albertans? The business community asserts a near religious devotion to free enterprise and the market but, surprisingly, often displays complete contempt for changing market sentiments.
It seems Albertans only love the market when it agrees with them.
Much of Alberta’s oil and gas industry, for example, refuses to admit that the public’s negative reaction toward its environmental record and carbon ‘problem’ has any merit.
But the oil and gas industry is not the only Alberta industry to dig its heals in and resist change. The reaction of the beef industry and its supporters to the Earls restaurant decision to source certified humane beef from Kansas is typical.
Earls Kitchen and Bar, a Vancouver-based restaurant chain, operates in a highly competitive commercial environment. In order to succeed, Earls is positioning its restaurants at the growing quality end of the market. So they’ve made the corporate decision to only use livestock that is treated decently – humanely – and is free of antibiotics and growth steroids.
According to the company, there are suppliers in Canada to meet these standards – but they don’t produce enough volume to meet its needs. So the company was forced to source its beef south of the border.
So do the proud Alberta beef producers and feedlot operators respond confidently with initiatives to meet changing market conditions?
No, they strike out in anger instead.
Upon learning of Earls’ decision, supporters of Canada’s beef industry called for a consumer boycott of the restaurant.
Nanton-area rancher Bob Lowe summed up the industry’s response: he said he was dumbfounded and insulted, and he called Earls’ decision a “slap in the face.”
Others went further. Craig Chandler – a prominent member of Alberta’s Progressive Conservative Party – even appeared to equate Earls’ desire for a higher standard of meat with support for Islamic terrorism.
It should be noted that even Chandler admits his logic is somewhat convoluted. No one is denying that Islamic meat handling standards are higher than industry standards and not dissimilar to certified humane, but to leap from that to Earls’ support for jihadists borders on the hysterical.
So what explains this irrational, head-in-the-sand reaction from one of Alberta’s principal industries?
Unfortunately, many of Alberta’s major industries suffer from ‘produceritis.’ In other words, these primary producers view the world and their market narrowly, through their own interests.
This condition is typical of businesses on the periphery of the commercial biosphere. It is a consequence of being so distant from the end-consumer that the industry is not only unaware of changing consumer demands, but feels itself to be insulated from those demands.
Often, Canada’s agricultural industries operates in a vacuum. They seem unaware of consumer preferences and (as a rule) believe that the market should respond to them, not the other way around.
Not surprisingly, such primary producers are slower to respond to changing market realities than other industries.
But the food industry is changing rapidly, and they will pay the price if they don’t adapt.
Younger people in general are becoming much more particular about the food they consume, demanding more in terms of taste, nutrition and quality. As the millennial generation rises as a demographic, they’re demanding more quality from restaurants, grocers and producers.
Poor Bob Lowe was genuinely hurt that anyone would question his beef handling standards. What he’s missing is that end-consumers don’t particularly care about his perspective. They simply expect a higher standard and that’s a market reality the beef industry can’t ignore. In the free market, producers must adapt or die.
And “adapt or die” is an increasingly common refrain in Alberta. As the oil and gas industry has discovered, the market can be a cruel taskmaster, and companies (or industries) that ignore market signals or changing customer values are in for a rude shock.
Earls’ decision is a wake-up call for the beef industry. The reality is they’d better start paying much more attention to the massive changes going on in society or be left behind.
But there’s a bigger lesson in this for Albertans in general: the world is changing and we’d better adapt fast.
If we don’t respond appropriately to these changes, the world won’t mourn our passing.