By Will Verboven, Contributing Editor
It’s been said that bad news comes in threes. So far, the western Canada cattle industry has been hit two-and-a-half times. The first has been incremental – the steady decline in the cow herd, including Alberta, the home of almost 50 percent of the Canadian cattle industry. The industry is down 30 percent from its peak in 2005; Alberta alone lost 300,000 breeding cows in the process.
Compare the Canadian decline to the United States, where cattle numbers have increased by 3 million head. The Canadian decline does not bode well for the two big packers in Alberta, Cargill and JBS. Right now, both plants are going flat out at almost 96 percent capacity. The only incident that hampered them earlier was slowdowns created by the pandemic and related union mischief. The reason for packer busyness is that most Alberta feedlots are also full, so there is no shortage of fed cattle. That’s been caused by two factors – fewer slaughter cattle exports to the United States and more feeder cattle imports from the United States.
So far this year, feedlot operators have imported 135,000 head from the United States. That’s an increase of 95 percent from the previous year. Canadian cattle exports to the United States are down 26 percent on a five-year average. It always intrigues me how robust the cattle trade is when one sees cattle trucks with the same type of cattle pass each other to and from the Canadian border – somehow, it must all make business sense.
It seems that, regardless of the downward trend of the Canadian cattle herd, feedlot operators will make up for it by importing ever-increasing numbers of American feeder cattle. One ponders … if those U.S. feeder cattle are fed imported U.S. corn and then sent back to the United States for harvest, are they Canadian or U.S. cattle? I suggest they remain U.S. cattle as they were just visiting Canada and returned home.
The second hit to the Canadian cattle industry has been one of the worst one-year droughts to batter western Canada in known memory. Droughts are nothing unusual up here, but this time, it is so widespread that it covers almost every bit of cow country in western Canada. It’s decimated pastures and hay crops, and now there is a mad scramble to find hay for the usual long, cold winter.
That’s caused many producers to sell off big chunks of their cowherds, and underweight feeder cattle are coming to market very early. That’s resulted in a buyers’ market as one sector’s misery is another sector’s bonanza. Feedlot operators have the advantage because any local feed shortages can be supplemented with trains full of corn from the American Midwest.
Provincial and federal governments have come up with billion-dollar relief programs, but I suspect it’s too late for many, and building up cow numbers will take many years and a break from future droughts. The irony was that earlier in the year, it appeared that cow-calf producers were holding back heifers to increase cowherd size; all of that has now disappeared down the auction market trail.
The Alberta government and producer groups are so concerned with the drought and the ongoing decline of cattle numbers that they have put together a task force to find out what could be done to halt the decline. I suggest significantly higher cattle prices might change the slide, but that is at the whim of the marketplace. With 3 million more head of cattle in the United States, big price increases may be years away.
The last half hit to the Canadian industry is the renewed determination of the Biden administration to return to country-of-origin labelling and narrowing the definition of what constitutes “Product of the USA.” Seemingly, that issue was resolved after a 10-year battle and a World Trade Organization victory. All of which was supported by mainstream American and Canadian cattle producer groups and beef processors. The cattle and beef business is a true North American business that benefits everyone in the supply chain, right to the consumers in both countries. One would hope that we could avoid repeating history on this issue.
Perhaps another half hit is coming to the Canadian cattle industry – the Canadian federal election. If the Liberal Party of Canada wins again, it could prove hazardous to the cattle industry. Federal Liberals in Canada are an urban-based, progressive left-wing party and are hostile to agriculture and western Canada.
Finally, on a sad note, Cor Van Raay, one of the most prominent players in the Alberta cattle feeding business, passed away at 85. Cor emigrated from the Netherlands in the 1960s and, from small beginnings, built his feedlot operation into the largest in Canada, with a capacity of 100,000 head. He was also involved in other business enterprises and, in his later years, became a philanthropist, contributing to several educational institutions and charities. I personally recall his response to a question on what contributed to his phenomenal success in the cattle business. He told me it’s quite simple – buy cattle cheaper, feed them cheaper and sell them higher than the next guy. In 2012, Cor Van Raay received the Queen Elizabeth II Diamond Jubilee Medal for his contribution to Canadian society and business.
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