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Pandemic creating concerns in the cattle industry

Temporary closure of Cargill’s beef plant at High River and reduction in processing at the JBS pant at Brooks could create a shortage of retail beef products and problems for producers with cattle at or ready to market weights

WESTLOCK – The COVID-19 pandemic that is affecting all Canadians to one extent or another is now affecting the cattle processing industry Alberta. Unless a solution is found quickly, it could create a chain reaction from consumers through retailers and processors and down through feedlots and backgrounders to the grass roots cow/calf farmers and ranchers.

Early last week, the Cargill beef plant at High River, AB stopped bringing in cattle for processing, and closed the plant with the exception of processing all beef still in the plant.

The decision to close the plant was made following the death of one worker due to COVID-19, and another 440 workers, staff and contractors testing positive (April 23 figures).

At peak capacity, the plant employs about 2,000 people and processes about 4,500 head of cattle per day.

The JBS plant at Brooks, AB has reduced their processing capabilities due the challenges brought forth by COVID-19. The Cargill and JBS plants combined account for 70 per cent of Canada’s total federally inspected beef processing capabilities.

What this means to retailers and consumers could be a shortage of beef supply in the short term, depending on how long Cargill remains closed and the JBS plant at reduced capacity. Sobeys has already said they may have to import some beef from the U.S. to maintain supply.

But the bigger concern in the immediate term, and until plants are up and running, is for feedlots with cattle already at market weight.

Walter Schmidt who, along with brother Gilbert, have operated Schmidt Livestock near Barrhead for over 60 years told T&C last Wednesday evening, “It’s totally utter chaos,” noting the live price for cattle went from $1.45 two weeks earlier to $1.00 per pound. 

“Right now, we have 50 loads sold, and they’re not being picked up, and they’re ready,” he said. “They are sold but they have to be delivered for the kill. We haven’t got the money, and we’ve got to feed them.”

He added, “When you feed an over finished product, you’re losing money. And we’re losing money left and right.”

“It’s a major, major loss,” he emphasized.

To put it into perspective, Schmidt said just before Cargill shut down, “We were shipping six to seven loads a day for five days. Normally we would ship about 25 loads a week (around 40 head per load).”

He added in a year, they would turn out 25,000 head or more.

“You have to realize, when we (Camada) are on normal production, we are a net exporter of beef. We have a Cadillac product; we have a very, very good product, and we need an export market. We have a very, very good product, and we can be proud of that,” Schmidt said. “But right now, with everything being slowed down, it’s really a major issue even to get this beef moving again. You can move it, but not efficiently as we did before.”

He said during the BSE crisis (2003) he recalled the provincial government came in with a set-aside program to provide funds to feedlots and producers to be able to keep and continue to feed already finished and feeder cattle on holding rations. “Our provincial government was very strong, and that kept a lot of us in business.”

“But we didn’t have the major problem we have now, with how much money it’s costing the federal and provincial government with this (pandemic), the whole shutdown. It’s huge!” Schmidt said.

“I think of it this way,” he observed, speaking about the cattle industry. “We are margin players. Right now, we’ll have the biggest crash for a long time. We’ll lose millions of dollars this year. But I’m thinking, how devastating if this keeps up. If it don’t get better; what will it do to our cow/calf people – to everybody?  We need everybody in the cattle business. Our cow/calf man is the backbone of the industry. Without him, we haven’t got a business.”

He concluded, “It’s not affecting them yet, but if we don’t have a correction or better prices, we will just maybe not buy and take our whippin’. Or we’ll have to buy so cheap to make a dollar.”

But his final thought, and on a somewhat positive note, which many can share, “We’ve got to have hard times to have better times.”

Jubilee Farms Ltd. west of Westlock are a smaller player in the market, but they too, will feel the pinch of the inability to market finished cattle currently.

Wayne Forbes, partner at Jubilee  said, “There’s so much uncertainty, but what I can tell you is the inability to market slaughter cattle when they’re ready affects us. It’s an important part of what we do, but we’re only a small player. We market some slaughter cattle, and we know it affects us.”

What he feels is very important in the cattle industry is the flow – from the feedlot to the packers to the meat wholesalers to the retailers, “It’s critical that the flow be maintained.”

“That’s what we’re concerned about; delaying marketing fat cattle affects us financially,” he said, “But the whole system is at risk we think. And then there’s the uncertainty of about when/if plants get operating at a reasonable rate.”

In their effort to cope as best they can, Forbes noted, “On the cattle that are ready to go, we’re changing the ration slightly, and on cattle that we were in the process of bringing up to a finishing ration, we’re taking them right back to a back grounding ration.”

He added, “It’s not efficient, but we can delay the marketing of those cattle. The ones that are ready to go, it’s extremely costly to put them on a holding ration of any sort.”

Like Schmidt, Forbes said a set-aside program would help feeders with the cost of putting heavy cattle on a maintenance ration, “But it doesn’t solve the problem.”

Forbes concluded, “If we don’t have this sorted out by fall, my opinion, it’s going to dramatically affect the price of all the grass steers and heifers and the calves. It’ll filter down to the cow guys by this fall if it’s not sorted out. And I can’t really imagine it being back to normal by this fall.”

In a release last Thursday, April 23, the Canadian Cattlemen’s Association said “The Canadian government’s efforts to help the country’s cattle producers don’t go far enough.”

Bob Lowe, CCA President said, “The assistance measures announced by the federal government are far from adequate to help beef producers navigate through this critical situation.  Any further delay in implementing policies to help us manage through these difficult times will be crippling the industry. We are facing a challenge every bit as devastating as BSE for the Canadian beef  industry and we are doing so without sufficient risk management tools.”

CCA recently developed recommendations for immediate support for producers to keep their operations financially sustainable. The Association is asking the Canadian government to:

• Classify the COVID-19 pandemic a natural disaster under Canada’s AgriRecovery Program;

• Extend deadlines for producers to repay cash advances under the country’s Advance Payments Program; and

• Establish infrastructure and governance for a federal Fed Cattle Set-Aside Program in which feedlot producers would bid to extend the feeding period of cattle up to a maximum of $2/head per day for up to 90 days, among other recommendations.

For the Canadian cattle industry, unless the current situation is resolved quickly, the problem will continue on down the beef chain through backgrounders to the cow/calf farmers and ranchers.

Les Dunford,

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