June 14, 2004
Canadian Cattle Industry Mulls Overproduction Problem
Cattle prices across western Canada are very low, and producers and feedlots are hard-pressed to make a profit. Bovine spongiform encephalopathy, or mad-cow disease, was found in an Alberta cow a little over a year ago, and the U.S. border has been closed to live Canadian cattle ever since. As of January 1, Canada¡¯s cattle herd reached the record size of 14.7 million head, according to Statistics Canada. The herd was 8.7% higher than the same point the previous year.
A number of industry sources have said a massive cow cull in the past year could have alleviated the current problem. Buddy Bergner, of the Ashern Livestock Yard in Manitoba, said that if the government had killed half the cattle in Canada, producers would have been able to receive twice as much for what animals were left, while costs would be cut in half.
Kent Olson, an Alberta feedlot operator and past president of the Alberta Cattle Feeders Association, said that "sooner or later we either need to find more export markets to get rid of the product, or we have to figure out a way to deal with the overproduction."
"Until there is some serious attempt to match cattle-herd numbers with domestic (slaughter) capacity or boost capacity to match Canada¡¯s cattle-herd population, values will continue to trade at extremely depressed prices," said Herb Lock, an Alberta based analyst with Farm$ense Marketing.
Part of the problem is the lack of competition at the slaughter level, Lock said, noting that the government cannot legislate competition.
A number of people in the industry feel a cattle cull could serve a dual purpose, said Olson. If there was large-scale slaughter of the oldest cattle and they were all tested for BSE, the herd would decrease while hard, scientific data was also gathered, said Olson.
The border closure has passed the short-term stage, and now the industry has to start considering the next step, said Olson. He thought part of the solution will likely involve some sort of inventory management of the herd.
Bill Newton, president of the Western Stock Growers Association, said a large-scale cull only help matters only if the U.S. border remained closed to live Canadian cattle. Newton said it was still too early to say whether a large cull would benefit the industry, "because we don¡¯t know if, or when, we will regain access for live cattle to the U.S. market," said Newton.
Newton thought the real problem is Canadian slaughter capacity. He said more slaughter capacity in Canada would limit the need for a cull, as there is a demand for the meat. However, it takes time to get a slaughterhouse up and running. In addition, if the U.S. border reopens, increased Canadian capacity becomes redundant and people are still uncertain about how things will turn out.
If the eventual answer regarding reopening the U.S. border to live Canadian cattle is "no," there would be a combination of a cull and increased capacity, said Newton. He stressed that a cull would not mean simply killing the animals and dumping them. Rather, he said, the industry would find other markets, give the animals away to developing countries, or some other option.
"I¡¯ve never really believed that there should be a cull," said Neil Jahnke, president of the Canadian Cattleman¡¯s Association. "There are hungry people in the world, and I don¡¯t think we want to go there." He thought there were other options if the borders remain closed and would rather find a useful purpose for the animals than simply dispose of them. "It doesn¡¯t make sense in today¡¯s world"
A cattle cull is not an option in the opinion of David Reykdal, president of Manitoba¡¯s Ranchers¡¯ Choice Beef Co-Op. Ranchers¡¯ Choice is currently working to develop slaughter capacity in Manitoba. He thought a cull would be "a complete waste of resources," as there is no money to be made by disposing of the animals. Reykdal added that Canadian packers have been importing meat from outside the country because there is not enough domestic slaughter capacity.
