August 12, 2020

 

Alberta, Canada's massive cattle backlog eases

 

A massive cattle backlog in the beef sector of Alberta, Canada is now easing, as major meat processors increased production to pre-pandemic levels, CBC News reported.

 

A build-up of tens of thousands of animals formed this spring after outbreaks of COVID-19 among meat plant workers resulted in slowdowns or temporary closures of North American facilities, including in Alberta.

 

If all goes well, the backlog could be cleared by sometime in October.

 

"The term I'm using is cautiously optimistic," said Janice Tranberg, president of the Alberta Cattle Feeders' Association, who noted the backlog has fallen from around 130,000 animals to closer to 110,000. "If the processing plants continue in the route they are, and if other sectors of the value chain aren't negatively impacted, then hopefully by fall we will be caught up."

 

That would be good news for a cattle industry which sees its busiest time in the fall. But uncertainty remains. The pandemic still clouds the outlook for the industry.

 

While there is confidence among the sector that processors have made the necessary preparations should a second wave of COVID-19 emerge this fall, even the thought of another temporary plant shutdown is enough to spark unease.

 

"That's what keeps me up at night," said Kelly Smith-Fraser, who ranches with her family near Pine Lake and is chair of the Alberta Beef Producers. "Another plant closure would be incredibly scary to our industry. We've been needing them to be operating at full capacity."

 

Food supply chains were rattled as demand from the restaurant sector crumbled overnight amid pandemic restrictions. The meat sector was also sideswiped by the temporary shuttering of processing facilities in Canada and the US.

 

In Alberta, this included a two-week closure of the Cargill beef processing plant near High River, where 900-plus employees tested positive for the virus. The JBS plant near Brooks scaled back production for a time, as more than 600 workers contracted COVID-19.

 

Three workers from the Alberta facilities died, as did the father of a worker.

 

The disruption to processing in North America helped push meat prices higher at grocery stores, but it had the opposite effect down the supply chain, where a backlog of cattle emerged. 

 

It "significantly" changed market fundamentals in Canada and the US, said Craig Klemmer, principal agricultural economist at Farm Credit Canada (FCC). 

 

The situation hurt cattle prices for feedlot operators with animals ready to go for slaughter. 

 

He expects the backlog to create challenges for the cattle industry for the remainder of 2020. 

 

The FCC's July forecast for the second half of the year expects prices for Alberta fed cattle (those going for processing) will be 12% lower than the five-year average. Feeder steers (those headed to feedlots) will be down nine per cent.

 

Ranchers and feedlot operators are encouraged by the strides they see processors making.

 

A Cargill spokesman said the company's facilities across Canada are operating near full capacity. Similarly, a representative for JBS said its Brooks operations have normalised and production levels have returned to "historical norms."

 

"Out of an abundance of caution, we have maintained our COVID-19 preventive measures and controls and will continue to do so until a long-term solution to the pandemic is identified," said JBS spokesman Cameron Bruett.

 

Dennis Laycraft, executive vice-president of the Canadian Cattlemen's Association, said having the large processors running at full capacity has made a "huge difference."

 

Another concern in the cattle industry is what could happen if a second wave of COVID-19 arrives this fall-again rattling the meat supply chain. Chief among those concerns is the possibility of a large processor again closing temporarily or limiting production.

 

The fall is particularly important to ranchers because that's when they sell their cattle at auction or directly to feedlots. Another large backlog during the "fall run" could sink prices or force ranchers to take on the substantial expense of holding onto their animals longer.