Canadian beef producers – primarily cattle feeders – could be hit with as much as a half-billion-dollars in losses over the next few weeks if the federal government doesn’t soon step up with some desperately needed assistance to help the industry weather the COVID19 pandemic storm.
The pressure mounts as processing capacity is dramatically reduced at a number of packing plants across Canada and the U.S., and to some extent the demand for beef is reduced with the closure of restaurants across the country — these are among factors weighing on the value of cattle already in the feeder system.
During an on-line Town Hall meeting with the media earlier this week, Dennis Laycraft, executive vice president of the Canadian Cattleman’s Association says feeder cattle today are worth about $1 per pound, compared to $1.45 a year ago. He estimates that cattle feeders are already losing about $600 per head. If processing capacity doesn’t soon return to some kind of normalcy losses will get worse.
The beef industry has made it abundantly clear to the federal government that assistance is urgently needed across a five-point industry support program.
Similar to the support program developed during the BSE crisis of 2003 the plan includes:
- Government support to implement a set-aside program to slow the number of cattle coming through the feeder system. Essentially cattle would be put on maintenance rations until there is need and/or room at packing plants. The set-aside program would be managed by a governance committee that would determine beef demand and processing capacity and then relay that information back to the feeding industry.
- Reduce premiums on beef industry insurance and risk management programs.
- Increase limits on interest free money available through the cash advance program from the current $100,000 maximum to $1 million annually, or up to $3 million over a three-year term.
- Update the AgriRecovery program to recognize COVID-19 pandemic as a natural disaster (similar to a flood) to broaden its coverage.
- Update or redesign the AgriStability program. The current program wasn’t designed to deal with a challenge of the magnitude of a global pandemic.
Laycraft says the urgency for federal government assistance is underscored as packing plants and processing capacity is impacted by the pandemic. The Cargill processing plant at High River, which processes about 40 per cent of Canadian beef was temporarily closed the third week of April as a hundreds of their nearly 2,000 employees were diagnosed with the corona virus. And the JBS plant at Brooks which processes another 40 per cent of Canadian beef was operating at 50 per cent of it’s capacity related to worker health and safety requirements during the pandemic. When both plants are operating at normal two-shift capacity they can each process between 4,000 and 4,500 head of cattle per day.
Along with Cargill and the JBS plants in Alberta, there were production slow downs at several other smaller federal meat processing plants in Canada as well as closure of some U.S. plants that process Canadian beef cattle.
It is hoped the complete shutdown at Cargill is temporary, and Laycraft says there may be some opportunity to increase capacity at smaller federal plants, or even some provincial meat processing facilities over the coming weeks.
Laycraft says while cattle feeders are feeling the first hit in the marketplace, it will eventually ripple back to those supplying backgrounding cattle to feedlots and eventually to cow-calf producers who will have a new batch of calves coming to market this fall.
He says while government assistance program do add up, at the same time keeping at least some of the beef production chain operating can also contribute about $350 million to the economy.
Lee Hart is editor of Cattleman’s Corner based in Calgary. Contact him at 403-592-1964 or by email at [email protected]