‘A light at the end of the tunnel’: Beef industry slowly recovering
Alberta’s beef industry is slowly recovering from the impacts of COVID-19, including temporary shutdowns at major meat-packing plants this spring. In April, during the height of COVID-19 outbreaks among employees at meat processing facilities across North America (including in Alberta at the Cargill plant at High River, where three workers died of the illness, as well as the JBS plant at Brooks where one worker died), temporary plant shutdowns left Western Canada’s beef slaughter capacity at about 25 per cent of normal. That led to a major backlog of ready-for-market cattle that suddenly had nowhere to go. According to industry estimates, at the height of the crisis, Canadian feedlot operators were losing $500,000 per day paying to feed and retain cattle that normally would be ready to ship to slaughter. Fed cattle prices also plummeted by $300-$400 per head, hitting their lowest point since October 2013.
Warning of a “real wreck” on the horizon, industry leaders successfully lobbied the federal and provincial governments to create a setaside program, which compensates producers for voluntarily holding their cattle back from market in an effort to allow supply to match demand. That program has helped to avert a price collapse, said Janice Tranberg, president and CEO of the Alberta Cattle Feeders’ Association.
“We’re still below the five-year average, we’re not normal, but we’ve certainly seen prices come up to a better level than they were a few months ago,” Tranberg said, adding better prices for feedlot operators should also translate to better prices for ranchers looking to sell animals during this year’s fall calf run, when calves born in the spring are sold to feedlots.
“If the fed cattle industry is getting a fair price from the packers, then that just continues right down the line to when their feeder cattle are coming into the process,” Tranberg said. “It should hopefully normalize the entire value chain.”
Also helping to normalize prices is the fact that both the Brooks and High River packing plants are back to near full-capacity operations, after introducing enhanced
COVID-19 safety and distancing measures at their facilities. According to Bob Lowe, president of the Canadian Cattlemen’s Association and owner of a feedlot near Nanton, the two plants are actually slaughtering more cattle than they were this time last year in an effort to meet the pent-up demand.
“I know in our lot, we’re selling a few loads every week. They come and get them and it’s kind of just like clockwork,” Lowe said, adding for consumers, the fact that cattle are moving again should translate to lower beef prices at the grocery store.
During the height of the beef supply chain woes, some retailers started sourcing meat from the U.S. and other countries due to a shortage of Canadian product. Mcdonald’s Canada, for example, which has previously stated its commitment to serving only 100 per cent Canadian beef, announced it would be supplementing its Canadian supply with beef from the U.S.
In an email this week, Mcdonald’s Canada spokeswoman Veronica Bart said as of June 29, Canadian beef accounts for 81 per cent of total beef used in the production of all the company’s beef burger patties but said Mcdonald’s Canada continues to supplement its supply with beef from outside sources.
“Mcdonald’s Canada is proud of our long-standing commitment to serve 100 per cent Canadian beef and plan to continue our Canadian beef sourcing long-term,” Bart said. “We’re committed to supporting Canadian ranchers and farmers, and we look forward to returning to sourcing 100 per cent Canadian beef as quickly as possible.”
Lowe said while no one knows the course the pandemic will take, for beef producers, the last month has been like a “light at the end of the tunnel.”
“It’s coming on in a far more orderly fashion than anyone would have guessed. So kudos to everyone in the system,” he said. “I wouldn’t say crisis averted, but the longer we proceed in this orderly fashion ... it’s not going to be near the crisis it could have been.”