COVID-19 pandemic outbreak severely rattling livestock’s economic chain
Alberta Newspaper Group
The closures and slowdowns at local meatpacking plants in the past few weeks due to COVID-19 outbreaks have already begun having a downward impact on prices of fat cattle, feeder cattle and cow cull cattle for local ranchers, feedlots and at cattle auction marts.
“The main impact we are facing in the auction market world is the slowdown of cull cow numbers coming through the ring,” explains Ryan Konynenbelt, an auctioneer and sales representative at Southern Alberta Livestock Exchange based in Fort Macleod. “With Cargill being shut down and JBS cutting their kill back, they are only taking fat cattle or finished cattle through the feedlots. So they are not taking any cull cows right now, and we have seen a slowdown on those numbers coming through the ring and a definite impact on the price. But not as aggressive as we thought we would see.”
Cull cows and bulls just aren’t moving very well at all right now, but Konynenbelt says the high U.S. dollar and a relatively strong cattle export market to the United States has taken some of the price pressure off here in southwest Alberta.
“The American market and the way the American dollar has definitely saved us in that aspect,” he confirms. “We’re seeing the fat cattle are going to start getting backlogged pretty quickly here with the meatpackers only taking X amount, and with Cargill not reopening until (last) week. These fat cattle are going to start backlogging because them cattle keep growing. So we are seeing a backlog, and these feedlots are going to start getting full pens here.”
In contrast, grassfed cattle and the light cattle markets have definitely been holding their own because those cattle won’t be ready for slaughter until the end of the year anyway, says Konynenbelt.
Darcy Wills, a rancher near Writingon-Stone Provincial Park, is concerned with what he is seeing in this current backlog situation at meatpacking plants. Feedlots are pulling back on their bids for feeder cattle at auction marts, which inevitably means less money in ranchers’ pockets.
“What a lot of people don’t realize is the cattle feeders are moving cattle on a daily basis; so it is kind of like one long cycle for these guys,” he explains. “In my situation, when I take my cattle to town, my whole year’s income depends on about 10 minutes when my cattle go through the auction mart. So for my situation, it is really critical the market forces be at their best when my cattle are being marketed in that 10-minute period. They (feedlots) will always take your cattle, but (right now) the concern is it will be at a significant discount.”
The chain from the farm gate to the packing plant usually goes from primary producer who raises the animal from birth and brings them in to sell at the cattle auction marts as feeder cattle which may weigh as much as 900 pounds. Those feeder cattle are then bought by feedlots who add a couple hundred extra pounds of weight to finish those cattle off for slaughter, profiting on the weight differential paid out to local farmers versus what is eventually paid out to them by meatpacking plants for the finished animals. The meatpacking plants slaughter the animals and act as the wholesale seller to the national grocery store chains.
Wills says any farm assistance program which is brought forward by government to help with this situation should be paid out directly to producers at the primary level.
“I have seen some situations with these aid programs in the past where the money goes in and they hope there is going to be a trickle-down effect,” Wills states. “That, a lot of times, doesn’t work. If you give it to the packers and they say, ‘We’ll pay more for the animals.’ Unless they are directed to pay more, a lot of money never comes down to the grassroots guys like me. And it’s the same with the feeders. If they get money in their hands, they might share it a little bit. But there is also a lot of things they could also spend it on, and it never seems to bring it back to the farm gate and the absolute, primary producer.”
Wills suggests an aid program where government calculates what the price of cattle would likely be under normal market circumstances, looks at what the cattle feeders are currently paying producers at a discounted price, and pays ranchers the difference.
“My personal opinion is if the (governments) are going to throw money around or put money into a program, you always hope that it is going to be done in the most effective way possible,” he says. “My situation, being a rancher, I always think it is most important to put the money in at the grassroots. Then the guy that actually produces that animal, and grows it from conception to the time of first sale, they are the people who are the most significant in the production of that animal. The rest of the (cattle marketing) system is done on margins. We ranchers start with nothing and make it into something.”
In addition to the $77 million in federal aid offered to meat processors this week to help clear the backlog of animals and provide safety equipment at plants, the Alberta government announced on May 7 additional provincial supports for the livestock industry. Premier Kenney announced $17 million will be paid out through the AgriStability program to cattle feedlot operators to help ensure price stability for up to nine weeks for finished cattle as the meat processing plants work to catch up on their backlogs.
Jane Halford is pretty innovative and has accomplished a lot in her career.
So, why not take on the role of chairperson at Farm Credit Canada during a pivotal year in Canadian agriculture in the midst of a global pandemic which is is devastating economically, including to Canadian farmers.
“I appreciated the time in my life professionally and combined it later in life with an agriculture operation (personally) and then through my expertise (in corporate business), I felt I wanted to do it,” explained Halford who had been on the FCC board of directors for a number of years as well. “When the opportunity presented itself, I felt called to lead….have the right skills to it….but I am one part of the puzzle.”
Halford is quick to point out that the remaining board of directors a re a very diverse and eclectic group where she can draw different skillsets, life and professional experiences. She said it is her role to best put those people in the best positions and duties to help push progress in FCC programming.
She is currently operating Halford Consulting which has been “helping boards and CEO accelerate the performance the improve the success rate of incoming leaders.”
She has been doing that for close to the last seven years. She has also been on the University of Alberta board of governors and board member of the
Canadian Angus Foundation each for three years and is the chair of the board of director of Alpha Phenomics which describes itself as ”an Alberta based technology company whose single focus is to improve the efficiency of animal protein production.”
She is the past chair of the Institute of Corporate Directors (Edmonton Chapter) and has earned accolades ranging from being named one of the Top 100 Women in Business; Alberta’s 50 Most Influential People; a Fellow of the Chartered Accountants; and Global Women of Vision… to name a few.
Halford says you have to be organized to be able to effectively deal with all the projects both professional and personally. She says the current pandemic status quo makes projecting what will happen economically challenging to predict. She is well aware of the FCC’s role in Alberta agriculture and what assistance producers need.
“…We have gone through highs and low before and in the last 60 years there have been ebbs and flows and we have seen tough times but we have never seen this scare before,” explains Halford. “One of the mandates is that we help focus on that next generation; we want the young people to have a future, We need to be continuing to have those conversations on how we can help get us through our first true crisis of this generation.”
When talking with Halford, you get the impression she is someone who is realistic but confidently emphasizes the positive aspects of any situation including currently where prospects look bleak. Not so fast says Halford.
“The capital is available for them, let’s take this as opportunities to grow something business-wise,” explains Halford.