Out­break rat­tling live­stock chain

Prairie Post (West Edition) - - Bargaineer - BY TIM KALINOWSKI 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 (this) 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.

“The fur­ther out you can go, the bet­ter off you can do,” says Kony­nen­belt. “Those cat­tle are bring­ing the same money as the cat­tle that are closer up (to fin­ish­ing). It’s a strange sit­u­a­tion, and no­body ever thought we’d be fac­ing it. But it is what it is.”

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 Thurs­day 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.

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