Reuters — One of Canada’s biggest cattle feeding operations, Western Feedlots, said Wednesday it will close feeding operations after marketing the cattle it currently owns, due to poor market conditions.
Closure of Western’s feeding operations, likely early in 2017 once its current cattle are sold, will make it more difficult for ranchers to find markets for their young cattle and pinch supplies for Alberta’s big beef packers, Cargill and JBS.
Feedlots buy young cattle from ranchers and fatten them to slaughter weight, then they are sold to packers.
Loss of the feedlot “takes out a material portion of demand for cattle across the Prairies,” said livestock industry analyst Kevin Grier. “To me, this is pretty big news.”
Canada is the world’s sixth-largest beef exporter, and Alberta raises more cattle than any other province.
Western’s holdings include feedyards at Strathmore, High River and Mossleigh, Alta., with combined capacity for 100,000 head of cattle.
The company said in a statement it would suspend its feedlot operations after the animals it now has on feed are marketed. Past that point, Western said, it will not buy any feed grain or feeder cattle, nor hire any employees.
However, the company said Wednesday, it will continue its other farming operations “for the foreseeable future.”
The Alberta Cattle Feeders Association has previously cited Western’s establishment at Strathmore, east of Calgary, in 1958 as the launch point for the province’s commercial cattle feeding industry.
Western’s owners made the decision voluntarily because of the high-risk, low-return environment in cattle ownership, and poor political and economic conditions in Alberta, Western CEO Dave Plett said in an interview.
“Our shareholders see the challenges facing the industry in the next few years are going to be greater,” he said.
Alberta, which last year elected its first left-leaning government in decades, no longer offers an advantage in business climate, Plett said, declining to give specifics.
Many of Western’s 80 staff will eventually be laid off, he said.
Grier said the loss of feedlot capacity is not surprising, given short Canadian supply and the high price of young cattle and the weak price of fed cattle.
Recent Alberta fed cattle prices of $125 per hundredweight are down 30 percent from a year ago, he said.
— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Includes files from AGCanada.com Network staff.