Alberta Beef Producers recently did something it hasn’t done since the BSE crisis nearly two decades ago — went to the government and asked for money.
Ottawa responded by offering $50 million to help cover the cost of feeding cattle stranded by slaughter plant closures and slowdowns — an offer that was appreciated but disheartening, said the farm group’s chair.
“The $50 million for the set-aside program came nowhere close to what our ask was,” said Kelly Smith-Fraser, a purebred producer from Pine Lake.
The provincial government quickly agreed to put up its 40 per cent share for the set-aside program but even as it did, it said there were already 130,000 slaughter-ready cows “backed up in feedlots.”
Each costs about $4 a day to feed, the number is growing by 6,000 to 9,000 head daily, and the price of those cows has plunged, said the Canadian Cattlemen’s Association.
“The value of a market-ready animal has dropped over $500 per head since the start of COVID-19,” the organization said. “Left unaddressed, the Canadian beef industry will lose half a billion dollars by June on market-ready cattle alone.”
The stress — financial and mental — will only continue to mount on producers, said ABP vice-chair Melanie Wowk.
“Right now, our biggest concern is what these calves are going to do in the fall,” said Wowk, who runs a commercial cow-calf operation with her family near Beauvallon.
“My concern is for beef producers across the province. I am worried for every sector.
“For such a big industry in Alberta, we are such a small percentage of people. We also need our consumers to lobby the government to make it understand what kind of situation we’re in and what kind of situation they’re going to be in at the grocery store.”
Because meat prices are high, consumers may think that money is going to producers, but that’s not the case, she said.
“I don’t think people really get it.”
Even before the government funding announcement, Smith-Fraser was getting calls from extremely worried producers.
“They’re so stressed, they have major bills coming in and the forecasts for prices for our calves are not great,” she said.
“Our producers are starting to panic. A lot of them are young producers. They’re trying to get into the industry, and now, it would be like having bought your first herd in 2002 (the year before BSE struck).”
Some won’t survive, Smith-Fraser predicted.
“They’re going to be young producers who can’t cover off the debt that they’ve got,” she said. “We’re going to lose some older producers who will say they’ve had enough and want to get out.
“I’ve got calls from producers who are telling me their (adult) kids have come home to work on the farm and they’re really questioning their future now.”
In addition to more money for the set-aside program, her organization and the Canadian Cattlemen’s Association want government to share the cost of skyrocketing premiums for livestock price insurance (which has jumped to $70 per head versus $15 or less prior to the pandemic).
“We need insurance, it’s our main risk management tool, it is especially important for our young and new beef producers,” said CCA president Bob Lowe, a rancher and feedlot operator from Nanton. “Without these tools, I am concerned that many beef operations — particularly our young producers — will fail or be forced to sell their cattle.”
While cow-calf producers won’t market their calf crop until fall, they can see the dominoes lining up, said Smith-Fraser.
“The backlog is increasing consistently and knowing that, there won’t be any pen space for calves coming into the fall if those pens are still occupied by fat (market-ready) cattle,” she said. “If there’s no pen space, there’s no bid. Calf prices will be incredibly depressed. We could be looking at calf prices from BSE times, is what people are really concerned about.”
And the stress is already intense, she said.
“I’ve got calls from producers concerned that they are going to lose the place they spent 30 years working on. They’ve bought it, trying to pay for it all and get their children in to become part of the operation. They are worried. They are incredibly worried.”
Assar Grinde, who farms near Bluffton, is a younger producer with a cow-calf operation. He sold his calves a little earlier than he would have liked to, back in March, and took a financial hit on them.
“We’ll have a lower income this year than what we were projecting,” he said. “But I think the big concern for most people is what is going to happen this fall. If there’s a backup at processing and a backup in the feedlots, the market for our calves might be really badly affected. That’s the big concern right now.”
Grinde agrees young producers are at the most risk as they generally have more debt.
“We don’t have the equity that people in their 50s or 60s have,” he said. “Right now, pretty much everything a young producer is running, and even their cattle, is on borrowed money. They’re at a huge risk of not being able to make their payments.”
There’s no one solution to fixing the mounting crisis, said Grinde, a zone delegate who has sat on ABP’s business risk management committee for six years.
Affordable insurance and the set-aside are key short-term measures, he said. Increasing the interest-free portion for the Advance Payments Program to $500,000 (from $100,000 currently) and extending the repayment period, which has also been requested by the CCA, would allow producers to put their cattle on leaner diets and then put them to pasture.
“If you’re doing that and you’ve never done that before, you need the cash to finance it,” he said.
In the medium term, changes to AgriStability are needed and while Ottawa’s $252-million aid package includes $77 million for food processors, including meat packers, the livestock-processing sector needs to be made more resilient, Grinde said.
“We’re seeing what happens when we have 80 per cent of our kill capacity in two plants,” he said. “If anything happens to them, it becomes a disaster.”
There were more plants before BSE, he noted.
“That has changed because of globalization and economics of scale. We’re seeing the risks of that,” he said.
Wowk, who is also a technical services veterinarian with Zoetis, said she has been glad to see people are still buying vaccinations and treating their animals, but worries some may be tempted to save money by not vaccinating.
And she worries about producers deciding there’s no future in raising cattle.
“We’re trying to do this for our kids,” said Wowk, who farms with her husband, their son and his wife, and their daughter. “You have to stay hopeful that this is all going to change. It’s hard to keep picking yourself up.”
Having lived through the BSE crisis, she speaks from experience.
“It took us 10 years to get out of that,” she said. “I think there’s a lot of debt out there, and it’s much more than it was at the beginning of 2000 and that’s why it’s hitting people so much harder now.”