Is the risk really worth it?
That was the underlying theme offered by a quartet of young cattle producers during a recent online presentation put on by the Canadian Cattlemen’s Association.
“Farming and ranching are already highly risky,” said Kendra Donnelly, who farms near Acme and operates, with her husband and parents, a trio of feedlots capable of finishing up to 70,000 head yearly. “There are many things we can’t control, and to add COVID to the mix worries me, especially as a mother who is looking at the future of farming and ranching for my son.
“We may lose an entire generation due to COVID-19 because of the losses we face as we try to sell our cattle.”
The feedlot sector was hit hard by temporary shutdowns and slowdowns at Alberta’s two big packing plants when hundreds of workers at the facilities were infected by the coronavirus. That quickly created a backlog of more than 100,000 market-ready cattle and sent prices plunging.
There was no shielding that blow because business risk management programs such as the Western Livestock Price Insurance Program simply don’t work for an operation like her family’s, said Donnelly.
“We would see significant losses if we were to purchase those insurance programs,” she said. “It’s not practical to pay for those premiums up front and then still see a significant loss. We’re monitoring those, and I think the whole industry is looking at ways to manage this risk moving forward.
“Ultimately, there is nothing really available to us. There’s not much we can do to manage risk at this stage. The tools are not practical at this time.”
The pandemic threatened to be equally devastating for Ontario producers Maryjo and Rob Tait, who direct market their beef and lamb. Prior to the pandemic, 80 per cent of the meat from Celtic Ridge Farms was going to restaurants in Toronto. Although the couple both have off-farm jobs, the abrupt loss of 80 per cent of their farm income when restaurants had to shut down had them worried about making their April 1 mortgage payment.
So they scrambled.
“Within a couple of days, we revamped our online store,” said Maryjo. “Now 100 per cent of our beef is going direct to consumers. We have been able to replace that income, and we’re thankful for consumers because we didn’t know what we were going to do.”
But the switch to a home delivery model means they spend a lot of time driving around southwestern Ontario and replying to requests from consumers. Fortunately, the couple, who has all their beef processed at a small family-owned abattoir, book their cattle a year in advance as hook space is now impossible to get.
“They became completely overbooked, which led to delays and financial roadblocks,” said Maryjo.
Small abattoirs were already fully booked before the pandemic, and their’s tried to up production when the big processing plants shut down, said Rob. Their abattoir is shutting down for a week to give the workers a break, he added.
While selling directly to individuals is a lot of work, there’s an upside, he said.
“One of the positive things, instead of trying to find the most economical type of food, people are trying to support local and support Canada, and we hope that people will try and support local farms,” said Rob.
The other producer on the online panel hasn’t been directly impacted because his family’s operation won’t market its calves until fall.
“The implications of COVID-19 haven’t hit us yet,” said Geoff Larkin, who raises purebred and commercial cattle on his farm near Middle Musquodoboit in central Nova Scotia. “Come the fall, it’s a very real possibility. No one knows day to day what is taking place, or even hour to hour.
“So to plan six months ahead is extremely difficult. To make projections about what you’re going to do with your farm is really tough.”
He said he wishes that there was something like Western Livestock Price Insurance (which can work for cow-calf producers) in Atlantic Canada.
“To have a system like this would be huge,” he said. “To pay a premium in the spring to have a set price for those calves, just allows you to start to plan.”
That’s especially valuable for young producers because they’re building equity and “don’t necessarily have a lot to borrow against.”
“Having programs like that, where you have a set price for your calves in the fall is huge, then you can start to borrow against those calves,” he said.
This year, Larkin has some extra grass, and would have loved to buy more calves.
“Unfortunately, I don’t know where the market is heading. No one does. With no tools in place for me to insure those calves, there is no way I could walk into a bank and buy those calves, because I don’t know what they will be worth in the fall.”
So instead of being able to seize an opportunity, Larkin said he must sit back and wonder what’s coming down the road.
“As a young farmer, I fear what is going to happen with COVID-19,” he said. “We can’t take the hits and the fluctuations. We have a higher debt load. There’s a lot of things we can’t take without proper programs and proper tools.”
Echoing Donnelly, he said not having such supports could prove costly if the “next generation” exits the sector.
“Once this generation is gone, it will be awful hard to get it back,” he said.