Beef industry’s challenges require co-ordinated effort

A new report on the competitiveness of the Alberta beef cattle industry contains few surprises, but it outlines significant challenges the industry faces if it is to remain healthy.

The report says the Alberta beef cattle industry has been “generally competitive over the past decade” with three comparative cattle-producing states in the United States — Texas, Nebraska and Kansas — and “remains capable of being competitive into the future.”

But there are some troubling trends.

Since Alberta is the province with the most beef cattle, it’s a reasonable measure of the state of the Canadian industry.

A telling indicator is the drop in relative size of the herd. In 2008, Alberta’s herd comprised 23 percent of the beef cattle among the three states and the province, but by 2018 that had dropped to 19.2 percent.

By mid-2018, Canada’s beef cattle herd had shrunk 26.3 percent since its peak in 2005. Meanwhile, the U.S herd has been expanding since 2014.

Labour issues are the most pressing. Canadian farm wages are, on average, $2.60 per hour more than those in the U.S. Canadian producers also face extra regulatory costs, such as occupational health and safety and workers compensation. The report does note that Canadian agricultural workers are often better off than those in the U.S., but that isn’t solving the problem. (The USDA estimates undocumented immigrants make up half the labour on American farms.) A 2016 report suggested more than 2,500 feeders and feedlots jobs were vacant, costing $268 million in output ($147 million in Alberta).

Canadian producers also face higher taxes, increasing land values, a potential decline in the number of major feedlots, higher feed costs and a likely increase in transportation costs once new regulations are enacted.

And with smaller profit margins — Canadian cattle fetch about $20-$25 per head less than the cattle in the three U.S. states in many months — there is not a lot of encouragement for farmers to invest in more cattle. Some farmland is being converted to more profitable cropland.

Simply put, with an aging producer population, fewer intergenerational transfers and a shortage of farm workers there is no formula for expansion of Canada’s beef cattle herd. Indeed, it hasn’t even been able to stop the decline.

Some of these issues are hard to address. It would require co-operation among industry and federal, provincial and municipal levels of government.

Yet they are worth addressing.

The Canadian cattle industry contributes about $18 billion to the Canadian economy (much of that coming from exports), which makes it almost as big as the Canadian auto industry.

The industry can do its bit. Trade deals offer opportunity. Cattle producers can adopt standards in sustainable farming that open up new markets. Europe, for example, has a demand for high-quality beef and is willing to pay more for it.

Yet 74 percent of Canadian beef is exported to the U.S., while Europe doesn’t even register as a destination, despite the presence of a trade deal. (Canada’s effective traceability procedures and respected food safety programs would help here.)

A more co-ordinated government approach is needed, starting with better programs for foreign workers that target agriculture. Better long-term lending programs can help address barriers to entry, as could more training for young farmers and an increase in the availability of animal agriculture specialists. More access to community pastures would also help.

Ignoring the rough terrain that may lie ahead for the cattle industry would make these issues difficult to address effectively in the future.

Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.

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