Sector welcomes province’s decision to contribute to AgriRecovery funding and offset livestock insurance premium costs
Saskatchewan cattle producers say provincial funding announced May 14 will help them through uncertain COVID-19 markets, but the real fix would be a return to full slaughter capacity.
Agriculture minister David Marit said the Saskatchewan government will contribute $5 million, or its 40-percent share, to the AgriRecovery program that Ottawa announced May 5.
He also announced $5 million to partially offset rising Western Livestock Price Insurance Program premium costs and asked Ottawa to contribute its 60 percent.
“We know our livestock sector is under tremendous pressure and today’s funding will help ensure our producers have the support they require in this unprecedented period,” he told reporters.
Saskatchewan and Alberta have now both committed their full share of AgriRecovery. Manitoba had yet to make a decision as of press time May 15.
In Saskatchewan, the federal and provincial funding together provides $12.5 million for the cattle set-aside program.
While the national announcement includes beef and pork producers, Marit said the pork sector is managing so far, as hogs continue to move to slaughter.
“We’re not seeing a concern here in Western Canada yet,” he said.
But Saskatchewan cattle are backing up.
“I think as of last week we’re estimating about 15,000 head of market-ready cattle have already been affected by the slowdown in processing,” he said.
The national backlog is about 140,000 head.
Details of how the set-aside will work have not been finalized, but the money is intended to help pay for the increased cost of keeping market-ready cattle longer.
Marit and industry leaders said they hope the two large slaughter plants in Alberta are back to capacity soon.
Saskatchewan Cattlemen’s Association chief executive officer Ryder Lee said a program similar to the one established during the BSE crisis would work, as long as it considers that the backlog affects everyone in the chain, from fat cattle to backgrounders to calves.
“All industry together largely is recommending that they strike a committee to help figure out how many cattle are backed up, how big are they, costs, and how to send that (money) out, because it’s a dynamic situation,” Lee said. “We’ve got to make sure we have the people at the table who understand the different aspects of the industry.”
Saskatchewan Stock Growers Association president Bill Huber said producers face a serious price crunch this fall.
“It is already costing the cattle industry $400,000 per day to feed cattle that normally would have been processed by now, and that number is growing every day as more animals go unprocessed,” he said. “We are concerned because negative margins in the feeding sector and a backlog of cattle will wreak havoc with calf prices in the fall.”
The WLPIP calf program allows producers to lock in floor prices on fall calves but premiums have skyrocketed since the end of February and become unaffordable for many. The SSGA said some premiums have quadrupled. Some went as high as $80.
The provincial assistance will pay for 40 percent of the premium differential for all cattle classes and is retroactive to Feb. 25, Marit said. This will be in place until Sept. 1 and then reassessed.
In addition, the deadline to obtain calf price insurance has been extended from May 28 to June 18.
There are concerns that producers aren’t using the program that industry has fought for years to have included in the federal-provincial business risk management envelope.
Jeff Morrow, vice-president of operations at Saskatchewan Crop Insurance Corp., which administers WLPIP and will look after the set-aside program once established, said enrolment is down.
“We’re probably at about six percent of the marketable calf crop that’s insured right now,” he said. “That’s lower than historic, for sure, for this time of year. The highest we’ve seen in the program is about 17 percent of the calves insured.”
Huber said producers can’t afford not to have coverage considering the situation.
Lee said there was a period when the coverage dropped significantly and premiums climbed at the same time. Coverage has come back up a bit, which hopefully will continue, he said.
“I think the participation level to date just reflects the impact that COVID had and that made it pretty much an unapproachable program for about a month-and-a-half,” he said.
Some farmers on social media said the changes won’t help them because they already took a chance and made marketing decisions based on the May 28 deadline.
Lee said it’s true that the premiums do often move lower as the deadline gets closer.
But with a potential second wave of COVID-19, and market uncertainty, producers have to make individual decisions as best they can.