WATERLOO, Ont. – Battered by falling prices, rising feed costs and a stronger dollar, the Canadian cattle industry’s troubles will continue for some time, cattle producers heard last week.
“We are entering a phase we haven’t seen for some time, a volatile phase,” Anne Dunford of Canfax told the annual meeting of the Canadian Cattlemen’s Association. “Be prepared. There will be some obstacles.”
CCA president Doug Gear, of Orton, Ont., agreed there are hard times ahead for some.
Last year was a low-margin or loss year for many in the business, he said. Some producers and feedlot owners cannot stand another losing year.
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“I think the number of producers will shrink,” he said. “The number of cattle won’t.”
The main problem is that tight world and U.S. grain supplies mean sharply higher feed prices.
“We’ve had a 50 percent rise in feed costs,” said Dunford.
At the same time, growing supplies of beef, pork and poultry have lowered cattle prices to 90 cents a pound in Alberta for cattle and $1.10 for calves.
Adding to the problem, the Canadian dollar has strengthened close to four cents this year in relation to the American dollar, further eroding the value of a product priced in American currency.
Dunford said if the Canadian dollar continues to strengthen, it will be bad news for the cattle industry that exports almost 45 percent of production, almost all to the U.S.
She said Canada’s weak currency during the past five years, when it fell from 89 cents to 70 cents U.S., was one of the main factors in the sector’s prosperity.
Several convention delegates recognized the irony of such a bleak prospect in the year during which the Crow Benefit grain subsidy was dropped.
The end of the Crow has long been a demand of the cattle industry, on the assumption that it would lower grain prices and make the cattle sector more profitable.
But Dunford’s industry outlook wasn’t completely bleak. She said the value of cattle and beef exports continues to increase and could hit a record $1.8 billion this year.
At the same time, the domestic market also is growing. In 1994, for the first time in years, per capita consumption of beef in Canada rose.
The average Canadian ate nearly one more kilogram of beef last year, raising per capita consumption to 23 kg.
