As Alberta feedlot owner Rick Paskal delivered 10 pound packages of frozen ground beef for $1 a lb. to eager customers, he took a moment to explain why he and his colleagues were driven to such desperate measures.
“We’re in hard times right now,” he said.
At the end of June 2003, that terse explanation summed up agriculture’s worst crisis since the Depression years of the 1930s. A single case of bovine spongiform encephalopathy reported May 20 isolated Canada from the world and threatened to collapse its powerhouse beef industry.
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Trading partners shut borders and Canada watched its hard-earned position as the world’s third largest beef exporter dissolve.
The history of Western Canada’s century-old beef industry has been marked with political interference and market vagaries, spiced with a dash of weather and disease challenges.
Cattle grazed the ranges of British Columbia as early as the 1820s when ranchers fed hungry gold miners. The Prairies did not open for another 50 years when the Dominion government granted major tracts of grazing land to build a western beef industry, drawing in British settlers and keeping out the Americans.
Politicians in Ottawa saw the opening of the West as a means to provide raw materials to Eastern Canada and increase trade with Great Britain.
From the outset, western cattle producers disagreed with that policy, arguing commerce with the United States made more sense, said University of Calgary historian Max Foran in his book, Trails and Trials.
Conditions on the western range were ideal to grow heavyweight grass-fed cattle favoured in the U.S. Three- to four-year-old steers weighing nearly a ton could withstand harsh weather and still net a reasonable return in markets like Chicago and Kansas City.
George Lane, founder of the Bar U Ranch near Longview, Alta., predicted in 1913 that the Pacific Northwest could be a primary market for western Canadian cattle because a large affluent population lived in Washington, California and Oregon.
The British market wanted a well-finished carcass that dressed out at 450-500 lb. These types were not economical for western ranchers to produce. Further, the prices paid for Canadian beef did little to encourage building a quality herd. Animals were often of Angus, Shorthorn or Hereford background with a fair amount of Holstein blended in, said Alberta historian Grant MacEwan.
Political inference made the 1920s an unstable period for the West. Live cattle prices dropped to $3 per hundredweight from $10 when American president Herbert Hoover imposed a tariff on Canadian cattle during a protectionist mood enveloping the U.S.
Being shut out of the American market forced 10 of Canada’s 86 meat plants to close. Cattle inventories declined and exports fell to $600,000 per year from $21 million. The tariff was finally removed in 1935, when U.S. president Franklin Roosevelt offered reciprocity on a variety of agricultural products.
Foran’s book said the American actions prompted the federal government to encourage exports to other countries like England. Canada even looked to Japan and in 1924, shipped 28 head for eight cents a lb. The freight was $2,407 or $800 over the selling price to an uncertain market across the sea.
More beef went to Britain during the Second World War and price controls were introduced. Once peace returned, Canadians were less willing to ship to England when Americans could outbid them. In 1948, more than 300,000 cattle worth $60 million went south.
Canada’s relationship with the Ameri-cans solidified with the signing of the North American Free Trade Agreement in 1989.
“NAFTA opened up the door for tremendous free trade access,” said Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association.
However, depending on a single market was too tenuous, so with the formation of the Canada Beef Export Federation in 1989, an aggressive campaign was launched to get markets in Asia and Mexico.
By the mid-1990s, Canadian beef found a place on the global menu but the majority continued to go to the U.S., followed by Mexico, Japan and South Korea. Total sales were worth more than $3 billion in 2002.
“A lot of things came together at the right time. It was the law of unexpected consequences,” said Laycraft.
By May 20, 2003, the unexpected happened and animal disease halted all trade. The Canadian industry floundered with uncertainty as it attempted to adjust to a domestic market only. Foot-and-mouth disease in 1952 had closed borders for nearly a year. The industry had a better chance of recovery then because the export market was small. Recovery 50 years later is more challenging.
Beef market analyst Kevin Grier has called the Alberta cattle industry expansion one of Canada’s most notable agricultural phenomena in the last 30 years.
The province always considered itself cattle country and revelled in its history of freewheeling cattle barons fattening steers on wide open ranges. In reality, their efforts were often clouded with failure. The real cattle barons took another 100 years to emerge in high tech, computerized feedlots and a world class beef processing sector located in the foothills.
Opinions differed among early settlers as to whether cattle should be raised and finished in the West. Harsh blizzards and temperatures as low as Ð40 C had killed thousands of animals throughout the early part of the century. The hardships and losses made people cautious, said Ranching in Western Canada author Ed Gould.
Fellow history author, Foran, contends the Canadian government promoted grain farming as more lucrative so land that should have remained under grass cover was broken and seeded to millions of acres of wheat. When Alberta and Saskatchewan became provinces in 1905, settlers were encouraged to farm the land rather than integrate livestock and crops. Growing wheat for Europe and Eastern Canada seemed a better paying proposition than grazing cattle on native grass.
Cattle feeding in the Lethbridge area took its first tentative steps in the 1920s because there was an abundant alfalfa crop available due to irrigation expansion. However, most efforts faltered and the industry failed to take hold for another 40 years.
Instead, the feeding industry developed in Ontario, where cattle were fed homegrown corn and processed in eastern slaughter houses where meat could be cheaply delivered to the large population of Eastern Canada.
Between 1935-37, about 200,000 western cattle were shipped by rail to Ontario feedlots. These tended to be yearlings and two year olds.
At the onset of the Second World War, the federal government offered a 50 percent freight reduction to send animals to Ontario feedlots rather than feeding them in the West. Kept on feed for 90 days, they were finished and slaughtered in the East and came west as boxed beef.
By 1980, 680,000 western feeders were shipped east according to Ontario Cattlemen’s Association figures. But change was in the wind and by 1989, only 250,000 went east. The rest remained in Alberta, and Ontario never regained its feeding capacity.
A glut of barley on the Prairies in the late 1960s encouraged people to think about feeding it to cattle. The western Canadian feedlots were modelled after yards in Texas and the American Midwest corn belt. Designed as custom operations where clients placed their cattle on feed for a fee, these differed from the on-farm lots common in Ontario.
One of the major innovators for the time was Western Feedlots. The idea of feeding Alberta-born cattle at home started with a meeting in Calgary in 1958. Cattle producers were encouraged to invest in the concept of retained ownership of their cattle through to slaughter.
The leaders included a who’s who of Alberta ranchers whose families were among the province’s early settlers. They included Eugene Burton, Frank Gattey, John Cross, Allie Streeter, Neil Harvie and brothers Charlie, Ed and Angus McKinnon. They put in $65,100 to finance the startup.
The first lot was purchased and built on 528 acres at Strathmore, east of Calgary. They placed 975 cattle. It was considered a big lot at the time, and eventually expanded to 10,000 head and two more sites in the Calgary area, making the shareholder company the largest lot of its kind in Canada. (Continued)
The success of Western Feedlots and others eventually catapulted Alberta into the fifth largest feeding area in North America. It handles 70 percent of the finished beef in Canada, feeding about 2.5 million a year.
The growth of the feedlots also saw major consolidation in the beef packing industry.
Alberta had five major beef packing companies in 1991. When American-owned Cargill Foods set up shop in High River in 1989, the impact was keenly felt among century-old companies like Burns Foods and Canada Packers. Unable to compete with the modern plants, they were soon gone. Cargill and the growing strength of Lakeside Packers at Brooks, Alta., captured most of the market and now handle two-thirds of Canada’s beef. These plants are capable of slaughtering, rendering, fabrication of boxed beef and storage, all in one location.
In addition, XL Foods in Calgary survived and was sold to Nilsson Bros. of Clyde, Alta., which also purchased a former Canada Packers plant in Moose Jaw, Sask.
As the feeding and packing industries evolved, marketing changes occurred. At one time people accepted prices from country buyers who may or may not have been honest, said longtime auctioneer Ken Hurlburt of Fort Macleod, Alta. No one knew what prices were offered to neighbours, but with the widespread use of auctions, price information was readily available.
Today’s modern feedlots sell directly to packers. Feeder calves from farms and ranches are marketed in live auction rings via the internet and satellite sales that entice buyers from all over North America. The technology is capable of selling thousands of animals during a working day.
While producers grew more savvy about marketing techniques, price instability was a constant threat because of the predictable expansion and contraction phases of the industry.
War encouraged greater beef production and often reasonable profits. In 1940, Canada produced 717,467,000 lb. of meat. That grew to more than one billion lb. by 1947. Most production centred in the four western provinces where 46 percent of the beef marketings occurred. By 1945, the four provinces contributed 60 percent of the beef market.
Marketing boards were discussed as early as 1972, but producers rejected them. Subsidy programs often failed to level the peaks and troughs of the cattle cycles because they tended to disrupt rather than support the industry. The tripartite red meat stabilization program introduced in the latter 1980s was another subsidy that turned sour. It was scrapped in the mid 1990s because of trade action threats from the Americans.
Besides price fluctuations, quality was often a problem. The basic beef herd was Angus, Shorthorn and Hereford, but many holdings were small with little expertise or interest in quality breeding programs. Dairy and beef crosses were common, causing lower yields and dubious quality.
Compulsory grading was introduced in 1947 and offered some incentive to improve breeding programs. However, some of those programs created other problems.
Animals were being bred smaller to produce small steaks and roasts because it was believed modern consumers wanted small cuts. Eventually dwarfism became a problem, especially among Herefords.
By the late 1950s, a handful of pro-ducers wanted a change, said Frank Jacobs, former editor of Cattleman magazine and author of Cattle and Us.
Canadians had seen and been impressed with large European cattle like Charolais and Simmental in 1950s. However, foot-and-mouth disease in Europe kept these breeds out of Canada for the first half of the 20th century.
Agriculture minister Harry Hays was convinced these cattle were a necessary ingredient to improved beef quality and growth.
By 1966, the first imports of Charolais arrived. These animals cost the Canadians less than $7,000 each. They were resold to eager American buyers for more than $30,000, said Jacobs.
The boom lasted till 1975.
“We didn’t realize what the cattle were worth. We hadn’t paid much for them over there – about $2,000. We had no idea they would sell for huge dollars here,” said Rodney James. The former manager of the Canadian Charolais Association was part of the buying team that imported the original 110 French animals.
Today there are 30 breeds of cattle registered in Canada, although most are considered minor breeds with British breeds like Aberdeen Angus dominating.
For many in the industry, the returned popularity of British cattle, the struggles with trading partners and management of animal disease proves history repeatsitself with the same regularity as thecattle cycle that spins around every dozen years.
The industry has survived every trial and tribulation with renewed confidence that proves the independent and tenacious spirit of the people involved. Their most recent challenge will make their tale of survival a legend for the next generation.
