Consumers paid more for beef, processors and retailers increased their profits and feedlot owners lost millions in 2020 because of COVID-19.
A paper published through the University of Calgary’s School of Public Policy, written by project co-ordinator Karen Spencer, indicates feedlots lost an estimated $379 million in gross revenues for 2020 compared to the previous year, reducing their collective income by 6.7 percent.
Consumers at the same time paid more for beef at the retail counter as demand surged when pandemic-related health measures forced closure of restaurants and increased demand for cooking at home.
On average they paid 6.2 percent more for beef products in 2020 compared to 2019, the paper said, and some months saw as much as 18 percent higher beef prices year over year.
In the early months of the pandemic, beef supply was temporarily short due to outbreaks of illness among slaughter plant workers, notably Cargill in High River, Alta., and JBS in Brooks, Alta., which collectively process about 70 percent of federally inspected beef.
But by the end of 2020, federal cattle slaughter rose above 2019 levels as plants attempted to address a backlog of fat animals.
“While producers received less revenues YOY (year over year), processors and retailers downstream in the value chain received higher prices,” the paper said.
“The average Canadian retail price for beef in 2019 was $19.21 per kilogram while the average for 2020 was $20.41 per kg., a 6.2 percent increase.”
June and July were expensive months for shoppers at the meat counter. In those two months, retail beef prices were 18 and 13 percent higher, respectively, than in the same months of 2019, the paper said.
Though processors and retailers moved less beef, retail revenues for beef were 3.3 percent higher than the previous year.
“This amounts to $563 million in additional gross revenues to the downstream processor/wholesale/retail portion of the beef value chain in Canada,” the paper said, based on Spencer’s calculation using Agriculture Canada’s red meat conversion factors.
The federal-provincial set-aside program, which subsidized feedlot operators to hold back cattle that couldn’t be sent to timely slaughter, paid out $21.7 million, which is 5.7 percent of the $379 million in losses or deferred revenue for feedlots, the paper said.
“It is of note that none of the set-aside benefits were directed to cow-calf operators, although they too were subject to substantial price impacts.”
The paper concluded that COVID-19 “hurt consumers and producers, while other select parts of the industry greatly benefited.”