SWIFT CURRENT, Sask. – Canadian beef producers should be optimistic, at least in the short term, about where their industry is headed, an agricultural economist told Saskatchewan Stock Growers Association members last week.
Andy Schmitz of the University of Florida also farms in Saskatchewan near Chaplin and Central Butte.
He said the American herd continues to shrink, as it has for the last 10 to 12 years, even though prices have risen. Producers there are not retaining heifers.
“The U.S. cattle numbers have steadily declined and I think will continue to decline for at least the next two to three years,” he said in an interview.
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“In fact, they may never increase in numbers, at least for the next 20 years.”
That’s good news for Canadian producers who are building the national herd.
Bill Donald, president of the National Cattlemen’s Beef Association from Melville, Montana, said producers are receiving the economic signal to keep heifers back but there are other factors at play.
“The problem we have in the United States right now is that we have got a huge area in the southwest that’s in severe drought and those folks have to liquidate their cows, not because the economic signals tell them to but because Mother Nature tells them to because there isn’t anything for those cattle to eat,” he said.
Pastures near the drought zone are full and it becomes too difficult to ship cattle further to feed.
Another issue is that many American producers are seeing the current profitability as a way to get out of the business. Schmitz said they lost money for so long that it’s a good time to exit.
In particular, herds of less than 88 cows are disappearing and huge operations are taking their place.
He pointed to Deseret Ranches in Florida, which runs 48,000 head.
Canadian producers who feel the same way could also pay off debts and leave the business, he added.
“This is the time to do it,” Schmitz said.
Brian Weedon, who ranches near Swift Current, Sask., and is a past president of SSGA, said the impact of that is unknown.
“I’m not sure how we are ever going to be replaced and where the industry is going to go,” he said of aging ranchers.
Schmitz said the convention theme, Let the Good Times Roll, was appropriate because the good times have finally come to the sector.
Prices are higher and consumer acceptance for beef has stabilized, he said. Consumption has remained high in spite of the recession as people choose to eat at home and eat more lower end cuts.
Exports are rebounding and there is growth potential.
This is happening with high feed grain prices.
“If you can still run a cattle business with $7 corn, you have to be optimistic,” Schmitz said.
