Everyone knows they are out there, but no one is sure what to do with those aging cows and bulls that are mowing down grass in Canadian pastures.
“The prevailing sentiment is that cows aren’t worth much, they aren’t going to be worth much, so get used to it and start making production decisions based on that,” said Alberta Beef Producers vice-chair Erik Butters, who led a recent meeting to discuss a cull cow strategy.
He said there is no single solution for handling cattle older than 30 months and suggested tax deferrals, cow set-aside programs and exit strategies for producers who no longer want to look after cows.
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The exit strategy could address the problem of older farmers who had considered their herd an investment in the future.
“Their cow herd is their RSP and right now their RSP isn’t worth much,” Butters said.
The federal government has offered retraining proposals in its agricultural policy framework for farmers wanting to leave the industry, although this may not apply to those wishing to retire.
A cull cow set aside may have possibilities. Unlike a fattening steer, a mature animal is not going to gain weight and be discounted by the packer, and because it is far older than 30 months, there is no doubt about dentition tests.
Tax strategies could also be devised for those forced out of the business because their herds were devalued.
The BSE surveillance program removes some older animals from the food chain.
As of May 17, 25,863 had been tested for BSE this year. Participating farmers and veterinarians were paid for their contributions.
Beef producers at the strategy meeting also discussed available farm programs and how the Canadian Agricultural Income Stabilization program might cover income shortfalls. It picks up about half of the lost cow price but as incomes continue falling, income averages decline and payouts are less.
“If the depressed market for cows continues very long into the future, we won’t get as much of a benefit from CAIS as we have been,” Butters said.
Cull cows and bulls end up as commercial beef that is used for processing such as fast food hamburger patties, sausages and other prepared meats.
The Beef Information Centre reports that commercial beef consumption has increased in Canada. Before BSE was discovered in 2003, Canadian processors imported this type of beef from Australia, New Zealand and Uruguay.
In 2002, Canadians consumed 28 percent of Canadian-produced commercial beef, but by 2004 that had increased to 65 percent.
Canfax said Canada should kill 600,000 culls in 2005, which would meet about 70-80 percent of the commercial beef requirements for the domestic marketplace.
In 2004, total cattle slaughter in federal and provincial plants was 3.9 million head. Beef production was 1.4 million tonnes and is expected to be 1.5 million tonnes this year.
According to Canfax statistics, the five year average annual cull is a little more than 10 percent of the beef herd, or about 860,000 head. Drought years were responsible for about one million head being cut from herds. Most were shipped to the United States for processing.
Market conditions in 2004 were so poor no one was willing to accept 20 cents a pound or less for their old animals, so the cull rate was around five percent.
In better years people might expect to receive as much as 60 cents a lb. for a cull cow. However, those generally were exported to the U.S. at a time when the Canadian dollar was below 70 cents US.
Offshore markets are needed for the extra commercial beef produced, but Cuba and Macau are the only two markets willing to accept beef from animals older than 30 months.
Cuba tends to buy according to price. For example, a trade delegation there last month made a deal with Cuba to buy 150 tonnes of Canadian liver at 29 cents per lb. Typically Cuba buys that product from Uruguay at 25 cents per lb.
Negotiations were also under way to sell Cuba beef trimmings for about $1.55 but Uruguay undercut the sale at 99 cents a lb.
Beef producers will meet again to discuss this issue June 14-15 in Edmonton.
