SASKATOON — The Canadian beef herd should stabilize and perhaps expand slightly in 2012, say industry officials.
That could better position producers to take advantage of the continual slide in U.S. herd numbers.
Canadian Cattlemen’s Association president Travis Toews said market signals point to stabilization followed by expansion, but other variables are also at play.
He said land use competition is one of the main factors.
“Canadian agriculture is actually in quite a robust economic position as a whole and so there are many opportunities for land use, including growing canola and wheat on the Canadian Prairies,” he said.
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“Consequently, producers are taking a look at what their highest return is, and in some cases, in spite of high cattle prices, they’re concluding that it’s better to grow annual crops.”
Saskatchewan agriculture minister Bob Bjornerud said some producers took advantage of high prices to retire from the industry.
“It’s a little bit of a double-edged sword,” he said of the strong market.
He said producers did a great job hanging on through BSE and market downturn, and he believes they’ve seen the worst.
“If the dollar settles out here and stays somewhat stable, we’re liable to see even better prices into the future.”
Toews said those prices must be sustained if the herd is going to rebound. The last eight years have seen equity losses and producers need a solid year before they will consider investing and expanding.
“We’ve all been burned pretty seriously,” he said.
There is also the increasing age of producers and how willing they are to take on more risk.
The steady decline continues in the United States, even though market signals have encouraged expansion. Toews said land use competition is a huge issue there because of the value of corn and soybeans.
Drought across much of the livestock region has also forced producers to downsize.
A smaller American cow herd, low interest rates, shrinking global inventory and improved market access put Canada in a good position.
“I think in Canada we have opportunity to grow our industry in perhaps a disproportionate way over the next three to five to seven years,” Toews said.
He predicted that more heifers will be retained and said a one percent increase in the herd wouldn’t be out of the question.
The Canadian cow herd is 4.2 million head, down significantly from the 2005 high of 5.5 million.
