CALGARY – With the loss of the Crow Benefit subsidy, young Saskatchewan farmers like Lloyd Rodgers of Palmer say they will not earn a living just growing grain.
The government announcement was the final straw.
Long before the Liberals announced the death of the grain transportation subsidy, Rodgers and his neighbors started to expand their cow herds and switch to special crops.
As wheat prices plunged and marginal land blew into ditches, the decision to seed land to grass and buy some cows wasn’t difficult.
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These farmers are hoping a buoyant cattle market will pay the bills and keep them on the farm.
For the cattle industry, the changes raise wider questions.
Will increased herd sizes reduce prices? Are there markets for increased production? Could increased sales south raise the protectionist ire of Americans?
For Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association, the government policy change merely makes the farm economy less distorted.
He said a low dollar, recovering demand for grain and confidence in the livestock sector offers a long-overdue adjustment for western agriculture toward a better mix of cropping, livestock and value-added processing.
“There’s going to be a very different policy environment. The one issue that tended to polarize is effectively gone now,” said Laycraft.
With no export subsidy, studies have indicated Canada could handle 300,000 to 400,000 more cows and with widespread expansion in Alberta feedlots, another 900,000 feeders could be absorbed.
The Canadian herd already has been expanding by as much as seven percent a year.
Packers happy
Prairie packers seem to show little unease at the prospect of more cattle to process.
The two largest beef packers, Cargill Foods and Lakeside Packers (recently purchased by the American firm, Iowa Beef Processors), showed confidence in the market by embarking on expansion plans long before the change to the Western Grain Transportation Act, said Barb Isman of Cargill.
“We knew the subsidies were going to change some time ago, since the GATT was signed,” she said.
Cargill will double its output with two shifts of workers to kill and process 4,000 head per day. The meat is destined for the United States and the Pacific Rim, where sales increase every year.
Canada Beef Export Federation, responsible for building sales in the Orient, reported 1994 exports of 11.5 million kilograms of beef and veal – the equivalent of 69,000 head.
By 2000, the goal is to export 105 million kg of beef and veal. That would require 630,000 fed cattle for the Asian market alone, said Neil Jahnke.
As president of the beef export federation, the southwestern Saskatchewan producer is witnessing production changes that he hopes are planned cautiously.
“I can definitely see a change in the cow herd. I just hope it doesn’t increase too fast and get ahead of our market development in other countries,” he said.
Canadian exports have soared in recent years and expectations are for continued off-shore growth, since the North American market likely is at the saturation point, he said.
