EDMONTON – A marketing dispute between one of the nation’s largest beef processors and a 140 member cattle producers’ marketing organization has ended.
XL Lakeside of Brooks, Alta, had informed Northwest Consolidated Beef Producers in Strathmore, Alta., that it would no longer bid competitively against the other major buyer of fed steers and heifers, Cargill of High River, Alta., if the group did not stop marketing its members’ slaughter cows.
Vern Lonsberry of Northwest told his members that the Nilsson Brothers’ company, XL, intended to start bidding attractively for individual members’ fat cattle, rather than for the group’s show list, the animals for sale to packers. This would undermine the producer group’s collective marketing strength, potentially breaking up the organization.
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He said it would happen unless Northwest stopped representing the group’s cull cows.
Northwest is currently the largest marketer of fat cattle in the province, with 150,000 head sold each year. Its members have the capacity to feed 250,000 each year.
Terry Schetzsle of Northwest said the organization’s board was relieved that it and XL came to a marketing agreement that would include fat cattle and butcher cows.
Lonsberry said with only two large buyers of cattle in the region, marketing choices are limited. Northwest makes it possible for its members to consolidate their cattle, which they say improves price discovery.
Schetzsle agreed, saying that few buyers and many producer-sellers create a poor price discovery scenario.
“It makes marketing difficult at the best of times,” he said.
University of Saskatchewan agricultural economist Bill Kerr said the group is bargaining from a position of improved strength versus handling sales as individual producers.
“It’s hard bargaining and it happens when there is change that affects one party or the other. The outcome is usually related to who has the most leverage at that point in time,” he said.
American country-of-origin rules have further hampered Canadian cattle producers’ opportunities to receive fair value for their animals due to their position in the value chain, say producers.
Nilsson Bros. did not respond to the Western Producer by press time.
