SASKATOON – The feedlot industry’s current economic pain will be felt in the cow-calf sector this fall, say industry analysts.
“The sad thing is that the cow-calf man who already took a hit last fall is going to take a real big hit this fall,” said James Bezan, Manitoba Cattle Producers Association executive officer.
“It will go down as a blood bath, one we haven’t seen since the 1970s. We are going to see a lot of people exit the industry.”
Myron Taterniuk, a broker with Grassland Cattle Co. in Yorkton, Sask., said losses felt in the rest of the beef industry are trickling down to the farm.
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“We’ve had a major shakedown in the packing industry and it moved back to the finishing industry, and this past winter backgrounding lots were the ones that took the biggest hit. From here it will move right down to the cow-calf producer. . . and unfortunately, he has no one to pass on his costs to.”
Brad Wildeman, president of Pound-Maker Agventure feedlot at Lanigan, Sask., said calves that fetched 90 cents a pound last year will get about 70 cents this year.
“That’s cutting the value almost in half from its high and what will that do for the financial stability of the cow-calf guys?”
Doug Walkey, a market specialist with Alberta Agriculture, said big decisions will be made when calves come off pasture this fall. Considering the outlook for flat slaughter animal markets and strong feed grain prices, cutting herds might be the preferred choice.
But in the long term, most observers agree profitability will return to the beef industry, partly due to elimination of the Crow Benefit.
When feed grains fall again, exporting them will make farmers “feel like they are working for the railways,” said Wildeman, adding that the local livestock industry will be the preferred customer.
But Bezan said the future for cow-calf producers is to follow the lead of the feedlot industry and expand.
“A lot of people don’t like to hear this, but you have to get larger to spread out the overhead. … They’ll have to see how thin do they have to make that overhead to make the cows profitable again, even in tough market conditions.”
