Bob Ivey thanks his lucky stars that someone else owned 75 percent of the cattle in his feedlot on May 20.
“I’d be out of business today if I owned all the cattle in my lot,” he said at a recent meeting.
Ivey, a farmer from Ituna, Sask., and president of the Saskatchewan Cattle Feeders Association, said feedlot operators who were custom feeding when the world closed its borders to Canadian cattle and beef are probably doing all right financially.
Ivey had 2,500 head in his lot at that time.
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“That’s the only thing that will allow us to survive,” he said. “The guys who own the cattle will take the losses. If we had owned all 2,500 head, we’d be toast.”
It’s a similar story at other Saskatchewan feedlots.
At Red Coat Cattle Feeders near Hazenmore, acting manager Miles Anderson said most of the cattle in the lot were being custom fed and they were sold first.
The feedlot-owned cattle that got too fat are just one cost. Anderson said staff filled out forms for customers who were applying for assistance from bovine spongiform encephalopathy programs. That involved a lot of unpaid office time, but Anderson said it made sense.
“It’s easier for us to transfer information from our computer to a piece of paper,” he said.
Anderson said the big question feedlots face this fall is whether their customers will be back.
There were about 3,500 head in the 10,000-head capacity lot in late September.
“Hopefully people didn’t get beat up so bad they aren’t going to do it anymore,” he said.
Ivey echoed that concern.
“(Customers have) taken a good licking.”
But Maurice Schuster, who manages Birch Island Land and Cattle Co. at Rhein in east-central Saskatchewan, said there are already encouraging signs.
His phone is ringing with inquiries from potential new customers. He expects many will retain ownership through this winter, but they need a place to feed their cattle.
“We’re doing quite well,” he said. “We’ve got a good client base and there is lots of interest.”
Birch Island, which accepted its first cattle Dec. 1, 2002, is about half-full. Capacity is between 6,500 and 7,000 head.
The enterprise is different from some of the other new feedlots in the province in that it was funded directly by 13 private investors, not hundreds of community investors.
“Sure you want a return on your investment,” Schuster said. “Even pre-BSE we’re not looking within a certain time period.”
They did put some projects on hold but he said they are easily making payments on their small debt.
Anderson said Red Coat, which opened in 2000, is also holding its own and making its payments. But coming off two difficult drought years didn’t leave anyone in great shape.
“It’s a tough business,” he said. “If we’d had anything left over from last year we would’ve been able to handle it better.”
Ivey said the industry needs to work with governments and lenders to get through this period.
“I think we have to very quickly look at what kind of financing arrangements are in place,” he said.
“Can we convince the banks that now is not the time to pull back?”
Ivey said those feedlot operators who didn’t have a relationship with a packer have been harder hit than others. This is especially true for feedlots in southeastern Saskatchewan and Manitoba that normally ship directly to the United States.
“Who’s making the money?” Ivey said. “I know I lost $900 on a steer. Where did it go? Somebody took us for a ride.”
He said the industry must be innovative and creative if it’s going to survive. Many producers who do retain ownership don’t have the facilities to feed them.
“What I’ll need is some sort of a financial package that I can use to feed those calves,” he said.
