Plant still closed | Producers holding animals, shipping to the U.S. while prices weaken
Uncertainty will rule the cattle markets as long as the XL Foods cattle slaughter plant in Brooks, Alta., remains closed.
“The uncertainty around this thing is driving everybody nuts,” said Martin Unrau, president of the Canadian Cattlemen’s Association and a producer from Manitoba.
Cargill Meat Solutions at High River, Alta., has increased production, but many producers are holding onto animals, while more cows and fat cattle are being exported to the United States.
However, U.S. packers may need time to adjust their processing lines because they must segregate Canadian cattle under country-of-origin labelling laws.
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They will want guarantees of steady, consistent volume before they make such a move.
Weakening prices are discouraging producers from doing anything until they see a return to normalcy.
“We have had lots of hurdles over time. It is tough out there and there is a lot of red ink out there, but prices haven’t fallen off anywhere like they have during BSE,” said Canfax market analyst Brian Perillat.
“Hopefully, looking back on this, it will be just a bump in the road rather than a dramatic, changing event,” he said.
No one anticipated the situation worsening when the first recalls were announced Sept. 16 after E. coli O157:H7 was detected in beef originating from the XL plant in Brooks Alta. Limited information from the owners of XL and the Canadian Food Inspection Agency gave rise to speculation about the impacts on markets and consumer confidence in beef.
“If we can get past this thing of not knowing what is going on, everybody can adjust their management and we can move forward and find some way to get that plant opened up and get some confidence back,” Unrau said.
The situation may have received more attention than it deserved and lessons need to be learned from this episode, he added.
“We don’t need an inquiry, but we definitely need to look at how this was handled and find some way of ensuring things don’t drag on this long if this happens again,” he said.
Western sales have slowed in the last week with fewer cows and feeders showing up for sale at auction markets.
Cow prices are down about 15 cents per pound, or $200 per head, and feedlots are holding cattle back, which is creating a backlog.
Fat cattle can wait a few weeks, but it becomes costly feeding and maintaining them.
However, grades may actually improve with more AAA because the animals are getting fat. At the same time, some animals are on feed additives that require timely marketing to achieve the full benefit of the growth promotants, said Perillat.
Profits were already elusive this year for the feeding sector and packers.
“There were a lot of losses in the feedlot sector and this is just extending those losses,” he said.
XL Foods’ operating licence was temporarily suspended Sept. 27 and more than 1,800 products from across Canada, the United States and Hong Kong have been recalled.
Some workers were allowed into the plant Oct. 10 to process carcasses that had been there for nearly three weeks. All meat was tested for the presence of E. coli and ruled safe. CFIA inspectors are scrutinizing the process and have told the company what is expected to ensure food safety in the future.
“We have already advised the company that its documented food safety plans are acceptable and that previously identified maintenance and sanitation issues have been addressed,” said the agency in a statement Oct. 12.
