RED DEER – Packer and feedlot concentration is a good thing for the beef industry, say analysts.
Often packer consolidation is blamed for lowering beef prices, but numerous government and privately funded studies have found little evidence of price fixing or market manipulation.
“If there is an effect on price, it is pretty darned small,” said Gary Brester at the Alberta Cattle Feeders Association annual meeting held here recently. He heads the trade research centre at Montana State University.
Other analysts say consolidation has saved the industry because it reduces the cost of doing business. Large firms can kill, cut and wrap cheaper and faster than ever before.
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“If packer consolidation had not occurred, this industry would be in worse shape than it is today,” said Kevin Grier, editor of the Canadian Cattle Buyer newsletter.
“The bottom line driver of packer consolidation has been cost reduction,” said Grier.
An obvious effect of industry consolidation has been massive restructuring within the Alberta cattle industry. In less than 10 years, the province has doubled the number of cattle it finishes.
It has drawn cattle and barley from other provinces and Montana.
In 1999, Alberta fed 69 percent of the cattle available in Canada or 2.4 million head. Ontario fed 18 percent and together, Manitoba and Saskat-chewan finished another nine percent. Fifteen years ago, Saskatchewan and Manitoba fed 19 percent, Ontario finished 27 percent and Alberta took 49 percent.
A decade ago there were 229 feedlot operations with more than 1,000 head. They fed 927,000 cattle. In 1999 there were 209 operators feeding more than 1,000 animals each.
Most of these lots held more than 10,000 head at one time. In 1991, only 12 operators had the capacity to feed more than 10,000. They finished 31 percent of the cattle. Today, there are 29 operators feeding 52 percent.
Alberta slaughter has gone up by one million head since 1991 when the province handled 45 percent of the Canadian kill. In 1999, 2.3 million, or 75 percent of available cattle, were processed in the province.
– DUCKWORTH
