Saskatchewan is just getting started with finishing, says the beef industry about the province’s cattle feeding potential.
Despite Saskatchewan’s natural advantages of centralized feed production, inexpensive land and available water supplies, cattle feeding has never been big business. Many producers instead ship cattle to Alberta and the United States.
The pattern of exports is long-standing and has occurred even as cattle production in the province increased by nearly one third over the past decade.
In 1990, Saskatchewan produced 750,000 beef cattle, according to provincial government figures. In 2000, the total was near 1.1 million and growing as the rebuilding phase of the cow-calf cycle entered its second year.
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Heifer slaughter numbers continue to fall, down 22 percent in 2001, as producers increase their breeding herds.
Saskatchewan Agriculture figures show the number of cattle backgrounded in the province has doubled in the past decade and now stands at 343,000. In that same period, the number of steers and heifers raised to slaughter weights and exported from Saskatchewan has increased only marginally.
Despite a growing cow herd, the number of cattle finished in the province has fallen from more than 200,000 a decade ago to 161,000 last year, Saskatchewan Agriculture figures show.
In Alberta, feedlots pushed 2.5 million animals through to slaughter, 600,000 of which left Saskatchewan as calves.
But the Alberta industry is facing hurdles to expansion, among them expensive land and water quality concerns.
Anne Dunford is a senior marketing analyst with the Canadian Cattlemen’s Association marketing arm, Canfax.
“The conditions are there to feed cattle in Saskatchewan,” she said. “The markets are there to support it and there would be no shortage of calves in Saskatchewan to fill any expansion that takes place.”
Basil Fritz analyzes the cattle feeding industry for the Saskatchewan government and says he is receiving more inquiries about feedlot potential.
Federal programs that finance studies for rural agricultural businesses have seen record levels of inquiry for assistance in producing business plans for feedlots of 20,000 head or more.
In Saskatchewan now, only one feedlot can accommodate that many animals at one time. In Alberta there are more than two dozen, say analysts.
Alvin Weekes operates one of Saskatchewan’s largest feedlots. He feeds more than 8,000 steers and heifers every day near North Battleford and is optimistic the province will expand its feeding business in the next few years.
But he says it won’t happen without assistance from the provincial government.
“Alberta didn’t build their feedlots without the help of that provincial government. Tax breaks and little initiatives here and there … a way to move profits from the oil and gas business into the feedlots and avoid taxes.”
The Saskatchewan government should use irrigation from Lake Diefenbaker and the proposed Meridian Dam project to expand the industry, said Weekes.
There have been more than 35 requests in the past two years for provincial and federal assistance or information from groups considering building feedlots in Saskatchewan.
Fritz said not all have resulted in construction but several are turning sod this fall and a couple began feeding this year.
Weekes said new feedlots will have no problem sourcing calves to fill the pens, but will face stiff competition from Alberta feeders.
“It’s a tough business. You have to be very careful and often you operate on really tight margins.
“Right now you lose money feeding cattle. You have to accept that it is part of the business and plan for it. Anybody starting to feed this fall with a bunch of debt and payments to make could be in trouble already if they haven’t worked this issue out,” he said.
Dunford agreed: “It could be a while before feeders are making money again. It is hard to compete with established companies in Alberta that have been expanding themselves over the past couple of years.
“Losses will be mounting between now and Christmas but for now, it appears feeders will keep on filling the pens. It worked last year and maybe it will work this year. That is the type of thing that new startups will have to be prepared to do if they are going to compete effectively,” Dunford said.
Fritz added that large amounts of capital are required for facilities, feed and cattle inventory. Producers who want to expand their cow herds lack the capital to convert from grain production to grass, and operate with reduced cash flow during the conversion.
Dunford said Saskatchewan is the logical place for growth in cattle feeding, “especially in eastern Saskatchewan where the high grain freight rates and reliable forage production make it appealing to a lot of grain producers that are struggling in that business.”
