CANADIAN livestock producers are to be saluted for confronting the challenge of handling the cull cow surplus caused by the BSE crisis. Over the years, Canada’s livestock industry has perhaps put too much faith in free trade and allowed too much of its slaughter needs to be met by packers in the United States.
In the 1960s Canada slaughtered all of its cull cows, but in recent years, before BSE limited access to the U.S., 42 percent of Canadian cull cows were shipped south. That lack of slaughter capacity is now causing pain.
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Instead of despairing, producers have begun planning new slaughter facilities.
As many as 20 proposals have been made, ranging from new small plants built by shareholders or new generation co-op to the involvement of Federated Co-operatives Ltd. to the redesign of existing hog slaughter plants. A wealth of enthusiasm and experience is evident at the meetings.
These efforts should be encouraged and supported by producers, industry and governments.
When we export live cattle, we also export jobs and economic activity desperately needed in rural communities.
But caution is also advised.
There is danger this combination of crisis and opportunity could cause an over response.
Prairie agriculture has experience in this. Most recently, dozens of pulse processing plants were built because well meaning and enthusiastic groups wanted to capture value-added opportunities in an expanding sector. The result was an overcrowded industry, disappearing profit margins and some company failures.
A similar desire to address a need in the 1990s led to a surplus of inland terminals, causing financial insecurity in the grain industry.
With financial reserves at the breaking point for many in the livestock industry, there is no room for investment failures or wasted resources.
To succeed, new packing plants will need sound business plans. But the planning must take into account not only the feasibility of the business on its home ground, but also in the wider context of developments across the West. It is unlikely that 20 cull cow plants are needed.
There must be co-ordination and co-operation when selecting plant sites to reduce the chance of failure. A committee with representation from each prairie province’s livestock industries could provide this needed co-ordination.
Plans must also include the contingency that the border may not stay closed for years. The new plants should be profitable even with American competition.
One way to help ensure that is to find a buyer for the product before the plant is built or better yet, find an end user with which to partner.
With far-sighted planning, producers can address current BSE challenges and create a stronger industry.
