Packing plants back on track, but future uncertain

With a huge backlog of animals to work through, cattle groups are fearful of what comes next


By Alexis Kienlen, Alberta Farmer Express (Canada)

July 1, 2020


Alberta’s beef-packing plants are working at or near full capacity but the crisis is not over yet, say cattle leaders.


“Our processing capacity has continued to increase over the past few weeks and cattle prices have been relatively strong, but markets are still vulnerable to a disruption in the processing plants,” Alberta Beef Producers chair Kelly Smith-Fraser said in a virtual town hall in mid-June.


The most recent fed cattle numbers indicate a backlog of around 130,000 head of cattle ready to be slaughtered. The Cargill plant at High River is now at 90 per cent of capacity and the JBS plant at Brooks and Harmony Beef at Balzac are close to capacity. Eastern Canada is now operating at 110 per cent capacity, while U.S. processing capacity is at about 95 per cent. Labour continues to be the biggest constraint.


The federal and provincial government have created a $43-million ‘set-aside’ program in Alberta to cover the costs of feeding cattle waiting to be processed, but Alberta Beef Producers and other cattle groups say the sector needs additional support. ABP has asked the provincial government to expand support to the cow-calf and backgrounding sectors. Cattle groups also want government to provide funding to reduce the cost of the Western Livestock Price Insurance premium for calf and feeder cattle insurance, and eliminate the reference margin limit on AgriStability, to make it more effective for cow-calf producers.


“Despite the assurances from the (provincial agriculture) minister that he is working to improve risk management programs and will monitor prices going into the fall, we have not received any commitment of funding for the cow-calf and backgrounding sectors at this time,” said Smith-Fraser, who ranches at Pine Lake.


“To be honest, it doesn’t appear likely that there will be any announcement of funding in the near future. There is no certainty that funding will be available for these sectors if there are major market drops in the fall.


“The existence of the Western Livestock Price Insurance Program makes it difficult for governments to implement the AgriRecovery fund to cover market losses. Any AgriRecovery support for the sectors in the fall would likely be restricted to cover feeding costs for cattle that can’t be sold.”


She encouraged producers to take steps to mitigate risk, and consider purchasing the Western Livestock Price Insurance, which was open until June 18. With COVID-19, premiums soared, but had since stabilized at about $42 a head, said Brad Osadczuk, finance chair with ABP.


Smith-Fraser said producers need to be prepared for the fall, and the uncertainty it will bring.


The set-aside program ...