Processing study ends soon; cattle producers make recommendations

Source: www.producer.com

The federal committee on agriculture is expected to soon wrap up its study into Canada’s processing capacity.

Beginning in November 2020, MPs have heard from more than 50 witnesses on the issue. During a Feb. 23 meeting, the Canadian Cattlemen’s Association testified.

In an accompanying brief, seven recommendations on how to “create an environment that will support an optimal Canadian packing system” was provided.

The recommendations were:

• Establish a red beat industry export development fund

• Support North American integration through standardizing Canadian and American shipping requirements for beef to South Korea

• Extend the set-aside program availability into 2021-2022.

• Update Canada’s specified risk material (SRM) removal requirements

• Implement the recommendations of the Labour Workforce Action Plan

• Support automation in processing plants

• Place vaccination priority on agri-food processing workers.

The lobby group made clear to MPs that about 78 percent of Canada’s total beef processing has taken place in Western Canada, averaging 56,249 head per week with an 86 percent utilization rate over the last five years.

COVID-19 seriously screwed that up: last spring, “temporary slowdowns effectively halted just over two-thirds (70 per cent) of Canadian beef processing capacity over a two-week period and resulted in the first half of 2020’s cattle slaughter being down 11 percent compared to the same period in 2019.”

A since-processed 130,000 head backlog out West ensued, creating millions in feedlot losses.

The CCA contend Eastern Canada’s federally inspected packing capacity flirted with full capacity even before the pandemic. Figures provided show utilization rates at eastern packing facilities being above 90 percent since 2017, and rising each year.

In 2020, weekly slaughter capacity was 12,550 and the use of it was 100 percent. The year before, a 13,250 capacity was used 98 percent.

“This resulted in longer feeding periods, increased costs and lower prices for producers,” read the submission. “This capacity shortage has been particularly acute during the fall and winter months where producers are experiencing delivery and processing delays and a negative price spread to other regions.”

The submission notes that while Ontario’s packing capacity was “keeping pace” during the pandemic, a December 2020 closure at Cargill’s Guelph facility resulted in an estimated backlog of 10,000-15,000 head of cattle during the two-week period.

The set-aside program put in place by the federal government during the pandemic helped bring “stability to the market” but a backlog of 10,000 to 15,000 head of cattle remains, according to the CCA.

Across Canada in 2020, Canadian federally inspected slaughter capacity averaged 57,681 head per week with a utilization rate of 89 percent.

But packing capacity taking place in Canada is becoming more and more concentrated in large facilities. The CCA says those big packers are highly efficient competitors that proved capable of enduring the pandemic.

Small- and medium-size packers in the past 10 years have had difficulty competing, and the CCA contends that’s because of efficiencies of scale and regulatory burden.

“Creating the right conditions for small, medium and large packers is essential to a resilient Canadian beef sector,” they say. “Additionally, the integration and thinning of the U.S. border for live cattle and meat trade will further build resiliency within the Canadian beef supply chain.”

The brief from the CCA says their recommendations would strengthen processing capacity in Canada.

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