Packers winning fall-run race | The Western Producer

The pricing impact of this year’s drought on Canada’s ranchers is starting to be felt as western Canadian cattle begin their journey off the range and into the markets.

For Alberta Beef Producer chair Melanie Wowk, this year’s fall run will see more cows heading to market than usual due to the drought.

“I can tell you from the prices, there must be a significant number of cows moving because cull prices have dropped significantly,” said Wowk.

In extreme cases, that price can be as low as 20 cents a pound for thin animals in poor shape, she said.

“We’re also taking a hit on heifer-calf replacements. They’re sitting at least 15 cents behind steer prices at 600 weight,” Wowk added.

The situation is bound to lead to reductions in the country’s cattle inventory, said Wowk, and the outlook for next year will be up to Mother Nature.

“We just really have to hope we get some moisture here this fall and we get some runoff to get some pasture regrowth back,” she said. “I don’t even want to think about if we’re dry again in the spring.”

Dennis Laycraft, Canadian Cattlemen’s Association executive vice-president, said weather is going to be a big factor.

However, demand for Canadian beef is increasing, especially in the export market this year, he said. Export volumes are up 25 percent and 33 percent in value, said Laycraft, with the potential to buoy prices in the long term.

“We’re going to set a new record — just shatter the record — on value for exports,” said Laycraft. “If there is that message, that we’ve got excellent international demand for the product, that’s always important when you are trying to figure out how to manage through a difficult situation.”

Forecasts are showing strong future prices as well, he added.

However, high feed costs brought on by a feed shortage caused by last summer’s drought are biting into potential profits, said Laycraft.

“Higher culling rates are going to happen this fall in some areas that are out of feed. We’ve already seen some herd dispersals take place,” said Laycraft. “That seems to be the overall environment that is shaping out there right now.”

Retail prices for premium beef cuts continue to remain high. Wowk said there is a disconnect between that and what ranchers are currently receiving.

“The packers are making an enormous profit right now. Everybody is well aware of that. It’s no longer a secret. They’re making quite a bit of profit off of these animals and we need to start seriously addressing (that) as an industry,” said Wowk.

For the health of the industry, profits need to be shared more equally throughout the supply chain, down to producers, she added.

Laycraft said the emergence of China as the world’s largest beef importer and the reopening of restaurants as pandemic restrictions loosen are also factors in the higher retail prices.

He added that some people think cattle producers will start to realize a higher share of the good prices once the United States supply tightens.

Wowk and Laycraft said government assistance under the AgriRecovery program will make a difference for beef producers, but how much has yet to be determined.

“It’s given us a little bit of breathing room,” said Wowk, “but not a whole lot.”

Laycraft said talks on the current problems are expected to take place with the provinces and federal government before long.

“If there is more support that we think that’s going to be necessary, we’re going to be reaching out to our provincial members to seek that,” said Laycraft.

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