Ontario beef producer stress increases as Cargill strike stretches on

The strain increases for eastern Canadian beef producers as Cargill’s Guelph Dunlop strike stretches into its fifth week.

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“We respect and support the collective bargaining process, but the disruption here is placing incredible strain, stress and anxiety on producers,” explained Richard Horne, Beef Farmers of Ontario (BFO) executive director. “And it’s creating cashflow constraints.”

The BFO, Canadian Cattle Association (CCA) and the National Cattle Feeders’ Association, representing 60,000 beef producers nationally, issued a joint statement urging Cargill and UFCW Local 175 to return to the table and expedited a labour resolution for the strike, which began May 27, 2024.

Ontario is the second largest cattle-feeding province in the country, and the impact on the feedlot sector, beef supply chain partners and farmers’ ability to cash flow their operations cannot be understated, said Craig McLaughlin, BFO president.

Why it Matters: Cargill’s Guelph Dunlop facility plays a significant role in the Ontario beef supply, processing approximately 75 per cent of its cattle and filling 67 per cent of eastern Canada’s federally inspected processing capacity.

Beef producers aren’t the only ones feeling the pinch, said McLaughlin, referring to a Guelph Today article reporting Hope House, a local food bank, is seeing 10 to 15 Cargill workers register for food support per day.

Active discussions on measures to assist producers with cashflow needs, such as risk management program interim payments, forgiveness or loan repayment flexibility through financing programs and other options, are ongoing with the provincial government.

“During the pandemic, we did have a set-aside program. Instead of a finishing high-energy ration, (we) put them (cattle) on a maintenance ration to slow them down . . . so they don’t get too large,” explained McLaughlin. “We have pitched that to the government.”

Initially, the conversations included Lisa Thompson, then Minister of Agriculture, Food and Rural Affairs. However, early in the strike, there was a cabinet shuffle, and newly appointed Minister of Farming, Agriculture and Agribusiness Rob Flack stepped into the fold.

Minister Flack immediately contacted McLaughlin to update him on the situation, which the BFO president appreciated and applauded, especially given that the new Ag minister was assembling his team and getting acquainted with the ministry’s files.

“His first day on the job Monday, we had an introduction meeting myself and Richard Horne,” explained McLaughlin. “Specifically to talk about Cargill.” 

Flack promised to contact Cargill to respectfully convey the long-term impact of the ongoing strike despite his limited influence on legal strike action.

“I think there’s a number of producers under significant amounts of stress,” Horne said. “And trying to manage the situation on their farms from a feeding perspective and a cash flow management one. With each passing day and week, that level of stress and anxiety is increasing.”

He said financial institutions deserve credit for the understanding extended to producers regarding operating lines and loan repayments.

McLaughlin said it’s difficult to determine when the tipping point for mitigating the growing cattle backlog will occur. While some operations are still moving cattle, others are not as fortunate.

He and Jack Chaffe, CCA director and beef producer, are in Calgary for the quarterly CCA meeting, and the Cargill strike is already on the agenda. McLaughlin said the conversation will take a broader tone because, eventually, it will impact western producers who send cattle east.

“That won’t be happening if Eastern cattle are not moving out of feedlots,” he said, adding that it could result in proposals for new national solutions that provide a workable fix.

Horne said the absence of concrete data makes accessing the backlog inaccurate. The anecdotal information indicates a good portion of the weekly capacity has moved to alternative facilities and markets, which is positive.

“Provincial plants are a very small portion of the overall capacity in Ontario,” explained Horne. “When you think of how significant Cargill is and the volumes they do, it’s very difficult to replace that capacity amongst a string of smaller plants.”

The role of truckers, transport companies, buyers, dealers, major processors, and other markets in managing this situation is significant. While Ontario’s capacity helps, it is an interim gap that cannot address the growing backlog.

If the strike lingers through the summer and edges into the fall run, it will have a domino effect, ultimately impacting the farmer’s ability to cash in on a year’s work, said McLaughlin.

“That will be ground zero then,” he explained, adding that it’s a resilient sector that routinely negotiates the impact of bad weather years and crises like BSE and the pandemic. “We will see a light at the end of the tunnel, but it will be some tough slogging.”