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Cow-calf sector looks for solutions

If the economics of raising cattle doesn’t change, it’s possible that another 7,000 producers will leave the industry in the next decade.
Industry leaders say the ailing sector’s best option is to produce the highest quality beef and sell it to the world’s highest-paying consumers

KISBEY, Sask. – Sitting in a small office attached to his machine shop, Darren Ippolito paused for about five seconds before answering a question.

Then, he started to laugh.

Ippolito had been asked if a large group of cattle producers in south-eastern Saskatchewan and southwestern Manitoba could join forces and sell their cattle as a collective — in a way, act like a regional marketing board and possibly receive higher prices for their cattle.

Ippolito laughed because he attends meetings with other producers and community leaders in the region around Kisbey, which is about 20 kilometres west of Carlyle, Sask.

Getting 12 people at those meetings to agree on anything is difficult, including what to order for lunch.

So, convincing 150 producers to agree on the structure of a cattle marketing board doesn’t seem likely.

“It’s impossible,” said Ippolito, who runs Moose Creek Red Angus with his family south of Kisbey.

Ippolito continues to raise cattle, but many farmers in southeastern Saskatchewan and across Canada have quit the cow-calf sector. Census of Agriculture data indicates the number of farms with beef cows declined 7,000 from 2011 and 2021.

In a similar time period, from 2010–23, the number of beef cows on Canadian cow-calf farms declined by 650,000.

Some producers quit because they reached retirement age. Others walked away because there isn’t enough money in the cow-calf business. Most cattle producers in Canada run “mixed income farms,” Ippolito said. They have small herds, with 50 to 70 beef cows, and have an off-farm job as a teacher or welder.

If the economics of raising cattle doesn’t change, it’s possible that another 7,000 producers will leave the industry in the next decade.

As well, the number of beef cows in Canada will continue to shrink.

Martin Unrau, who runs a 600 head cow-calf farm near MacGregor, Man., with son Garett, wife Roxie and daughter-in-law Heidi, is a former president of the Canadian Cattle Association and Manitoba Beef Producers.

During his time in those roles, Unrau learned that a couple of things will determine the future of Canada’s cattle sector.

“Our only option, in my mind, is to produce the highest quality (beef), sold to the highest paying consumer in the world,” he said.

“Number two, policy. (Government) policy has to be right. So, it’s not one sector (of agriculture) against another.”

Another item on that list could be “synergy” — more co-operation within the beef sector and co-operation between crop and livestock producers in Canada.

While with the CCA, Unrau visited Europe, Australia, the United States, Asia and other destinations to support the export of Canadian beef.

He learned through those travels that Canadian ranchers can’t compete with countries such as Australia and Brazil on cost of production, mostly because of climate.

Therefore, cutting costs by raising grass-fed beef isn’t realistic.

“Brazil can, Canada can’t. Look outside. We’re fighting elements eight months of the year.”

Therefore, Canada must compete on quality.

“(We) need the right product.… We have to sell to the highest-paying consumer.”

Data shows that Canada’s beef sector is having some success in increasing sales to established and developing markets.

In 2022, as of December, beef exports were:

  • $518 million to Japan, up 18 percent from 2021.
  • $214 million to Mexico, an increase of 12 percent from 2021.
  • $192 million to Korea, up 65 percent.
  • $129 million to Vietnam, up 56 percent .

Canada does have multiple free trade deals with different regions of the world, and some of those deals are working, such as the Comprehensive and Progressive Partnership for Trans-Pacific Trade.

Others, such as the Canada-European Union free trade deal, have been a disappointment.

“Our exports to Europe are minimal, a far cry from what we expected and certainly much less than the amount of beef Europe is sending to Canada,” said the late CCA president Reg Schellenberg in September.

The European agreement hasn’t delivered, so Canada relies on other markets to increase the carcass value of every animal. Markets such as South Korea, Hong Kong and Vietnam will pay for parts of the beef carcass, like tongues, that are less marketable in North America. That increases the value of cattle raised in Canada.

“I think we’re up to $600 an animal now, on what we’re gaining from international markets,” Unrau said.

That additional revenue should, in theory, trickle down to cow-calf producers and increase how much they receive for calves.

But the cow calf producer is still at the bottom of a tiered system.

“They get what’s left (over),” said Bill Campbell, who farms near Minto, Man.

“If they don’t get enough, what we see is declining cow numbers.”

Right now, cow-calf producers are receiving a decent share of the profits within the value chain.

Earlier this winter, calves were selling for more than $3 per lb.

“We’ve got six-weight (600 pound) calves up over $3 per lb…. Most recently the livestock price insurance program started offering coverage levels for the fall at $2.90,” Tyler Fulton, Manitoba Beef Producers past president, said in February.

“That represents $1,750 for a six-weight steer calf.”

Strong prices will keep more producers in the cattle business, but over the longer run, Canada needs agricultural policies that are fair for both grain farmers and cattle producers, Unrau said.

One example of a policy that favours grain production is subsidized crop insurance.

“On our grain side, I can buy insurance on my canola that will cover my expenses,” said Unrau, who has 1,400 acres of cropland.

“In the cattle industry there’s absolutely nothing like that…. We have price insurance that’s fully paid by us…. This is what I mean by government policy.”

Unrau shared other examples of policy tilted against the livestock sector, but he added that cattle producers have a responsibility to innovate and adopt better practices, such as improving the quality of feed and tracking the amount of feed that cattle consume — copying what’s done on hog and dairy farms.

“You have to be creative. You can’t have 500 calves and just throw hay bales out there every day and think everything is going to work out,” he said.

The Unraus grow corn, produce corn silage and feed a precise ration to their cattle.

“In my world, we measure all our feed. We know what they are eating,” Unrau said.

“We look at every acre as a unit of production… We have to make the land work for us.”

Higher quality and more consistent feed should produce a better quality of beef, but the cattle sector has room for improvement on genetics, Campbell said.

For decades, he raised Limousin — known as the carcass breed — because it produces a large quantity of high-quality beef.

Genetic data and information on practices that produce quality beef should be shared throughout the beef value chain, Campbell added.

“We don’t know … the ideal animal (for beef). The pork industry knows what is the ideal (pig)…. When you buy chicken breast, you know what it is, you buy bacon, you know what it is,” he said.

“When you go to a grocery store and buy a rib steak, are you sure it’s going to be the same every time? That’s where the beef industry has some work to do yet.”

Unrau relies on corn silage as the main source of feed on his farm,, but he also uses canola meal.

It’s a great source of protein for beef cattle and it represents an opportunity for grain and livestock farmers to work together.

There will soon be a large supply of canola meal in Western Canada as major companies expand or build new canola crushing plants in Saskatchewan.

Canola crush capacity is expected to jump by 5.7 million tonnes over the next few years, a 50 percent increase over today’s levels, according to the Canadian Oilseed Processors Association.

That will result in an additional 3.5 to four million tonnes of annual canola meal production.

“The massive question is, where is all this meal going to go?” said Chuck Penner, analyst with LeftField Commodity Research.

The canola sector hopes China and the North American dairy sector will take most of the meal, but the industry may be overlooking Canada’s beef sector.

“Somebody has to deal with this canola meal…. Usually we can ship it, but not always. When there is soybean meal around, canola meal doesn’t move that well,” Unrau said.

“When I think about the integration between sectors … we can both win…. We (cattle producers) can be an amazing help to the canola industry because we buy canola meal.”

That’s just one example of co-operation between grain and beef producers in Western Canada.

There are other possibilities, such as a cattle producer growing alfalfa on his neighbour’s land. That can improve soil fertility for the grain farmer and the cattle rancher gets access to more productive land.

However, at a higher level, cattle and grain farmers aren’t part of the same farm organizations in Canada.

In Manitoba, for instance, Manitoba Beef Producers hasn’t been a member of Keystone Agricultural Producers for more than a decade. Since representatives from the two groups aren’t sitting around the same board tables in Canada, co-operation and collaboration between the grain and beef sectors is less likely.

If a meeting of the two sectors does happen, someday soon, a good starting point could be what to have for lunch.

Roast beef on a whole-wheat bun seems like the obvious choice.