How quickly things change.
It was not that many years ago that the Canadian Prairies were talked about as the ideal location to raise livestock.
There was cheap land, cheap feed grain and cheap labour, which were a trifecta of elements that suggested good returns were possible in finishing cattle and hogs.
But that changed rather quickly.
The cattle sector of course was hit by Bovine Spongiform Encephalopathy (BSE).
That shut Canadian exports out of many export markets, and hit returns hard.
It was hoped that the situation, which forced Canada to find domestic solutions to finishing cattle, processing the beef and consuming the meat, would mean a stronger domestic beef sector once borders reopened.
The situation was thought to create raised consumer awareness to eat Canadian beef and to create infrastructure around finishing cattle and processing beef.
But once the borders reopened on the American market, based on scale and the American dollar exchange, it drained off calves to finish.
Then the economics changed.
Grain prices jumped, along with other commodities, as the world economy boomed thanks largely to China.
Finding staff became much harder based on the same economic upturn.
Profit margins tightened.
Small feedlots closed, such as one near Rhein, which only a few years prior had been the Yorkton Chamber of Commerce’s Business of the Year.
The processors’ plan to deal with the post-BSE glut stalled.
And while the world’s economy has certainly cooled, again largely due to China’s growth stagnating, the ripples of a Canadian beef sector that has been largely transferred to the United States continues.
Western Feedlots Ltd. is one of Canada’s largest cattle feeder operations with sites near Strathmore, High River and Mossleigh. It has a standing capacity for 100,000 heads and it is shutting down. The company has announced that it will idle its operations in early 2017 after it finishes marketing the cattle it currently owns.
Western Feedlots Ltd., which started in 1958, has been hit hard by recent volatility in the cattle markets. Alberta cattle prices surged to record heights in 2014 and 2015, but have since plummeted, which reflects the general economy in many ways. It’s an age-old situation where the feedlot bought animals at high prices and now sells them at a major loss.
Company officials have suggested losses on some cattle of as much as $500 to $600 which sums up the mothballing of feedlots. In the volatile politics of Alberta, however, they also cite New Democrat policies as a problem, which is hardly unexpected. The largely unexpected win in long-time Conservative Alberta has meant finger pointing on practically everything.
But whatever the reasons, the reality is that the feedlots are likely to stay closed.
Canadian processors lose 100,000 head of animals.
Grain producers lose a local market.
Beef producers lose a competitor in terms of buying calves locally.
And jobs are lost.
Instead, more Canadian calves are being fed American grain as they are cared for by American workers and then shipped back up here as processed beef for Canadians to consume.
That just never makes sense in terms of our economy.
