What does the future hold for cattle producers in Saskatchewan? According to Sheldon Wilcox, manager, Direct Livestock Marketing Systems Alberta, the next four years look to hold high prices for cattle farmers, and he was at Harvest Showdown to explain why he thinks this is the case.
The simple reason boils down to supply. Wilcox says that a decreased cattle herd and a decreased reliance on the US market mean that producers in the market right now can expect good prices for the foreseeable future.
The decreases in the herd were due in part to BSE, but Wilcox says that it was going in that direction. The reason was the cattle market in the country was too big for the Canadian market, making the country extremely reliant on exports. Now that the herd has been reduced, and it's moved towards more local production, prices have moved upwards. While he says demand hasn't increased by a large amount, the supply is the main driver of price increases.
In general, he expects the markets to be fairly consistent over the next few years, and he doesn't expect large changes overall over the next few years. He notes that trucking is contributing to some lows, but since the market is largely at home it doesn't take as long for the truck to get back.
Unlike in previous years, he expects prices to be more in Canada than in the US on occasion, something that hasn't been seen in decades. As prices stay on the higher side, everyone can expect to make more money.
"Cattle feeders can't stand prosperity, if they make money they have to spend it," Wilcox suggests.
He expects the market will stay consistent over the next few years based on the reason why prices are up in the first place. Since the herd is smaller, it takes time to increase the supply to old levels. As a result, Wilcox believes it'll be difficult to turn bad for the next few years, as increasing the herd substantially cannot happen overnight.
"Long term, this is a smaller industry, but it's a more profitable industry," he says.
One bright spot in the market is the heifers. Wilcox believes that as people want to grow their herd, the heifer becomes the more desirable animal, as people retain the ones they have and others want to buy more.
He also expects that cows will be the lower end of the market until smaller operations move back into the industry. He says it may be a couple of years before the number of sellers is met by the number of buyers, and right now there are more sellers than buyers. In general, he believes prices will be high.
One thing he sees as a limiting factor for the herd to grow is the age of the industry, and he says that it's difficult to attract young people into the cattle industry. The longer the supply stays low, the higher the prices will go.
For the Yorkton area specifically, Wilcox sees the industry doing well. In the past ten years the industry has changed rapidly, with more expertise and growth.
"Long term, I think this is going to be cow country. I think this area is well placed to have a really solid cattle industry," he concludes.
