High demand for beef driving cattle sector


Advertise with us

Canadian cattle producers are fighting for their fair share of the profits generated by the high demand for beef, according to one Albertan senior analyst in the industry.

Read this article for free:


Already have an account? Log in here »

We need your support!
Local journalism needs your support!

As we navigate through unprecedented times, our journalists are working harder than ever to bring you the latest local updates to keep you safe and informed.

Now, more than ever, we need your support.

Starting at $4.99/month you can access your Brandon Sun online and full access to all content as it appears on our website.

Subscribe Now

or call circulation directly at (204) 727-0527.

Your pledge helps to ensure we provide the news that matters most to your community!

Hey there, time traveller!
This article was published 10/02/2022 (230 days ago), so information in it may no longer be current.

Canadian cattle producers are fighting for their fair share of the profits generated by the high demand for beef, according to one Albertan senior analyst in the industry.

That’s what Brian Perillat told attendees of the 43rd Manitoba Beef Producers (MBP) virtual annual general meeting Thursday. The event served as an opportunity to discuss economic growth, trade and industry updates in a key sector of the provincial economy.

Perillat, a senior analyst and manager at Canfax, a Calgary-based company and Canadian source for cattle market information, gave an overview of some of the significant concerns in the market.

File The North American market as a whole saw record-high beef prices at the wholesale and retail levels amid a record-high beef production in 2021.

The North American market as a whole saw record-high beef prices at the wholesale and retail levels amid a record-high beef production in 2021. The analyst said the desire for beef remains huge and the United States has a high number of cattle on feed numbers.

“Last year, the United States processed an extra 330,000 cows in the United States on top of these large feed numbers,” Perillat said.

Despite the strong prices for beef, Perillat said his industry is competitive with pork producers and they are seeing strong demand for red meat across the board. With the rising cost of inflation, Perillat said it’s something the consumer needs to be concerned about.

“Beef is the luxury good and high inflation eats into disposable income,” Perillat said.

Perillat expressed concern over the recent border blockades in Manitoba, Alberta and Ontario hampering the ability to transport cattle.

“There is a lot of uncertainty moving cattle through Coutts, [Alta.], which has thrown a wrench into the system that we really don’t need right now,” Perillat said.

Globally, Perillat said the industry has had to adjust to the constant growth in consumption and demand for meat. He attributes this to an increase in wealth overpopulation metrics, such as the growing middle class in China, one of the largest importers of meat.

Cases of the African swine flu and countries in Europe struggling to meet these needs have impacted overall supply and demand in the beef industry.

It’s rare to see global reductions in consumption and production of beef two years in a row, he said.

Despite a record level of production in North America driven by the U.S. industry, Perillat said shrinking calf numbers will allow producers to take more of that money from the industry and put it back in their pockets.

“From 2015 to 2019, the U.S. cow herd increased by 2.6 million beef cows added to their herd,” Perillat said.

“In the last three years, we’ve taken 1.6 million of those cows out. The number of feeders available in 2022, 2023, and 2024 is going to be very price-supportive.”

The 1.6 million cattle were processed based on a fixed amount of packing capacity, and overall Perillat has found producers are keeping fewer breeding heifers, bringing the supply down.

Perillat said the industry is near the peak of a repeating cycle. With fewer cattle in the processing plants, the opportunity to find a better equilibrium in price may go toward the producer’s favour. Additionally, he has found exports to be up 20 per cent through data collected by Statistics Canada and Canfax.

“We’re the smallest herd in 30 years, and that goes across all provinces,” Perillat said.

“Areas of Manitoba were hit a little bit more. We’re going to be shrinking some more this year.”

A current challenge he sees producers having to face is the availability of forage and pasture land for cattle. With Canadian herd numbers peaking in 2015, Perillat referenced a change in census data between 2006 to 2016 has found the industry has lost 14 per cent of Canadian land use for pasture and hay, 28 per cent of land use for tame hay and 33 per cent of the total Canadian herd.

Perillat said some of the larger producers are switching over to silage and other crop usage, and the competition with grain farmers is tough.

“I’ve often promoted it’s not necessarily competing with grain land, it’s complementing the grain land,” Perillat said.

“We’ve lost with mixed farms and bigger grain operations that don’t entertain cows. To me, that’s where the opportunities are, but sometimes it’s challenging for their willingness to work with cattle producers.”

In 2021, cattle culling remained slightly above the average of 11 per cent at 13 per cent in the country. He found the reduction in breeding herds and salvaging crops later in the growing season was key to keeping the culling numbers at bay.

Perillat said Manitoba feeder and calf prices are well-positioned at the moment, and in recent times have been some of the strongest in Canada. The country continues to limit the number of cattle it exports to keep more in Canada, and is a net importer of 250,000 feeders. He said this is how the country has grown beef production in recent years, but this may level off.

Over the last few months, Perillat said there is market optimism surrounding the price of 500-pound steers cracking $2.50 a pound compared to $2.10 a pound in October.

Over a five-year average, Perillat has found Canadian producers are receiving a smaller share of the consumer dollars in the market. However, with more than a million cows reduced from the North American breeding stock, packing plants will be competing more for protein. They in turn can pass down the dollars to the feeding stock sector and producers. This is also creating more optimism surrounding the cattle futures market.

The big challenge Perillat has found is turning those dollars away from the packing plants and instead, finding a way for beef producers in Canada to get that share of the profits compounded by very strong demand.

“We’ve been through this cycle before, it’s a slow-turning ship,” Perillat said.

Casey Vander Ploeg, vice-president of the National Cattle Feeders Association (NCFA), spoke to concerns over supply chain issues in the industry and how beef producers have responded to the work done by his association.

“It’s been an incredibly tough year for our industry in 2021 with the drought and fires from British Columbia we had which comes on the heels of 2020,” Vander Ploeg said.

“Questions on feed availability and feeding costs are absolutely incredible. With barley at $450 a metric ton compared to $250 a few years ago, that’s hurting the profitability of the feedlot sector.”

As a business-oriented organization dedicated to advancing the interests of cattle producers across the country, some of the NCFA’s highlights presented from 2021 included the increased amount of trucks allowed to transport cattle across the border.

Working with the U.S. Department of Agriculture and the Canadian Food Inspection Agency, the United States had previously limited cattle producers to three trucks allowed to transport cattle. Vander Ploeg explained that producers can now apply to be trusted traders with the CFIA and have additional vehicles upon crossing.

Additionally, over the last month, the CFIA came to an agreement with the NCFA to increase the amount of time considered to humanely transport cattle to get to their destination from 36 to 40 hours. The four hours of flexibility were negotiated to meet transport delays experienced on the road in case of emergency situations.

Newly appointed provincial Agriculture Minister Derek Johnson attended the AGM, where he announced the Manitoba Agricultural Services Corporation (MASC) is increasing limits on several lending products to help manage the demands of farmers in today’s economy.

“Our government recognizes the economic pressures on producers as they strive to succeed in the competitive world of agriculture, despite the challenges presented by last year’s drought and the impact of the ongoing pandemic,” Johnson said.

“In response, MASC has increased lending limits to provide our farmers, especially the younger generation, with financial options that give them greater flexibility in managing, establishing or expanding their operations.”

The MASC’s lending programs provide Manitoba farmers access to credit with reasonable interest rates and flexible repayment terms. The corporation, which provides direct loans and stocker loans, last updated its limits in 2018.

Johnson announced that effective April 1, 2022, the direct loan limit will increase from $3.5 million to $4.25 million, reflecting increased land values and operating costs. The minister said loans may be used to purchase agricultural land and buildings, farm equipment, breeding livestock and quota for supply-managed commodities. The money can also be used toward the construction or renovation of farm buildings or refinancing of debt.

The minister said stocker loan limits will increase from $500,000 to $750,000. As a result of Manitoba’s beef herd reduction and a recent drought period, Johnson noted this provides an excellent tool to help producers rebuild their herds.

Finally, Johnson stated the provincial limits on the Manitoba Livestock Association Loan Guarantee program will increase from $500,000 to $750,000, and association limits will increase from $8 million to $12 million, both as of April 1.

“These changes will help ensure that MASC’s lending products remain relevant to producers and that capital is available,” Johnson said.

“Supporting growth in the agricultural industry is important, as it is a key driver of our provincial economy.”

» jbernacki@brandonsun.com

» Twitter: @JosephBernacki

Report Error Submit a Tip


Advertise With Us