Canada's cattle industry is 'broken': NFU
Thursday, November 20, 2008
by SUSAN MANN
The National Farmers Union plans to use its report on the decline in cattle prices to jump-start a diverse, intensive discussion on the sector at meetings across Canada, says research director Darrin Qualman.
The discussions would include ideas on how to fix the cattle industry, he says, “because it really is broken.”
The 128-page report, ‘The Farm Crisis and the Cattle Sector: Towards a New Analysis and New Solutions,’ was released at the NFU convention in Saskatoon Wednesday.
Some of the NFU’s ideas to repair the sector are: ban packer ownership and control of cattle, stop packer mergers, and refocus the industry on the Canadian domestic market rather than on exports.
“We think that a properly structured, properly sized Canadian beef sector and cow-calf sector really has the potential to be profitable and contribute to community development,” says Qualman.
Officials from the Ontario Cattlemen’s Association were unavailable Wednesday to comment on the report.
The NFU analyzed prices from 1936 to 2008 and found that there has been a steady downward shift in cattle prices after 1989. Ontario slaughter steer prices fluctuated between $130 and $280 per hundredweight from 1942 to 1989.
From 1989 to 2003, when the first case of BSE in cattle was discovered in Canada, prices oscillated within a much lower range of values – between $98 and $140 per hundredweight. The discovery of BSE in May, 2003 caused prices to dip even more. Since that time, prices for fed steer have fluctuated between $75 and $110 per hundredweight.
The current prices duplicate those of the Great Depression, the report claims.
“This past year, September, 2007 to August, 2008, prices for slaughter steers averaged $85 per hundredweight, live weight. But the average for the 47-year period from 1942-89 was $174 per hundredweight – double the recent average,” the executive summary of the NFU report notes. Prices for all classes and types of commercial cattle have followed the same trajectory.
“These half-price cattle are bankrupting family farmers across Canada and creating the most severe crisis in the sector since the Great Depression,” the report concludes.
If fed cattle prices kept pace with other prices, cattle today would sell for about double their current value. Why has this happened? The report says it’s due to a number of factors including:
- a transfer of control in the industry to two large U.S.-based corporations that have concentrated production in a few huge plants;
- the Canada-U.S free trade agreement that greatly accelerated market integration between the two countries;
- Canada ramping up cattle and beef exports mainly to the U.S.; and
- increasing levels of packer-owned or controlled cattle in Canadian feedlots (this provides packers with options to either use their own cattle or bid on cattle from independent feeders).
“Captive supply gives packers significant power to push down prices of finished cattle and thus push down prices of feeder cattle and calves,” the report notes, suggesting the combined events had the effect of driving farmers’ prices down in Canada, the United States, Mexico and around the world. BF