October 2016 • Country Life in BC


3


US herd expansion delivers skidding cattle markets Growth south of the border has resulted in a 40% decrease in exports of Canadian feeder cattle to the United States


by DAVID SCHMIDT


VERNON – Cattle prices have seen “quite the correction” in 2016, Gateway Livestock cattle market analyst Anne Wasko told the BC Association of Cattle Feeders (BCACF) annual meeting in Vernon, September 9, warning the small group of feedlot operators her presentation “is not going to be good news.” She noted the Alberta price for fed cattle was just $134.00 per cwt during the last week of August, a 25% drop from the year previous. And the news went downhill from there. The price of feeder steers has dropped 35%, 600-pound steers dropped 40% and cows dropped 30% from a year earlier. Wholesale prices are also dropping, but not as much as cattle prices, with the wholesale price of AAA cutouts down 18% from a year earlier. Retail prices, however, have yet to reflect the lower producer and wholesale prices. As a result, packer and retailer margins are increasing while those for producers are decreasing.


Wasko says expansion in the US is solely to blame. “The US cow inventory is up by two million cows this year,” she said. “So much has come on so much quicker than anyone expected.” Given that the entire Canadian beef herd numbers less than four million cows, that’s a huge increase for the market to swallow. Although the overall Canadian cow inventory hasn’t changed much in the past year, BC is bucking the trend. BC’s inventory is up 4% this year and now numbers over 200,000 cows, the largest total since 2010.


Despite that, Canadian production continues to increase, due largely to ever- increasing carcass weights. Production is up 9% from both fed and non-fed cattle. “We are running at record carcass weights after last year’s record carcass weights,” Wasko said. “More animals and larger animals equals more product.” That is putting a strain on processor capacity.


Exacerbating that is a lack of workers, particularly in this province. BC Abattoirs Association (BCAA) executive director Nova Woodbury says BC’s 65 provincially-licenced abattoirs are short about 250 workers. The BCAA is starting a 10-week no-cost training program for new workers in Kamloops in October, but it


cattle to the US.


All this leads her to predict even lower prices next year. “The present market suggests a 35% decrease in feeder cattle prices.”


One factor driving the US production increase is the big grain crops.


Anne Wasko


will not make much of a dent as it will only train 10 people per session.


“We will have a second program in March and hope to roll it out across the province in the future,” Woodbury said. Feedlots also have a worker shortage, BCACF president August Bremer said, noting the Seasonal Agricultural Workers Program “doesn’t work for us since we feed year- round.”


Wasko does not expect a turnaround anytime soon. Just the opposite. She expects US beef production to increase 5% this year, another 4% next year and hit an all-time high in 2018. With more domestic beef available in the US, there has been less demand for Canadian cattle, resulting in a 40% decrease in exports of Canadian feeder


“The US is projecting a record 15 billion bushel corn crop this year,” Wasko reported, saying low US grain prices mean Western Canada no longer has the cheapest feed cost to gain ratio. A glut in production makes the Verified Beef Program more important than ever, says BC VBP program co-ordinator Annette Moore. VBP began as an on-farm food safety program in 2005 and has just been expanded into the VBP+ program to include new animal care, health of animals (biosecurity) and


Moore reported.


Although it costs $100,000 per year to run the program in BC, the training is provided free of charge and the cost to join the program is still only $100 per year. However, that could change as government funding is set to end in two years.


Annette Moore


She accuses producers of having a case of “head-in-the- sand-itis. The Canadian Cattlemen Association says we have it but we don’t have enough people on it.”


“We are running at record carcass weights after last yearʼs record carcass weights. More animals and larger animals equal more product.” Gateway Livestock cattle market analyst Anne Wasko


environmental stewardship components to meet


consumer and buyer concerns in those areas.


“Restaurants are making claims and want the


assurances we are living up to those claims,” Moore says.


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The new BC Water Sustainability Act (WSA) came into effect in BC in 2016. All groundwater wells used for any purpose other than single family use require a license under the WSA. Avoid the application fee by licensing before March 1 2017.


If you have questions we can help.


That is because, unlike similar


programs in the supply- managed sector, the program remains voluntary.


Even though 1,000 BC people, representing about 750 operations, have been trained in the VBP program, only 123 BC operations have actually joined. Only 77 are currently active and another 16 are waiting for audits,


“We have had 13 years of funding,” Moore notes. The lack of participation is causing some buyers to consider implementing their own programs, which could come at a greater cost and force greater requirements on producers. Fortunately, Moore says, major buyers are working with the Canadian Roundtable for Sustainable Beef to develop an “enabling framework to verify the good you’re already doing.” She notes McDonald’s has been sponsoring a verified sustainable beef pilot project for the past three years. Based on the VBP+ requirements, the project has already conducted 183 on-site verifications in Western Canada.


Moore stresses VBP+ is “not about premiums,” rather it’s about providing assurance to the public. She urges producers to learn about the program, take the training, do the record-keeping (including implementing any required practices they are not already doing), then register for and maintain the program. “If you want the program to go across Canada, you have to join it.”


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