Question for Canadian Cattlemen and Cattlewomen

[stocky]

I go to Canada a couple of times each summer, but I haven't been yet this summer. When I was there after the border closure I was reading that 75 percent of the beef that Canada produces is exported to the United States, I dont know if that is correct, it was what was in an Ottawa newspaper. When I was there last summer, they were saying that the fed cattle were down to 10 or 12 (US currency) cents per pound to the farmer. At this same time the steak at the restaraunt next to hotel was 30 dollars and the beef at the store was much higher than here in the States. I know that there has been alot of progress in the export market to countries other than the United States, but my question is whether or not the cattlemen in Canada have been able to put pressure on the retailers to lower their prices in the store and the restaraunts to bring it in line with what the farmer receives to increase the consumption so that Canada doesnt need to export 75 percent of it's beef to the United States to be able to make a living on the cattle farm? It seems like the retailers were making a fortune buying cattle at 12 cents and charging 30 dollars in the restaraunt for a 12 oz steak and the stores were sky high for meat. If the farmers are getting 75 percent less for their cattle, the retailers could charge at least 50 percent less and there would be a huge rise in consumption because most people love beef and would buy more if they could afford it. Or am I all wet in my line of thinking?

 

[Cattle Rack Rancher]

The one thing you are missing in this equation is processing capacity. The reason why cattle prices are so low is because there is nowhere to process them. For example, I called into the local abattoir on January the 21st to book a couple of beef at their next available date. I got them booked in for the 29th of November. We have always had some export of beef to the US but when the original Canada-US Free Trade Agreement was signed back in the early 80's , there was a huge influx of American buyers showing up at Canadian auction houses and buying feeders and finished cattle. Because of the advantage of the American dollar, we soon found ourselves shipping live animals instead of beef to the US. This caused the majority of our packing plants to shut down as they just couldn't compete with those Yankee greenbacks. 20 years later, all the packing capacity moved to the US except for what we used domestically and what little we exported to other countries. We also increased the supply of cattle to meet US demand for live cattle over the years. Suddenly, two years ago, the border closed and the pipeline stopped dead. With only limited capacity for producing beef, packers are concentrating on producing the highest price cuts they can so now hamburger cows and bulls are virtually worthless. Hope that explains a few things. Good Luck.

 

[stocky]

Cattle Rack rancher, That makes alot of sense. I keep reading where the packing plants on the States side of the border are closing because they arent getting enough animals, now I understand why since they had built up depending on the Canadien beef. It kind of burned me to pay 30 dollars for a steak dinner or 4 dollars per pound for ground beef when I was hearing the farmer was getting 12 cents. That is like a few years ago here in the States when hogs went to 8 cents, but bacon was still 3 dollars and tenderloin was still 3 dollars, it didnt come down a bit. I will be going back to Ottawa in July and was curious to see if I would see a difference in retail prices--thanks and good luck

 

[dj]

Aren't they building new plants up there now? I thought some of the plants closing here were going to relocate. Of course that won't speed things up for your getting personal beef
processed.

 

[Cattle Rack Rancher]

Aren't they building new plants up there now? I thought some of the plants closing here were going to relocate. Of course that won't speed things up for your getting personal beef
processed.

Setting up plants seems to be a really slow process. I think when the BSE thing hit, George Bush's promises that the border would open 'soon' kind of lulled everybody up here into thinking that things would be back to normal fairly quick so people were hesitant to invest in new plants in case the Americans came back up and outcompeted us with their US dollars and closed the plants down again. Over two years later, there have been some initiatives and there are some new plants being worked on. The producers up here, though, are running awful tight with the way things are and most don't have the money to invest in slaughter plants. Any business plan put together by the slaughter plants has to be based on the US border being open and so funding for these plants is hard to come by. The plants that are being built, however, will be very competitive. Its a slow process, but eventually, I think we will get back to being self sufficient and at that point the old plants across the border shouldn't be able to compete with our shiny new equipment.

 

[stocky]

Cattle Rack, you have explained alot of things that make alot of sense to me. I still am wondering about the retail price of beef in stores and restaraunts in Canada. Has there been or is there any way for the cattlepeople to put pressure on to pull the retail price of beef down to a reasonable level considering what the farmer is receiving? If beef is cheaper than pork or chicken, many more people would choose beef and the consumption would go up. It still seems to me that there are people making a fortune selling the beef that the farmer gets a pittance for. Also, with the low slaughter capacity of Canadian plants, has there been any effort to try for a situation so that Canadian cattle could be transported across the border to the US plants and processed and then transported back to Canada for domestic consumption or for Canadian export? It seems like the reason for the border closing was because the Canadian cattle were being slaughtered here and sold in the US or exported as a US product. That would seem to be a help in the situation with limited slaughter capacity. Having a situation where the cattle would come in and get processed and all product return to Canada would keep the processing plants open and give you the opportunity to market the beef.

 

[Cattle Rack Rancher]

Although I can't speak for the rest of the market, what I hear from the retailers around here is that they get quite a bit of spoiled meat that doesn't sell so they have to keep beef prices high to compensate for that. There has of course in rural areas been a bit of cannibalizing of the market by people processing cattle themselves and selling to family and friends at cheap prices, cutting out the middle man. This is uninspected meat, and is supposedly illegal but people do it anyway because they are just trying to do waht they can to get through this thing. The packers can make good money shipping beef to the US and so they expect to make the same money when they are selling in Canada. Thus the high prices. If they have to lower the price in Canada, they might as well ship everything to the US. Like I said, the big problem is a lack of processing facilities. Packer demand for lower end cuts is low so prices for the producer are low as well. As far as shipping Canadian beef to the US for processing, we tried that and the US was having no part of it. No live cattle are going across the border whether they are in a sealed trailer or not. Good Luck.