Western Feedlots is gone, what now?

News Roundup from the October 24, 2016 issue of Canadian Cattlemen

cattle in a feedlot

As our October 24 issue went to press, people across the industry were still trying to assess the impact of the surprise September 22 announcement that Western Feedlots Ltd. is mothballing its feeding operations.

The company plans to feed out the remaining cattle at its High River and Mossleigh yards until sometime in early 2017. The Strathmore lot has been closed for a couple of years now.

In an interview with the Calgary Herald president and CEO Dave Plett indicated Western’s equipment would be stored and maintained so the yards could be opened again if the conditions for feeding cattle improve with time. Meanwhile, the company will continue farming operations “for the foreseeable future.”

The shareholders took this action because of the current high-risk/low-return environment in cattle ownership and the poor political and economic climate in Alberta.

Western was one of the largest feedlots in Canada with a standing capacity of 100,000 head.

While recognizing the loss of one of the biggest buyers in the market, Canadian Cattlemen Association president Dan Darling says it is anticipated cattle that would have gone to Western Feedlots will be absorbed by the existing vacancies in other feedlots. “Overall,” he says, “the eventual wind down is not really expected to have a major impact on the local market.”

Despite the slight increase in Canadian calf and feeder supplies over the last couple of years, Canfax manager Brian Perillat says feedlots are still facing the smallest supply of feeders since 2001.

Besides the usual market factors — supplies, cattle futures, the dollar, basis levels and feed costs — the demand for feeder cattle is also driven by the lack or excess supply of feedlot bunk space. When he looks at the present capacity of finishing feedlots over 1,000 head, and adjusts for the Western Feedlots closure, Perillat says the bunk capacity relative to the western Canadian calf crop does move to a historically tight level of 2.28 calves for every bunk space of finishing capacity. This compares to 2.11 last year, and a five-year average of 1.97.

Since 2005, the last year with a comparable feeder-to-bunk space ratio, Canadian feedlot finishing capacity has declined by 23.5 per cent, or almost 410,000 head.

Some heifers will be used for replacements, others will go into backgrounding lots or pastures and others will head south, although feeder exports are down 40 per cent from last year and are projected to remain below a year ago for the rest of 2016.

Meanwhile, some Lethbridge County cattle feeders, who have more than half of the cattle-on-feed in Alberta and Saskatchewan, claim the regulatory and tax burdens that shut down Western Feedlots are magnified by the per head cattle tax Lethbridge County council recently imposed on cattle feeders to pay for county infrastructure projects like roads and bridges.

“Our industry is under attack on all fronts,” says Rick Paskal, president of Van Raay Paskal Farms Ltd. “We are going to see more cattle feeders go under in the next six months in Lethbridge County and see more cattle fed in the United States, which will mean job losses, further price reductions for ranchers and another blow to Alberta’s already faltering economy.”

Paskal is one of a group of cattle feeders that is calling on Alberta MLAs to stop the head tax that Lethbridge County enacted this past spring.

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