Canada’s national beef organizations are pushing for the swift implementation of a program used to weather the industry’s last major storm.
With processing capacity reduced across Canada, including one of the country’s largest packing plants, the Canadian Cattlemen’s Association (CCA) and other stakeholders are calling on financial support from the federal government to reintroduce the BSE-era set-aside framework.
“The reason that we are requesting urgent action on this is because we know from experience that the quicker that we react and the quicker that we get stability within our market, the better off we’re going to be in the long term,” said Fawn Jackson, CCA’s director of government and international relations.
CCA and other industry groups originally submitted recommendations on managing this crisis to the federal government on March 24.
“One of the recommendations we had is what to do in a critical situation,” said Jackson. “With the reduction in slaughter capacity we certainly see that we are now in that critical situation all across Canada.”
This week, CCA met with members of parliament and government officials to discuss its recommendations, including the urgent need for funding to implement this program to deal with insufficient processing capacity.
This comes after Cargill announced it would temporarily suspend the second shift at its High River, Alta. facility until further notice in an effort to reduce the spread of COVID-19. With about 2,000 employees, the plant has a 4,500-head per day capacity, accounting for 36 per cent of Canada’s processing capacity.
CBC reported on April 13 that 38 employees have tested positive for COVID-19, according to a union official.
Cargill has since implemented several preventative measures at its High River plant to adhere to social distancing practices, enhance sanitation efforts and monitor employees for symptoms of the virus.
A set-aside program delays the marketing of cattle when there is inadequate slaughter capacity. To do so, producers are encouraged to hold cattle on a maintenance diet, allowing for a slowdown in marketings until sufficient capacity is available. The program would include both fed cattle and feeder cull cows.
“Through a government and industry governance committee, we would identify how many cattle we would need to slow down within the supply chain,” said Jackson, noting that the situation is fluid and CCA is unable to estimate the number of head to be set aside yet.
“People that have farms and ranches and feedlot operations would be able to identify if they have a group of cattle that they would be willing to feed this maintenance diet,” she said. “It does cost money to extend the feeding period of an animal, and so that’s why we need some government assistance at this time.”
The slowdown at Cargill’s High River facility has already affected the movement of the supply chain. “The immediate impact is while this is going on they’ve pulled their bids, so there’s not even an offer on cattle right now,” said Dennis Laycraft, CCA’s executive vice-president.
Industry representatives are indicating that without these measures the situation will worsen. Janice Tranberg, president and CEO of the National Cattle Feeders’ Association, stated feedlots are reporting negative impacts due to reduction in deliveries.
“They can probably manage for the next couple weeks, but much past that it’s going to be quite a bit of crisis,” she said. “Hopefully we can get the Cargill plant up and running very quickly again, but I think this is going to be a little bit longer term as we need to slow lines down just to mitigate risk.”
CCA’s other recommendations to the federal government include adjustments to risk management programs used by the beef industry:
- Having COVID-19 deemed a natural disaster under the Agri-Recovery program
- Enhancing the Agri-Stability program by removing the $3 million payment cap and reference margin limit
- Addressing the extremely high premiums needed to pay into the Western Livestock Price Insurance program, as well as making this program available across Canada
The shift reduction at Cargill’s High River facility is the latest in a number of temporary closures at Canadian meat packing plants, including Calgary’s Harmony Beef, which is now back in operation. Other major closures included the Maple Leaf Foods poultry facility at Brampton, Ont. and the Olymel pork facility at Yamachiche, Que.
Brian Perillat, manager and senior analyst at Canfax, estimated that Canada’s total beef processing capacity has been reduced by around 25 per cent, due largely to the slowdown at Cargill but also in part to smaller reductions at other plants practicing safety precautions.
The COVID-19 pandemic has also resulted in the closure of several packing plants in the U.S., including the JBS beef facility at Greeley, Colorado. The plant, with a 5,400-head per day processing capacity, will temporarily close until April 24, coming after it was reported that at least 50 employees tested positive for COVID-19.
“Some of these U.S. slowdowns do affect Canadian cattle flows,” said Perillat. “We are seeing more cows potentially going to be exported to the U.S. in the meantime, which allows Cargill to focus on more fed slaughter here while they’re on these reduced kills.”