Numbers are the lifeblood of the North American beef industry. Whether it’s cattle prices, wholesale beef prices, slaughter and production levels, or cattle and beef exports and imports, the industry pores over numbers every week to glean what might lie ahead.
Forecasts for 2015 start with cattle numbers. The early prospects continue to be bright for cow-calf operators but not for cattle feeders, beef processors, those who buy beef and those who consume it. That’s because cattle numbers in Canada, the U.S. and Mexico were expected on January 1 to be down 835,000 head on a year ago. This would be a 9.6 million head decline in five years.
Canada’s herd total might decline to its lowest level in just over 20 years. The total on Jan 1 last year was 12.220 million head. Forecasts have it declining to 12.060 million or 11.950 million head (USDA’s number). Either number would bring the total back to 1994 or 1993 levels, respectively. USDA forecasts that Canada’s beef production this year will fall 40,000 metric tons from 2014’s estimated 1.050 million mt.
Cattle feeders and packers will thus have fewer cattle available to run their operations, and consumers will have to pay more for beef. USDA forecasts that consumer beef prices in the U.S. will increase 4.5 to 5.5 per cent this year from last. That’s far less than the 11 per cent to 12 per cent increase it forecast for prices in 2014 versus 2013. But those record prices caused beef sales to slow in the final third of 2014 and that trend will be evident at least the first half of this year.
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The decline in Canadian cattle numbers mostly reflects a decline in beef cow numbers. Analysts have well documented the reasons for the decline. One reason that needs to be re-emphasized is the labour shortage, especially in Western Canada. Many readers, I’m sure, know first-hand how hard it is to find someone to work on a ranch or in a feedlot.
Not surprisingly, three representatives of the Alberta Beef Producers (ABP) group pressed the labour issue at a series of meetings in Ottawa last November. Cattle farmers, ranchers, feeders and meat processors are having a hard time finding the skilled workers needed for the many available jobs in Canada, they said. Vacancies on farms and ranches include two or three spots at a time, with processing plants seeing vacancies in the hundreds.
The worsening labour shortage is most acute at the plant level, where it is hobbling production, especially of value-added products. The crisis has been mounting for some time. But the Canadian government exacerbated the crisis last June when it interrupted a temporary foreign worker program. The meat industry had been using the program since 2002 to help fill vacancies. The industry as of last November had more than 900 vacancies in nine processing plants across Canada, the Canadian Meat Council’s Ron Davidson told me. But the vacancy issue will get much worse. This is the most serious threat facing the industry in Canada. Nor is it confined to the industry. The rest of agriculture and other sectors of the economy like trucking face a similar crisis, he says.
The 900 vacancies included 320 at Cargill’s High River, Alta., beef plant and 150 at JBS’s Brooks, Alta., beef plant. These plants need more than 2,000 workers each to operate at the level they want to. It’s little wonder then that John Masswohl of the Canadian Cattlemen’s Association warned last November that a corporate headquarters outside Canada might do the math and decide it was not worth operating a plant in Canada. Let’s hope the government was listening.
A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.