The Canadian cattle industry has lost more than $5 billion during the past 21 months after a case of BSE was discovered in Canada and the U.S./Canadian border closed. Producers are struggling financially as they search for markets to sell their cattle — especially cull cows and bulls.
At the 2004 Canadian Western Agribition in Regina, Saskatchewan, I spoke with three producers about how their lives have changed since May 2003 and to get their opinion on how this crisis was handled.
Canadian cattlemen have learned a hard lesson about being too dependent on marketing their cattle through another country for processing, says Larry Toner, an Angus seedstock producer from Kelfield, Saskatchewan. The U.S. market accounted for 60% of Canadian cattle exports, while Canadian cattle only accounted for 4-5% of U.S. slaughter capacity.
He says that since the border closed in May 2003 the thought among cattle producers is that they must further process their product in Canada before moving it on. “In a box you can move it anywhere in the world. On hoof we can only send it to one export market,” he adds.
Since the border shut down, Toner says his bull sales have dropped 60%, and he's lost about $500/head on those he has sold.
“The culling program was put on hold because we couldn't get any value for the cows. We didn't even bother preg-checking,” he says. “Consequently, inventories have increased and values have dropped.”
Horror stories have circulated around Canada about cattle bringing pennies per pound, and Toner found himself in that position when a valuable bull became lame. He brought the bull to a local auction house where he hoped to get 15-20¢/lb.
“They told me he went through the ring too slowly, no one bid on him so they passed him up no sale,” Toner says. “A pet food representative there offered us 2¢/lb. for him.”
Instead, Toner processed the bull for hamburger. “Instead of getting a check for $30, I got a bill for $960 and we've been peddling a lot of hamburger,” he says.
Toner says despite the challenges faced during the past 21 months, Canadian cattlemen are in it for the long haul. “We believe it is a North American cow herd we are dealing with here,” he adds.
Reed Andrew, Regina, Saskatchewan, says he initially didn't think much about the impact BSE would have on the Canadian market. He was busy calving in the spring of 2003, and didn't anticipate the U.S border closure lasting.
Andrew raises 290 cows and farms about 7,200 acres of grain crops. He says he now backgrounds and feeds out his calves instead of selling them off the cows. He takes advantage of shows and sales like the Canadian Western Agribition, and retains ownership of his calves in feedlots.
Andrew tried to put a positive spin on Canada's beef crisis, saying cattlemen are adjusting to the border closure and are finishing their calves in Canadian feedlots. The downside is the lack of space to harvest cull cows and bulls.
“Our numbers (of animals) have actually increased where the U.S. numbers have decreased, especially in the breeding herd,” he says. “So we will have what they need when the border opens — we just don't know when that will be.
“My prediction is the moment the border opens, there will be a nice spike for feeder cattle for a period of time,” he says, adding it all depends on the strength of the Canadian dollar.
“An 84¢ dollar isn't really friendly to agriculture in Canada. We're better off with a 65¢ dollar than an 84¢ dollar,” Andrew adds.
Reg Schellenberg is a commercial cow-calf producer from Beechy, Saskatchewan. “The climate is similar to northern Montana. We can graze our cow herd until about Christmas,” he says.
He runs 400 cows on 1,400 acres of native grass. Calving on the range starts April 10, and steers are sold off the cows in October. The heifers are backgrounded and those not retained are sold as replacement females at the end of the year.
Schellenberg says producers initially thought the border closure would be temporary. “We didn't fully comprehend the impact until it was prolonged,” he says. “The first hit we took was on the value of dry cows off the grass.”
He says they usually sell those cows in June when they are in peak condition for the hamburger season. In 2003 those cows lost 80% of their value right off the top.
Prices, which had increased in fall 2003 amid speculation of an open border, fell again after BSE was found in a Washington state cow.
“It was tough after that,” Schellenberg says. “Value-wise, we saw the brood cow herd lose 50% of their value.”
Shellenberg says Canadian ranchers believe the issue isn't a scientific crisis, but a political one.
“It gets hard not to point blame, but the bottom line is nothing was based on science. It was based on policy,” he says.