Cattlemen brace for losses as Canada’s largest processing facility closes

Jack Chaffe, a beef farmer from the Mitchell area, says Ontario was on the verge of losing 20 per cent of its beef producers before the pandemic, and now expects the casualties will be roughly 40 per cent. Cory Smith/Postmedia Network SunMedia

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The shutdown of one of Canada’s largest beef processing plants in Alberta due to a COVID-19 outbreak will have a major impact on Ontario beef producers, some farmers say.

“Unfortunately, the beef industry here in Ontario had been hurting for months,” said Jack Chaffe, a cattle farmer in Perth County and vice-president of the Beef Farmers of Ontario. “We were going to lose 20 per cent of our producers if things didn’t change going into this. Now, we could lose 40 per cent. Guys will just quit feeding cattle.”

Chaffe estimates farmers in the province are losing more than $200 a head on their cattle due to the pandemic. He said they were already down $250 a head in 2019.

There are more than 800 beef farms in Southern Ontario, according to 2016 census data, with cattle ranching and feedlots making up 13.7 per cent of the province’s total farms.

The Cargill plant in High River, Alta., which handles about a third of Canada’s beef processing, closed after one worker died from COVID-19 and more than 400 other employees tested positive.

Other plants, including JBS in Brooks, Alta., have reduced shifts after COVID-19 outbreaks, putting a major dent in the nation’s capacity to process beef.

“There’s definitely going to have to be cut-backs and changes in the way we do business,” Chaffe said. “That hurts the whole economy; there’s feed mills, veterinarians, truckers, it’s just down the list.”

The Canadian Cattlemen’s Association (CCA) is calling for a set-aside program from the federal government – similar to one implemented during the BSE crisis – that allows beef producers to hold cattle in an effort to stabilize the market and keep farmers from going under.

“Any further delay in implementing policies to help us manage through these difficult times will be crippling to the industry,” Bob Lowe, president of the CCA, said in a statement.

The CCA are projecting $500 million in revenue losses for cattle farmers by the end of June.

Sylvain Charlebois, a professor of agriculture and food security at Dalhousie University, estimates more than 70 per cent of beef processing in Canada has been impacted by disruptions related to the coronavirus pandemic.

“This is very destructive, and disrupting the supply chain,” he said. “It’s not ideal for cattle ranchers.”

The immediate financial burden on producers will vary from farm to farm, as some might have guaranteed contracts with processors while others only make money as cattle ship, Charlebois said.

“The economics of meat packing is a high-volume, low-margin business like most agri-food sectors and it’s not easy to be successful,” he said.

Despite that, he said there are some factors working in producers’ favour. The production cycle of cattle is much longer than that of other livestock, and with the warmer weather, animals don’t burn as much energy, making them cheaper to feed this time of year.

Still, Charlebois said producers should brace for the likelihood of more plant shutdowns due to COVID-19 outbreaks.

“If I were a virus, I would love meat packing plants; they’re cool, they’re humid, they’re great. I would spread like crazy.”

But the extended economic toll facing farmers depends on how long the processors are shut down, how quickly the plants can clear a backlog when they get running again.

“If it’s a few days or two weeks, they’ll be fine,” Charlebois said. “If it’s more than that, it’ll be problematic.”

 

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