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Cattle industry holding up despite high feed costs

High feed costs have caused severe problems in the Canadian hog industry this year, but the cattle industry doesn’t seem to be following in its footsteps.

Two large hog production facilities in Canada had to file for financial help in mid-September because operation costs were becoming too expensive. High feed costs paired with falling hog prices were to blame.

Cattle producers in Canada are also facing squeezed profit margins because prices are a little bit lower, but the situation isn’t as severe as it is in the hog industry, said Cam Dahl, operations manager of Manitoba Beef Producers, said.

"I think that it’s hard to say why different industries react differently," he said. "But, I don’t see the same kind of volatility coming in the beef industry as in the pork industry."

The cattle industry also has more feed options that are slightly less expensive, which helps to ease the pressure of high feed grain costs, said Martin Unrau, president of the Canadian Cattlemen’s Association.

"Cattle producers can feed straw and blend in a bit of dry distillers’ grain and a bit of barley, and sometimes they have access to lesser quality hay and that’s ground and mixed in with other feeds," said Unrau, a producer at MacGregor, Man.

Hog producers feed strictly by grain, he said, so the price of feed grains determines whether they "live or die."

There are some smaller Canadian cattle producers who won’t be in the game this year because of the high feed costs, but the problem is very isolated, Unrau said.

Cattle producers could still run into problems later in the year, though, as it’s still early in the season, he said. "The cattle industry’s cycle is a little longer so it takes a little longer to feel the pain and re-establish itself when it does run into difficulties."

"Get on it now"

One problem some Canadian producers could face later on in the year is a water deficit, he said. Unrau has already had to find alternate water sources and deepen three of his dugouts because they’re starting to dry up.

"I know cattle producers will face difficulties this winter with water situations," he said. "It’s not an emergency situation but if we don’t get any snow or rain before winter then it will be."

Unrau said the water shortage could cause producers a lot of problems when their cattle come off of grass and start feeding in the spring.

Some cattle producers in Canada could also find themselves running short of hay.

There’s not an excessive supply of hay, and a lot of it is being sold to U.S. buyers who are short because of the drought there. Since there’s so much hay heading south, there’s going to be less supply for Canadian producers, Unrau said.

"I think anybody that is a bit short of hay needs to get on it now before all the supplies are gone," he said.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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