Cattle industry scrambles for additional capacity

Anxiety hangs over the cattle industry in Alberta and across Canada as the fall calf run gears up, the yearling run is on — and XL Foods’ Lakeside beef plant remains closed to slaughter cattle.

"If it doesn’t reopen, that will devastate the Canadian industry. It’s disappointing this thing couldn’t move faster and with more answers. If we could have progressed quicker to a resolution versus laying people off — it sounds like a prolonged process to get re-listed," said Alberta Beef Producers (ABP) chairman Doug Sawyer.

"Producers need to know what’s going to happen and what to do and feedlots need to know where they can market these cattle," he said.

While the cow-calf sector is nervously awaiting news about the Lakeside plant at Brooks, Alta., feeders are even more worried about where to send finished cattle.

"These fats that were contracted into Lakeside, we’re having trouble getting trucks to get them down south to be processed," Sawyer said.

Compounding the uncertainty, XL on Saturday laid off most of the Brooks plant’s staff, then on Sunday recalled about 40 per cent of the workers to finish processing stored carcasses at the plant under CFIA supervision.

The Brooks plant’s federal license was suspended Sept. 27 in the wake of a still-expanding, weeks-long recall of beef products and primal cuts, shipped from XL to processors and retailers across Canada and the U.S., on concerns over contamination with E. coli O157:H7 bacteria.

CFIA said it would allow the processing of carcasses in order to watch the plant’s upgraded food safety protocols in action. The resulting beef products will remain in detention and no slaughter cattle are allowed entry.

Sawyer and others remain concerned what a possible permanent loss of the plant could mean for the Canadian cattle industry.

"That’s huge. Moving cattle into the U.S. for slaughter and not having a fully Canadian product… We built up really strong Canadian brands, and we have retailers and wholesalers that are loyal to the Canadian brand. Now we may have trouble getting enough Canadian product to fulfill the Canadian brand orders that we have."

The closure at Brooks piles on top of already-reduced Canadian slaughter capacity. Earlier this year, the Levinoff-Colbex plant in Quebec was closed, and XL’s smaller plants at Moose Jaw, Sask. and at Calgary have also closed in recent years.

"Anytime we lose infrastructure that impacts our ability to move cattle through our Canadian system, so a U.S. border closure would have significant impact on our ability to get these cattle processed," Sawyer said.

ABP is working with other producer groups and the provincial governments to try and fix the problem, he said.

"We need this plant back open. It’s crucial infrastructure to our Canadian industry and it’s very important to the economy of this province."

Long-term commitment

Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association, said the industry is already preparing for the possibility the plant will remain closed for the short or long term.

"Will the plant remain closed while they try and sell the plant, which we think is a pretty clear possibility?" he said. "There have been suggestions come up about leasing it to someone else. Whomever gets involved, we want to make sure they have a long-term commitment to the success of that operation."

Laycraft said the CCA is examining possibilities of increased slaughter capacity elsewhere. "We’ve been in touch with a number of companies and certainly, Cargill is the clearest one who could ramp up more quickly by killing Saturdays and increasing their daily throughput and they’re doing that," Laycraft said.

U.S. plants are another option, but Laycraft said the biggest short-term challenge is trucking capacity, as there are fewer companies still approved to go to the United States.

In the meantime, some U.S. plants are stepping up processing, and others are establishing segregation protocols for killing Canadian cattle.

Laycraft said the industry has learned from the closure of the U.S. border due to BSE.

"I think one thing is clear — we don’t want to be so dependent on the U.S. that we’re back in the same situation we were back in 2003."

Calves heading south?

Another problem looms for the Canadian industry. If feeders aren’t rushing to buy fall calves, too many may end up south of the border. "We need to create enough certainty in the industry that we can continue on so that feeders feel they can continue to fill the pens and the cow-calf industry will still want to retain heifers and build to the future," said Laycraft.

Milt Scott, general manager of Thorlakson Feedyards near Airdrie, Alta. is concerned the plant will stay dark because of what he feels was an extreme overreaction by the CFIA.

"Today’s problem is big government flexing their muscle and really trying to prove a point. If you really get down to laymen’s terms, they overdid the recall, ran to cover their butts and once you start covering your butts, then where do you stop?" Scott said.

"My question to the CFIA is if they had 40 inspectors plus six veterinarians in there, they were in there prior to September — why didn’t they stop it then?"

Scott fears the crisis will result in the loss of as much as 20 per cent of Alberta’s feedlots.

"If we can’t afford to buy the feeder cattle because our price for the fats is going to be Washington less freight then yes, the feeder cattle are going to move south."

Jobs will move too, Scott said.

"We’re taking all the infrastructure out of Canada, especially Western Canada, and we’re going to move it south. Alberta is a vast land that produces forage — it makes zero sense to haul the cattle away from where the forage is produced."

— Sheri Monk is a reporter for Alberta Farmer Express at Pincher Creek, Alta.

Related stories:
Klassen: Calf market drifts lower, Oct. 15, 2012
XL recalls some laid-off beef plant workers, Oct. 15, 2012
"Hang on, all things will pass": XL chief Nilsson, Oct. 12, 2012

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