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Bumper year for the beef industry, despite dry season

The beef industry is floating on high prices, high cattle volumes and cautious regulatory optimism going into 2018

Manitoba beef producers have plenty of reason to look back on 2017 fondly.

The beef sector enjoyed good prices and high market volumes through the fall run, while early concerns about feed quantity evaporated as the province mostly dodged the drought conditions seen in south-central Saskatchewan.

“It’s been, actually, a good year,” Brian Lemon, Manitoba Beef Producers general manager, said. “It’s been a year dominated by, I think, some good signals from the market. Prices were better than they’ve been in recent history, so those are positives for us.”

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Farmers who bought feeder cattle in fall 2016 enjoyed premium prices when those animals returned to market, Rick Wright of Heartland Order Buying Co. said.

“They reinvested it here in the fall again, purchasing inventory, and our prices were anywhere from 30-55 cents per pound higher than last year on the calves during the fall run and we did stay pretty active throughout the market, so the cow-calf producers were really well rewarded for their efforts this year,” he said.

Manitoba cattle drew little interest from the U.S., although Wright noted that meat moved more freely. Few cattle have crossed the border out of Manitoba either this year or in 2016, he said, save those bound for custom feeding due to lack of pen space in Canada.

Wright blamed the slouch on a lower, more export-minded U.S. market. Canadian feedlots had higher prices on offer and drew more Canadian cows.

Ontario and Quebec picked up the slack, something Wright has noted throughout the fall, but that, he says, is not entirely unusual.

“This happens in Manitoba every year,” he said. “We’re in a unique position here because, most of the time, we have active buyers wanting to purchase Canad(ian) and, because of our geographic location and we have good quality of cattle in Manitoba, Ontario and Quebec are buyers every season and they’re ready to pay a premium when they get them.”

Volumes bound for Eastern Canada are typically low, he said, although they were a driver in the market this year. Eastern demand brought Manitoba’s prices 10-15 cents a pound higher than Alberta operations in some cattle classes, Wright said.

Pen space and transport bottlenecks

Manitoba’s markets were hard pressed by the flood of cattle during this year’s fall run. Producers were already being warned to book their cattle by the second week of September.

Cattle from Alberta and Sask­atch­ewan arrived earlier than normal this year, Wright said, and pens quickly filled.

“Our fall here in Manitoba was actually late,” he added. “We had a drawn-out fall and we didn’t see the real big numbers come until late October, early November. Normally, we go head to head with Alberta at that particular time. This time, we didn’t have as many Alberta guys delivering quite as many cattle.”

Transport also became harder to arrange as driver schedules filled.

Pen space is still short, Wright said, but the transportation backlog is starting to ease as the industry wraps up for the end of the year.

“We’re going to see, after Christmas, some of the yearlings that were put in August and September will start to come out and those pen spaces will be available to refill,” he said.

Trade: National issues, local impacts

Trade captured Manitoba Beef Producers’ attention this year, Lemon said. The Trans-Pacific Partnership, a highly anticipated deal for beef producers, who hope it will open up the Japanese market, hit a major hurdle in early January 2017, after U.S. President Donald Trump pulled out of the deal as one of his first acts in office. Canada and the 10 other countries are still attempting to save the deal without the United States.

CETA, Canada’s awaited deal with the European Union, also came into effect this summer, although the beef sector has seen little change. The deal promises 35,000 tonnes of fresh Canadian beef and 15,000 tonnes of frozen beef duty-free access by 2022, but key carcass washes used in Canada still need to be approved in the EU. EU regulations also close the door on hormone-treated beef.

“CETA, this past year on the trade file, was huge,” Lemon said. “We’re still working through some technical issues to actually realize that access. We’re looking forward to TPP, hopefully, working itself out without the U.S. as part of the agreement, so that’s a positive.”

A new U.S. agreement with China (U.S. beef access for Chinese poultry) may also boost U.S. interest in Canadian cattle, Lemon said.

NAFTA renegotiations, meanwhile, have had no effect on the beef market, although producers are watching closely.

“I don’t think immediately we’re going to have a big impact on the cattle business,” Wright said. “Just for the fact that we’ve gone through pretty much 12 months with no American activity on the market as it is. I mean, we’re sending meat products there. We’re not sending any live cattle there.”

Beef has avoided the spotlight in NAFTA talks so far, eclipsed by debate over supply-managed sectors like dairy.

Carbon tax

Manitoba announced its flat $25-per-tonne carbon tax plan in late 2017.

Manitoba Beef Producers welcomed some parts of the plan, which included exemptions for farm fuel and on-farm emissions, but also argues that benefits should be retroactive for producers who are already pursuing a lower carbon footprint. Input prices are another concern, with MPB arguing that costs will trickle down from manufacturers to producers.

MBP has since joined in provincial consultations on the green plan.

“Certainly, those are important opportunities where we’re able to get our messages out. Those are also, in some cases, somewhat limited in terms of what message actually gets heard just because you are part of a broad consultation,” Lemon said.

Forage dodges trouble

Winterkill and an abnormally dry spring, followed by a dry summer, raised concerns over pasture and forage, but both Manitoba Agriculture and the Manitoba Forage and Grassland Association reported generally good growth and adequate cattle feed.

“It started out dry and we all thought that hay production would be down, and on some fields, it was,” Manitoba Forage and Grassland Association chair Dave Koslowsky said. “An older hay stand didn’t yield as good as a newer stand, which is a normal thing in a dry year.”

Interlake producers took advantage of the open fall to extend their grazing season, while Koslowsky says some dry patches of the province are short on feed, particularly in the northwest near Swan River.

Brown pastures in central Manitoba forced a short grazing season, although hay quality was also up and there is a “reasonable supply of almost all classes of feed, including straw,” according to Manitoba Agriculture.

“Pastures that were overstocked or on lighter soils stopped growing in late summer, providing very little regrowth for grazing,” the final crop report read in October.

Cattle in the east were also moved off pastures one to two weeks early.

Despite that, 20 per cent of livestock operations in the east reported a winter feed surplus.

The southwest pulled through early concerns and an unimpressive first cut after timely rains. Some areas will need to supplement for poor quality, however, the province reported.

Both the province and the forage association have noted a drop in subsoil moisture and the driest regions will need to recharge their dugouts. Some dugouts in the northwest dry patch reported 50-60 per cent capacity, with water quality concerns, the province said.

“Subsoil moistures are definitely dried down compared to what they were a year ago, so it is a concern coming into spring,” Koslowsky said. “We need some good rain, some good snow.”

Looking into 2018

The market’s sunny standing may slip in 2018, Wright forecast. The province has shipped at least 25 per cent more calves this year, while herd sizes have not changed, he said. Calves moving in 2018 may “already be in the bank,” softening spring numbers, while futures data does not support current Canadian prices, Wright said.

“Our cost of feeding is higher than it is in the United States, so my opinion would probably be that the cattle we’ve sold this fall are slightly oversold,” he said.

Wright expects a market correction towards February and March, but the market will stay strong if U.S. cattle exports also remain strong, he added.

MBP is now looking to the expected changeover from Growing Forward 2 to the new five-year Canadian Agriculture Partnership, coming into effect March 2018.

“Getting it up and running is certainly a concern of ours and making sure that there aren’t any gaps in programming, recognizing that there’s a bureaucratic shift that has to happen overnight on March 31,” Lemon said.

MBP also expects sustainability and carbon tax to be key issues again in 2018.

The Canadian Round Table for Sustainable Beef released its framework in December, and is expected to help benchmark sustainable production practices.

Predation issues (a major complaint for producers in the Interlake and northwest), traceability (manifests and premise IDs will be enforced in 2018) and Lake Manitoba and Lake St. Martin channel projects are also expected to feature.

About the author

Reporter

Alexis Stockford

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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