Saskatchewan Stock Growers Association (SSGA) is calling on the provincial and federal governments to conduct a pricing investigation to address the significant imbalance in cattle and beef pricing markets.
“Though each industry sector has its own frustrations, we agree that price transparency and discovery, packer capacity and pricing spread are our biggest joint concerns,” said SSGA President Garner Deobald.
The severe drought across the Canadian Prairies has greatly impacted the beef industry. Grass continues to be scarce in several regions, and feed grain and forage prices have doubled from two years ago. The situation has caused a wider availability for cattle ready for slaughter with higher placements in feedlots.
Ranchers and feedlots are operating at a loss, forcing many ag businesses to make the difficult decision to reduce their cattle numbers or even exit the business, which is affecting cattle prices through the supply chain as well as domestic and export beef prices.
“The reduction in herd numbers could result in more grassland being converted to farmland. Removing the grass cover also eliminates the habitat that species at risk call home and releases carbon sequestered in the soil into the atmosphere as carbon emissions,” said Deobald.
“Many producers and feedlots are feeling challenged by increased costs due to inflation, fuel and record-high feed costs. Our members are sharing their frustrations with us. There is a disconnect between what producers are receiving for their animals and the high prices consumers are paying for beef products. Producers are feeling exploited,” Deobald said.
“Though packer margins have tightened, both packers and retailers are reporting strong profits as consumer demand and willingness to pay higher prices for beef products remains strong. Producers are tired of working so hard for little or no return on investment,” Deobald added with concern.
Though the pandemic imposed restrictions on packers to optimize worker safety through work spacing requirements, packers were running at near capacity within months after lockdown was announced. More recently, packers have stopped running extra shifts because they have eliminated the backlog. However, industry members are questioning packers’ strategy, which seems to be limiting the amount of product available at the retail level ― keeping boxed beef prices high while allowing fed cattle supplies to build in the countryside, which keeps cattle prices low.
“Limiting supply to drive up prices is changing the face of Canadian agriculture. The packers and retailers know there’s no one else to take their place or profits, so they have control right now,” Deobald explained.
Beef is considered a protein-rich food staple in many homes. When beef prices rise, many consumers are willing to pay more while some cannot. When food prices for staple items exceeds what consumers are able to pay, producers and consumers are negatively impacted.
“Our goal is to produce safe and nutritious beef for Canadians while maintaining our ranching livelihoods,” Deobald affirmed. “If producers continue to operate at a loss, many will go out of business, which could drive Canada to rely on imported meat. We believe a pricing investigation is the best way to ensure all livestock value chain members remain profitable and all Canadian consumers have economic access to our products. We look forward to working with all stakeholders to make this happen.”
