Cattle industry bounces back
Okotoks: Profits 'a long time coming'
Wednesday, Jun 11, 2014 12:33 pm
Beef producers in Alberta are filling their pockets as beef prices continue to soar to record highs.
Statistics Canada reports that beef prices have increased close to 12 per cent in the last year, the price of a sirloin steak jumping from an average of $17.96 to $20.12.
Darren Shaw of the Highwood Livestock Auction said auction values have been high and he’s hoping that the prices hold until the fall when the cow calf producers are ready to sell.
“We’re seeing calf-cow pairs up to $3,500, call cows at a record high, bulls at a record high,” he said. “It’s benefiting the industry as a whole, but what I would like to see is the cow calf producer to get a hold of a bunch of this. I think it’s their turn and I think it’s coming to them this fall. It looks like we’re heading in their direction.
“There’s been extremely good demand, and what’s driving it is the short supply.”
Rancher Ralph Nelson said over the last few years he’s seen other cattle producers sell their herds and get out of ranching altogether, which is lowering the cattle supply.
“It’s been a long time coming for the beef industry,” he said. “It’s been a pretty tough go for a long time post BSE.”
Nelson said the industry is still recovering from BSE, commonly known as Mad Cow Disease, and many ranchers chose to sell their herds and get out of the industry.
“That really hit the entire industry hard, and it takes a long time to recover from that,” he said. “So many people were hit hard and it takes years to recover, and some people got out at that time.”
While the higher prices are good for ranchers and will help boost profits, ranchers are having to deal with rising costs as well, Nelson said.
“I don’t know if they will be looking at a premium higher than last year,’ he said. “If you’re getting $300 a piece for 100 calves, that’s $30,000, and that isn’t even enough for a new pickup truck. For the producer it’s better than the market going the other way, but its not as if you’re going to buy another farm.”
This, Nelson pointed out, poses another problem for the ranching industry.
With land values climbing it’s nearly impossible to start a ranch and make a profit. In the meantime, younger generations continue to be drawn to the oil fields and the older ranchers have no one to take over.
“There’s no way to expand your land base because the prices are so high,” said Nelson. “My dad paid $30-$40 an acre. When we started it was $300 an acre, and now if my kids tried to buy it would be $3,000-$5,000.”
“So expansion is really difficult in this part of the world. The economics aren’t there even with cattle prices as high as they are.”
While some consumers might not be happy about the extra costs at the check-out, Nelson said they need to consider what they might be paying more for in other places.
“I would challenge consumers to think about where they spend their dollars, and if they have to pay 20 per cent more for beef, they might want to compare to what they’re paying extra for on gas or their cell phone,” he said. “It’s about priorities. If it’s a priority for them to eat red meet they should reflect a little bit on what they’re spending on other things.”