First grain, now beef prices affected

Canadians facing higher prices for products with grain can add beef to the list thanks to mother nature in western Canada.

Drought in cattle producing provinces are forcing ranchers and farmers to thin their herds in an attempt to stay in business, the latest blow to a reeling industry. Alberta, with 1.85-million-head herd of beef cattle, will likely contract by at least 10 per cent and as much as 28 per cent this year, said Kevin Boon, vice-chairman of the Alberta Beef Producers. A chilly spring topped by drought has stunted pasture growth. However, the biggest concern is a shortage of winter feed, he said. Numerous late frosts this spring damaged the hay crop that farmers bale and save for winter. The poor condition of some pastures has caused some farmers to graze their cattle on hayland. They're in very serious trouble, said Boon, who raises 100 head of cattle near the Alberta capital of Edmonton. Hay prices, currently $60 to $70 per tonne, could double this year, Boon said, but short supply is a bigger concern than price. The neighbouring province of Saskatchewan is also coping with drought and poor pasture growth. In the past year Alberta’s beef herd has declined 11 per cent as the industry struggles with BSE (bovine spongiform encephalopathy), a dip that started with export markets closing due to detection of mad cow disease in 2003. Most recently, United States bound exports have weakened with American country-of-origin labelling laws. Boon said cattle farmers are already borrowing against their equity to stay afloat, while smaller producers have been liquidating their herds altogether. “We’ve gone through six, seven years of turmoil and it’s taken a huge tax on the producer, said Boon. "There’s no profit in it." Drought this year has contributed to more cows heading to market, said Scott McKinnon, market analyst with Canfax. Farmers would reduce herds even faster, but weak demand has prompted auction marts to stagger deliveries to ensure the market isn’t flooded with cattle, McKinnon said. No one wants to get stuck with cows down the line if there’s not going to be any feed. Many farmers are selling cow-calf pairs at a discount, instead of delaying until the calves are old enough to separate and sell at a higher price, said Ken Ziegler, a beef specialist with the Alberta government. Farmers, getting $1,150 to $1,400 per pair on May 9 before the drought took hold received as little as $775 on June 5 at auction due to a glut of cattle for sale, Ziegler said. Drought conditions cover a large portion of central Alberta, stretching from the Rocky Mountains into Saskatchewan, according to Agriculture Canada’s precipitation map. Environment Canada is forecasting no rain through Thursday for Calgary, Edmonton and Coronation, which roughly form the triangle points of the driest area. Farmers should cut their losses by moving cattle to pasture, even if it means travelling as far east as Manitoba, Ziegler said farmers should reduce their losses even if means travelling as far east as Manitoba, Ziegler said. That's a radical idea to some farmers, but the cost of selling cattle at a deep discount exceeds transportation and land rental expenses, he said. Drought has also left Alberta crops are at least two weeks behind schedule due to drought which could drive up the price of grain and lead to farmers importing corn as an alternative from the United States, McKinnon said.