Drought cattle sale a mounting concern

Posted on September 10, 2015 by Vauxhall Advance

By Delon Shurtz
Southern Alberta Newspapers – Lethbridge

With more than 2,000 yearlings on sale recently at Balog Auction east of Lethbridge, one might think all is well with the cattle industry.

Nothing could be further from the truth.

Those 2,000 yearlings shouldn’t be for sale until September, but they’re what Bob Balog of Balog Auction Services calls “drought cattle,” because they can no longer be sustained on the drought-stricken land on which they’ve been raised, so they need to be sold.

The Canadian cattle industry is in crisis as producers struggle to cope with drought, high feed prices, declining herds and a weak Canadian dollar.

The perfect storm has resulted in record-high cattle prices never before seen, anywhere, in “anyone’s history,” Balog says.

And the light at the end of the tunnel is very dim.

The industry, Balog points out, is still reeling from effects of BSE several years ago which drastically reduced the number of cattle by 10-15 per cent.

Add to that problems in the U.S. where packing plants are closing and drought in some areas, particularly Texas, are prompting Canada’s largest customer to buy even more cattle from its northern neighbour, further reducing the number of cattle here.

Well, you get the picture, and it’s not very pretty. In fact, it gets even uglier.

Land prices are up, many older, primary producers have quit the industry and young people aren’t interested in it, at least not in its current state.

And believe it or not, beef consumption has jumped significantly. More people are eating more beef, but there’s just not enough cattle to keep up with demand, forcing prices to skyrocket.

Balog points out producers on both sides of the border were gearing up for expansion until the drought hit and hay prices jumped. That has brought any plans for expansion to a grinding halt.

“We just can’t climb back to the numbers we used to have despite the demand,” Balog says.

So while producers struggle with the current situation, consumers can expect to continue paying high prices for their burgers and steaks.

As already reported by Statistics Canada, the price at slaughter for 100 pounds of Alberta beef rose to $192.80 in May. That’s a 36 per cent jump from May 2014 and the highest price on record.

And don’t expect a quick recovery. Balog says an industry that has been in decline for 10 years can’t be fixed in one year.

In fact, he suggests cattle prices may remain high for another three to five years, and that’s only if conditions are favourable.

That means plenty of moisture and good grass next spring and summer.

“Mother Nature is still the boss. She calls the shots.”

Roughly 80 per cent of the Prairies is experiencing drought, reports indicate, with some areas in eastern Alberta and western Saskatchewan receiving less than 40 per cent of their usual rainfall.

The dry conditions mean grass pasture and hay stocks haven’t grown enough and producers are scrambling to find ways to feed their cattle.

If they can’t afford to feed their cattle, they’re going to sell them. If they sell them, there’s going to be fewer calves and that ultimately means less beef, and “up go prices.”