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First it was Oil – Now the Cattle Industry is Plagued by Low Prices

Sep 11, 2016 | 5:12 PM

LETHBRIDGE – It appears another backbone of Alberta’s economy is being impacted by low prices.  However, those prices aren’t advantageous for consumers and are impacting an important sector of the agriculture industry.

While Alberta is still dealing with the wallop of reduced oil prices, the province’s economy may be hit by a double whammy, as the cattle industry struggles with low prices.  To make things worse, the situation doesn’t appear to be on the radar of government officials.

Local cattleman Bob Balog says his industry is “probably at one of the worst crossroads we’ve seen in a long time.”

“This fall is certainly going to be a challenge and it’s going to , I hope, be able to keep feedlot people and the primary producer both in business, cause right now, it’s pretty touchy.”

As we’ve gone through the summer barbecue season, a huge bone of contention has been the high cost of beef. Consumers are asking why, and assuming that cattle producers are making big bucks.  Not so.

Last week, Balog posted a market report that left some in his industry gasping. On one particular day, he labeled the auction market in “absolute melt down”, after “the toughest sale they had since BSE, with cattle prices in a free fall, with no stop in sight.”

According to Balog, there is a massive disconnect between what’s happening in the retail store and what is happening with producers who sell the cattle.

“We have tremendous volatility that’s being caused by, probably, fear and manipulation, as far as the futures market goes, but we have the prices coming down dramatically – they’re dropping every day, probably for the last 20 days. So naturally, the industry, especially the primary producer and the feedlot man are extremely concerned about what’s happening.”

In simple terms, while beef prices are high in the store, producers and feedlots are losing money on the cattle they produce.

Their costs in raising the cattle includes animal feed and care.  Feed costs are high and a lower Canadian dollar also factors into the picture.

“So, I guess we have to look at what happens between when the feedlot man sells them and they get to the grocery store, and that’s where the disconnect is right now – the people that are buying beef know, the price in the store right now is too high compared to what the man who is selling the cattle is getting paid.” says Balog.

Balog says right now, there is concern over the equity that has been lost in the feeding industry and now it is going to be handed down to the primary producer this fall.  He says it’s larger that he’s ever seen.

“This is going to be a bigger problem than BSE was –  we had a reason when BSE hit and we all worked together and the Canadian consumer was one of the heroes because they stepped up and they started eating beef big time.”

Unfortunately, Balog says consumers aren’t eating as much beef right now because the price is so high. Lower prices for pork and chicken have also prompted consumers to select those protein choices for summer barbecues.

“With the wobbly economies in both Canada and the United States, we need the consumer to be able to go to town and buy beef to help the extra surplus disappear.”