Gov’t kills beef industry by favouring dairy
The last sentence says it all for the beef sector: “Ontario beef farm hasn’t earned a profit after capital depreciation since 2016.” (Farmers Forum website)
With the number of beef operations in Canada near steady decline since 1981, the average age of a farmer pushing 60-plus as farms consolidate or leave the industry, the cost of land, materials, iron, labour, fertilizer and feed inputs exponentially increasing, the lack of new entrants in the sector. Even the lure of more affordable land in the “clay belt” hasn’t brought these profitability numbers up. Is it really a surprise that no one wants to enter the industry anymore? The numbers don’t lie.
Isn’t it interesting that about 7 years after supply management was introduced the beef industry decline started? How did the beef and dairy industry exist before supply management, and both were profitable once upon a time? What changed there? Isn’t it interesting that the decline of the beef industry also coincides with the decline of abattoirs since the 80s? Why is the price of beef $30/lb at the grocery store today, but still $2.50/lb at the sales barn like it was 10 years ago?
Where is the money going? Not to our producers. Is this by design to kill the industry? One has to start asking these questions as it seems that there is no positive outlook anymore. The culprit? Government.
The average Ontario cow/calf operation is 20 head. With the costs of feed per head using round numbers, being $100/month, how can you feed a cow for 9 months, then the calf for another 8 months, sell the calf for $2,000 at best and after deductions, yardage, trucking, and feed inputs, get your feed input costs back to barely breaking even. No other business operates on such a punitive margin.
I’ve been feeling it for awhile now. My off-farm income has been subsidizing my operation for many years, and thus everyone else’s dinner. My “a-ha” moment when another farmer bought my calves at the sale barn and told me he got out of cow/calf because there’s no money in it. He was better off to buy them from cow/calf producers like myself.
I have a fantastic healthy closed herd. I do all the work, take all the risk, bear all costs and sell the calf for a wash. He called it “farming the farmer.” I’ll never forget that saying, because he’s right. I’m further ahead financially by pulling up the fence posts, mothballing the barn and renting out the land to the highest bidder.
Even the big beef operators must agree with me here. There is little margin in the beef industry today and we continue to get squeezed. That breaking point happened years ago for most. The racketeering that goes on at the sales barn by big meat packers. You take lot A, I’ll take lot B… You know who you are. It keeps our prices low and profitable for you. But in my opinion, nothing will change here until policy changes. The culprit to all this? Supply management, regulations killing abattoirs, price-taking producers, USMCA (NAFTA) importing beef from lower cost of production countries. Point blank: Government.
You can’t have rules, regulations, guaranteed price points in the dairy sector set by supply management, while having a by-product of that industry flood the beef market with steers and cull cows. The dairy sector already profited from their milk production, yet their by-product that they can sell at any price point since it’s a bonus to them, disrupts ours. No one seems to talk about this advantage the one industry has over the other, by design of regulations.
This isn’t a farmer issue, dairy vs beef, it’s a government issue. It doesn’t work when you regulate half of it and not the other. Clearly the last 40 years have told us this story. How can anyone deny that?
These systemic issues are deep rooted and stretch wide. We’re so far gone that now we have government grants and rebates for watering systems, fencing systems, manure run off controls. They don’t fix the root of the issue with it all which is how we as producers can determine our own price of beef with the packing plants. The money is there at $30/lb at the retail level, but the equity distribution of it all is off. Everyone else in the supply chain is making the 20-40% profit except the producer who takes all the risk.
Our government has eroded the measures available for us to succeed. We can’t control our input costs, Bank of Canada interest rates, and the cost of land and labour, but our product prices are kept artificially low at the sale barns because of the racketeering that goes on by having fewer and fewer abattoirs. How can BFO justify their existence on a market that hasn’t been able to post a profit since 2016.
Those numbers don’t lie.
Mark Grossi
Cow/Calf Producer
Little Britain, Ont.
