If you’ve been buying beef lately, you might be excused for thinking ranchers are rolling in cash.
But a Saskatchewan cattle producer says that’s just not the case.
Les Johnston of Nisku Farms said it’s really a matter of what timeframe one is looking at. While prices for his cows have gone up compared to years past, he said that in the short term, he hasn’t been seeing extra money, even as stores charge prices not seen since the mid-90’s.
“It’s hard to believe, but actually, cattle prices in the last 2 weeks have dropped probably 5 per cent in some cases. So, as far as a producer’s perspective, there’s probably a bit of profit-taking in the retail sector as opposed to what we’re getting. But overall, year-on-year, our prices are up substantially from what they were a few years ago,” he said.
Johnston said shorter-term movements in the retail price of beef are generally not caused by producers.
“When you go to the store today and pay a few cents more for that cut over what it was maybe a month ago, that’s not the producer doing that to you. That’s somewhere else in the chain,” he said.
Johnston said consumers may be experiencing sticker shock after a decade of low prices in the wake of the Bovine Spongiform Encephalitis (BSE) scare of 2003.
“The problem is we fed you so cheap for so long, it looks really terrible now,” he said.
Johnston said those years of low prices have led us to where we are today. Thousands of producers left the industry as they couldn’t afford to keep selling cows at cutrate prices. That’s meant fewer animals in the supply chain — and now a shortage of Western Canadian beef.
According to Bloomberg Business News, Canada’s herd size is the smallest it’s been for 22 years.
Johnston said the current dry weather is also playing a role. While his area in southeast Saskatchewan hasn’t been too hard-hit, he said parched pasture land has forced many Western Canadian producers to sell off cows they simply couldn’t afford to truck hay in for.
He said that’s likely behind the recent dip in prices for cows.
“You know how it is, supply and demand. Huge numbers of supply would maintain the price or drive the price down.”
While that might seem to indicate some relief coming at the grocery store, Johnston said it could also mean more pain at the till down the line. If the weather doesn’t turn around, more and more producers could end up selling their breeding stock. That would force them to pull animals from the market as breeders when it comes time to grow the herd again.
“By rebuidling this herd, we’re actually going to create another shortage. So the consumer’s looking at another shortage created by the rebuild program, which you know, a rebuild takes a couple years,” Johnston said.
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