ALBERTA

Beef Prices Could Rise Further With Cruel Alberta Drought

08/02/2015 05:00 EDT | Updated 08/04/2016 05:59 EDT
The price of steaks, roasts and other cuts of beef are expected to increase further because of drought conditions in Alberta, although it may take about a year before consumers feel the full bite on store shelves.

Retail beef prices hit record highs early this year and have continued to climb since then as the number of cattle in the Canada continues to dwindle. Now, drought in Alberta and Saskatchewan means ranchers struggling to feed their animals are choosing to sell some of their cattle at the auction market.

At least nine different counties throughout Alberta have declared states of agricultural disaster due to harsh drought conditions. Many areas received less than 100 mm of rain between the start of April and early July, which is less than 50 per cent of normal rainfall levels. The hardest-hit areas received less than 50 millimetres of precipitation, according to Alberta Agriculture. 

Not only are pastures and hay crops in poor condition, but little feed is available for purchase.   

In the short term, for consumers, the price of beef may actually fall slightly as ranchers reduce their herd size, but retail prices may jump further next year as the number of cattle in Canada will be even smaller.

"Over the long run, if the drought causes the cow herd to shrink even further, then the supply, of course, gets tighter," said Greg Bowie, chair of the Alberta Beef Producers. "It is going to drive the price to a different level again."

Food chain

Kelly Mabbutt has seen the drought firsthand. His cattle usually graze on lush grass on his rolling prairie land, but this summer, they wander around the brown, scorched grass finding barely any vegetation to munch on.

"It shows the trouble we are in," he said, at his ranch near Gibbons, Alta., about 40 kilometres north of Edmonton. "It worries us. We talk about it everyday."

His fields, which normally produce three bales an acre, are now only yielding about half a bale an acre.

In a typical year, Mabbutt has more than enough hay for his own cattle and supplies hay to half a dozen other farmers. This year, Mabbutt will join them in having to search for feed to buy. He's considering straw and alfalfa pellets to cover his shortfall of hay.

Selling the herd

One of his usual buyers is Martin Skaret, who owns Simmeron Ranch in Morinville, about 25 kilometres west of Gibbons. He has 40 purebred Simmental cattle. 

"I depend on buying all my hay. The guys who I usually depend on to sell me hay say they haven't got any for me this year. So I'm not sure where I'm going to get hay from," he said.

It's desperate times on his ranch, with only 40 days worth of feed left.  

"Right now, it's very stressful because I just spent 15 years building this herd to where I want it," he said. "Now, all of a sudden I have a feed shortage. I don't want to have to give up any of this herd yet for a few more years. I need help."

A big round hay bale usually sells for about $50, but farmers say this year it costs between $150 and $200, if you can find any for sale. To cover the rapid rise in feed, Skaret is spending twice as much time operating his landscaping company. It's supposed to be a job on the side, but he's relying on it now more than ever to pay the bills. 

"I'm busy landscaping, I don't have a lot of time to run around looking for feed right now," said Skaret.

Imports

Regrettably, he'll also have to make the same move other ranchers are making, and sell off some of his herd. The influx of cattle onto the market is expected to affect beef prices at the grocery store — if not now, then soon. 

"They will probably drop if people start selling off all their stock right now, but I could see next year where it is even higher because cattle numbers will be down," said Mabbutt. 

Some experts suggest the impact on prices could be mitigated if more American beef is imported into Canada. While the herd size is shrinking north of the board, it is growing in the U.S. 

Canadian cattle industry groups say this country's herd size must turn around and begin to rebuild to maintain the viability of the processing facilities in the country. If those plants close, Canadian beef may have to be shipped to the U.S. for processing, and then imported back to sell in stores.

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