Beef business going bust
Alberta may lose up to 40 per cent of cow-calf operations by Christmas
David Finlayson
The Edmonton Journal
Saturday, October 27, 2007
Tired of losing money, Brian and Lois Scarrow plan on getting rid of almost all of their cattle next month.
CREDIT: Larry Wong, The Journal
Tired of losing money, Brian and Lois Scarrow plan on getting rid of almost all of their cattle next month.
EDMONTON - Marcel Turgeon cried when he watched 50 years of his life get sold for $56,000.
That's what the 63-year-old Lac La Biche rancher got at auction for 123 of the best charolais cows in the province.
They were so good they didn't need to be fattened up at a feedlot before going to slaughter, but that didn't matter to the packing plant buyer.
"I told him he stole my cattle, but he said he had no bidding competition so what was he to do," said Turgeon, who was banking on the sale to help fund his retirement.
Under normal market conditions Turgeon could have expected to get $200,000 to $250,000 for the pregnant cows, but he only got $479 apiece.
"I knew prices were low but I didn't expect that bombshell," he said. "I'm pretty depressed. I've put my life into this."
Turgeon is among thousands of ranchers quitting Alberta's heritage industry or drastically cutting their herds because of rock-bottom cattle prices and higher feed, fuel and other costs. Industry insiders believe Alberta will have lost as many as 40 per cent of its 35,000-odd cow-calf operations by Christmas.
Lois and Brian Scarrow of Donalda, east of Ponoka, have been raising cattle for only seven years, but are sending almost all of their 180 cows to auction next month.
"They've treated us well but we're stretched too thin," Brian Scarrow said. "Everybody's still hurting from the BSE days, and grain has gone up three or four times while cow prices have fallen."
"We'll keep a few, just enough for the grass, and maybe rebuild again."
The Scarrows will keep this year's calves and sell them in the spring, then concentrate on the trucking business they started in 1999, at least for a while.
Lois Scarrow said she and Brian, in their mid to late fifties, can't afford to keep losing money on the ranching side.
"I feel sorry for people who have spent years building up their herds, and then spend their retirement fund feeding their animals," she added.
Fairview rancher JoAnne Loland is selling half her 200 cattle because she can't afford to keep them, and she's ready to give up ranching altogether after 30 frustrating years.
"We had three years of drought, then three or four years of BSE and now prices are so low we're losing money," said Loland.
"Sometimes I feel like crying. I wish I'd never started ranching."
Not only have feed costs increased, cattle prices are less than half what they were five years ago, Loland said.
"Yet that's not reflected in the supermarket prices, so somebody's making money. If it goes on we'll all be eating beef from Brazil and Australia."
Gary Jarvis, owner of Triple J Auctions in Westlock, said he's already had a number of herds come through, and there are more scheduled in the next few weeks.
"Based on what I am seeing, we will lose between 30 and 40 per cent of cow-calf operations before Christmas, and they are the grass roots of Alberta ranching," Jarvis said.
"We're getting the same today for fall calves as we did 30 year ago."
A good young cow that's been pregnancy tested is selling for between $500 and $600, he said. Before the arrival in Alberta of bovine spongiform encephalopathy, commonly known as mad cow disease or BSE, such a cow would sell for as much as $1,500.
It costs $650 to $675, not counting labour, to keep a cow for 12 months, he added.
Cory Sekura, at Sekura Auctions in Drayton Valley, figures one in four ranchers in his area have got out of the business in the last couple of years.
"People who've been in it a long time are getting out," Sekura said. "They get so fed up they say just let the cattle go."
"It just doesn't add up when you're getting 80 cents a pound for a fat calf when it costs 85 cents to put each pound on it."
Economies of scale are taking over, so farmers with 40 cattle or less can't make a living, Sekura says.
Even ranchers with 200 or 300 cattle are suffering because high feed costs and the strong loonie are combining to push down cattle prices, he said.
Blair Vold, owner of Vold Jones Vold Auction at Ponoka, said he's had far more people than usual calling about selling their cattle, even before the peak winter sale season.
"I'm seeing a lot of sad faces at the auctions," Vold said.
Prices for calves are about as bad as they were during the darkest days of BSE, and grain prices have jumped 70 per cent because of the competition from the biofuels industry, he said.
At times like this, many ranchers get a push from the banks to sell some or all their cattle, he said.
Meanwhile, Marcel Turgeon will start looking for another job and probably will have to sell some of his five quarter sections so he can enjoy the retirement that's being forced by his worsening asthma.
"They said at the auction my cows were some of the best they'd seen, didn't even need to be finished," he said.
"But it didn't help. It's really sad."
dfinlayson@thejournal.canwest.com
WHERE'S THE BEEF
There are more than 35,000 Alberta beef cattle producers, with an estimated cattle population of 5.5 million.
Alberta produces almost 60 per cent of Canada's beef, about 700,000 tonnes a year.
Most cow-calf ranches breed their cows in June and July, so the calves are born in March and April and miss the winter.
Calves graze with their mothers on pastures and grasslands until October or November. That's when they are bought by feedlot owners or packing plants for finishing on a grain diet, usually barley, which gives the meat its distinctive white fat.
The animals got to slaughter when they are between 12 and 14 months old. Smaller calves can be 18-24 months old before they are big enough for slaughter.
Ranchers will also sell pregnant cows at the winter sales.
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