It’s been a rough stretch for many Canadian ranchers, with drought, pandemic-rattled supply chains and soaring feed and fuel prices taking a toll on those who raise their herds on the Prairies.
Now, recent numbers from Statistics Canada provide some insight into the depth of those impacts, as operators opted to cull their herds in the face of shrinking profit margins.�
The figures show that the number of cattle in Canada has dwindled to the lowest level since 1987.
The Canadian cattle herd fell 1.4 per cent from last year on July 1, to 11.9 million head, with beef cattle taking an even harder hit, dropping 2.2 per cent. It’s the third year in a row the federal agency has recorded a decline in cattle numbers.
For the ranchers still left in the business, the low supply could provide them an opportunity to capitalize on high beef prices, if they can afford to stay in the game.
For consumers, it means prices at the grocery story will likely continue to rise.
“I’ve been tracking cattle for, you know, 30 years, and I’ve never seen demand so great as in the last few years,” says Kevin Grier, a livestock market analyst.
The price of a steak on a shelf isn’t indicative of how much farmers are taking home at the end of the day, though. If this is the bottom of the curve before herds start to stabilize, as some economists suspect it could be, a number of factors will need to line up just right.
The first of those is ongoing weather conditions, says Brenna Grant, the executive director of CanFax, a division of the Canadian Cattle Association, which tracks market data.
Grant points to year-over-year drought as the main cause of the continued liquidation of herds.
She said this May marked a turning point in that pattern, as rains led to a pause in farmers selling off cattle, a trend that continued throughout the summer.
That stall in marketing is a good sign the industry is heading in the right direction, said Grant, but it doesn’t guarantee cattle numbers will be maintained throughout the upcoming year.
“Just stopping selling off the cowherd is not enough in and of itself. You also need to them to be replacing those with breeding heifers,” said Grant.
She predicts the main determinant of what farmers choose to do with their herds this year will be feed availability.
“That really depends on what hay production was this summer and what harvest is like this fall.”
Some farmers have hope on that front.
Kent Holowath runs a grain and cow-calf operation in Rumsey, Alta., north of Drumheller.
Last year, he said drought conditions were so dire that he considered selling off his whole herd, a prospect that sent his son looking for work off the farm in case the worst happened.
But this year, Holowath said the pair are back working together, owing in large part to the fact that they’ve secured enough feed to get the herd through the winter.
“Everybody’s grass took off and grew with the moisture [in spring], we were fortunate enough that we’ve got lots of grass this year.”
Because of that, he said they plan to maintain their herd of about 150 head for the foreseeable future.
The rain wasn’t enough to alleviate all of Holowath’s concerns, though — he still has to haul drinking water to his herd daily, a job that takes between three and four hours.
“Our dugouts have dried up again, they’ve never replenished from 2021,” said Holowath, who’s also the finance chair of Alberta Beef Producers.
Holowath said they’re still battling high input costs, as the price of fuel and fertilizer continues to rise.
By utilizing swath grazing, a farming practice where forage crops are cut and left out on a field instead of being collected and redistributed to cattle later, Holowath says they’re able to cut down on fuel expenses.
“We just put the cattle out on them stripped fields and let them harvest up that forage themselves and that saves us $2.5 dollars per head per day.”
Despite these various squeezes, Holowath said he thinks most operations will be able to rebound this fall.
“I hope we bring the cow herd back to where it was. How? Only time will tell.”
What would it take to rebuild?
Maintaining current cattle numbers is one thing, but rebuilding herds to the sizes they once were in the country is another.
Grant says continued high beef prices are an incentive for farmers to stay in the industry, but they can also be a double-edged sword.
Graham Overguard, who ranches 220 cow-calf pairs northwest of Sundre, Alta., bought heifers to replace the cattle he sold off last year.
“Whether it’s right or wrong, I’m not sure … My goal is to keep building if possible, but it’s very difficult to retain heifers [which is] what you need to do in order to keep growing your herd.”
He says that’s because current prices for those animals are “unheard of” — up to $2,500 per head, a figure driven by the ongoing low supply of stock.
“It’s difficult for people to make a decision [to] keep that heifer and put her into the cow herd when you can get money for it that you’ve never had before.”
The way Overguard sees it, beef prices are where they need to be to keep ranchers in business, but he doesn’t see the current market as a sustainable one.
It’s a cycle that’s hard to break out of if ranchers want to keep expanding — drought and high input costs have led to farmers selling off their herds, creating a lower supply and driving beef prices up, which then continually tempts farmers to cash in on checks when margins continue to be thin.
Overguard says aspects of the industry out of ranchers’ control make each year a gamble.
From his perspective, the declining availability of rental pasture for cows to graze on will be a roadblock for the industry going forward.
Big rolling fields for cattle to graze on were once plentiful in Alberta, says Overguard. But with grassland being converted to cropland at a higher rate, and with development increasing in rural areas, he said parcels are becoming smaller and smaller.
Now, he’s paying three times more per head of cattle for pasture, and he’s hauling his herd further than ever before to find those pockets of land.
“It’s really tough. For people that are still in the business, it’s kind of cut throat because you need the grass so badly, so you’re outbidding your neighbour … it’s driving that price up for everybody.”
New landowners aren’t always game to rent their land for grazing use, said Overguard.
“I wish that I could get the message that grazing cattle on your land is a very good thing.”
“[You’re] creating a major fire hazard with dry grass just growing and not being grazed down at all.”
Next generation could be key
At the end of the day, Grant says the cattle inventory is just one indicator of how the industry is faring, and that while overall numbers are historically low, the total tonnes of beef being sold is still high.
“We’ve been making these record lows for several years now … [but] we’re also seeing markets respond with productivity improvements,” said Grant.
She said cows themselves are bigger than they once were, meaning Canadian producers have been able to offset some of the decline in numbers.
“So the total pounds produced actually doesn’t decline as much as the total inventory numbers would suggest.”
Holowath says his profit margins are better than they’ve been in the past five years, but that the volatility of the industry still gives him pause.
“I’ve been at this for 35 years producing a cowherd and, and building it up to where it is today. So you just don’t sell that cowherd off and get it back the same as it was a year later sort of thing.”
He said if beef prices can be maintained, that could attract more young people to ranching, something he says is necessary to rebuilding herds.
“I think that’s where we’re seeing a lot of cattle moving out of the system as people are aging out, they’re going, ‘I’ve had enough of this and it’s time to cash in and move on.'”
“The industry needs to be profitable so that a person can make a living off it, especially the youth, and not have to go to town to make a make a living.”