Packer profits continue to raise eyebrows in cattle sector

(United Soybean Board/ BY 2.0)

The disconnect between the cutout value and the fed cattle cash market has continued to frustrate producers in Canada and the U.S.

South of the border, the temperature is rising for politicians to grasp some political will, while in Canada the volume has been much quieter on the matter. With the choice cutout reaching US$330 this week, the debate on where the producer’s piece of the pie is continues.

In Canada, livestock groups have been pushing for U.S. equivalent pricing and sale transparency as a starter to achieving a more efficient market.

“There’s certainly frustration out in the industry,” says Janice Tranberg, CEO of Alberta Cattle Feeders Association (ACFA). “I think that [Canadian beef producers] are just frustrated that there doesn’t seem to be any price transparency right now either in Canada.”

In terms of price transparency, there’s debate on whether price reporting should be mandatory or voluntary, says Tranberg. Reporting was an action item on ACFA’s most recent annual general meeting agenda, but the thought of something being mandatory or government regulated isn’t appealing, she adds, although it’s important to stay competitive. (Story continues below video)

A recent unprecedented meeting between groups in the U.S. discussed pricing and packer profits.  The same kinds of discussions are happening here in Canada too, although Tranberg says that those discussions have been on the “low burner” for quite a while, despite rumblings are getting bigger.

ACFA hasn’t sat down with the two main packers in the country — JBS and Cargill — but has discussed intentions of a meeting similar to the one in the U.S. with other beef and cattle organizations. Tranberg also mentioned that ACFA was yet to have discussions on this issue with politicians provincially or federally which also indicates the slower burn.

“This is something that everybody is starting to recognize, that is an issue here in Canada,” says Tranberg, and the intent to manage the issue should remain within the industry, she adds, including following-up on effectiveness and next steps.

As Tranberg notes, Canada’s beef industry is closely linked to the U.S., and expects that Canada’s issues can use the U.S.’s solutions as a model, except that Canada doesn’t have the same amount of choices that the U.S. has for packers. Canada has a more consolidated packing industry than the U.S. but also in some regions live Southern Alberta, packers from Washington and Idaho routinely provide bids on cattle.

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