Canada’s Feedlots Facing an Uncertain Future

The coronavirus has taken a huge toll on the North American meat industry. As the virus continues to claim the lives of workers and workplace conditions become unsafe, many meat processing plants simply haven’t been able to adequately staff their facilities. Subsequently, many plants and feedlots — including leading brands in Alberta — have temporarily shut down operations.

Other big names that haven’t experienced outbreaks in their facilities have managed to remain open or at least reopen and function at a lower capacity. However, even these cattle feedlots and processing plants are facing an uncertain future as the pandemic drags on.

A Dip in Demand

In addition to facility outbreaks, a dip in demand for pork, poultry and beef has also resulted in major setbacks for feedlots and slaughterhouses. Since officials issued stay-at-home orders three months ago, restaurants and butchers haven’t been ordering as much meat from big-industry meat processors. Instead, with no guests to serve or customers to whom they might sell prime cuts, these businesses have dramatically cut their orders.

Of course, the meat industry wasn’t expecting this sudden decrease in demand. As cows continued to birth calves and inventory built up in feedlots, these companies were left with no other choice than to cull thousands of animals per day and discard the carcasses. Obviously, this represents a massive amount of waste as well as a huge loss of profit.

Selling Calves

Many small farmers and large industrial developments also worry they’ll lose money this fall when it comes time to sell calves. These cow-calf operations usually generate a decent amount of revenue when the economy is good. In light of recent events, however, market conditions aren’t exactly prime for selling calves.

Moreover, as feedlots reach and exceed maximum capacities, the animals will most likely become more anxious. This increase in stress levels will negatively impact their immune systems and, ultimately, the quality of meat that comes from them. Consequently, this fall’s herd may not be as healthy as the last, meaning they’ll sell for much less and leave feedlots and meat processors in the red.

Assistance and Adjustments

Early last month, the Canadian government announced it would provide $252 million in federal assistance to the agri-food sector. The vast majority of this federal aid will go to processing plants in hopes of better-protecting workers and helping facilities function at full capacity once again. Still, as long as demand is low, it’s unlikely the industry will bounce back quickly — even with financial assistance. At best, this money will help keep the industry afloat until restaurants and eateries fully reopen.

Additionally, meat processing plants that have remained open or resumed operations are beginning to consciously cut their inventory and production output to meet the decrease in demand. While this will help the meat industry, it may cause issues for fast-food chains and restaurants that may experience shortages as a result.

Is the Worst Yet to Come?

Over the past few weeks, some major meat processors and cattle feedlots have begun to reopen. Already, they’re back to processing 60,000 cattle per week. However, prices aren’t rising for consumers, thus showcasing the resiliency of the Canadian food system. In the coming months, bottlenecks should stop and business should be able to return to normal — as long as a second and third wave of coronavirus cases don’t sweep the nation.

In the future, the meat industry might invest more in expanding local and regional food supply chains. This way, if Cargill, National Beef, JBS and Tyson — which own more than 80% of the beef supply — shut down again, small ranchers could provide meat for their communities. Thus, the industry wouldn’t face such an uncertain future if another pandemic were to occur.

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