By Brenda Boetel
Roughly 80% of Canadian federal slaughter capacity is consolidated between two companies and three facilities: two in Alberta and one in Ontario. One of these plants, Cargill High River plant in Alberta Canada, averted a strike with successful negotiations, and not only Canadian, but also American fat cattle producers can feel relieved that another packing disruption did not occur. The labor contract negotiations at Cargill High River plant in Alberta, Canada, have some questioning why Canadian labor issues would affect American cattle supply and prices. A brief look at the integration of the North American beef industry and the importance of imports to US feedlots and slaughter plants might help answer that question.
The US has three sources for imported cattle, including Canadian slaughter cattle (steers, heifers, cows, bulls), Canadian feeder cattle and Mexican feeder cattle. In 2020, US imports of Canadian slaughter cattle were 528,518 head. Imports for 2021 are 9.6% below 2020 levels. Although imports of slaughter cattle are down in 2021, partially due to the declining Canadian herd, the supply of cattle coming to the US from Canada has been relatively stable ranging from 480,000 to 580,000 head per year during 2016-2020. Note though that the US federally inspected annual cattle slaughter during this same time of 2016-2020 averaged 31.9 million head, with 25.4 million head being steers/heifers. Canadian slaughter cattle imports account for an average of 1.6% of US cattle slaughter during this five-year period. Nonetheless, disruptions in the Canadian Cargill High River plant could have increased US imports of Canadian slaughter cattle by as much as 85,000 head (0.2% of US cattle slaughter), and a strike in Canada would have similar impacts to a US facility being shuttered temporarily. Given the limited ability for slaughter increase due to capacity and labor constraints, the increased supply of slaughter cattle could have presented downward regional price pressure.
Although imports of Canadian slaughter cattle represent a small portion of domestic supply, imports of Canadian and Mexican feeder cattle are more significant. Total imports of feeder cattle from Canada were 118 thousand head in 2020 and are up 12.7% (14,000 head) in 2021 year-over-year. Imports of Canadian feeder cattle have continued to decline since the most recent peak of 418,000 in 2014. Mexico is the larger supplier of feeder cattle to the US market, with total imports of feeder cattle from Mexico at 1.42 million head in 2020 and 2021 being expected to be 22% year-over-year lower, a decrease of almost 300,000 head. The majority of Mexican feeder cattle are steers.
Canada is consistently one of the US’s largest beef export markets, with the US exporting an average of 6.9% of total US beef export tonnage to Canada. This percentage has been declining the last 5 years. The US is consistently the largest source of imported beef for Canada, although Australia, New Zealand and South American remain important sources for lean trim. Additionally, the US is the largest beef export market, with the US accounting for an average of 77.3% of total Canadian beef exports over the last 3 years.
Given the beef and cattle trade volume and importance between Canada and the US, beef producers in both countries have a vested interest in the well-being of the beef industry throughout North America.
Source : osu.edu