Mixed Outlook for Livestock Producers

Aug 17, 2021

Margins for western Canadian cattle producers are likely to remain under pressure but Canadian hog producers should enjoy relatively better times through the end of this year, according to the latest livestock outlook from Farm Credit Canada.

Released Tuesday, the outlook projects the 2021 Alberta price for a fed steer at $155/cwt, up slightly from the year-to-date price of $150 but still below the five-year average of $160. Ontario fed steer prices are projected to average the same, although that is $5 above the provincial average. Meanwhile, the average market hog price for Ontario and Manitoba this year is estimated at $95 and $90/cwt, both $15 above the average.

In its accompanying commentary, FCC said prices for hogs in both Manitoba and Ontario should continue to exceed their five-year averages on the strength of global and domestic demand. “Chinese pork imports have largely driven strong global demand and continued strength in North American hog prices,” it said.

On the other hand, the outlook for cattle in Western Canada is being clouded by drought which has pushed feed prices higher and resulted in increased herd liquidation, which is weighing on prices.

Federally inspected slaughter numbers show the cattle slaughter in the first half of 2021 was 13.5% higher year-over-year and 6.5% higher than in 2019. Losses are more likely as feed costs increase with diminishing feed supplies while cattle prices weaken as more cattle are slaughtered, FCC said, adding that local basis levels are expected to decline given increased culling and early marketing of yearlings.

On the feed side, Alberta hay prices rose 25% between May and June 2021 and average Montana hay prices increased 50% between May and August 2021. Additionally, Lethbridge feed barley prices hit a record $415/tonne or $9/bu for the week ending July 30.

Regardless of the weather, FCC warned the red meat sectors may soon see diminished overall markets as China slows its purchases of red meat. Although North American demand has held up well amid the pandemic, consumption of animal proteins has fallen with declining incomes throughout the rest of the world, it said.

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Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”