Guelph, Ont. – Beef Farmers of Ontario (BFO) has raised the alarm regarding the economic crisis facing the industry and has brought an urgent request to Ottawa for federal assistance. A perfect storm of market and trade disruptions has caused average weekly losses of $2 million over the past year in the Ontario beef industry, and Ontario’s beef farms are at a tipping point.
Recent market and trade disruptions have not been business as usual and aren’t sustainable in the long term. Cattle processing capacity and bottlenecks in the value chain have been a growing problem, with processing plant utilization up from 85 per cent in 2016 to 95 per cent in 2018 to over 100 per cent during peak periods throughout 2019 and into 2020. As a result, access to processing space has been limited and competition for cattle significantly reduced. Farmers are often forced to keep their cattle longer, incurring additional costs and then facing penalties that can amount to $300 per animal.
Non-tariff trade barriers are another major disruption, including sanctions imposed by Saudi Arabia that have destroyed exports to that country where the market had grown to over $26.5 million for Ontario beef exports. Added to that market loss, continued segregation requirements south of the border, as a result of unresolved market access issues, have cut off competition for Eastern Canadian cattle in the U.S. market.
Ontario beef farmers are facing these losses without access to sufficient government-supported insurance backstops typically provided to other sectors by well-funded business risk management programs. The Ontario beef industry deserves an equitable level of support and assistance proportionate to the harm beef farmers have received.
Beef Farmers of Ontario’s request for federal assistance includes business risk management funding to address the shortfall in current programming and a cattle “set-aside program” to help spread out cattle sales, which would serve as temporary measures to help restore some of the competitive balance in the marketplace until more permanent, long-term solutions can be implemented.
The Ontario beef industry is significant, with farm gate sales of approximately $1 billion, processing revenue of $3.25 billion, and retail sales of $9 billion per year (total gross sales over $13 billion). Plus, it has a total GDP contribution to the Ontario economy of $2.69 billion and is responsible for over 61,000 jobs in the province. While there is high demand for Ontario beef domestically and globally, the industry needs federal assistance to get through this crisis.
Source : BFO