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Plant closures force cattle producers to juggle inventory

The suspension of three beef processing plants in Ontario will force more cattle to be processed outside the province, costing producers in both higher transportation costs and lower returns for their animals.
The CFIA cancelled the three licenses earlier this month after initially suspending them in September.
Inadequate processing capacity
The Beef Farmers of Ontario says the province already had too few processors, so the closure of the three plants increases the backlog.
Meanwhile, the Canadian Cattlemen’s Association notes the lack of capacity has hurt both the beef and dairy industries, and estimates the economic impact is approximately $174 million for eastern Canada.
Ontario Federation of Agriculture says as a result of the plant closures, farmers are feeding cattle longer and at increased costs.
Longer hauls
Western Canadian plants will likely absorb much of Ontario’s packer capacity shortage, says Ryan Copithorne, president of Cows in Control, a financial and risk management consulting company.
Some Ontario cattle will also head to the United States, but either way, transportation costs will be higher.
Cattle hauled to the U.S. also face additional export and inspection costs, Copithorne notes.
Longer transportation distances also mean greater cattle weight loss. The traditional three to four per cent lost in transit will now reach seven to eight per cent or more, Copithorne estimates.
“Overfat cattle will shrink more on the trucks, and you can’t get as many on the trucks,” he says.
Source : FCC

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