If the closure of XL Foods Inc.’s packing plant in Brooks persists, its impact on beef producers could escalate from being a minor setback to becoming a financial crisis, says an industry official.
Doug Sawyer, a cow-calf producer from Pine Lake who chairs the Alberta Beef Producers, said Monday that the loss of XL Foods’ slaughter capacity is significant.
“They process at least a third of our cattle,” he said, adding that feedlot operators are being forced to hold onto cattle and feed them — a significant expense given the current high cost of feed.
“When you’ve got a fat animal, your cost per day per animal is probably over $4.”
Plus, continued Sawyer, feeding cattle beyond their market weight can result in meat that is fattier and less valuable.
The Canadian Food Inspection Agency temporarily suspended XL Foods’ licence on Thursday due to concerns that beef products contaminated with E. coli had been shipped from the plant. Meat sold at dozens of stores in Canada and beyond has also been recalled.
Sawyer said one option for affected cattle feeders is to ship their livestock to the United States for processing. But the associated transportation costs and discounted purchase prices would also mean a big financial hit.
“It could be $200 to $300 per animal,” said Sawyer, noting that that alternative will become more attractive as time passes.
“Certainly, the guys are looking at it.”
Cattle feeders aren’t the only ones watching the XL Foods situation closely.
“It’s also hurting the cow-calf producers, because this is the time of year when we normally bring cows off pasture and we market our cull cows,” said Sawyer.
With packing plant and feedlot capacity limited, those farmers will have to incur the additional cost of feeding their cows and calves, or pondering other options.
“Everybody is a little edgy. Nobody knows really what to do.”
Sawyer said he met with Alberta Premier Alison Redford and Agriculture Minister Verlyn Olson in Calgary on Sunday. Then on Monday, he flew to Ottawa for a previously scheduled beef industry roundtable involving federal Agriculture Minister Gerry Ritz and other members of his department.
Both levels of government are doing what they can to resolve the situation, said Sawyer, but there are limits to what they can do.
“This is really between XL Foods and the CFIA, and they’re the ones that have to get it fixed. But anything that we can do to support it, we are doing.”
He expressed optimism that things will be resolved quickly and before producers are hurt too badly. However, added Sawyer, it’s impossible to know what will happen.
When the industry does return to normal, there may be some residual impact on beef consumption, he acknowledged.
“When something like this happens, there’s always a little blip on the market.”
But the Canadian beef industry has a good reputation for the quality of its products and its commitment to safety, he added. That should win back most consumers.