The drop in the livestock markets in the past couple of months is concerning because the factors that created it show little sign of abating.
“I think if we saw an end in sight, we’d ride through it,” said Joe Hill, president of the Beef Farmers of Ontario. “Unfortunately this is more than just (the North American Free Trade Agreement). If it was signed tomorrow, it wouldn’t change things. There is still the U.S.-China relationship affecting it. There doesn’t look to be a short-term fix for it.”
Why it matters: Significant drops in major livestock prices can have an effect on rural economies; building projects are halted or scaled back and services can’t be purchased.
The American price for hogs plummeted in August after another round of tariffs was put on American hogs by China in retaliation for American tariffs on Chinese steel. Similar tit-for-tat tariffs between the United States and Mexico also resulted in tariffs on pork. When the pork price dropped, it took other widely traded meats, including beef and veal, with it, even though there are no significant tariffs on beef products in the current trade dispute.
There was some improvement in the futures markets in late September.
American producers are being given subsidies worth US$12 billion to help cushion the blow, but none are forthcoming in Canada, other than risk management programs already in place.
“Those producers will weather challenges so much better than we will in Ontario unless the government steps up,” said Hill.
The Ontario-only risk management program will help, said Hill, but “it is simply not adequately funded to address these type of losses.”
Federal Agriculture Minister Lawrence MacAulay has said that no new money will be coming for farmers.
Beef producers are losing between $200 and $300 per finished head.
Hog farmers are losing about $50 per head, said Ontario Pork Chair Eric Schwindt.
“People will have to make decisions sooner than later,” he said.
Veal producers are also feeling the squeeze and were part of a letter released by the associations before the International Plowing Match and meetings with Ontario Premier Doug Ford.
Jennifer Haley of the Ontario Veal Association, said that veal farmers are losing $100 to $175 per head. An additional influence on the tough veal margins is increasing imports of veal from the Netherlands as the CETA trade agreement with Europe is being implemented.
Agriculture representatives in the meeting with Ford said he was listening to their concerns.
“The comments from the premier give us some optimism that he’s watching the issue and recognizes the importance of agriculture to the Ontario economy,” said Hill.
Ontario cattle have also been trading at a discount to Alberta cattle for a couple of years now, a stubborn irritant to Ontario farmers. Strong packing capacity in Alberta means producers there can get $5 to $20 per hundredweight more than in Ontario.
The effect of the tariffs brought in by U.S. President Donald Trump has already had a significant impact on Ontario grains and oilseed producers, and Chinese tariffs on American soybeans have driven down the price of major crops on American exchanges.
The livestock farmers are just the latest to the party.
Sheep farmers have been insulated from a tariff-driven price decrease, said Jennifer MacTavish from the Sheep Farmers of Ontario. However, she said, low prices in any commodity affects the agriculture economy.
“When other commodities experience prolonged difficulties, all of agriculture suffers,” she said.
Ontario sheep production is consumed in Canada, so that sector is not subject to the influences of export-oriented livestock sectors. But eventually sheep will have to compete with other lower-priced meats.