There’s high demand for Ontario beef domestically and globally, but farmers have limited options for processing cattle and are struggling to stay afloat.
Ontario’s 19,000 beef farmers are passionate about raising cattle, but the last year has been tough for all of us. 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 those millions of dollars are coming from farmers and our families.
It seems to us that the past year of economic loss amongst Ontario beef farmers hasn’t been a major story outside the industry (it’s certainly been the number one thing on Beef Farmers of Ontario’s agenda for the past year), but our family farms are at a tipping point. Beef Farmers of Ontario has now brought an urgent request to Ottawa for federal assistance to get farmers through this time of crisis.
Recent market and trade disruptions have not been business as usual or manageable losses within the industry. Cattle processing has become a major bottleneck in the value chain with processing operations steadily increasing from 85 per cent utilization of their capacity 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 have been 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. And then came the trade disruption with China in late 2019, temporarily cutting off another market for Ontario beef. Rebuilding these trade relationships will take time and trust.
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. But there’s a big opportunity for the Ontario beef industry if it can weather this storm. Ontario beef exports have grown tremendously in both volume and value over the last five years and a recent report from the Organisation for Economic Co-operation and Development estimates that global beef trade will increase by 25 per cent by 2023.
We at Beef Farmers of Ontario have raised the alarm that this is an urgent crisis and created a plan to help farmers. While governments have staunchly supported the supply-managed sectors with billions of dollars to help their farmers offset losses incurred or expected as a result of recent trade agreements and disruptions through direct compensation payments, infrastructure assistance, and quota value protection, we are making it clear to our federal government that the Ontario beef industry deserves an equitable level of support and assistance proportionate to the harm beef farmers have received.
The Ontario beef industry’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, longer term solutions can be implemented.
Our 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, we need federal assistance to get through this crisis.
Beef Farmers of Ontario is in Ottawa this week to make it clear to our federal government that the Ontario beef industry is seeking a speedy response as we face this storm of market and trade disruptions. You can join our call for support from the federal government on Twitter with #HelpBeefFarmers, and more information can be found on Beef Farmers of Ontario’s website, ontariobeef.com.
Rob Lipsett is president of Beef Farmers of Ontario.