Manitoba beef producers have a reason to smile these days as a combination of high cattle prices and lower feed costs puts them back in the black after a decade of struggles.
Manitoba Beef Producers president Trevor Atchison said North American feeder cattle prices have risen more than 35 per cent in the past 18 months, hitting a record $1.37 a pound last week on the Chicago futures market.
And feed barley prices have fallen about 40 per cent in the past year, he added, dropping by about $2 to just over $3 a bushel in the wake of last fall's record North American grain harvest.
While high cattle prices are causing a pain in the pocketbook for meat-eating consumers, they're providing much-needed financial relief for punch-drunk producers who have had to battle floods, droughts, a prolonged bovine spongiform encephalopathy (BSE) crisis, punitive country-of-origin labelling (COOL) regulations in their primary export market of the United States and soaring feed costs in 2011 and 2012.
"It's been a long time coming," Manitoba Beef Producers (MBP) general manager Cam Dahl said of the turn in fortunes. "Right now, things look good."
But he stopped short of agreeing producers are in a sweet spot right now. "I would describe it more as a return to profitability." Dahl and MBP president Trevor Atchison are hoping the improved market conditions will prompt Manitoba producers to start rebuilding their herds, which are now at their lowest level since the 1950s after soaring feed costs and mounting debt loads in recent years forced many producers to sell off cattle to stay in business.
Dahl said the number of beef cows in the province has dwindled to about 500,000 head from about 680,000 in 2006, when the BSE crisis was choking off beef exports.
And Atchison pegged the total number of beef cattle -- cows, bulls, calves, heifers, etc. -- at just under one million. He said that number was as high as 1.5 million in 2006 or 2007, before feed prices took flight and many producers began culling their herds.
Atchison said he's heard of some farmers who have already started rebuilding their herds. But he's also heard of others cashing in on the high prices and selling off all of their cattle to pay off debts or transition into retirement.
He and Dahl said it's hard to get a handle on which way most producers are leaning.
"But I think this year will give us a good indication..." Dahl added.
The shrinking Manitoba beef herd is part of a broadly based trend that has seen North America's beef herd plunge to its lowest level in 30 years in the wake of a variety of setbacks, including soaring feed prices and severe droughts in parts of the United States. And as the number of slaughter cattle declined, cattle prices increased.
Kevin Grier, senior market analyst with the George Morris Centre, an independent, not-for-profit research institute, said it's going to take several years to rebuild North American beef herds.
And he said the supply of slaughter cattle could tighten even more over the next couple of years if a significant number of farmers opt to rebuild their herds and hang onto heifers rather than sell them as feeder cattle.