Western Canada knows beef. The four western provinces account for about 85% of beef cattle on Canadian farms—with nearly half in Alberta alone. Home-grown beef is a trademark of the region—you don’t have to look far to see one of the popular “I heart Canadian Beef” bumper stickers. Roughly seven decades after the beef industry was transformed by the historic growth in Alberta-based feedlots, Western Canada’s beef industry remains strong. It has seen its share of bumps along the road, notably the Bovine Spongiform Encephalopathy (BSE) crisis and more recently, the COVID-19 pandemic backlogs. Questions about trade access remain. Overall, the industry is set to continue as a source of prosperity for the Western provinces.
The Finish Line: Feedlot Expansion in Alberta
The end of the 20th century ushered in a new era in raising beef cattle—one that replaced traditional industry practice with operation specialization in the growth of commercial feedlots. This transformation made Alberta the epicentre of Canada’s beef industry and a world leader in high-quality beef.
Starting in the 1950s, growing consumer demand for higher quality led to the emergence of more specialized and integrated sectors in beef cattle farming with the growth of large-scale feeding operations. As market factors changed and global competition increased, cattle farmers found the concept of pooling resources through feeding arrangements both more attractive and less risky. The industry’s operations began to shift west, from Ontario and Manitoba to Alberta. Alberta’s grasslands, home to grazing bison generations ago, and the dry climate that fostered its growth of grasslands, was ideal for cattle finishing. Alberta became the choice area for feedlot operators.
While operation specialization occurred at every stage of cattle raising between the 1950s to 1970s—from cattle-calf to stocker operations––cattle finishing saw particularly remarkable change. The “Green Revolution” in agriculture and modernization of technology alongside it helped the cattle finishing process to become highly sophisticated, efficient and more productive. By the 1970s, commercial feedlots across Alberta, buffered by a healthy supply of grain from the glut that dominated that decade, perfected the science of beef cattle finishing and mastered the process that would ensure world-class grade beef.
After the demise of the Crow Rate in the 1990s, Alberta’s feedlot operations experienced a second wave of growth. With the removal of the subsidy that encouraged grain to be sent eastward, Western Canada found itself with an abundance of affordable feed grain for cattle finishing which allowed it to capitalize on the proximity of grain farmers to cattle feeders.
In the years that followed, commercial feedlots sprung to life in Alberta. The three original feedlot operations were Western Feedlots in High River, Big Valley Feeders in Strathmore and Lakeside Feeders in Brooks. Eventually, the highest concentration of feedlots in Western Canada was found south of the Trans-Canada highway that runs through Calgary, commonly known as “feedlot alley.”
As the critical link between cattle ranchers and producers, the growth of feedlots in Alberta also spurred another shift in the beef cattle industry— the growth of the beef processing industry. The majority of the large packing plants moved from Manitoba to Alberta, setting up shop in close proximity to the feedlots to improve efficiency. Over 70% of beef produced in Canada is processed in Alberta, providing employment for 10,000 people.
A gradual consolidation of operations followed the growth of commercial feedlots. By the mid-1980s, only one in 10 feedlots had the capacity for more than 10,000 cattle yet that group fed almost 40% of the total cattle in the province. From that point onward, larger operations have dominated.
The explosive growth of feedlots in Alberta signalled an important shift in raising beef cattle as the industry moved even more westward and beef became an event more important part of the agricultural and economic footprint of the province.
The Importance of Western Canada’s Beef Industry
Today, Western Canada’s beef industry is integral to the region’s economy—especially Alberta, where the beef industry generates $5.2 billion annually, more than the canola and wheat sector combined.[1]
Currently, the Canadian beef industry represents the second-largest single source of farm cash receipts, with cash receipts from cattle and calves totaling $9.4 billion annually between 2015-2019, representing 16% of total farm cash receipts and contributing $18 billion to Canada’s GDP annually. In the most recent census in 2016, 60,000 farms in Canada reported deriving more than half of their income from beef production, with 84,740 operators, most of them in Western Canada.
As of the most recent census in 2016, there were 12.5 million cattle and calves on Canadian farms. Alberta led the way, with 40% of the national herd at 5.2 million, followed by Saskatchewan at 2.6 million head. For Alberta, this translates into a market that generates $14.8 billion annually. Alberta now has more feeder beef cattle than all the other provinces combined. In 2016, it stood at almost 1.5 million head. [2]
At a national level, the beef sector generates an estimated 347,352 jobs in Canada—with every job in the sector yielding another 3.56 jobs somewhere else in the economy. Of that, the Prairies account for more than half of the industry’s workforce. As the home to the vast majority of feedlots and 2 of the 3 largest meat packing plants in the West, Alberta alone accounts for 35% of all beef workers.
Canada is also one of the largest exporters of red meat and livestock in the world, exporting around 45% of the Canadian beef and cattle production each year, producing approximately 1.55 million tonnes of beef annually. In 2020, Canada’s beef industry exported $3.2 billion dollars’—or 438,467 tonnes of beef, representing 40% of domestic production.
Industry challenges: Supply Chain Vulnerabilities
The beef industry supply chain, with its historic shift towards finishing operations in Alberta, is highly specialized and has clear advantages. Two historic occasions have also brought to light its vulnerabilities.
The BSE Outbreak
Bovine Spongiform Encephalopathy (BSE), colloquially known as “mad cow disease” was first identified in Britain in 1986. As a progressive, fatal neurological disease in cattle, BSE is believed to be caused by prions—irregular protein particulars that are hard to destroy. They can survive being cooked and can be passed on to humans who ingest infected tissue or food products containing the tissue; BSE has been linked to a variant form of Creutzfeld-Jakob disease in humans, a rare degenerative disorder that leads to dementia and death.
The first case of BSE in Canada was identified in 2003. Over the following decade, Canada officially had 18 cases of BSE, including 13 from Alberta. The last reported case was detected in 2015. In none of the cases did the infected animals enter the human food supply chain or animal feed chain.
Despite the Canadian beef sector isolating the problem, the destructive impact of the outbreak was extreme. Following the discovery of the first case of BSE in May 2003, more than 30 countries closed their borders to Canadian beef imports—including the US, the largest destination market for Canadian beef at roughly 83% of total beef exports in 2002. At the height of the crisis in 2003, the industry was losing $11 million a day—with millions of head of cattle trapped in Canada awaiting processing . Even after the US border was reopened to Canadian beef in 2005—with some restrictions— some non-tariff barriers on the importation of Canadian beef continued, including COOL (country of origin labelling) requirements implemented by the US in 2013.
Despite the injection of millions of dollars’ of aid from the provincial and federal governments into the beef industry in the early 2000s to aid in the industry recovery, the Canadian cattle supply chain was hit hard by the BSE discovery and subsequent border closures. The supply chain’s greatest vulnerability at the time became apparent—trade market access, but more specifically, Canada’s dependency on exporting live cattle to the US. In 2002, Canada supplied 34% of the US beef and veal imports while only supplying 3.5% of US imports of frozen beef products, for example.
Pressure grew on the government to provide support for new domestic processing facilities for the dual purposes of increasing competition among Canadian packers to process meat domestically at fair prices and lowering risk for the beef cattle industry. Action was also taken to address border closures with the US, including Alberta establishing its own envoy to Washington D.C. in 2005 to advocate for the province’s beef industry. At an industry level, some companies saw an opportunity to diversify, starting the production of value-added beef- based products, like Edmonton-based Siwin Foods and its domestically made frozen ginger beef.
Canada has been deemed a “negligible risk” country for BSE by the World Organization for Animal Health (OIE) in May 2021— a status change that has enabled increased market access for Canadian beef. Despite this, Canada’s beef cattle herd has gotten smaller—shrinking roughly 25% since its peak in 2005. The destructive impact of a beef cattle born disease on Canada’s beef industry—contained as it may be, has become clear.
The COVID-19 Supply Chain Crisis
The COVID-19 pandemic caused major disruptions in the Canadian beef industry supply chain but unlike the BSE crisis that predated it, there was a market but no supply. Despite a strong start to 2020 in Western Canada’s beef industry, COVID-19 outbreaks in three federally inspected meat plants in Alberta beginning in March 2020, closed or partially closed them for several weeks, effectively halting 70% of Canadian beef processing.
Processing shutdowns caused a ripple effect throughout the supply chain, resulting in a backlog of animals to be slaughtered as feedlot operators had nowhere to send their cattle for processing. Slaughter rates were down –27.5% in April 2020 and -31.1% in May 2020—this also corresponded to a month-over-month live cattle and calf price decrease of 9% in April 2020.
The beef supply chain was further strained by an atypical increase in consumer demand for beef—the week of March 11, 2020 saw beef sales surge by 55% year-over-year as Canadians panic-shopped at the beginning of the pandemic.
The ensuing strain on the supply chain saw prices for finished cattle fall dramatically, with feedlot operators facing the tough choice between an increase in transportation costs to send their cattle further for processing or paying out of pocket for an increase in overhead as animals waited for slaughter. According to the National Cattle Feeders’ Association, this back-up peaked at about 130,000 – 150,000 head costing an average of $4 per day to feed each animal—amounting to a loss of $500,000 a day for the feedlot sector.
Consumers, on the other hand, saw an atypical increase in costs, with Canadians paying 6.2% more for beef products in 2020 as compared to 2019, and in some months, paying as much as 18% higher. Yet the beef farmers themselves did not reap the benefits—the reduced throughput combined with lower cattle prices compared to the previous year lowered Canadian feedlot gross revenues by an estimated $379 million in 2020.
Months after the start of the COVID-19 pandemic, the prices have yet to fully recover, with beef prices— from both a finished cattle and beef product standpoint—still off the historical five-year average. From mid-March 2020 to December 2020, the beef cattle industry losses reached upwards of $500 million.
A critical vulnerability in the Western Canadian beef supply chain was clear. With three slaughterhouses accounting for close to 85% of the Canadian beef supply, the entire industry hinges on the operability of these facilities. The whole supply side of the industry quickly broke down when processing facilities closed. The need for diversification of packing facilities to prevent a similar issue in the future has become clear.
Looking Forward: An Industry that Just Keeps Kicking
The vulnerabilities in the beef supply chain in Western Canada have hit the industry hard—with the herd size at its lowest in 30 years. Yet despite the shrinking number of beef cattle in Western Canada, the beef industry remains strong. Since hitting lows in 2015, Canadian beef production has grown by 23%– twice the rate of American counterparts. The industry continues to advance. It has implemented new technologies for risk management, real time inventory management, and individual animal management, among others and created internationally recognized state of the art facilities at every stage of the supply chain. Advancements have equally been made in the sustainable management of herds. Labour shortages—both on and off farm—in Western Canada’s cattle beef industry are one of the next big challenges to industry growth.
As demand for beef is not the same as it was in past decades, the beef industry also faces market changes, but consumption rates of beef have stabilized in recent years. Demand remains strong domestically even amid the rise of the plant-based protein sector and consumer choices to reduce meat consumption. Demand for beef is also driven by the growth of emerging markets. Securing further trade access particularly in the high growth potential markets in Asia is key to the prosperity of the Western Canadian beef industry. At a North America level and following the recent renegotiation of NAFTA ensuring continued free market integration of the cattle, beef trade remains a priority.
