This morning I was scanning my news feeds and I stumbled across a tweet from MB Farm Journal. The topic of the tweet was the apparent need for increased cattle slaughter capacity in Manitoba. The discussion in the video was with the candidates in the Manitoba provincial election. They were discussing the apparent need in Manitoba for a cattle slaughter facility that would potentially kill commodity beef or niche products.
I live in Alberta so I cannot speak for Manitoba but this initially struck me as incredibly odd and based on common producer fallacy. Are the issues in the Canadian cattle industry really about slaughter capacity? I realize that Manitoba has a freight disadvantage compared to Alberta feeders but that advantage isn’t exactly lighting up the income statements of producers here.
To me this seems like a political trap. Look at what is happening in Alberta right now. We have a slaughter plant in Brooks and High River and neither are killing at full capacity and feeders are struggling to break even. The industry is sick but not because we need another packing plant.
Below is the interview on Golden West Radio that has me a bit confused. If you cannot see teh embedded video below click here
Currently producers are waiting four weeks to get fat cattle lifted due to the slow movement of boxed beef. Having more killing capacity does not sell more boxed beef. Sometimes I think we fall into the trap of thinking more slaughter capacity is the answer. Its easy to kill the cattle but getting the boxed beef moved down the line to the consumer is more challenging. A farmer owned packing plant always seems appealing to producers because they think they will pay themselves more for the cattle. Basically that presumption leads to a producer owned packing plant that is bankrupt in 12 months. Any business plan in manufacturing built on “we will pay our suppliers more than the competition” is a great way to lose some investment income in a real hurry.
As a feedyard owner just said to me on the phone, “Nielsens and Cargill are not cutting back to four kill days because they are making too much money.”
What do you think? Will a new slaughter plant make Manitoba a profitable cattle feeding province? Is the freight disadvantage the only thing holding the province back? Would a niche plant be able to make money in Manitoba? Or is all of this empty election promises to try and attract rural votes?