How has the protein supply chain changed in the last while, and how has COVID-19 changed things from March until now? What economic principles drive those price fluctuations that you might see in the grocery store? And why aren’t there more federally inspected processing plants?
It’s time to talk livestock processing capacity challenges and opportunities with Dr. Jared Carlberg, professor of agribusiness and economics at the University of Manitoba, with sometimes host Kara Oosterhuis for today’s LIVE!
RealAg hosts a LIVE! Q&A on a timely topic each weekday on social media at 1 pm M/3 pm E!
- Grew up on a mixed farm near Osage, Sask.
- Attended University of Saskatchewan, Oklahoma State, before joining the department of agribusiness at University of Manitoba
- Beef and cattle markets, processing
- Beef, pork, chicken are huge protein sources, at beginning of pandemic, there was rationing of proteins
- Food security issues associated with lack of processing capacity, little bit reminiscent of BSE
- Disruptive to supply chain, implications for food security
- Economies of scale in processing and manufacturing
- More people working in close proximity, leads to larger disease spread as the processing plant gets bigger
- Large processors provide cheaper food, less costly to produce, resulting in food security benefits, but market power also increases as these processors get larger, catch 22
- Competition policy is complex
- Conflicting prices of beef in store, versus what ranchers are getting?
- Supply chains and price transmission along them are complicated
- Regulators are prone to “letting sleeping dogs lie,” important to have producer-lead advocacy groups as well as consumer-lead advocacy groups
- Mergers are always proposed to increase profits and efficiency, in the U.S. there seems to be more farmer ownership and cooperative spirit
- Producers can seem to be antagonistic towards check-offs, but producer groups have a strong role to play in taking care of their members
- Been a tough road for farmers to go down to get vertical integration into place, takes a lot of effort
- COVID-19 numbers are rising, if another lock-down occurs, and processing facilities also have to shut-down, whatever’s bad for processors is also bad for producers; Carlberg thinks food processing plants will likely be left alone when it comes to lock-downs
- Stumbling blocks of getting a processing facility going in Sask? Big capacities at Cargill and JBS plants in Alta. Lots of Saskatchewan cattle end up in Alta or in the U.S.
- Appetite of ranchers and government to contribute funds to a packing plant in Sask. In “normal” times it’d be tough. Would need a champion from the cattle sector in the upstream segments; one or more large ranchers or feedlots. Need guaranteed supply of cattle. Big capital. Where are the governments in terms of funding?
- Having a champion, and/or a grassroots movement that start to make things happen is the key factor
- Feasibility study is also real helpful
- Finding a GM and a production manager to start. Having enough line workers is an issue.
- Managing costs and marketing the product are some of the most important aspects of having a successful plant.
- Craft/boutique/niche markets progressed from coffee, to beer, to maybe beef?