Consumers paid more for beef, processors and retailers increased their profits and feedlot owners lost millions in 2020 because of COVID-19.
A paper published through the University of Calgary Simpson Centre, written by project co-ordinator Karen Spencer, indicates feedlots lost an estimated $379 million in gross revenues for 2020 compared to the previous year, reducing their collective income by 6.7 percent.
Consumers at the same time paid more for beef at the retail counter as demand surged when pandemic-related health measures forced closure of restaurants and increased demand for cooking at home.
On average they paid 6.2 percent more for beef products in 2020 compared to 2019, the paper said, and some months saw as much as 18 percent higher beef prices year over year.
Spencer said the impetus for the paper was to put some numbers to the trends consumers and the industry were seeing early in the pandemic.
“What we wanted to do was see if we could quantify the challenges that were within the industry and the supply chain in 2020 and quantify the retail impacts and the farmgate price impacts and then quantify the set-aside program uptake,” she said.
“I think that we were very interested in terms of magnitude of these impacts. We know that the beef industry is a very small margin industry. It sells a lot of its product to a global market and so the prices are driven globally.”
In the early months of the pandemic, beef supply was temporarily short due to outbreaks of illness among slaughter plant workers, notably Cargill in High River, Alta., and JBS in Brooks, Alta., which collectively process about 70 percent of federally inspected beef.
But by the end of 2020, federal cattle slaughter rose above 2019 levels as plants attempted to address a backlog of fat animals.
“While producers received less revenues YOY (year over year,) processors and retailers downstream in the value chain received higher prices,” the paper said.
“The average Canadian retail price for beef in 2019 was $19.21 per kilogram while the average for 2020 was $20.41 per kg., a 6.2 percent increase.”
June and July were expensive months for shoppers at the meat counter. In those two months, retail beef prices were 18 and 13 percent higher, respectively, than in the same months of 2019, the paper said.
Though processors and retailers moved less beef, retail revenues for beef were 3.3 percent higher than the previous year.
Meat processors have said they spent millions to improve safety measures at their plants that in part included installation of barriers, provision of personal protective equipment and increased social distancing in common areas.
However, packers still posted profits for the end of 2020, according to government data.
“We did not look at specific profits for processing plants per se but we do have Statistics Canada information that showed that everything downstream benefited with higher netbacks, higher returns,” said Spencer.
The 3.3 percent increase “amounts to $563 million in additional gross revenues to the downstream processor/wholesale/retail portion of the beef value chain in Canada,” the paper said, based on Spencer’s calculation using Agriculture Canada’s red meat conversion factors.
The federal-provincial set-aside program, which subsidized feedlot operators to hold back cattle that couldn’t be sent to timely slaughter, paid out $21.7 million, which is 5.7 percent of the $379 million in losses or deferred revenue for feedlots, the paper said.
“It is of note that none of the set-aside benefits were directed to cow-calf operators, although they too were subject to substantial price impacts.”
Spencer suggested business risk management programs be examined to see how the cow-calf sector could be better assisted in similar circumstances in the future.
The paper concluded that COVID-19 “hurt consumers and producers, while other select parts of the industry greatly benefited.”
April 02, 2021 at 01:57AM
https://ift.tt/3ujWfbn
Feedlots, consumers paid beef price - Western Producer
https://ift.tt/2RxTDX4
Beef
No comments:
Post a Comment