Canada Cattle Slaughter Seen Declining to 19-Year Low

Cattle slaughter in Canada is poised to fall to the lowest in almost two decades as worker shortages constrain production for major meatpackers including Cargill Inc. and JBS SA (JBSS3), according to an industry group.

Meatpackers will probably slaughter 2.51 million head of cattle this year, the lowest since 1995 and down 3 percent from 2013, said Brian Perillat, a senior analyst at Calgary-based Canfax, a market-research unit of the Canadian Cattlemen’s Association. Labor shortages at processing plants and industry consolidation are contributing to the decline, he said.

Seven of the nation’s largest beef and hog-processing plants are running at 77 percent capacity amid a shortage of qualified workers, according to the Canadian Meat Council, which represents packers including Cargill, JBS and Maple Leaf Foods Inc. The slowdown is expected to cost the industry as much as C$300 million ($279 million) this year even as beef prices climb to all-time highs.

“As we lose critical workers in the plant, there will be a corresponding decrease in our ability to process meat,” Ron Davidson, a spokesman for the Canadian Meat Council, said in a June 16 telephone interview from Ottawa. “We need workers there, or you can’t run your line speed at the normal speed.”

Meat packers need as many 1,000 more workers nationwide, and the vacancies may worsen as government rules are making it more difficult to recruit temporary foreign employees, who account for 10 percent of the laborers, Davidson said. Processing plants are unable to purchase as many animals for slaughter because of the labor shortage, and feedlot operators are selling more animals to the U.S., he said.

Exports of Canadian feeder cattle to the U.S. in 2014 have risen 44 percent from a year earlier, the U.S. Department of Agriculture said in a June 18 report.

Cattle herds have shrunk in Canada and the U.S., increasing competition for available animals, Ryder Lee, the manager of federal-provincial relations for the Canadian Cattlemen’s Association, said in a June 17 telephone interview. U.S. plants that are running more efficiently can bid more for animals, reducing Canadian beef supplies, he said.

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Patrick McKiernan

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.