No one can blame the provincial NDP government for the downturn in the price of beef that is the initial cause of Western Feedlots closing after close to 60 years in business.
However, the government has made the economics of finishing cattle much worse with Bill 6 and the carbon tax.
Feedlots are price takers and the packers are paying them an average of $1,000 less per head of cattle -- $2,000 now compared with $3,000.
The profit margin was just $20 to $30 per head.
The WCB agri-business coverage required by Bill 6 has taken $2 from that profit.
And the carbon tax to be paid by feedlots will subtract another $6 to $7 per head.
A total of $8 to $9 subtracted from $20 to $30 equates to the end of an era.
If you take those numbers to the bank where you have made your loans for years, the manager will be more inclined to say, “forget about it.”
Look across the borders of the province to Saskatchewan, B.C. and Montana, and Alberta's 150 feedlots are much less competitive.
“The shareholders looked at the business climate in Alberta and the cattle industry and said, ‘We don't foresee it getting better soon,'” said Western's CEO Dave Plett in an interview.
Added to uncompetitiveness is new uncertainty for the agri-business.
The question facing agricultural owners and investors is, “what's next?”
What concerns the agricultural sector most is that the new government does not express any visible care or concern about the impact of its policies on farming.
The closure of feedlots will have a ripple effect. Barley growers sell 80 per of their crop to feedlots. Meat packers depend on healthy feedlots for their supply of beef
It is not just the 85 jobs that will be lost when Western Feedlots closes its three operations; employment across the entire sector is at risk.
The devastating impacts on agriculture are consequences that the government did not intend.
But it has to cowboy up, acknowledge the damage and work with the farm community to make things right.
- Frank Dabbs is a veteran journalist, and book author and editor.
