Alberta feedlots see significant losses in May

Leighton Kolk is the co-owner of Kolk Farms Ltd. near Iron Spring, Alta. He says the feedlot industry has been seeing financial losses for the last 18 months, but the month of May was one for the record books.

“Buying the animal last fall, putting it on feed with the very high grain prices and selling it at what the market would allow us to sell it for as a finished animal, left us with a $300 red ink financial loss per animal,” Kolk said.

Brenna Grant with Canfax Research Services said the feedlot losses are some of the worst in decades.

“Historically, this is the second-largest loss for the month of May going back 31 years — with only May of 2020 — when the packing plants had been closed — being a larger loss,” she said.

The erosion of profits is significant for the entire industry, even when just looking at the Prairie provinces.

“For Alberta and Saskatchewan, cattle on feed on May 1 was just under 1.1 million head,” Grant said.

Kolk said there are a number of factors at play, including packing plants dealing with labour shortages through the COVID-19 pandemic which limited the amount of animals they can process.

“Packing capacity is half of the issue, and the other half of the issue is the drought in Canada last year. (It) increased the price of everything that animals — and thus people eventually — eat.”

Kolk noted some areas of the industry are seeing big gains.

“The packing industry, we are told, is about a $300 a head profit currently, and the retail would be somewhere similar to that,” Kolk said. “(This is) at the same time as there is a $300 loss in the feedlot industry and probably another $300 loss in the ranching industry.”

Grant said it takes time for the markets to balance out supply and demand due to a bottleneck caused at packing plants during the pandemic. As a result, she said consumers can expect to see high meat prices for a while yet.