by SUSAN MANN
The North American-wide protein shortage has chomped into the retail level with higher meat product prices, says a beef industry spokesperson.
Dave Stewart, Beef Farmers of Ontario executive director, says worldwide demand for protein is increasing “and our supply across North America shows the cow/calf herd is down about 26 per cent.”
Stewart made the comments in response to Maple Leaf Foods Inc. CEO Michael McCain remarks on Thursday. In Maple Leaf’s second quarter financial results showed double-digit sales losses in their meat sales, such as for sausages and bacon, after they boosted prices for those products. Maple Leaf is Canada’s largest pork processor.
Porcine epidemic diarrhea (PED) has affected both Canadian and United States pork producers. In a July special report called ‘Sticker Shock at the Meat Counter,’ BMO Capital Markets says PED virus has killed about seven million piglets in the United States since the disease first appeared in April 2013, equivalent to more than six per cent of the annual slaughter.
In beef, Stewart says there are two trends in different directions. One is the supply of calves is smaller, while the other is the surging worldwide demand for meat protein due to growing populations and people in emerging economies, such as China, Viet Nam and Indonesia, moving to an income level where they can afford to buy meats. As people’s incomes in those countries rise, “they’re shifting their diet to meat proteins so that’s putting a new floor under the price of meats.”
Ontario beef farmers sell to the highest bidder, he explains. “In Ontario there are a limited number of processors and those processors bid what they have to so they get the cattle and even with that they aren’t getting enough cattle to run the plants efficiently. Sooner or later that has to be passed on” to the retail level and “that’s what we’re finally seeing,” he adds, noting the price for beef calves has gone up fairly substantially and then for feeder animals and finally for finished animals.
The BMO report says red meat prices on grocery store shelves have surged “on the back of cattle and hog prices, both of which charged to all-time nominal highs in 2014.” The farm price for hogs averaged US $85 per hundredweight between April and June, which is up nearly 24 per cent from the same period last year. Cattle prices averaged US $146 per hundredweight during the same period, which is nearly 18 per cent higher than last year, the report says.
“After adjusting for inflation, hog prices are now at their highest since the mid-1990s, while real cattle prices are higher than they’ve been since the early 1980s,” the report says, noting lower feed costs have put herd expansion on farmers’ agendas for the first time in nearly a decade.
About higher red meat prices at supermarkets, the BMO report notes in Canada the depreciation of the loonie during the past year has contributed to an even sharper rise in consumer meat prices than in the United States, with beef in Canada up 12.8 per cent and pork up 16.6 per cent year-over-year in June.
On the consumer demand side, the BMO report notes “consumers have shown themselves unwilling to raise their food budgets to accommodate higher meat prices.” Consumers are shifting towards less expensive cuts of meat and other non-meat protein options.
Stewart says with rising meat prices “it’s likely that the consumption might fall by about one pound per person over the year in beef.” Consumers may also shift to cheaper beef cuts and products.
“I don’t see beef as a luxury item but certainly it’s a special occasion meal if you get that big prime rib roast,” he says.
The BMP report says consumers aren’t the only ones being affected by rising prices. “Food processors, grocery stores and the restaurant services industry have all seen margins come under pressure as wholesale meat prices have risen,” the report explains. “Hog and cattle farmers, on the other hand, are enjoying a much-needed renewal in profitability after several extremely tough years.”
Stewart says Beef Farmers of Ontario is concerned about the supply of calves and finished animals in Ontario. The organization is in the final stages of finishing a report on ideas for growing the provincial cow herd “based on increasing production in the north.” That report is slated to be released at the end of this month or early September.
Ontario Pork declined to comment for this story. BF
Comments
Of course Ontario Pork has no comment, they maybe are too busy taking another vote on how the Government should give away Supply management for more lucrative foreign trade deals! One-sided trade deals we could never hope to fill!
Know wonder there is a consumer backlash against ridiculous Beef and Pork prices,the Federal Government has been so busy patting itself on the back for the Korean and CETA trade deals that they haven't noticed we can't seem to fill our own markets.
I don't think the meat-buying consumer realizes how pathetic the meat industry in this country really has become,some have called it disjointed (which is an understatement).We continue the long fight against the US Country of Origin Labeling so we can have unrestrictive shipping to US processors while at the same time our processors can't get enough Pork and go bankrupt.There are some experts in the industry that say this could take 10 years to level out,maybe that's what farmers want?
The Public should be wondering are we trying to fill some foreign meat contract while our prices skyrocket? why are prices sharply up here more than the US where they have had it much worse with PED and drought?
You just can't rise prices 12-16% without some consumer suggestions of price gouging but the meat Industry is not like the gas companies hiking the prices just before a long weekend..people will still drive but they may find alternatives to steaks and pork chops.
you must be a sm farmer upset that a hog farmer is finally more money than you. don't be jealous for too long we don't make this kind of money every year like the sm guys.
No one begrudges farmers making a profit from a honest living but as the article suggests,there can be some consumer questioning when prices rise that sharply in that small period of time.Better Farming had a recent story on the Cattle Industry and how it has turned around in record prices but almost as an afterthought at the end it was mentioned about the risk of some consumer backlash,l am just not sure the consumer is as understanding now as they were when BSE was discovered here.
The comparisons can be made with the Fed's foreign trade deals and Ontario Hydro,why are we almost giving/paying neighbours to take our excess power and at the same time raising Ontario homeowners rates ?Its why some of these trade deals have become so one-sided as of late.
Please don't blame the farmer for the prices they receive, be it pork, beef, corn wheat or beans. The markets decide what the products are worth. Farmers are price takers whether they are low or high. Processors/retailers- well that is where you might wish to voice your displeasure. When the price of commodities go up, they rush in to raise retail price, but when the pprice of commodities fall, (and they always do) they barely lower the prices (if at all) since the consumer is now used to paying a higher price.
If there was any truth at all (and there isn't) to your claims that processors and/or retailers are villians in some sort of conspiracy against consumers, then:
(A) retailers wouldn't be constantly locked in a struggle for margins, market share, and even existence itself
(B) processors wouldn't be also constantly locked in a struggle for margins, market share, and even existence itself (ie. Quality Packers).
The unvarnished truth is that farmers themselves, through the stranglehold of supply management, are the true villians in the conspiracy against consumers - what with even the Dairy Farmers of Ontario admitting, in late 2010, that the farm gate price of milk in Ontario was within pennies per liter of the US retail price.
There are, alas, three eternal verities in the farm community:
(1) death
(2) taxes
(3) a woeful, and seemingly deliberate, misunderstanding of everything to do with the marketing of farm products - starting with the completely-mistaken belief that farmers are always the heroes, and that processors and retailers are always the villians.
Stephen Thompson, Clinton ON
Right you are Mr. Thompson Hog and Beef farmers should be selling thier livestock at a loss the same as the G&O farmer currently is .
Finally you said some thing that make sense .
In my reply "Please don't blame the farmer" I wasn't referring to SM industries, where the prices farmers receive are pre-determined. The open market based industries are price takers, for better or worse. Right now, the prices are high for swine and beef products (good for them - they've had low prices for far too long) Up until this year, grain prices were very profitable. Prices in an open market system are typically cyclical, but you already know this.
When one states - "please don't blame the farmer" for high food prices, it is almost always either:
(1) an attempt by supply management to absolve themselves of just exactly that
(2) an attempt to blame, without providing anything except anecdotal evidence, participants in the processing, distributing and retailing sector.
Now that you have stated you aren't referring to point (1), it would appear you are trying to attach "blame" to members of the food processing, distributing and retailing sector who, regardless of the farm gate price of food products, have been, and continue to be, locked in their own fierce battles for margins, profit share, and even survival.
Unfortunately, the villians clearly the most-responsible for the high retail prices of dairy and poultry products are, indeed, farmers, and, therefore, for anyone to suggest that farmers, across the board, aren't to blame for high food prices, is simplistic and misleading.
Stephen Thompson, Clinton ON
give your head a shake, he wasn't even talking about sm in the original posting.
It always amazes me that some on this site get bent so out of shape when talking about SM that gives the farmer a fair price for his product. The cost of milk equates to about $35 more a year compared to the subsidized milk across the border. Yet, those same people ignore the fact that we pay 42% of our household income to taxes. That's more than food, shelter and clothing combined. Someone needs to get their priorities right.
I don't think anyone would begrudge farmers or processors a fair living...but consumers are being screwed royally by processors hiding behind PED. Has noone noticed the size of packaging shrinking??? The best example I can give is Bacon...pre-PED was 500g pkg for $3.99....Post PED...375G for $5.99.....do the math...the processors have DOUBLED the price of bacon...and are blaming it on the shortages caused by PED. Wake up folks....
Another example a few years ago happened when corn and wheat prices spiked to double or triple the price and bread and cereal prices tripled. Unfortunately, after corn and wheat tanked back down to their previous below COP levels consumers blindly failed to ask for a rebate. Even the size of cereal packages has been reduced but not the price. You are so.......correct, we as consumers are being gouged..... Wake up folks..... Where are the farm groups like OFA, Ontario Pork, Beef, and GFO in all this price gouging???
Incase you haven't noticed even hot dogs have been hit by this . No more 12 packs they are all 10 packs . Gues they are getting closer in line with the 8 pack of buns .
You could sure tell when the price of corn and beans rose by the crying on the sideroads from those poor hard done by pork farmers who were more than willing to screw their neighbor to by the farm they owned or the consumer with the price of pork . When pork was soo cheap a few years ago and beef with BSE , I don't remember any body claiming that the retail price was too high . No it was we need to keep supporting the industry . Even if grain farmers gave the grain to pork farmers they still would have lost money according to their book keeping . Funny thing is some pork farmers were still making money but the industry painted a totally different picture because they did not want the truth to be known .
Another cash cropper who thought land was cheap and prices never go down!
Ha Ha Ha . That funny ! Sorry dude I did not buy expensive land . I am a realist . What is going to happen with the new sanctions and the pork prices when the meat can't be sold because of a market that was chased and now is not there ? I think we both know the answer will be We pork farmers need adhoc money and another Gov Buy Out !!
Seriously folks who is kidding who here ? We are not all in it together and livestock farmers have sent that message loud and clear . So no more help from this guy .
The price of bacon has not doubled. Did you even take the time to read the above story?
Well now that you have you can calm down and stop being so full of sh*t.
But you are correct that alot of package sizes have decreased. 500g cheese blocks have now become 450g
Raube Beuerman
A 2x4 has not been actually a 2x4 for a long time either,it's just something we almost take for granted nowadays,it should come as no surprise when it happens in food stuffs.
However,no one should be surprised by your reference to cheese,when the real story is the 16% rise in pork retail prices
Based on the example given, this price went from $7.99 per kg to $15.97 per kg.
That is just more than double.
Your full of sh*t comment was uncalled for.
But of course unsigned math has no evidentiary value.
Signed, The Anonymous Rabble
Show me in the above article where it says the price "went from $7.99 per kg to $15.97 per kg.
You still have not read the article.
You're still full of it.
Read the story and get back to me.
Raube Beuerman
READ the reply oh high and mighty one ! The poster who ever it was did not quote the story in case you can't read . He was giving an example . That must have been to easy for the all knowing RABE to see and read .
In reading the story it is clear that processors would like a SM system that shares the wealth and gives them a steady supply that they can run their plants profitably on . While the farmer reps want the highest price and want a high-low price cycle of doing business . Just going to be how long before the processors move out of this province and country ?
I am not a proponent of SM as it is today but there are some real good pionts to it like the price stability that make sense for the whole production chain . I am sure I will get bashed for that comment !
You're ignoring the fact that SM is a consumption tax, guaranteed by tariffs.
Currently there are zero support dollars flowing to pork farmers.
SM is currently, was yesterday, and will be tomorow, and has always been collecting its consumer subsidy.
Why should consumers have to pick up the tab for quota $$?
Raube Beuerman
As per again the high and might RABE did not read the response but does how ever seem to want to respond to what he did not read .
Strike two for today RABE !!
In the above story BF has reported from good sources that YOY, beef and pork markets have risen 18 and 24 percent respectively.
They have also reported that retail levels for beef and pork have risen 12.8 and 16.6 percent YOY, from good sources once again.
Then we have some posters claiming that prices have "doubled". They give no brand names, whether or not the prices were regular price or sale price, no store location, and of course, their own name. They are just pulling numbers out of thin air, or their simple imaginations.
Therefore, anonymous claims have ZERO value.
This particular poster became so fustrated when unable to provide no evidence, that he/she then resorted to ridiculing the spelling of my name.
The vast majority of anonymous posters on this site are absolutely pathetic.
Raube Beuerman
You got lost on the thread there . It was not even the same poster . Talk about simple Rauby .
Sighhhh
No truer words have been written, Beurman. Good to see you understand the pathetic postings.
Ever wonder why some posters that wrongly believe themselves infallible seem to have have low levels of success and respect as farmers yet seem to have high levels of time to sit and write responses pontificating to the world about farming?
The one thing consistently lacking in all anonymous postings, is any sort of evidence and/or "proof" to substantiate the opinion being expressed.
Furthermore, because none of the anonymous opinions expressed is consistent with any sort, type, or kind, of basic economic principle, anonymous posters must rely, as always, on the sort of "so-there" and/or "shoot the messenger" approach favoured by those who seem to have become adults still trapped in kindergarten, and who regularly evoke, for those of us who aren't anonymous, the wisdom of the adage - "nil carborundum illigitemi".
Stephen Thompson, Clinton ON
Is it just me, or is it really funny when some posters seem SO MUCH to want to come across as The Intelligentsia to the mere, lowly farmers.
If you read carefully he is actually giving a good example of the “so-there” message he is trying to mock.
The irony in his response is that - the proof is in the pontification.
Right on, my anon friend!
And the pompous attempt looks even more pathetic by the use of mock Latin.
But it is rendered funnier since the phrase is also not even spelled correctly.
So much for The Intelligentsia farce.
But hey, Rube will still think you are smart.
Other than being a mechanism to:
(A) transfer large amounts of wealth from many poor consumers to a few rich farmers
(B) allow dairy and poultry farmers to be financial bullies in the farm community
there are no "good" points whatsoever about supply management - price stability is another word for, and means, gouging, period.
Therefore, you don't need to consider yourself "bashed", but, instead, informed about basic economic truth.
Stephen Thompson, Clinton ON
Yet again another that is so smart he can't read .
What are we all to do now since these are types who seem to making decisions for the rest of us ! We are indeed screwed !
You would think with the $500 million loss in the Russian market and the supposedly limited supply here that consumers might be in for a break when it comes to high Pork prices.
Don't hold your breath!
Well, now that Putin has put this one year ban in place, his own people will have to pay
similar rip off prices on pork, like we have on chicken here in Canada.
Raube Beuerman
Ive heard it said a little knowledge is dangerous. If one is so sure some sector of agriculture is growing money trees. U would think they would get on board themselves and have more money then they can possible figure out what to do with. I DARE you to go "farming" whatever u term that as for a min. of 5 yrs. then tell us what ur books look like , how ur back feels and how many paid weeks of vacations u took Oh ya and how many days off you had. You know those days some people call weekends. Wish u all the best
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