It wasn't long after commercial cattle feeding began in the U.S. that Canada got in the game. It's proven to be a viable player. Alberta alone is fifth in cattle feeding behind Texas, Kansas, Nebraska and Colorado.
Anne Dunford, senior marketing analyst with CanFax in Calgary, Alberta, says commercial cattle feeding began in the late 1960s. During the early '70s, about 500,000 head were fed annually. Today it's 2.4 million head.
"Growth has been primarily fueled by ample feed supplies and the proximity to feeder cattle," Dunford says. Approximately 80% of the national cow herd is located on the nearby prairies.
She adds that 250 feedlots in Alberta have feeding capacity greater than 1,000 head. These represent 90% of the fed cattle marketed in Alberta. Average capacity of these feedlots is 6,280. The largest holds 102,000 head and three operate with a capacity of 75,000 head.
EconomicsFinished cattle mostly end up at packing plants in Alberta, Saskatchewan and Ontario or at U.S. plants in Washington, Utah, Idaho and Colorado. Selling methods include sealed bids, private treaty, formula or grid pricing and forward contracts. Estimates show about 14% of the 1998 fed cattle supply was packer-owned.
Despite having every marketing tool at hand, Dunford says price volatility is one of the toughest challenges.
"One of the greatest economic challenges facing Alberta feeders is volatility in basis levels. The difference between the local market price and the U.S. market can vary dramatically. During a year it can range from $2-13 Canadian (CDN) under the U.S. price in periods as short as four months.
"Other than a basis contract with a local packer, basis risk is difficult to manage," Dunford adds. "This is one reason we've experienced consolidation in the feeding business and it's expected to continue."
Despite normal industry consolidation, industry leaders display a relatively bright outlook for feeding in Alberta and the surrounding region.
Ron Axelson, manager of Alberta Cattle Feeders Association, says several factors point toward growth. One is environmental regulation.
"Currently, there are no existing environmental laws pertaining specifically to feedyards," Axelson says. "We're governed by laws under the Environmental Protection and Enhancement Act and the Health Act. These come into play if an event contaminates water sources or puts public health at risk. That's not to say regulations are lax - there are examples of action being taken by the authorities in justified instances."
New and evolving regulations continue to be part of daily operations, and Axelson sees some as benefits. He says new siting requirements and a provincial approval body to review new development applications on a technical basis offer chances for feeder input.
"Under this forthcoming system, land use remains a municipal responsibility. Technical standards will be established under regulation to guide approval processes for new or expanding operations," Axelson says.
"However, there will be operating standards under the same regulations that will govern activities of existing operations, monitored by the province. This gives livestock operators a solid set of standards to guide nutrient management planning and is seen as a plus," he says.
Those operating standards, Axelson adds, were developed by the provincial government for operation locations and safe manure handling. Formerly voluntary, many municipalities adopted the criteria into land use bylaws. New regulations are being developed by a broad group that includes government, industry, municipalities and environmental groups.
Will the new regulations create negative business changes? Axelson doesn't think so. He thinks expansion in this region is needed to compete, and that likely includes Montana, Idaho and Washington. It's a scenario that if it becomes reality, "will create a powerful regional industry to compete globally," Axelson says.