When you are looking at cereal grains, oilseeds and pulse crops, the ebb and flow results in more, or less, acres planted, which of course reflects in overall production.
On the livestock side of things, increasing production means keeping more females to produce offspring, and when you want to reduce production, you send some of the producing females to market.
Of course, the ups and downs in production are typically relatively short-lived, as prices tend to react to production in an opposite fashion. Increased farm production sends a message to markets there is a greater supply, and prices tighten, which in turn tells farmers to reduce supply.
So when Statistics Canada releases numbers in terms of livestock herds, or crop acreages, increases and declines are the norm, and while they help farmers formulate plans, if you see a big increase in numbers, you might want to hold off expansion in that area because you can see prices may be declining in response to bigger production, the more telling numbers are in long term trends.
For example, when Statistics Canada released the 2020 livestock inventory on March 1, a one percent decline in the Canadian cow herd, all of the decline in the west as numbers actually inched higher in the east, was not extremely significant past maybe sending some market inklings to producers.
Far more telling is that the one percent drop in the national cattle herd is part of a general decline that has been happening since 2005.
When numbers have generally moved lower for 16 years, it is a trend and one that will not easily be turned around in a significant way.
The situation suggests some producers have simply quit the cattle business, and depending on location; their land base may well be in grain production now, meaning fences have been pulled up, and the likelihood of cattle ever returning slim.
Once a fence gets pulled, it takes a serious shift in agronomics over a period of time to see the investment of putting it back as worthwhile.
The question then becomes, what does the long-term decline mean?
It would suggest the consumer looks to beef less often these days. If demand was steady, production rarely declines.
It may also mean those wanting a good steak will see regularly higher prices. Lower supplies tend to push up end-product prices.
It also likely suggests cattle production is moving back to the fringe lands best-suited to grazing while planting on land where crops can reasonably be grown.
Certainly, the trend of cattle numbers will be one producers and consumers will want to watch in the years ahead.
- Calvin Daniels
Disclaimer: opinions expressed are those of the writer.
