Industry behemoth Western Feedlots to close operations

Melissa Strle
Times Reporter

 

Western Feedlots Ltd. announced last week that it voluntarily decided to suspend cattle feeding and ownership operations at its operating sites near Strathmore, High River and Mossleigh.
The company, which started in 1958, will feed and market existing cattle and once that is complete, operations will be terminated.
The company will cease hiring new employees and purchasing feed grain or feeder cattle after that time. However, the company will continue farming operations for the “foreseeable future.”
Western Feedlot shareholders chose to terminate operations due to “strong headwinds” and the current “high risk/low return” environment in cattle ownership. In addition, the company stated the “poor political and economic environment in Alberta” also contributed to the decision.
President and CEO Dave Plett said in an interview with the Calgary Herald that the majority of Western’s approximately 85 employees will eventually be laid off, and the company has “teams working now to assist them with transition.” He said all of Western’s equipment will be shuttered, stored and maintained in functional condition.
“Should circumstances change going forward, there may be opportunities to do something to activate it – but that’s not the case at this time,” Plett said.
The company’s press release stated: “Western would like to thank all our employees, suppliers and customers for their years of dedication and support and their continued understanding and cooperation.”
Alberta Agriculture and Forestry Minister Oneil Carlier said “the loss of jobs is really unfortunate.”
In a public statement issued on Sept. 21, Carlier said his government is aware “producers are hurting from the significant decrease in the price of cattle. We do support the cattle industry and we’re doing our best to keep them strong.”
The minister explained the government agreed with the Feeder Association of Alberta’s request to increase the loan guarantee from $55 million to $100 million.
“The cattle and livestock industries are key drivers in Alberta’s rural economy, and feeder associations are vital to the success of the industry,” said Carlier. “This is the result of the productive discussions we have had with the industry.”
Anne Wasko, market analyst at Gateway Livestock, said consolidation in the feedlot sector in Alberta was not a big surprise since cattle numbers have declined considerably over the last decade, contributing to more pen space than cattle.
“But at this kind of a level when you’ve got one of the largest in the country closing I think it caught everybody a bit by surprise,” she said, adding that the industry has been going through some difficult times.
“Losses have gone on now for 14 consecutive months and the average [price] is only $300 per head so this one [industry low] has been deep and it doesn’t look like anything that is in feedlots between now and the end of the year is going to make any money either.”
According to a September 2016 report by Canfax, a division of the Canadian Cattlemen’s Association, “cattle prices are currently in the downturn of the cycle with prices moving back in line with the long-term trend. If the market follows the patterns seen in previous cycles, prices may drop below the long-term trend moving forward and bottom in two-four years.”
Alberta Cattle Feeders Association chief executive officer Bryan Walton said markets are tough right now and are just as bad as they were after mad cow disease erupted here in 2003.
According to Walton, 2014 and 2015 were pretty good years, but things have changed in a hurry and it has happened “hard and fast. Right now the markets are really causing some grief,” he said. “Last year a steer would sell for $3,000 and today it’s around $2,000. [That’s a] 30 per cent decline in the price of market-fed animals.”
According to Alberta Cattle Feeders Association, Alberta’s progressive feedlot sector contains 151 feedlots of 1,000 head or more. In addition, Alberta is home to 4.9 million beef cattle with a 1.8 million head annual output. Alberta provides 69 per cent of Canada’s fed cattle production.
Wasko ranks Western Feedlots as one of the largest feedlots in Canada, having a one-time capacity of 100,000 head between its three physical locations.