Beef, cattle prices bounce back to record highs

After a decade of beef prices in the mud, profitability is returning to ranches, farms and feedlots across the country.

Cattle and beef prices are at all-time highs in Canada as herd numbers dwindle, global demand picks up, and the Canadian dollar falls in value.

"It's pretty phenomenal," said Brian Perillat, senior analyst with Canadian beef market statistics firm CanFax. "We're certainly in uncharted territory."

In addition to the high beef prices, a decline in grain and fuel prices is adding to the profitability of the sector.

"We're just coming through 2014, which was probably one of our best years," said Perillat.

On grocery store shelves the cost of steaks, roasts and ground beef is climbing. 

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On average, beef prices have jumped 44 per cent in the last four years, according to Statistics Canada.

"We may still see some higher beef prices," said Perillat.

Welcome change for producers

The surge in beef prices may help the industry grow in size.

Since the mad cow disease (BSE) crisis in 2003, the beef industry has struggled to recover. The steady price declines led some ranchers to close their operations and discouraged others from entering the industry.

"When I was in my second-last year at the University of Guelph, cattle prices had declined significantly, to a low that we had never seen before, so I was a little unsure of what's to come," said Jill Harvie, who ranches near Olds, Alta.

"For about 12 years now, give or take, we've had prices that are just not sustainable for our industry, but we stuck with it."

There are many different reasons why people choose to ranch, but one factor is the financial prospects. 

Harvie hopes the current prices encourage some people to enter or return to the industry, knowing there is now a business case to be made.

"A succession plan is a little bit more real right now," said Harvie, who hopes her two young daughters will take over the ranch one day. "I hope that they have the love for nature, being around cattle, and the business as well."

Herd size concerns

The beef industry still faces a significant problem: it is shrinking.

The herd size has decreased for about a decade and experts have different opinions about whether it will soon turn the corner. The number of cattle in the U.S. is beginning to grow, but that is not the case in Canada, at least not yet.

"Hopefully, from an industry point of view, we will get enough interest at these price levels to grow our herd," said Perillat,

"It's a slow turnover rate. If you decide to expand this year and you breed some heifer in the spring of 2015, they calve in 2016, and we can't turn that calf into beef until 2017."

That's why he expects prices to remain relatively high for the next several years.

Revenues from the Alberta beef industry are $3.3 billion and make up one per cent of the provincial economy.