Disruption at High River Beef Plant Would Affect U.S. Market
While Cargill and the United Food and Commercial Workers Union appear to have avoided a labor strike at the High River, Alberta, beef plant, a shut-down could produce significant disruptions to the U.S. cattle market.
Altin Kalo, senior market analyst at Steiner Group Consulting, says that while the Canadian cattle herd is much smaller, any long-term closing of the High River plant could cause regional market disruptions for U.S. producers. Such a disruption could shift as many as 80,000 fed cattle to U.S. slaughter facilities, which are already operating at near capacity.
So far this year monthly imports of slaughter cattle from Canada have averaged 38,000 head per month, which is down 11.6% from a year ago. This compares to average monthly U.S. cattle slaughter of around 2.8 million head per month.
“The High River plant is one of the largest North American cattle processing facilities and it accounts for around 35% of all Canadian cattle processing capacity,” Kalo said.
Earlier this year workers at an Olymel hog processing facility in Canada went on strike and it took several months for that dispute to be resolved. That labor strife caused waves in the Canadian pork market, but also affected US hog markets. Canadian hogs were shipped to the U.S., resulting in wider regional price spreads.
“With no capacity slack in Canada, we could see more Canadian slaughter ready cattle come to the U.S. However, the impact may not be as immediate as it is with hogs. Hogs have a much tighter marketing window than cattle, but eventually cattle will need to go to market,” Kalo said.
With its High River and Guelph, Onatrio, beef plants, Cargill accounts for 46% of all the fed cattle slaughtered in Canada. JBS has a plant in Brooks, Alberta, which accounts for 31% of Canada’s fed slaughter. Together, Cargill and JBS account for 77% of Canada’s roughly 3 million federally inspected slaughter.
Cargill and UFCW announced earlier this week they have tentatively agreed on a new six-year contract, pending approval by 1,400 rank-and-file union workers at the High River plant. The new contract offers a 21% pay increase, retroactive pay, a $1,000 signing bonus and a $1,000 COVID-19 bonus, along with new health and safety protocols at the plant.
