Alberta farmers wait for a downpour

The recent drought has impacted farmers’ pastures and crops to the point of emergency. Is this a bad year or the new normal?

Alberta Venture, Jul 15, 2015

At his quarter-section ranch just southeast of Ponoka, where he’s lived for 23 years, Greg Bowie kneels to grab a handful of grass. Last night’s rain amounted to less than one-tenth of an inch, and yet the rolling fields look lush. But he pulls up blades no longer than six inches that are already starting to go to seed, which means they won’t grow much more, if at all. “If this were a normal year, this type of stuff would be the worst we’d see,” Bowie says. “This year, it’s the best.”

“When it rains, it pours” could be one way of describing the predicament of Alberta farmers, who despite recent record prices for beef have faced down a decade of BSE scares, trade issues, labour shortages, floods, dwindling herds and the loss of major processing plants across the country. But the problem, of course, is that it hasn’t poured; in fact, northern Alberta is facing down its driest spring in 50 years.

As Bowie, chairman of Alberta Beef Producers, points out, farmers are talking about the weather regardless of its course. But this year, with the Rocky Mountain snowpacks as low as 25 per cent of normal measurements, resulting in diminished river flows, it’s been a more frequent conversation piece. After July 2014, rain was scant, and now the dry winter and early melt – not to mention more wind, which reduces soil moisture – means Alberta farmers face another setback. Some areas of Alberta have received fewer than 10 millimetres of rain in the last 30 days, marking less than 25 per cent of normal precipitation levels. And on Tuesday, July 14, Parkland County declared a state of agricultural disaster after record-low moisture levels and ruined crops.

Brian Perillat, a senior analyst with CanFax, a beef-industry research consortium based in Calgary, says there’s been a “slight uptake” in ranchers shipping feeder cattle to the U.S. to be processed. There’s no evidence of a widespread exodus of Albertan cattle, but “the drought’s been a double whammy on your average producer,” he says. “They’re selling the cattle ahead of schedule and they’re not getting the weight and performance they were hoping for.”

Crops have fared better than pasture land, but many of Alberta’s 13 irrigation districts had to begin watering early, increasing water costs. Most dramatically, provincial data show the price of hay increasing from $90 to $120 per metric ton in Alberta. Lots of hay land in Alberta was broken up years ago to make room for crops with higher returns, forcing the price of hay upwards. Now an increase in demand – and added transportation costs – means Bowie has watched his per-day cost skyrocket. He says that in a good year, a creative producer can keep his per-day cost as low as $0.80. But calamitous years can increase that four-fold. Much of that is attributable to a rise in the cost of forage. Farmers are using reserve stocks rather than sending their cattle to the U.S., but for many, these reserves were already lessened from last summer’s dry spells.

Droughts also put pressure on the supply of calves, which over time reduces the amount of cattle entering processing plants. According to a report by Bloomberg, 2015 marks the smallest herd in Canada in 22 years as ranchers recorded fewer than 12 million head. Meat processing plants are running at just 74 per cent of capacity, which – although it means retail prices are the highest on record in a decade – is an omen of a shrinking industry.

But one dry year won’t herald the end of Alberta beef. The drought is more of an insult added to injury: after the cattle sector’s profitability in the last several years thanks to record-high prices, producers finally felt like they were turning the corner on a woeful decade. Now, as they are so accustomed to doing, Alberta ranchers may have to wait, and hope for a strong 2016.

Reprinted with permission from Alberta Venture.