COVID-19 significantly impacted Saskatchewan’s livestock industry. The Cargill and JBS Brooks plant closures or slowdowns led to a significant drop in beef processing capacity.
Similar shutdowns in the US and Quebec have impacted hog prices.
Concerns were also being raised over disruptions in poultry processing.
For cattle producers, the spring represents a critical time in the production cycle. Decisions are being made around feed availability and marketing this year’s calves. Producers are unsure how long they will need to hold onto stock and whether government support will be available in the event of price declines and rising feed costs.
Producers are reluctant to take on more debt in the current operating environment. The recently announced changes to FCC lending capacity and the Advance Payment Program limits will provide little assistance to sectors uniquely impacted by COVID-19 disruptions.
The availability of operating credit might already be contracting due to reduced value of livestock inventory against which to borrow.
Of the livestock producers responding to the Agricultural Producers Association of Saskatchewan's COVID-19 Farm Survey, 60 per cent faced cash-flow challenges and 20 per cent of respondents had difficulties either managing existing loans or securing financing for future operations. The situation will worsen with continued price declines and increased feed costs.
APAS requested Farm Credit Canada to develop clearer targeted lending criteria for farm businesses producing commodities or holding inventory that lost 10 per cent of market value due to COVID-19-related market declines.
To ensure the additional lending capacity is made available to farm businesses banking with other financial institutions, the lending criteria should include financial guarantees or other arrangements provided outside of FCC’s portfolio.
APAS supported the Canadian Federation of Agriculture’s request for a $2.6 billion emergency relief fund to help agricultural sectors cope with COVID-19 disruptions. For livestock sectors, this fund should be used to develop programming aimed at protecting farm margins and helping sectors recover from extraordinary costs.
Although there is an urgent need for direct financial support at the farm-gate and feedlot levels, the APAS believed additional steps were also required to target processing capacity in order to stabilize markets and facilitate supply-chain recoveries.
