Consumers in Eastern Canada may see more imported beef if the strike at Cargill’s Guelph beef processing plant continues

Sylvain CharleboisNearly 1,000 Cargill workers in Guelph are on strike, marking the end of its first week. The Guelph plant is one of the largest beef processing facilities in the country and the largest in Eastern Canada. Unfortunately, this might just be the beginning. The Cargill Case Ready plant in Calgary could also see workers on the picket lines later this month, as a strike vote is scheduled for June 5 and 6.

Labour disputes in beef processing are not new, and the pandemic highlighted the dark side of working conditions in this sector. The beef industry now faces a potential rupture that has been long overdue.

The Guelph plant is the only major federally licensed beef processing facility in Eastern Canada capable of exporting and shipping outside the province. If the strike extends beyond a few weeks, consumers in Eastern Canada might see more imported beef from the United States or even Mexico. However, it is unlikely that the strike will significantly impact prices, given that they are already quite high at the meat counter.

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The strike in Guelph is not good news for cattle producers in Ontario and Quebec. Eastern-based cattle producers can hold on to their livestock for a while, but keeping livestock inevitably leads to higher costs and decreased quality. They may need to transport their herd to Alberta or the U.S. to sell, which would increase the cost of processing the meat.

The potential strike at the Calgary plant could also disrupt the beef market in many parts of the country. Meat is sourced from the major Cargill beef processing facility in High River and then transported to Calgary, where workers trim, weigh, and package it. The packaged products are shipped and distributed on the same day. The domino effect created by an idled Calgary plant could be substantial.

Canada produces excellent beef, but the weakest link in the beef sector has always been domestic processing. Just three major plants process about 90 percent of all the beef in the entire country. These plants rely heavily on foreign workers, as recruitment has always been challenging due to the rough working conditions.

For consumers, climate change and complexities affecting supply chains have slowly made beef a luxury item at the grocery store. Due to droughts affecting inventories in both the U.S. and Canada, some beef cuts have increased by almost 50 percent since early 2020. Prices have been incredibly volatile. Ground beef, known for its price stability and affordability, has risen by 11 percent, according to Statistics Canada.

Higher prices have led to a significant decrease in beef consumption. Canadians are expected to eat less than 24 kg of beef per person in 2024, the lowest amount in over 50 years. That’s a 38.4 percent drop since 1980; most experts expect that trend to continue.

Despite beef being considered a luxury, the beef value chain has always been managed very frugally. In contrast, the pork and chicken industries have invested more in processing and automation. New greenfield plants have been built in Hamilton, London, and other parts of the country. On the other hand, the beef industry has not seen a new plant in years, making it more challenging to comply with new food safety and working environment regulations.

But it’s not as if beef processing is dominated by underfunded players. Take Cargill, for example. This privately held U.S. firm, with a 159-year history, reported over $170 billion in annual revenues in 2023. However, their net profits were less than $4 billion, highlighting the low margins in the food industry. Cargill employs over 160,000 people in more than 70 countries. JBS, another foreign company that controls the other federally licensed plant in Alberta, is also a massive organization.

Labour disruptions point to a much broader problem in federally licensed beef processing that has not been addressed in years. Every time a plant closes, for one reason or another, beef producers are held hostage with no compensation while retail prices increase. As for striking workers, it’s hard to blame them: they know few other Canadians would want to do the job, so why not ask for more money?

Unless automation plays a more significant role in beef processing, the industry will continue operating archaic plants worthy of the 1980s.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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