Auction Marts Grapple With A Shrinking Herd And Changing Industry - Canadian Cattlemen - Free Websites, Share News And Posts Publicly

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The air is tense during an auction at the Calgary Stockyards. In the sales ring, cattle bunch together, snorting. But they can barely be heard over the auctioneer’s quick chant, designed to entice buyers while moving things along. Unless you’re a seasoned pro, listening to the rhythmic patter can be like listening to a different language.
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When COVID-19 happened in 2020 and the world fell into isolated disarray, the sales ring at the Calgary Stockyards fell eerily silent. A place once filled with people and livestock now sat mostly empty. Instead, a different place was filled — that of the online world.
For Danard, moving online at the beginning of the pandemic wasn’t a concern. Calgary Stockyards has been using the internet for cattle marketing for a long time and was equipped to handle the sudden change.
“It was a bit of a fluke,” Danard says. “But we had already been broadcasting our sales from Strathmore for years prior to COVID. So we just carried on.We didn’t really have to change anything … and the electronic method of marketing definitely picked up.”
He says the online auctions are a great option for some producers. For others, not so much.
“There’s folks that have tried the electronic method, and if they fit the system, they have a tendency to not go back. But it does take some numbers to fit. So if you’re a smaller cow-calf operation, the electronic platform might not work for you … I still think the auction market is probably the best platform to be trading on. But again, if you’ve got the numbers to load lots together, the efficiencies and the reach that the internet is able to provide — I think it’s definitely shifting.”
Not only is the industry shifting online, but the work done by auction marts has become even more challenging as the national herd shrinks.
“The shrinking national herd is a big deal,” Danard says. “It’s having an impact on the truckers, on the entire service side of the business. (With) the numbers shrinking, we’re all fighting for smaller pieces of the pie.”
The Calgary Stockyards aren’t the only ones dealing with this issue. For the past few years, auction marts across Canada have dealt with the online shift and shrinking national herd, which has strained some businesses. Danard says the persisting drought hasn’t helped.
“We killed a lot of cows that maybe we shouldn’t have, had we not experienced the drought that we did, again, fueling the fire of this national population shrinking. It was shrinking anyway but this really poured gasoline on the fire. As a cattle feeder, input costs just keep going up. With the value of fed cattle you’d think that a cattle feeder should make money right now but they’re not, again because input costs just keep going up and up and up.”
According to Stats Canada, the 2021 farm census reported around 12.6 million cattle in total in Canada, up from the census in 2016, which reported 12.5 million cattle in the country. This increase was mostly seen in dairy cattle, as well as steers. However, there was a decline in heifers for slaughter, heifers for dairy herd replacement, heifers for beef herd replacement and bulls.
A report from Canfax stated that although the herd continued to shrink in 2021 and 2022, exports for Canadian beef remain strong.
The shrinking national herd in Canada is nothing new. In 2005 the herd peaked at 17.3 million cattle and has been steadily declining ever since.
In 2021, the beef cow culling rate was up due to the drought, according to Canfax.
“In Western Canada, last year was a tremendously difficult drought year where we had a real shortage of feed,” says Rick Wright, executive secretary with the Livestock Markets Association of Canada (LMAC). “And it was probably one of the most severe that we’ve had in many, many years. And because of the shortage of feed, a lot of producers, especially in certain regions, were forced to liquidate a lot of their cattle … we’ve seen a pretty steady reduction actually in the cow herds over the last few years.”
While the numbers aren’t in yet, Wright says he’s expecting 10 to 12 per cent more cows culled than normal right across Western Canada.
Although these issues directly affect cattle producers, auction marts are concerned, too, as their main customers are the ones who are struggling in a changing industry.
“Primary cow-calf producers are our customers, so when their numbers are down, that means there’s less cattle for us to trade through the public auctions,” says Wright. “Now, keeping in mind that this was in Western Canada. In Ontario in 2021, they had a lot of feed. So they brought a lot of cattle in.They actually increased some of their cow herds down there, because they could get a good buy on Western cows to take back to Ontario. But that’s a one-year blip in the cycle.”
The shrinking herd is a more significant concern for the smaller auction marts.
“You need a minimum number to survive. And we’ve always said in the last few years that we have probably more auction markets than we require,” Wright says.
It’s not just the shrinking national herd causing concern for the well-being of certain auction marts. It’s also the shift to online marketing.
Auction marts have been migrating online for years. According to an article published in the Western Producer in 2015, 40 per cent of the cattle sold in September of that year were sold in online auctions. When COVID-19 struck in 2020, most auctions had to move to online sales to keep business going.
As a result, Wright says the industry is changing permanently.
“We saw in the farm sale business, which is kind of a cousin to the auction mart business … that they went to online sales. And we’re seeing that the online marketing of cattle on the commercial side has shown slow but steady growth over the last two or three years in the numbers that they’re handling. So now we also have a new player in the game than what we had before.”
Despite all of these issues, hope remains in the industry. Danard says they’re combatting some of these issues by changing their approach.
“We are — more than ever — very concerned about the profitability of our customers, because we’re seeing them exit in such huge numbers. So I think we’re a lot more conscious of what a transaction looks like to the customer than we have been in previous years. In previous years, maybe the objective is to sell the cattle at the top of whatever’s happening at the moment. And now it’s more about, let’s help our customers manage their risk by working with them in terms of their marketing,” Danard says.
“We’re helping equip our producers with more marketing tools than we’ve been able to in the past.”
Despite the work auction marts are doing to combat some of the issues, Danard says the industry won’t return to what it was. Now, auction marts need to adapt to the new currents shaping the industry — primarily, the shift to online.
“It looks pretty obvious to me that we’re going to see the trend continue, we’re going to see more and more cattle trade online. And it’s a better option for a lot of producers. It really allows the risk management, better exposure on the buyers’ end … So if you’re true to your cost of marketing, it truly is a leaner, meaner machine that it’s hard to compete with. It’s a better way of marketing.”
You may be less likely to stumble upon a live auction today at the Calgary Stockyards than before the pandemic, although Danard says in-person auctions are returning, especially in the 4-H space. Nowadays, a click of a computer mouse is more akin to bidding than the raising of a producer’s hand.
However, Danard is still optimistic — not just for the Calgary Stockyards, but for the industry as a whole.
“It feels to me like the world’s appetite for protein, beef in particular, will remain strong for years to come,” he says.
“I think, again, if you’ve been able to weather the storm that we’ve endured the last couple of years, better days are ahead. I firmly believe that.”
Field editor
Melissa Bezan is a field editor for Canadian Cattlemen and a graduate of the University of Regina School of Journalism. She grew up on a commercial cattle farm in western Man., and previously worked for the Western Producer. She is based out of Regina, Sask.
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