With doors still closed at XL Foods’ Brooks, Alta. packing plant, beef producers are forced to cope with a growing list of setbacks.
“The temporary closure, at that time, was really talked about … as just a matter of days. Since it’s gone to weeks, it’s starting to have a more significant impact,” said Brian Perillat, manager and senior analyst with CanFax.
CanFax is a division of the Canadian Cattlemen’s Association and analyzes the markets and trends in the beef industry.
The Canadian Food Inspection Agency suspended XL Foods’ licence on Sept. 27 and has given no indication when the plant could resume full operations.
At the time of the licence suspension, the Canadian Cattlemen’s Association released a statement predicting the impact the shut down would have on the Canadian cattle market.
“We expect to see a temporary impact in the live cattle market as a result of this action. However, as Canadian and U.S. cattle supplies are currently quite low, there is ample processing capacity and cattle demand at other facilities in Canada and the U.S. to process animals that would have gone to (the XL Foods plant),” the statement said.
Despite this optimistic prediction, Perillat said the cost of cull cows has dropped up to $200 per head as a result of the recall and said he expects further hardship the longer the plant is closed.
He said the biggest concern currently facing producers is when the plant will reopen and resume production.
“The timeline is really fuzzy right now as to when (the plant) will open,” he said. “We have a backlog of cattle in Canada that we need to take care of and prices will likely be depressed for a few weeks.”
E. coli bacteria was first detected on Sept. 3 in a shipment of meat destined for the United States’ market. It was tested at the border by American officials and came back with a positive reading. Contaminated meat from the facility has since been linked to 15 cases of E. coli in Canada.
The U.S. border was closed to XL Food products on Sept. 13 and has yet to reopen. Although this closure limits only the export of XL Foods products, Perillat said industry discounts to the U.S. have ballooned for all exporters.
“We’re often (offering) $8 or $10 discount to the U.S. We’re more around $16 discount to the U.S. market, so that has quite a big impact on our prices,” he said, adding that translates to roughly $100 per head of cattle.
The Canadian Food Inspection Agency began recalling ground beef on Sept. 16 – nearly two weeks after E. coli bacteria was first detected in meat processed at the plant – but has since expanded the recall to include more than 1,800 products sold worldwide.
The agency’s newest development came Monday with the announcement that two loads of inedible meat products would be transported out of the facility for disposal. None of these materials will enter the food chain.
XL Foods made a bleak announcement Saturday, when officials said 2,000 employees at the packing plant were being temporarily laid off. The following day, the company announced 800 of these employees were returning to work.
