Thank you, Madam Chair, and I thank everyone on the committee for allowing us to testify here.
Good afternoon. My name is Bob Lowe and I'm a rancher and feedlot owner in southern Alberta. I'm also the current president of the Canadian Cattlemen's Association, the national voice of Canada's 60,000 beef operations. With me is Fawn Jackson, director of government and international relations.
The beef industry is the foundation of jobs for 228,000 Canadians and contributes $17 billion to the Canadian economy. As you've likely seen in the news, challenges brought forward by COVID-19 have resulted in a number of Canadian and American meat processing facilities significantly reducing their processing capacity.
Due to these reductions in processing capacity, we estimate that we have built up a backlog of 100,000 head of cattle that are ready for market with nowhere to be processed. As a result of COVID-19, this group of cattle alone has dropped in value from $250 million to $166 million. It costs approximately $400,000 per day to feed and care for these cattle. The loss in value is only a small portion of the economic impact, as all market-ready cattle have dropped significantly in value and financial hardships are rippling through the full beef supply chain. We can't stress enough how important swift action is to mitigate the scale of the problem we are faced with.
The CCA estimates that if this is left unaddressed, the Canadian beef industry will lose half a billion dollars by June on market-ready cattle. Again, this doesn't account for the full supply chain impacts and the growing costs of feeding and caring for cattle that would otherwise have gone to market.
It has been two weeks since the Cargill plant at High River shut down, removing 36% of Canada's total beef cattle processing capacity. That plant's reopening today does not change the urgency of our recommendations, as it, along with other packers, both in Canada and the U.S., is and will be operating at significantly reduced levels. We estimate that 6,000 to 9,000 head of cattle per day are still being backed up within the Canadian beef supply system.
Eastern Canada was dealing previously with these shortages, and you just heard from Rob about the problems in Ontario, so I won't go into those.
As we have stated from the onset of COVID-19, the beef industry has three immediate recommendations.
First is to establish a set-aside program. This program would help manage inventories within the beef supply systems and help us avoid a large backlog of market-ready cattle.
Second is to address the sky-high premiums that have made our main risk management tool—price insurance—unusable. We would also like the tool to be made available to the Atlantic provinces. This program is very important to our young and new producers.
Third is to adapt the advance payments program, similar to what was done for canola producers last year, to provide added liquidity and financial flexibility.
These changes will enable cattle producers to market their commodity at the best time and actually make reinvestments in their herds.
The CCA has also stressed the importance of assisting with challenges at processing facilities. It should be noted that the existing suite of BRM programs comes nowhere near being able to address the current challenges we are facing. For example, AgriStability has only 31% total farm enrolment, and for the beef industry the utilization rate is much lower due to the structure of the program not being suitable for beef farms. If our recommended changes are made to this program, it will be more usable by the beef industry in the future, but it should be noted that this program was never designed to be able to address a pandemic.
Utilizing AgriRecovery, another one of the BRM programs, with the provinces could be one method through which funding could be quickly delivered. However, this is yet to be completed. Furthermore, as Rob mentioned, the current funding announced—the CERB, wage subsidies, loan programs or otherwise—is almost entirely unusable by our industry.
The Canadian beef industry knows the impact of hard economic times, having lived through them during the early 2000s. Following the difficult financial times of BSE, 27,000 beef farmers exited the industry, marking it as one of the largest economic, social and environmental structural changes in Canada's agricultural industry. We lost a generation of young producers during the BSE crisis, and today our younger and newer producers are once again the most vulnerable group in our industry due to the extreme hardships we are currently facing. We have to do everything we can to find ways for all producers to weather this storm, and immediate multi-faceted action is needed.
We look forward to your questions.