CHARLEBOIS: Beef on the brink: Labour strikes expose cracks in Canada’s meat processing industry

Nearly 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

However, 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 5-6. 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.

 

 “Canada produces excellent beef, but the weakest link in the beef sector has always been domestic processing”

 

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 prices will be significantly impacted, given that they are already quite high at the meat counter.

This 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 costs inevitably rise with keeping livestock, and quality is also impacted. They may need to transport their herd to Alberta or the United States to sell. Regardless, the distances to harvest the meat would clearly be greater and more costly.

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% 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 United States and Canada, some beef cuts have increased by almost 50% since early 2020. Prices have been incredibly volatile. Ground beef, known for its price stability and affordability, has increased by 11%, according to Statistics Canada. With higher prices, beef consumption has significantly decreased. Each Canadian is expected to consume less than 24 kg of beef in 2024, the lowest level in more than 50 years. That’s a drop of 38.4% since 1980, and most experts expect that trend to continue.

Despite its luxury status, the beef value chain has always been managed with acute frugality. In pork and chicken, the processing sector has seen more capital investment and automation. New greenfield plants have been built in Hamilton, London, and other parts of the country. However, the beef industry has not seen a new plant in years, making it more difficult to comply with new food safety and working environment regulations.

It’s not as if beef processing is dominated by underfunded players. Take Cargill, for example. The company, a privately held U.S. firm with a 159-year history, reported annual revenues exceeding $170 billion in 2023. Net profits, however, were less than $4 billion, demonstrating how low margins are in the food industry. Cargill employs over 160,000 people across more than 70 countries. JBS, another foreign company, controls the other federally licensed plant in Alberta and is also a massive organization.

These 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, as they know few other Canadians would want to do the job, so why not ask for more money? Unless automation takes a greater role in beef processing, the industry will continue to operate archaic plants worthy of the 1980s.