By the time this column is read, the sledgehammer of Trumpday, January 20th, will be hitting the economic fate of Alberta. No reprieve is in sight for agriculture or energy exports, although one wonders how much time will be needed to implement the tariff collection logistics. There is a hope that the tariff imposition will trigger negotiations. Perhaps, but I suspect they may not occur immediately, as any initial negative impact on US economic or consumer sectors may be months away. Tariffied Alberta energy exports could have an immediate effect, which could cause the new Trump administration to exempt those exports sooner for political purposes. That would be a positive outcome but would aggravate national unity. The outside hope would be that food exports like cattle and beef would also be exempted – but that is unlikely. The US is essentially self-sufficient in meat products if their exports are factored out, so it’s less of a US consumer impact concern. Unless big meat processors can mitigate the financial impact of the tariffs, Canadian beef at the retail and wholesale level will price itself out of the US market. A 25% tariff probably means that Alberta producers will end up paying the tariff one way or another – as usual. At the best of times, Canadian beef is less than 10% of the US market and can be replaced by redirecting US exports or bringing in more Australian and New Zealand imports.
But wait – there is more on the horizon for the cattle and beef industry in the coming year. To date, cattle and beef prices have seen new highs, with most sectors finally making the returns that they so richly deserve. For the producers’ sake, those prices and even higher need to be maintained, but there is a threshold of price pain for the consumer. That threshold has not been reached to date, but market prognosticators feel that a market correction seems ominous, perhaps by April. That correction may come sooner if the fallout from Trumpday takes effect. As always, cow-calf and feedlot producers will be the first to be hit by a sudden market downturn. One of the more aggravating aspects of the tiresome discourse on high food prices is that no consideration is remotely given to the reality that those in the primary food business are severely impacted by ever-increasing production and processing costs. But I digress.
There has been less concern about the Trumpday impact on Canadian grains and oilseeds exports to the US. Fortunately, Canada has a robust offshore export business that could redirect most of those US-bound ag commodities. What is ominous is a lower-than-average US corn and soybean crop, as noted in a recent USDA post-harvest report. That’s supporting prices for those crops that, for corn, bottomed out in September with prices below production costs. However, the looming South American corn/soybean crop could depress present prices. China could impact the market if it dramatically increases its corn import purchases. Corn prices impact feed barley prices in western Canada if supply issues are factored in. Expensive corn and barley will hit feedlot operators hard, but that may be offset if Trumpday collapses Canadian feeder cattle prices.
I suspect feedlot operators and processors are trying to hedge everything they can but are leaving open opportunities for low-priced feeder and stocker cattle due to Trumpday. Those selling such cattle will probably be holding back possible sales until the tariff issue is alleviated – although that could take months. Only the BSE crisis can be compared to the anxiety and instability the cattle and beef market is facing over the next few weeks.
The annual agonizing over what the weather will hold for agriculture in Alberta in 2025 seems of less concern than the market havoc that Trumpday will inflict upon us all. At this point, all the ag industry can do is pray for abundant rain for bumper crops and lush pastures everywhere. We will need such good fortune to offset the damage of an unmitigated Trumpday market nightmare.
In closing, the only folks who will survive the upcoming market calamity are supply management producers. How lucky they are, at least until the CUSA trade agreement renegotiations start. Dairy supply management, in particular, will have to be radically changed to appease Trump emboldened US renegotiation demands. Dairy producers would be wise to accept that reality and develop a more realistic milk marketing alternative – and soon – you heard it here first.
Will Verboven is an ag opinion writer.
