Strikes at Cargill plants in Guelph and possibly Calgary reveal a deep vulnerability in Canada’s beef industry, from heavy reliance on a few large facilities to the challenges of poor working conditions. As the price of beef soars and consumption declines, the sector faces an urgent need for modernization and investment.
Nearly a thousand Cargill workers in Guelph have been on strike since May 26. The Guelph plant is one of the largest beef processing facilities in the country, and the largest in Eastern Canada. Additionally, the Cargill Case Ready plant in Calgary could also see its workers picketing later this month. Labor conflicts in beef processing are not new and the pandemic has highlighted the dark side of working conditions in this sector. Generally speaking, the beef industry is really in serious trouble.
Only the large processing plant in Guelph has the capacity to export and ship beef outside the province. If the strike extends beyond a few weeks, consumers in eastern Canada, including those in Quebec, could find beef imported from the United States or even Mexico in meat counters. All this could favor Bœuf Québec, without increasing meat prices, because they are already quite high.
The potential strike at the Calgary plant could also disrupt the beef market in many parts of the country. The meat is brought from Cargill’s main beef processing facility in High River and then transported to Calgary, where workers cut it, weigh it and package it. Packaged products are shipped and distributed the same day. The domino effect created by a shutdown Calgary plant would have major consequences.
Canada produces excellent beef, but processing has always been its weak link. Just three large plants process about 90% of all the beef raised in the country. These factories rely heavily on foreign workers, as recruitment still remains very difficult due to difficult working conditions.
Climate change and complexities affecting supply chains have slowly made beef a luxury item at the grocery store. Due to droughts affecting stocks in the United States and Canada, some cuts of beef have increased by almost 50% since the start of 2020. Prices have seen incredible volatility. Ground beef, known for its price stability and affordability, increased by 11%, according to Statistics Canada. With these significant price increases, beef consumption is decreasing significantly. Each consumer is expected to eat less than 24 kg of beef in 2024, the lowest level in almost 50 years. This decline has reached 38.4% since 1980, and most experts expect this trend to continue.
Oddly, despite its luxury status, the beef value chain has always been managed with great frugality. For pork and chicken, the processing sector has benefited from significantly more investment in capital and automation. New factories sprang up in Hamilton, London and other cities across the country. However, the beef industry has not seen any new plants in years, making compliance with recent food safety and workplace regulations very difficult.
This is not to say that beef processing is dominated by underfunded players. Take the example of Cargill, a privately held American company with a 159-year history, which generated annual revenues exceeding $170 billion in 2023. Net profits, however, remained below $4 billion, demonstrating how profit margins remain low in the food industry. Cargill employs more than 160,000 people in more than 70 countries. JBS, a massive foreign company, controls the other federally licensed plant in Alberta.
These work disruptions point to a much larger problem. Every time a plant closes, for one reason or another, beef producers find themselves held hostage without compensation while retail prices rise. As for the striking workers, it’s hard to blame them, because they know that few other people would want to do the job, so why not ask for better pay? Unless automation takes a larger role in beef processing, the industry will continue to operate archaic plants worthy of the 1980s.