Livestock Head Tax Creates An Uneven Playing Field
The new head tax on livestock in Lethbridge County creates an uneven playing field for local cattle feeders, hampering their ability to compete with U.S. firms and those outside the county and province. Canfax, a not-for-profit reporting agency, found that from 1981 to 2015, U.S. cattle feeders achieved an average $5.60 per head profitability advantage over Canadian operators. An additional $3, $4 or more per head will have a significant impact.
The $3 per head tax is slated to rise to $4 per head in 2017, with further increases expected to fund the county’s $252-million infrastructure plan. The tax could reach as high as $14 per head in the coming years, wiping away all or most of cattle feeders’ profit margins that run between $15 to $25 per head on well-run feedlots.
Cattle feeding operations in the United States and other jurisdictions do not have this kind of tax adding to their cost and eating away at their margins. Cattle feeders simply cannot compete under this kind of tax regime, driving Lethbridge County’s hard-won feedlot capacity, built up over the past 50 years, to the United States and perhaps to other provinces such as Saskatchewan.
Entire beef industry to feel impact The head tax hurts the entire cattle industry in Alberta and across Western Canada, from cow- calf producers to meat processors, and supporting businesses.
If Lethbridge County feedlots start to go under in the coming years because of the head tax burden, it will mean fewer options for Alberta and western Canadian ranchers to sell their cattle. This is much like Alberta’s oil industry that suffers a discount because pipeline capacity limits the number of customers for its product.
Ranchers across Western Canada will suffer an estimated $100 per calf reduction in calf prices, resulting in a $300 million loss per year. Hundreds of businesses that supply Western Canada’s ranching industry will also suffer.
Cattle feeding is a volatile business. Numerous cattle feeding operations have shut down over the past 20 years because they couldn’t stay competitive and manage thin margins. Still, Lethbridge County has traditionally been an ideal feed lot location. Dry weather, access to water, the entrepreneurial spirit of the community and the once-enviable business climate all contributed to this success.Without a fair solution, the industry faces a steady decline along with the jobs and prosperity it brings.
This campaign paid for by a group of concerned cattle feeders.