Cattle Industry Issues & Alberta Beef Producers Policies

[loric]

Fall, 2007

Calf Prices – Fall 2007
Weaned calf prices have been declining throughout the month of September and are placing significant financial pressure on the cow-calf sector. The combination of a par dollar (with the US) and feed barley prices well over $4/bu. are the primary reasons for the lower calf prices. If not for US live cattle at almost all-time highs, Alberta calf prices would be even lower this fall.

CAIS Program
Declining CAIS reference margins are the number one issue facing the CAIS program. Factors including drought, the BSE crisis, and an appreciating Canadian dollar have all contributed to the declining CAIS reference margins of Alberta beef cattle producers. The declining reference margins greatly reduce the support provided to producers from the CAIS program. ABP and the Alberta Government both recognize this fact and are working together to find a solution to this problem.

Rule 2
Rule 2 comes into effect on November 19. The rule allows all Canadian cattle born on or after March 1, 1999, as well as OTM beef from cattle of all ages, to enter the United States. We expect R-CALF to file another lawsuit requesting an injunction to prevent the Rule from coming into effect. The US congress may also have an opportunity to disapprove Rule 2. ABP and the CCA will employ all resources necessary to try and ensure a successful outcome for Rule 2.

Age Verification
Alberta Beef Producers encourage cattlemen to age verify their cattle using the CCIA database. Although producers have often not received direct premiums for age verifying cattle, age verification is a benefit to producers and the industry for a number of additional reasons. Age verification helps producers to avoid packer discounts associated with marketing under 30 month heiferettes that could otherwise fail dentition when inspected at slaughter. Secondly, age verification is important for producers who seek to export over 30 month live cattle to the U.S. when Rule 2 is implemented. Third, age verification is a prerequisite for Canadian cattle and beef to be exported from the North American continent. Failing to adopt age verification means your cattle and beef are locked into a captive North American market.

Biofuels
U.S. biofuels policies and the explosive expansion of the ethanol industry in the United States are major factors contributing to the large increase in feed grain prices. We are very concerned that Canadian and Alberta biofuels policies will increase the degree to which the cattle industry is competing with government policies and incentives for crop acreage, forage land, and feed grain. Alberta Beef Producers has taken a strong position in favour of purely market driven bioenergy policies that do not undermine the competitiveness of the Canadian cattle industry. We are working with the Canadian Cattlemen's Association to assess and try to manage the impacts of bioenergy development on our industry.

Enhanced Feed Ban
The CFIA’s enhanced feed ban came into effect on July 12. This measure is designed to remove all specified risk materials (SRM; cattle tissues that may contain BSE prions) from entering the animal feed, pet food and fertilizer systems. According to the CFIA, this rule was critical in ensuring that Canada received international “Controlled BSE Risk” status, and is expected to lead to the elimination of BSE from the Canadian cattle herd within 10 years. However, ABP and the CCA are very concerned about the extra costs of SRM segregation and disposal that must be borne by industry. We worked actively to encourage the CFIA to focus their efforts at the packer and renderer level without adding excessive requirements on-farm. The CCA has taken the lead in lobbying the federal agriculture minister to develop and implement a program that would help the Canadian beef and cattle industry deal with the additional competitiveness issues resulting from the Enhanced Feed Ban.

Country of Origin Labeling (COOL)
It appears as though COOL will come into effect October 2008 in some form. If a so-called “fix” is passed by the US Congress, there will be three categories of labeling for beef sold at retail in the United States when COOL comes into effect. Even with this “fix”, US packers must track imported cattle through their operations, thus providing a disincentive to use imported cattle. Ground beef can be labeled with a list of countries where product may have originated. To combat these labeling requirements, ABP has been helping to fund the Beef Information Centre to position Canadian beef in US markets so as to minimize the impact. CCA has joined with other affected industries (hogs and sheep) to form Canadian Livestock Producers Against COOL (CLiP COOL), a group calling upon the Canadian Government to challenge COOL under existing trade agreements.

Animal Health Act
ABP delegates and staff have been actively engaged in discussions with the provincial government regarding the new Animal Health Act. This Act replaces the current Livestock Diseases Act, and greatly expands the provincial government’s powers with respect to disease control measures, traceability, record keeping, cattle marketing and animal medicines. The regulations for this act are currently being drafted. Together with Alberta Cattle Feeders' Association, Western Stock Growers Association and other industry groups, we have been asking the government to justify how the proposed measures will improve animal health, and to consider the impact on our ability to do business.

Competitiveness Challenges
In addition to the impacts of the rising value of the Canadian dollar and increased feed grain costs, the competitiveness of our cattle industry is also adversely affected by the regulatory burden we face in Canada. A wide variety of federal regulations add costs and barriers to the development and sale of new grain varieties, veterinary drug approvals, imports and use of pharmaceuticals, animal transportation, and beef processing. We are pressing governments to reduce this regulatory burden while working to prevent the imposition of more regulations. ABP also recognizes that productivity of our feed grains is another serious competitiveness challenge and is planning a long-term funding commitment for more research and development work to improve this productivity for the benefit of both grain and livestock producers.

[rkaiser]

Thank you loric, gives everyone a chance to respond to ABP policy on the 9 subheading that you have introduced to us. I asked our zone rep if it would be feasible to have a forum on the ABP website. Must have decided that good old Agriville will have to do for now. Only hope that more than just the staff at ABP reads and responds.

Calf prices ---- Well "we" threw everything "we" had at getting the American border opened and "we" finally got what "we" wanted. An open border to the floundering American economy. Could we please put the loonie into perspective here and quit talking about it's strength and talk about the truth. The American dollar is weak ---- period. Has anyone bothered to take a look at the loonie compared to the Euro or the Yen? Just think what might have been if we would have used the work done by CBEF and acted on their advice to BSE test and get our butts in to Asia. Yes feed grain costs are high but we put all of our eggs in to one basket that ended up having a GWBush sized hole in it. So what can we do about it ----- not much right now I guess, but we could ASK THE GOL DANG JAPANESE IF THEY WOULD TAKE OUT TESTED BEEF AND "TELL" CARGILL AND TYSON THAT CANADIANS SUPPORT TESTING AND WE WANT THEM TO TEST.

Didn't mean to yell.


CAIS --- sorry no opinion. The program was flawed from the beginning and more wasted time and money will not fix it. Scrap it and start from scratch. No suggestions on where to start --- I would rather just have a fair price for my cattle and beef rather than have to farm the government for profit.

Rule 2 ---- Another salmon run for the packers, but finally some good news for the purebred industry. Won't be many cows crossing the line with legs still on but the plants will be picking up steam and mooooovin boxes by the truckload. The cull that a few folks called for a few years back is going to happen but instead of smoke in a pit it will be green in the pockets of Cargill, Tyson, and their little Canadian cousin who some believe is connected to the purse strings of one of the above. Could be asking Cargill and Tyson to test the cattle and send the beef to Asia, but that would just screw with their plants in other parts of the world.

Anyone in that there ABP office getting it yet. We are dealing with two Global companies that do not give a shit if we live or die. If the cow numbers drop hard enough they will simply bull doze the plants that have paid for themselves many times over in the last 4 years and build new one with the profits in Uruguay, Brazil, Argentina, or what ever other country offers them a great tax incentive like we Canuckleheads offered them to come on up.

Age verification ---- What is that - an unscientific attempt to open markets????????? HMMMMMMMM. And guess what - this one comes directly out of the producers pocket with out even trying to hide it in the "trickle down illusion". Make the verification a private matter between the producer and the government and then allow the producer to sell the information to the buyer of his stock ---- if they want it---- after they buy the cattle.

Biofuels ----- raise cattle that can produce beef on lesser quality rations.

Enhanced feed ban ----- Beg and plead with the feds to help the poor packer out and give them more money LOL
OR BSE test the cattle and be done with it.

COOL ----- Another choice for us to take the side of Cargill and Tyson and help them to continue to use deception to sell beef ------- or tell them that we want to identify our product as "Product of Canada" and we want that label to go along with our superior product until it reaches the consumer.

Time for ABP/CCA and every producer in Canada to grow some balls and tell Cargill and Tyson what we want instead of the other way around.

Gotta go for supper --- hope to see more responses later.

Chow

[grassfarmer]

I'll throw in a couple of different ideas I think ABP should be acting on but probably isn't.
1 Animal health - Review Canada's policy on FMD with regard to vaccination. Watching the current outbreak in the UK and the mayhem it is causing far beyond affected herds I believe vaccination is the way to go.
2 Animal Health - Review Canada's policy on Blue Tongue. In light of the severe outbreaks across Northern Europe this year we need to rethink our policy re the US imports and possible vectors. This was a disease "out of Africa" that has moved first to the Mediteranian countries and now to northern Europe. Being blamed on global weather changes and warming. Let's get on this one before it becomes an issue.

[rkaiser]

Sure was hoping to see more input from others here on Agriville. No time? No opionion? Given up? Or do you all agree that ABP has taken every step needed to date and should be simply left alone to run things the way they see fit?

How about some response from ABP to my post? No time? No Opinion? Given up? Or do you all think that BIG C members should just take over the reins for a while and take their kick at the cat? Can't really get much financially worse out in the conventional Canadian cattle world, can it?

[BFW]

Rkaiser, I believe that the cattle industry is about to begin a down-sizing that will take us back to levels of cattle numbers not seen on the Canadian prairies since the mid 1980's. What as a new ABP delegate, do you think the ABP or CCA can do to help with this transition?

[rkaiser]

We have to take back control of our industry. And that simply means that we support the needs of producers first. If that means we have to legislate policy that does not fit the ideals of Cargill and Tyson - so be it. If that means we buy the ranchers beef plant and support every other packing plant project that wants to truly sell Canadian beef, we buy and we do. We will shrink no matter what we do, and when we do, they may abandon us anyway. Good friggin ridence I say - they when can start to build our industry up again from the bottom in a more practical manner.

We need to court more export markets than the USA. Yes they buy a lot of beef, and they are our next door neighbor, and they have money (although it is worth less every day), but their very own multinational companies have proven that they will even black ball their own countrymen to make a dollar let alone the Canadian cattle producer.

We have all been buffaloed into thinking that there is no profit in BSE testing for Asian demand, or dropping hormonal growth promotants for the ever increasing beef demand in the E.U. by two companies that sell most of the beef produced in this country. Two companies who will fill those two lucrative markets from plants that they own in other parts of the world. Rather than promote and even attempt to sell the merits of a fine Canadian beef product, they will say and have people believe that they can produce the same thing in Brazil or Australia and sell it to them cheaper. Bull Shit - but if we don't stand up for ourselves who will tell them otherwise.

How on earth can we continue to cater to two companies that would cut our throats rather than work with us to identify and specialize our product?

So how do we accomplish this task. First ask the majority in a plebiscite. Then can every ABP or CCA delegate and employee who does not agree with the majority. If that plebiscite says that we follow the lead of the current ABP/CCA mandate to suck the packers tit, then I go back to selling my beef and bulls in what may be an even smaller niche market.

If the majority says what I think that they will say - we start to build our own industry and begin legislation to stop the takeover of our industry by two bloody companies with less infrastructure in this country than Subway. Find some innovative ways to stop the ownership issue. Packers only need to be packers UNLESS they are producers. I don't know how we could do it, but some of the bright minds that are out there waiting for a place to start could come up with something, I am sure. What is that old fellows name who has brought up the packer ownership issue at every ABP AGM for the last 5 or 6 years?

In the latest Western Producer - Brian Evans says it is the industry who has not asked for the BSE testing issue to be dealt with by government. Is he passing the buck? OR do we need to truly ask the industry and not simply those in the drivers seats at ABP/CCA who can't get the American packer out of their wet dreams.

The feds have pumped another few million into the CBEF coffers. Can you imagine if CBEF could actually make good on all the preliminary work they have done in Asia, and would OPEN AN office in Europe. Under our current system of promoting the hell out of our product with BIC and CBEF money and then hoping that Cargill and Tyson sign a PO from Canada rather than another plant, somewhere else in their hard worked for world, we might as well throw the money away. We could have bought most all of the product shipped to countries besides the USA in the last 4 years with the CBEF budget, dumped it in the Ocean and saved the shipping. We need packers or wholesalers who will use the work of our checkoff dollars to sell OUR product, and not laugh as they sell someone else's product while keeping us captive in our own outhouse with a Canadian flag on the roof.

A major change like you say is coming, and I will not argue with Jeff, needs another major change to counter. An association of feeders who will "damn well show those packers who's the boss" will not work. We will all need to work together and work together in a very different way to stop this country from becoming an importer of beef --- just like the E.U.

[rkaiser]

Sorry for all of the reading we all may have to do to understnd the problems and find the solutions, but I could not resist posting this one amazing solution. The New Zealand beef story is another, and believe me there are more. I would love to see Canadian producers live out their own story.


Against All Odds: The Danish Pork Industry Success Story
If we were to analyze the pork industry in Denmark using conventional
indicators of cost competitiveness, we would find that, relative to Canada:
• land in Denmark is scarce and high priced;
• Danish feed costs are inflated by the effect of the European Union’s
Common Agricultural Policy;
• processing lines in packing plants are far slower, so that fixed costs
must be spread over a lower throughput;
• labour costs are almost three times as high; and finally,
• Denmark is much further from the lucrative Japanese market, resulting
in higher transportation costs.
This basic cost comparison suggests that the Danish industry should
be highly uncompetitive in world markets. The export statistics tell a
different story.
In fact, Denmark is the world’s largest exporter of pork, accounting
for nearly 30% of global trade. In 1999, this small country on the northern
edge of Europe accounted for 29% of Japanese pork imports. Denmark
competes head-on with Canada for a 17% share of US imports.
Moreover, the pork industry in Denmark is not heavily supported by
8 Hobbs, Cooney, & Fulton
EU subsidies; it receives relatively small, intermittent export subsidies—
not nearly enough to support a global exporting strategy. The answer
lies, rather, in the organization of the industry and the vertical co-ordination
of activities from breeding to production, slaughter, processing,
and distribution.
Ninety-seven percent of Danish production is channelled through
three farmer-owned co-operatives that slaughter and process their
members’ hogs. All the co-ops belong to Danske Slagterier (DS), an
umbrella organization that undertakes marketing activities on behalf of
the industry, and conducts research on breeding, production, processing,
and markets. Communication and co-operation are the watchwords
of the Danish industry. Danske Slagterier gathers intelligence on consumer
preferences in key markets and uses this information at all stages
of the chain, improving quality and responding to consumer needs. It
was market research, for example, that determined that Japanese consumers
prefer pork that is deep red/pink in colour. This led to research
both in controlling meat colour through genetics and in methods of
objectively grading carcasses on the basis of colour. Ultimately, these
initiatives will enable the industry to produce “Japanese-quality” hogs
specifically for that market.
Through close working relationships with—or ownership of—
processing and distribution firms, processors are able to tailor their
products to the needs of particular markets and market segments. The
emphasis is on meeting the needs of specific markets. Sophisticated
carcass-grading techniques provide feedback to farmers on the quality
and suitability of individual carcasses. Traceability, food safety, and quality
assurance are all top priorities, and are all facilitated by close vertical
co-ordination along the chain.
The Danish case demonstrates that the value-chain concept can be
applied on an industry-wide scale. This is not how we normally think
about value chains—it is, in fact, quite different from some of the other
value chains that are discussed in this booklet—but it demonstrates
some of the same principles: communication, co-ordination, and co-operation
are central to the international competitiveness of an industry, even
to the extent of overcoming natural cost disadvantages and making it a
global leader.
For a more detailed explanation the Danish experience, see Hobbs

[grassfarmer]

Yeah Randy in response to your earlier question - "No time? No opinion? Given up?" I think one of these options fits most Alberta producers. I'm in the earlier category for the moment - too busy trying to get some projects completed before winter to respond too much on this topic. Fear not, will come armed with a "top 10" list of suggestions in resolution form come Fall producer meeting time. Don't want to divulge them all in public for now, forewarned is forearmed and all that ;o)
It will be a tough battle ahead though - the vocal minority assaulting the established organisation that claims that producer apathy equals producer satisfaction.
Man, I can't wait to see this year's ABP video presentation, complete with fancy- dress, make-believe cowboys, telling us all how well the "industry" is doing and how we are all moving ahead great style.