CAIS Question for ABP or farmers_son

[rkaiser]

Can anyone tell me about how or why cows were one of the only commodity's not included in the calculations for P1 minus P2?

It seems that cow inventory values were sacrificed some how when the finance chair of the time for ABP saw no need to push the issue.

CAIS seems to pay those who simply follow the norm. I guess that is what it was designed for. A little hard to keep taking the fact that most of the hard work and money spent by folks who either direct market or create a market through advertising like us purebred guys is simply put in the pocket of those who change nothing through CAIS.

I guess I have pointed out two separate issues, but both need discussion.

[farmers_son]

I believe you are referring to the CITI program. This is the program that was to pay Alberta producers for the change in value of bred heifers but it was being overlooked. ABP discovered this problem and lobbied the province and the Federal Government with positive results amounting to millions of dollars in additional payments going to Alberta producers. Bred heifers are now included.

You might want to check out:

Fact sheet - CAIS Inventory Transition Initiative (CITI)
http://www.afsc.ca/doc.aspx?id=91

Quote “What is the difference between market commodities and productive assets?
Market commodities are intended for sale. Examples include feeding and finished livestock, as well as in-field and harvested grains. Productive assets (non-market commodities) are intended for use in the production of other commodities and are commonly kept-over for several production periods. Examples include breeding livestock.” End of Quote.

Yes cows and bulls are considered productive assets. Like sows and boars are productive assets. And yes these productive assets change in value just like other productive assets such as machinery and land change in value. But the CAIS program does not cover producers for the change in value of productive assets. If it did the increase in land values would mean no one would ever get a payment.

I know I like getting a cheque from the government as much as the next guy and I will be happy to cash my cheque for the change in value of my bred heifers that ABP got me. But I do understand that getting paid for the change in value of productive assets like breeding cows was not ever going to happen. I would point out that when commodities are included, you may get paid when the value of the inventory drops but it works against you when the value of the inventory increases.

I think if you want to focus on CAIS the bigger problem is not that cows were not included in the CITI program but that cow calf producers have no reference margin left. Without reference margin nothing works for the cow calf producer, even the CITI calculations required reference margin to trigger a payment. If the change in value of breeding cows was included (not going to happen no matter how much we might want it to) without reference margin it would not generate a payment to producers anyway.

Another issue with CAIS is there are still producers out there who have advance overpayments dating back to 2004 and the province is going to come knocking on our doors saying where is the money. Big problem… Kind of reminds me of the sub prime thing in the States. That advance money was to be repaid from future CAIS payments but as a result of lost reference margins and an over reliance on CAIS to carry the ball through the BSE crisis the CAIS program has not generated payments to producers through some of the worst years in the cow calf business. Where producers are going to get the money to pay the province back in this economic environment is beyond me. Could be the straw that breaks some producer’s backs. The money certainly is not coming from CAIS.

You say the CAIS pays those that follow the norm. Actually as far as cow calf production goes, CAIS is not paying very many. CAIS was supposed to be commodity neutral but if you look into how the program works it does discriminate against cow calf production which has cycles of profits and loss that are much longer than the tiny 5 year window allowed within CAIS.

But hey Rkaiser, I think you still have ABP’s phone number. I bet you already know all this.

[grassfarmer]

This doesn't relate directly to the questions raised but my god the CAIS system needs a big clear out of useless staff.
I've been following the Federal Government's interest free advance program since October hoping to get the advance to cashflow retaining ownership of my commodity calves through to at least yearling age.
CAIS have other plans as they still haven't come up with a 2006 margin for me - first they required additional information, i sent it and they misplace it, I send it again and still no margin calculation. Of course this program needs a positive reference margin to qualify so will exclude many producers in any case. To my mind this was a worthwhile program that could have helped a lot of producers last fall but the effect has been negated by a useless CAIS administration.
Now we are hoping to qualify for the new Federal advance program beginning in April. It doesn't rely on positive reference margins so should help most producers.

[rkaiser]

I was not talking about the CITI program and if you are thanking ABP for that it's a matter of your own misunderstanding and improper book work on your part. I did not receive a prop up from the CITI program as my bred heifers were in the proper place on the original forms.

The "productive asset" thing has helped me out however. Putting cows in the same category as land as a productive asset seems ludicrous to me but must have made sense to the finance chair at ABP/CCA at the time of negotiations.

Cows do not last forever like land does and certainly have an effect on year to year profit. Especially the cull cow aspect.

Thanks for posting farmers_son. I now see where ABP/CCA was coming from when they lost any potential for cow calf producers to receive inventory adjustment payments from CAIS.

Maybe some other people like the ones invited to the ministers round table can help fix this problem that is obviously unfair to the cow calf sector.