Province Takes Over Alberta's Cattle Industry

[farmers_son]

Thinking about this some more...any money we get from this program will come off any payment we might have expected to receive from CAIS. But we lose any age verified premiums and have to do all this new work.

Make no mistake about it in the coming years the government money will be replaced with fines if we do not provide the government with what it wants.

The winners from this announcement are the packing plants who will save millions of dollars that they were paying for age verification, plus the governemnt will be buying processing equipment for Cargill and Tyson. The losers are the cow calf guys who have lost some of their freedom and the ability to earn some profit from the marketplace. The government gets what they want... control over the cattle industry, for no money at all if you consider that money was previously announced anyway plus a new revenue stream going down the road from fine and punishments handed out to cattle producers who do not tow the government line.

When it comes to providing the governemnt all the information they think they need savvy producers will just provide the governemnt BS numbers like they already do with Statscan. Anything else will be capitulating to a heavy handed government attempt to take over our industry.

[rkaiser]

Take it over from "Who" farmers_son?

[jensend]

exactly my thought. cattlemen are now going to have to pay the price for turning their industry over to the packers. who will be the more benign caretaker - govt. or cargill and tyson? perhaps if cattlemen get on the ball it will be a step along the road to taking back control (unlikely since we're talking about govt.) or making the industry viable again. probably the alberta govt. could see the cattle disappearing out of alberta as a significant economic factor unless something was done. abp and cca are taking a passive (to be charitable) stance while the industry suffers a slow death.

[grassfarmer]

Farmers_son (and Sean to an extent) I just do not understand your opposition to this. It seems you are having a total lack of vision of the potential here. Seeing the US as our only marketplace, always trading at a basis discount to US cattle with MCOOL about to be introduced does not fill me with high hopes of a prosperous future. On the other hand if this plan succeeds in uniting the AB industry, coming forward with new and exciting brands, backed by research and tracking from genome to plate level with Government backing both morally and financially might open a lot of doors for us. It might make us stand out as a country with a unique and high quality product to sell on the world stage. What if even some of our beef carcases can become worth $200 by accessing new markets? There is more to consider than losing $30 age verification premium on a few of the fat cattle kill. Open your eyes to the opportunities - isn't this supposed to be the Alberta way?
Sean, your packing plant may indeed have EU certification and protocols in place but how much beef are they currently shipping to Europe?

[farmers_son]

From here on in any money coming from the province to the cattle and hog industries is going to be conditional on producers following practices and jumping through hoops that are mandated by the Province not the market place. Previously we would occasionally receive support in times of need but producers remained free to manage their operations based on their understanding of the marketplace. It is my understanding that this new approach is not unlike we would see in Europe only without the same level of support but a similar level of government control. Even with CAIS we remained free to farm as we wished, not so any more. As I said this new Alberta model is much like my understanding of the situation in Europe. But it gets worse….

It is not clear to me how any of the proposed benefits from this scheme will trickle down to producers as the price of our live cattle will still be determined in the U.S. minus a basis only now Alberta producers have to bear the extra costs of the government mandated policies.

Our two Alberta packers do not operate under some kind of benevolent margin program where everything they make selling Alberta beef is passed down to Alberta producers minus some small stipend for the costs of operating their plants. Cargill and Tyson pay only the Alberta producer as much as it takes to keep the Alberta fat steer from going across the line and anything they make beyond that is theirs to keep. Anyone who believes different is dreaming in Technicolor.

Unless you believe Alberta Government can create a made in Alberta live cattle price, Alberta producers are going to have to shoulder extra costs with no benefit to them once the first year financial incentives end. We achieved significant benefits from being harmonized with the U.S. which was very important because our live cattle prices were established in the U.S. and we needed to operate under a similar cost structure. This new program may eventually, years down the road, create a competitive advantage for Alberta beef but not Alberta cattle producers. Unless the Province is prepared to establish a supply management system with artificially fixed prices in order to ensure the benefits get passed down to the Alberta producer we as the cow calf producer will not reap the rewards. The rewards will not trickle down past the packing plant. Alberta packing plants will never be required to pay Alberta cattle producers any more than it takes to keep that feeder or fat steer from going south of the border. The Province can make us do whatever it wants I suppose but I do not see how the price of our live cattle will change one cent. Actually it is going to change $30 a head, downwards, because with one stroke of the pen Groeneveld has made it so that money that used to come to me from the marketplace now stays in the packers hands.

Does anyone believe the province is willing to commit into perpetuity to pay producers $300 million a year to provide age verification, premise identification, vaccination, animal welfare practices, and process of rearing and breeding information or is it more likely that this will be one or two year program after which we will be fined, punished or as the Minister tells us… exit the industry.


There is no real financial benefit from this program anyway. Anything you get will be deducted off of your CAIS entitlement. Only this program is countervailable where CAIS is not.

Bottom line, this program only benefits the packers. The province is spending millions of dollars to upgrade processing equipment for the American owned packers, the packers no longer have to pay producers for age verification, or any of the other protocols, and there is simply no means established in this marketplace whereby any of the benefits that may very well accrue will ever be paid to Alberta cattle producers. Our two Alberta packing plants will continue to only pay producers just enough to keep cattle from going south. There is simply no reason they will ever pay more, especially now the Government says they do not have to. What producers will see however is more and more fines, more paper work for no pay and dramatically more Government involvement in the industry, ultimately fewer producers.

I see the potential and sure there are benefits from this but they all go to the packers.

[rkaiser]

Amazing speech batman! You would think you were going to lose your job or something....

[jensend]

farmers_son you seem to be lamenting the fact that the prov. govt. did not allow the dismantling and relocation of the alberta cattle sector to the united states. what is the option to trying to revitalize beef production in alberta? somebody had to do something or the industry would have been a small fraction of pre-BSE size. abp's 'leadership' was killing what has been a vital part of alberta's economic development.

[farmers_son]

Actually I will lose my job. I depended upon that $30 a head age verification payment to make my small feedlot viable. It amounted to quite a bit of money, really made a difference for me. Now I am going to have to sell my calves. I will still be farming and raising cattle but I am done fattening calves.

But more than me, producers need to be aware that this announcement amounts to a transfer of wealth from themselves to the packing plants and that from this point forward the packers do not have to use the marketplace to acquire something of value from producers. The government will force producers to do it on the packers behalf or else as Groeneveld said the producers can exit the industry.

[farmers_son]

Jensend, other than the direct injection of cash, how is this going to make a difference to Albertas cattle industry? How is it going to raise the price of live cattle in this Province or do you believe we can create a made in Alberta live cattle price? I would love to create a local price for live cattle, however our live cattle price will remain determined in the U.S. where there is our only, I mean ONLY, competitive pricing for live cattle.

Our live cattle price is tied to the U.S. price minus a basis not the price of what Alberta beef actually sells for or where it actually sells to. That is a critical point that needs to be understood. The packers profit however is a direct result of the difference between the live price and the beef price so if this initiative works guess who is going to reap the benefits. Not you or me. But whether it works or not you and me bear the cost.

As long as there is grass in Alberta there will be cattle. But clearly how we will get paid for those cattle has changed. No doubt we were going to see changes in the Alberta beef industry but the solutions to those challenges cannot be taken out of the cow calf producers hide for free.

When the government mandates solutions that should have come from the marketplace it takes away the profit incentive to make change. I guess the packers have more profit incentive than ever though. This means millions for them, which all flows to their U.S. parent companies anyway.

There will always be government know it alls who think they know what is best. But in a free enterprise economy we depend upon the marketplace to determine what needs to happen and profit has to be what drives our industry. Groeneveld apparently does not understand that.

[farmers_son]

Groeneveld's constituency includes High River and the Cargill plant. Go figure...