Province Takes Over Alberta's Cattle Industry

[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...

[blackjack]

...sometimes f_s i have a hard time figuring out your logic...what was that 30 bucks doing for you ...when you were losing 200 bucks fattening them...

[per]

Arno's constituency has Lakeside in it. Big deal. Every minister has to be from somewhere. Having a hate on for a guy clouds your usually well grounded perspective farmers_son.

[jensend]

hopefully this is a step towards rationalizing the cattle sector of the aberta economy. by that i don't mean the usual get rid of some producers; i mean take some steps to make the industry more viable by diversifying markets and differentiating product. this was not happening under the 'market' (read oligopoly) conditions presently in existence. farmers_son you seem to want to assume the market was working when in fact your industry was collapsing. in spite of your great fear there will have to be changes.

[grassfarmer]

Sorry farmers_son but your argument is still making no sense. With the new programs producers will remain free "to manage their operations based on their understanding of the marketplace." - no change there.
"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." Couldn't agree more - which is why we need to establish new, alternate, higher value markets which plants like Sean's are ready to exploit. This program may help us break the mold. Nothing else on the table will and ABP/CCA have clearly no better ideas to suggest to improve the situation.

"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." - How many years out of date is that? our industry is in ruins now supposedly because we cannot compete due to the higher costs established in Canada with extra BSE regulations, higher feed cost structure and now the threat of MCOOL which will increase the discount on Cdn cattle going to the US or even dry up the demand for them totally.

"There is no real financial benefit from this program anyway. Anything you get will be deducted off of your CAIS entitlement." How was CAIS working for you? I thought you were always condemning it as useless because producers had no production margins?

Another of your quotes was "...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." That is, and always has been, the problem - packer concentration. Too bad the ABP/CCA stance has been to refute and ignore this cause at every turn and how ironic that you are pulling it out now as something to defeat a proposal engineered by the Ag minister to bring the industry back from ruin caused largely by packer concentration.
At least the minister finally seems to realise that by creating opportunities in new and diversified marketplaces for our beef there might be a chance to break the stranglehold. With a little Government support and encouragement plants like NV might actually be able to export to the EU as they always planned to.
Note also in part 5 of the plan "Attract foreign investment that helps secure the long-term commitment of international customers” Imagine that … a European country might choose to invest in Alberta’s beef sector as a means to secure a supply of high quality, fully verified product produced to standards that few in the world could actually compete with. I much prefer that to your tunnel vision view of remaining the least cost supplier to the US with all the growing price problems of their subsidized ethanol byproduct advantage, MCOOL protectionist barriers and the currency issue.

[farmers_son]

I guess some of you think Cargill George knows best. But please understand this… People may see benefits from accessing new markets and so forth. But what makes you think you are going to get paid for those benefits? There are unquestionably benefits to age verification and I used to get paid for that benefit but no more. Cargill George says the packers will now get that information for free or else no subsidy money for me. Cargill George knows what is best for the industry and the producer beatings will continue until we realize that.

Cargill George can force me to do anything he wants. He can force me to record any information he wants, he can force me to handle my cattle a certain way and breed my cattle any way he wants, he could force me to haul my cattle a certain way, feed feeds he wants, and it could go on and on. After all Cargill George knows what is best. If the marketplace does not have to pay producers for doing the right thing and instead the government can force you to do what it thinks best or no subsidy money for you then what assurances do you have going down the road that you are going to realize any benefit at all, other than you may still get your subsidy?

And mark my words carefully, those subsidies will quickly be replaced with fines.

But I ask you to consider if Cargill George has our best interest in mind or does he have the packers best interest in mind. Some may believe what is good for the packers is good for producers but I tend to believe that what is good for the packers is good for the packers. And no one should ever mistake the fact that this is good for the packers.

[grassfarmer]

Or you could rephrase that a little:

"ABP/CCA have spent the last 5 years telling us that what is good for the packers is good for producers but I tend to believe that what is good for the packers is good for the packers."

"I think in this case I'm inclined to think George has the interests of producers in mind whereas ABP/CCA continue to have the objective of the packers in mind. Why else would you opt to perpetuate the captive supply situation, largely supplying only the US market at an ever increasing discount to US producer prices due to currency and MCOOL??"

[jensend]

when an unofficial spokesman of the abp starts calling anybody a puppet of the packers we've gone from the sublime to the ridiculous. to read farmers_son's posts you'd think the alberta govt. had just gutted a thriving industry instead of trying to drag a half-eaten carcass into the twenty-first century.

[farmers_son]

Grassfarmer: Isn't tying subsidies to government mandates like age verification, premise ID and so on what they do in Europe?

[grassfarmer]

Not really, subsidies used to be tied to production #s ($x per animal continuing the post WW2 era strive to increase production) Then subsidies were "extensified" to encourage less intense production(more $ per animal if you carried 2 per hectare instead of 4) Then subsidies were "decoupled", that is to say disassociated from production - if you used to run 100 cows now you can run one cow and get 90% (but this % is always decreasing)of the subsidy you used to get. It's more land based than numbers of livestock based. The biggest criteria now is to comply with environmental and anti pollution regulations to get the subsidy.

The regulations governing birth date records, movement records, drug administration etc have been around for a long time but were greatly increased around the late 1980s and again when BSE was at it's height in 1996. Europe in general is way more regulated - I think it comes from their longer history. The older civilisation gets the more complicated and regulated it seems to make things. Look at Italy - their Roman empire ran most of Europe BC and now they couldn't run a #%@#-up in a brewery.
But I digress, it's a different world there though, more people, not enough land (or desire to tolerate)agriculture. It's ironic that their extensification and decoupling efforts were designed to reduce agricultural production and now they are screaming about the high cost of food they need to import.
Makes for some great opportunities if we are progressive enough to exploit them. Having a system in Canada that compares to what they already have in the EU with regard to traceability, health records, known feed protocols etc will give us the chance to enter that market that few other countries have - I really think this is a smart move by the AB Government.

[rkaiser]

Best entertainment I have had in weeks farmers_son....

I'm going to take my cheque from George and work on some of the export markets that Canadian Celtic has been looking at and now seem more realistic to pursue.