Ok, Here's another idea.

[kato]

At the risk of starting too many threads, how about this idea?

Anybody else here old enough to remember the farm debt crisis of the 80's? Maybe we need to dig up some ideas from back then and have a good old fashioned debt moratorium.

Imagine if all of the deep in debt cattle producers got a one year holiday from loan payments and interest costs? I can almost guarantee it would make a world of difference. The government is trying loan guarantees for hog producers right now that no one even wants to borrow on.

More debt is not the answer. A one year reprieve from existing debt might be. FCC is so deeply involved in farm lending in this country that I'm sure if the government wanted it to happen it wouldn't take much.

Just a thought.

[gaucho]

That's a great idea just focus on the symptom instead of the disease... the crux is the pie is big enough...its the retailer concentration and their ability into fooling Canadians that imported product is Canadian is the problem why it is difficult to get more at the farm gate. While as an exporter we get slapped with COOL costs. AS long as you sit and whine and ask for another gov't bail out things will never change. Take some responsibility and if you don't then you have no right to whine... its that simple... In today's day and age of internet, blogs, face book and twitter it is easier than ever to take on multinationals, then again there is the old fashioned way and GF certainly could fill you up with ideas.

[grassfarmer]

With ideas or BS? ;O)

[smcgrath76]

I wouldn't turn down free interest for a
year, but I agree that it is only a
symptom of the problem. Each operation
took on its' own debt, although whether
or not there was a choice can be
debated. I think the danger in this
approach lies in the fact that it
promotes more debt (since it is
essentially free) rather than structural
and functional change. We already know
most cattle operations are
overcapitalized and Canadian land prices
are by and large higher per productive
capacity than many other places. The
issue is really with a functional
marketplace (retail shelf/trade back to
the farm gate) so that is where we
should focus.
Every time we recieve "Free" money, it
always has a price tag. I think the
next tag will be to force everyone to EU
standards, when we don't require them.
I do strongly think we need to advocate
government to enable participation in
and access to these type of markets as a
choice. I think we need to tackle
retailers, etc. somewhat more directly
(not in the Beef Information Centre can
I help you? kind of way either).

[kato]

I was not offering up the idea as a solution. Or as a substitute for a solution.

But, that being said, the solutions to the problem are going to take time, and by the time they start to see results it just may be too late for a lot of producers.

On our operation, we just don't have the will to wait two or three years to see if things improve. We've frittered away enough equity already, and like many others, are not thirty somethings with lots of time to build it back up again.

This winter will decide what we do. We have to decide whether we shut it down while there's still time to salvage a decent retirement, or whether we go down in a blaze of glory. Or maybe we will do something in the middle. We just don't know.

Who knows, maybe this really is the year it turns around. We've seen that before, and from past experience can say that the big turnarounds that have followed the several recessions we've been through have been nothing short of spectacular.

All I can say is we don't have the luxury of having twenty years to get back what we've lost in the past seven if that turnaround doesn't show up soon. We've got more than a few neighbours who are in the same situation as we are, and one by one they are dropping out.

[perfecho]

I certainly agree that the problem has to be solved, not just another stop gap. I am tired of being thought of as always looking for handouts.....but a fair price makes so much more sense. As Canada imports more and more beef, things may even get tougher. Yes, we'll probably see some spikes and people will get optimistic and will "top the market".....but will they make any money?
A system that works is needed for sustainability.

[smcgrath76]

Kato, I agree that time is a big issue.
I think the one thing I am most angered
about by government and probably should
have known better is all the posturing
about what they are/will/can do...
I think brutal honesty about their
intentions would have probably saved a
lot of damage and made the decisions at
the farm level much easier to make on an
individual basis.
I think we need to tackle retail as they
are the ones who can tackle the
processing industry and government and
right the chain around.
I have been reading a book called hot
flat and crowded and the approach that
has been taken to preserve certain
ecological gems is the same we need to
take with our situation. Talk to
governments about economics, the public
about peripheral benefits, etc.
Basically tailor the complex message to
very simply target the areas of specific
concern to each audience involved.

[kato]

Time is everything.

The other thing, besides improving cattle prices that occurs after recessions has historically been high interest rates. Anyone here who remembers what it was like to pay an operating loan at 20% will know what I'm talking about. There was a time, back when we were thirty somethings and had a long time to get over it that we paid interest that was absolutely criminal. If that happened now, we'd be gone so fast we'd be a blur.

Everyone here should take their current debt and run it through the calculator and see what it would cost at even 15%. It would be scary.

I also remember a time when if you were to grow your calves slowly, grass them, then finish them, if you had any sizeable debt load at all, the interest could literally eat up the value of the calves by the time they were gone. This is another part of the source of the tradition of getting calves big off of the cow, and cranking them through the feedlot as fast as possible, but it's one that has been forgotten. Time is money when the cost of borrowing goes crazy.

I have a real fear of high interest rates coming back, mainly because no one seems to have remembered the lessons taught by the last time it happened. Rates have been low for a long time, and that tends to lull people into a false sense of security when they go and buy that new piece of equipment, house, or land. If history repeats itself, and it usually does, anyone who hasn't locked in their interest rates is going to be in big trouble.

On the other hand, I know people who sold out in 1980, took the money to the bank, in plain old term deposits and Canada Savings Bonds, and doubled it in five years. Unbelievable, but true.

[smcgrath76]

That is a great lesson and good reminder
Kato. Thanks.
I have run our numbers at 18% but not at
20...

[sagewood]

Kato, I am old enough to remember the high interest rates of the '80's and what it did to a lot of my neighbors, i.e. they lost their land and were forced into receivership--it was a nasty, ugly time and the lenders were mean-spirited and relentless in their attack on those in ag. who could not make the 20% interest payments and still stay afloat.

During the past month I have had the opportunity to talk to a lot of cattle people in AB. and while we like to discuss bulls and the upcoming calving season, many are asking the question 'when will this turn around'? Many of them, like you, do not have the luxury of 'time' left to make back what they have lost in these past 7 years. Many have told me this year is their last and some folks that I have known for years (and are younger than me by at least 10 years) have already sold out this year. They were out of feed and were not about to throw good money after bad, so just loaded up the cattle and headed to the local auction mart. The sad part of one sale was that the one open cow brought $50 more than the bred cows. These cows were all good Red/Black Angus with good genetics and always well managed and well cared for--they were not scrubs in any way shape or form. Even though many of these folks are in their mid 50's, they have all told me they are done--not going back into the business. I guess if enough of us shut down this year and sign off on the cattle business, it may help those who remain. At some point supply and demand have to take over--that being said--it seems if prices get too high the powers-that-be just import more U.S. beef and the price to the Canadian producer never improves. I understand that in some of the pricier downtown Calgary restaurants a good steak will set you back anywhere from $40 to $60...how is it that none of this huge cost never filters back to those of us at the farm gate. Personally, I think the cattle industry in Canada will never recover and years from now when the masses cannot afford red meat and it has become a great luxury, they will wonder what happened--those who can remember 'the good old days'will reminisce about cattle the way we talk about the huge herds of buffalo who used to roam the prairies. When I see the preoccupation the masses have with all things 'electrical' and the hysteria over what Hollywood and the tech industry are doing I wonder if the masses even care if they have beef to eat. I don't see a bright outlook for our industry, even if we get a loan/interest break--it is a stop-gap measure and I agree with everyone else who has said that people are tired of hearing about the beef industry woes and tired of hearing about us whine and ask for more breaks and handouts. To go out in a blaze of glory or with a whimper--that is the decision many of us need to make, and soon. It must be ground-hog day--depressing to think we will have six more weeks of nasty winter...

[perfecho]

Good post Sage.....forward to your MLA and opposition.

[perfecho]

Just a quick note with some after thought.....there seems to be "favorites" of the AB gov, I won't mention names, that will continue to do well. They seem to have a direct line to AG $, programs and available money. These people will survive and survive well. Is it because they are "forward thinking", in with the right crowd? Lobbying on their own behalf....where as the ordinary cowpoke has no voice?
Maybe it is meant to be?

[sagewood]

Perfecho, I do agree that some of that 'favouritism' does happen and will continue to happen, I doubt there is anything we can do about it besides change the government--but alas, the bureaucrats will continue on regardless of the change in tone of the government. I just listened with interest the interview with Shane Haney and Ryan Kasko after Kasko's trip to Brazil. He notes at the end of the interview that the 'big' operations who are managed from the cities and have investors seem to do well, but that there are thousands of subsistence people who barely eek out a living and hang on by a thread. This, remember, is in Brazil where the land is fertile and the seasons allow for many, many croppings and most of their cattle are grass finished. I suspect that if the truth were know from our government types that they will let the Canadian beef industry keep struggling until the weak die off and the 'progressive' or 'investor driven' businesses continue on while they controlling masses of acres of land either by purchase or by rental and those who wish to be in the cattle industry will work for a wage for these investors. At least that is the way I see the industry going. I hear a few rumours of 'quota-driven' type cattle operations. Whether this will come to fruition is anybody's guess--whether it will work for the beef industry as it has worked for the chicken and dairy people is also a good guess--it did not seem to work so well for the hog folks. I guess if the government finally throws their hands in the air and offers a buy out package for the beef industry, similar to what they did for the hog industry, it might be a way for the government and bureaucrats to get us out of their hair so they can concentrate on doing good deeds abroad. We are a dying breed and we have no clout with anyone anymore--sad fact of life in our industry and in Canada...

[kato]

Good posts! I can't add a thing to them.

I'm really looking forward to seeing that cattle inventory report, to see if it reflects what we all see out here in the real world. Maybe it will be bad enough to be a wake up call. Or a give up call??