New Alberta program???

[ValueChainFX]

What are your thoughts on the new Alberta program for cattle?

Here is the link
http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/com7306?opendocument

[rusty1]

This one apears to be a little more thought out. Like the funds should be able to get into the right hands this time. May encourage the calve to come to market. I would have liked to see a plan for the cow calf sector if the calf prices had fallen off the rails to encourage more "retained ownership."

[rsomer]

The beef industry should be grateful for the additional government support shown the feedlot lot sector in this time of crisis. Premier Klein has been quoted as saying unless the border opens up by the end of August the industry will crash. It is August 23 and we have yet another program put in place because the market has ground to a halt. Ann Veneman, the U.S. secretary of agriculture announced August 8 that her country will now accept applications to import boneless meat from cattle under the age of 30 months but where’s the beef. It must still all be on the Canadian side of the border. The clock is ticking.

Once the fall run begins in a few weeks, cow calf producers can only hope to receive fair and equal treatment to the over $½ billion in support shown the feedlot sector, in Alberta 75% controlled by 100 companies each of which will have received millions in direct government support. Even with the generous support shown the Canadian feedlot sector most producers are predicting that when it is time for these same 100 feedlots to purchase our calves this fall prices are likely to be considerably less than 90 per cent of the weekly average U.S. price for feeder cattle, the level the feedlots have been supported at throughout this crisis. Will cows calf producers receive the same fair and equal treatment as the feedlot sector received from government or will the cow calf man be told to look to FIDP and NISA, maybe with some loans thrown in. For many producers hard hit by years of drought there is no reference margin left in FIDP and the NISA account has not had an opportunity to build, a result of the feedlot sector lobbying for years to keep government money out of the cattle business in Alberta. Loans have to be paid back, with what?

If I, as a cow calf producer, thought I was going to be supported at 90% of the U.S. price until the border opens to live cattle it would be a huge relief. I am not optimistic. I think there is reason for concern that the money will run out before it reaches the cow calf producer.

[ValueChainFX]

rsomer you're point is well founded. I really do believe Klein wants to help producers more directly, keep in mind he has to take the advice of his front line people and I think they are feeding him some "BULL" (a little pun intended). What kind of program do you think would work, it seems that no matter what program is introduced the crooks in the industry have it figured out and can get more than their share!

I find this frustrating, but we all know it's happening. Going deeper into the supply chain (retained ownership, as it has been put) seems a likely possibility. But the equation to calculate compensation becomes complex. I am just wondering what you as producers see as a method to ensure you are not getting the dirty end of the stick.... once again?

[pandiana]

Excerpted from the above link: "Are all cattle eligible?
No. The cattle must meet the following criteria to be deemed eligible:
must have been owned by the Applicant on May 20, 2003.
must be on feed in Alberta in a confined feeding operation as of May 20, 2003 on a high energy full feed ration intended to maximize weight gain to slaughter weight in the least practical amount of time (not backgrounders).
must be deemed to be slaughter/fat cattle as evidenced by a minimum net live weight (Heifers 1200 lbs, Steers 1250 lbs), or if sold direct to slaughter at lesser weights, must grade either Canada A or Canada Prime.
must be eligible for A or B grades as evidenced by age (no heiferettes, cows or bulls).
must not be branded as part of the Self Set-Aside or Market Bid components of the Alberta Fed Cattle Competitive Bid Program."

I fail to see how any of these programs will help the cow calf producer unless, possibly, you can afford to retain ownership through slaughter. So far, as rsomer pointed out, they only benefit has been to feedlots and packing plants.

[charliep]

Any thoughts on what should done for/in support of the cow calf sector?

Things that I think might happen:

1) More retained calves at the cow calf level.

2) Some more certainty as we approach the winter on finished cattle prices. Opening of the US border for muscle cuts and perhaps shortly the road finished animals under 30 months will help establish some stability on finished cattle. What the new price relationship with the US/basis with futures I am not sure (others thoughts).

3) A thunder cloud I hightlight is uncertainty over feed grains. A possibility (1 in 10 I would estimate) is that feed barley is mid west corn plus transportation costs. Cost of gain would be high relative to the US.

4) Calf price/backgrounder price is the residual.

[rsomer]

I have pasted the following clip from Animalnet, August 20. If the CCA has any influence this is what we might expect to see happening.

The Canadian Cattlemen's Association (CCA) held its 2003 Semi
Annual Meeting August 15 and 16 in Moose Jaw, Saskatchewan... The Board set policy direction related to disaster relief. Resolutions were passed recommending that compensation include interest free cash advances
for all cattle producers, and that the owners of all cattle on feed as of
May 20 (the date BSE was announced) and who have not already received
deficiency payments for those cattle receive a cash settlement and the
deficiency payment program be ended.

[pandiana]

I am not sure how to interpret this clip, rsomer. It doesn't make sense to me.

[ValueChainFX]

What kind of program would you like to see? That you think is good for everyone?

[cakadu]

Not good that the US has just announced that the shipments won't be moving before September 1st. In fact, permits won't be granted until after the labour day weekend.

[ValueChainFX]

Another kink in the story, ya just gotta hate the games!

[rsomer]

pandiana: These links will take you to the original information that may be easier to understand.

http://www.info-cca.ca/index.cfm?app=bulletins&fuseaction=bulletin&bullet inid=18
http://131.104.232.9/animalnet/2003/8-2003/animalnet_august_20.htm

For information, Anne Dunford's comments on the market outlook at this link, excerpt below:
http://www.producer.com/articles/20030821/market_quotas/20030821mkt01.html
She [Anne Dunford] predicts more than half a million cattle will be backed up by the end of the year at the current rate of slaughter. That includes about 171,000 fed cattle and 353,000 cows and bulls.
Slaughter numbers are now 60,000 a week, up from a low of 30,000 after the May 20 announcement of a single case of bovine spongiform encephalopathy, but still off the norm of 75,000.
Dunford said the backlog could grow to more than 750,000 by the end of the first quarter of 2004.

[rsomer]

valuechainfx: you said "What kind of program would you like to see? That you think is good for everyone?"

The only program that will work and is good for everyone is one that will open up the border to live cattle.

Since that might not happen for a while we are then looking at financial support for the entire industry. There are three things that need to be considered:

1. How long until the border opens to live cattle
2. How much money government is able to commit to save the cattle industry
3. What will the U.S. reaction be to Canada’s financial support of the BSE crisis.

The focus until now has been on the feedlot sector which owned calves as of May 20. At some point it will be necessary to pay attention to the cow calf and grasser sector which also owned calves as of May 20. Although the feedlot sector received per animal support to 90% of the U.S. price from May 20 to now we probably won’t see that kind of support happen for the cow calf producer as 80% of the cattle traded per year happen in the next 3 months. Gets kind of expensive.

The government is committed to its safety net programs but I think they were not designed for this kind of crisis. FIDP supports the producer at 70% of his/her reference margin years but won’t support negative margins. Assume in 2003 a 200 head cow calf producer had a FIDP reference margin of $30,000. His/her actual margin in 2003 might well be negative $100,000 after the calves are sold for possibly $400 per head than last year and the loss in value of his cows is determined. The producer’s margin in 2003 is $130,000 less than his reference but FIDP will only pay 16% of the producer’s total loss or $21,000 , his support level based on 70% of his reference margin down to zero. The producer is expected to stand 84% of the loss himself when the feedlot sector was backstopped at 90% of the U.S. weekly price on a per animal basis. That is not fair. And there will be producers out there who have very little reference margin left and will get even less help from FIDP.

If I were to offer a suggestion I would say that FIDP should be amended to cover negative margins based on cash losses ignoring accrual losses until such time as the border opens to live cattle trade. I would allow the producer to go back 7 years to choose his reference margin years. The cow calf producer would still only be covered for 70% of his/her loss when the feedlot sector was covered for 90% but this change would make FIDP more fair for everyone than if left as is. I would leave the maximum claim at $100,000 per producer with a maximum of 5 producers per claim so limited funds could reach everyone. No individual should be getting a multi million dollar cheque if there is not enough government support to reach each and every producer affected by this crisis. I think this should be trade neutral i.e. not subject to countervails.

You asked, I think that might work. Any other suggestions.

[kato]

You know what? Manitoba is not even in this FIDP program. I personally do not know a thing about it. Other than the fact that there are apparently premiums to pay. Who has money for premiums? Not us.

I don't think it's going to help us anyway due to the fact that we usually buy feeders every fall, and this year may not do that. This gives us a profit, no matter how bad things get. We are missing the usual expense of the feeders. On paper it looks good, but in real life there is no money. I am sure lots of people are in this same boat.

[charliep]

FIDP (Farm Income Disaster Program) is an Alberta program. The Canadian version is CFIP (Canadian Farm Income Program). Information can be found at: http://www.agr.gc.ca/cfip/welcome.html.

Both have been replaced by CAISP (Canadian Farm Income Stabalization Program) - the new name for the changed super nisa.