New Alberta program???

[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.

[ValueChainFX]

Stabalization Programs are good in times of normal market ups and downs. Usually these funds do not have the ability to carry on. In such cases as the BSE challenge there would have to be more thought put into how this would work across the board.

Risk management is something we all hear a lot about, but like any management practice, risk management is based on looking into the future and trying to forcast something that "MAY" happen than trying to figure out how we are going to deal with it (if it does).

I look at the numbers of import and exports ("State of the Union on BSE" from the Alberta Beef Producers) and ask myself what the government wizards dealing with imports and exports have come up with. I would hope they have looked at the programs we use for importing and exporting beef products to and from other countries and are in the process of designing a paper (this is what they do best) to help reduce the imports into Canada. The total value of these imports in 2002 was $997.4 million dollars. Our major importing nations being USA at 456.00 million dollars imported, New Zealand at 165.00 million dollars imported and Austrailia at 293.5 million dollars imported Argentina is 5.8 million and Brazil is 6 million. Seems to me that under the conditions we have in Canada we can figure out a way to put some of those dollars back into the producers jeans??? Your thoughts?

[rsomer]

charliep: No sooner do we understand one program than another comes along. Could you give us a heads up on what we are looking at with the new CAISP program. Thanks.

[kato]

I attempted the CFIP forms once, and gave up in frustration as soon as it became clear there was nothing in it for us. I know people who paid accountants more than they received from the program. I'm not sure who ever got money out of it. Anyone here?

We do know that NISA is toast. Got a letter telling us it's going to shut down the accounts. Since we are among those who never had cash to deposit, big deal. We are going to borrow some this fall and top up what we can, then take it all out and pay back the loan. Other than that, it's never been much use to us. I just send in the forms with the income tax and wait to see what happens. How they decide all the payouts etc. is up to them.

It has been years since we were eligible to receive any money, and yet we never had any to put in.

I think that is one of the most frustrating things to deal with now. We have always preferred to figure our way out of tight spots on our own. Not used to this asking for help business. The government seems to ignore the fact that of all the segments of society, cattle producers have always gone it alone without asking for handouts, bailouts, and breaks. You would think they would realize this, instead of treating us like a bunch of whiners looking for a free ride.

I sent an email to Mr.V.C. last night letting him know my opinion of this whole thing, and I tell you it made me feel a little better just venting. Too bad you can't yell in an email. ;-)