Plan B

[countryguy]

I happen to think that alot of the things GLTUSA said were true.I think what we should be assuming is that the border is NOT going to open,not that it won't in the near future,but just in case.

What are some other directions we could take our industry?We are predominantly an exporting nation.How can we make our product more desirable than other exporting countries product to the countries who are still accepting our product?No one can dispute that the health craze is on.Is the natural beef route one worth persuing?Any other ideas?

[carebear300]

The natural beef market I think would turn out to be a small market at best for paying a large premium for it. If you give anybody the choice and the price is the same most would take the naturally produced. The same old thing the consumer won't pay any more than he has to. Sort of changing the subject a little bit we used to have an old german neighbour that made the best summer sausage I ever tasted and guess what he wouldn't make it out of anything but a skinny old cow. So that is maybe the solution for a good portion of our cull cows. Don't know if there is a big enough market for that much summer sausage tho.

[cowman]

I don't have any magic answers but I suspect if we had the safest/highest quality product in the world we just might do okay. Unfortunately we do need the Americans to help get the trade rules sorted out. Which is unlikely to happen until they have their own BSE crisis! And they can shoot,shovel and shut up all they like but sooner or later one will turn up! Then you will see a big push to get the rules changed.
However we all must realize that rules based on "science" don't necessarily cut it! In Europe they still reject the idea of hormones in beef and won't have anything to do with it. I believe GMO food hasn't been accepted there either?
So we have to go back to pleasing the customer. If he doesn't want hormones we don't inject hormones...it's as simple as that! If he(Japan) wants a BSE test then we test! If not they won't buy and what good are the rules?
We need to meet our customers needs and the premium markets are in these richer countries. Anyone can sell liver and guts to some third world nation but if we want the big bucks we need those premium markets. The US has had the Japan/Korea market pretty well locked up when in reality they have a pretty shaky product healthwise...no traceback etc. We could move into that market if we had a much safer product.

[rsomer]

I do not believe quality is the number one factor in beef exports. Politics is. We could have the safest/highest quality produce in the world and we would still not have more than an insignificant share of the Japanese market. International trade revolves around trading blocs and complex trading relationships. Science has been used by all countries to limit trade, it is used to justify whatever position government wishes.

Pleasing the customer is important but first you have to get your foot in the door. That is where politics come in. The United States used threats of retaliatory measures against Japan in order to get their beef in that door and it worked. Japan could have the same quality elsewhere.

For instance, even before BSE, Canada only had a tiny share of the beef market share in Japan. But our live barley fed steers were going down to the United States to be slaughtered there and shipped to Japan as U.S. exports. It was the same quality steer that was shipped from Canada as got shipped from the United States but the U.S. had a 50% market share and Canada had, I believe, about 2%.

If it wasn’t for import quotas on non NAFTA beef such as Australia and New Zealand and non tariff barriers such as Foot and Mouth restrictions on South American beef these countries would blow the Canadian and North American beef producer away in our domestic market much less international markets. Politics is the only reason we are here, it is not because our beef is such high quality. Traceback and phytosanitary measures serve more to create a non tariff barrier to beef imports into North American than they offer a marketing opportunity internationally.

A little bit about quality. Australia is the worlds number one beef exporting country. We should look at how they do it. Canada imports Australian beef even though we are looking to be a major beef exporting nation. Which country has the best quality beef? Our further processors are saying that even if Canadian beef is priced the same as Australian they still prefer to use Australian. Canadian beef producers need to get their head out of their ass and figure out why we are importing beef into this country before as an industry we take on even more costs such as testing and traceback expecting that it is going to open any doors to international trade.

[ValueChainFX]

rsomer I think you are right, some in Canada have their heads where the sun don't shine! Any strategy we use will have the critics so be prepared! Also politics is a major challenge (not just science). I am a promoter of quality! This quality covers many areas not just the product itself! To start with here Australia does have a strong quality control system! The question is why? I suggest it is because they are an exporting nation (like Canada) They have checks and balances throughout their system, trace back ... trace forward, improved grading (and Identification of product systems) and they are constantly improving their systems (such as in the case of tenderness identification etc.)

So a multi-pronged strategy would need to go in place. Politics are part of that. At home we import 1 billion dollars worth of beef! A billion dollar market going to some other countries! Also around the world there are countries that want our product but want us to change some things (such as hormone free for the EU) If we want to sell to those countries change the darn practice ... how hard is that! But these are only scratch the surface things, building relationships takes years, I started working with the Japanese for going on five years (a little more but the real involvement started five years ago) these people look at food as their life source their soul almost! Everything must be "RIGHT" for them. If we want to sell to make the product ... how hard is that!

Yes, I suggest we make Canada the safest product in the world! I suggest we label everything "CANADA IS THE COUNTRY OF ORIGIN" I suggest we say "WE HAVE A 100% TRACE BACK TRACE FORWARD PROGRAM, THAT IS FAST AND VERIFIABLE" I suggest we have a "CERTIFIED BSE FREE" label on tested product. I strongly suggest all of these things are promoted, supported paid for and implemented and owned by the producers and the benefits of these things goes back to the grass roots. I believe a national Grass Roots Producer program could make this happen and the discussions have already started on this possibility! Much of the work to make the above things happen has been in the process for a long time now. Is the interest in Canada there? Well I'm sure we will find out soon!

What are your thoughts???

I like plan B ... do you? I just don't want the groups that have brought us to this point in the industry messing this up too!!!

[rsomer]

We have to be very careful about the quality thing. Rolls Royce went bankrupt in 1970 building a very high quality product. You are suggesting we add in costs to our product with the expectation that the consumer wants and is willing to pay for these quality assurances. Carebear300 correctly points out that the consumer won’t pay any more than he has to. Does the consumer really care where the beef on his plate comes from? I have suggested that traceback and Country of Origin labeling is really driven more by protectionist motives rather than being consumer driven.

Prior to May 20 I would have been totally onside with your and cowman’s comments that we should be supplying the EU with hormone free beef. Since BSE the scales have fallen from my eyes. I now suspect that we could dance on the tip of a pin and the EU still wouldn’t accept our beef. The politics are not right for our beef to move into the EU. The problem is not product, it is politics.

So if you believe as I do (based on the fact that the U.S. continues to deny reasonable access to the North American market even though our beef has been declared safe) that politics are the reason behind our present crisis, then initiatives such as producing natural beef, or beef targeted to the EU or testing for BSE will not produce substantial positive results. If the U.S. and Japan were to throw open the borders to our beef and if the consumer, now given the opportunity to purchase our beef, decides not to then I would say that we have a quality problem to overcome and testing, traceback, culling of older cows etc, may help move our beef. However these American and Japanese consumers aren’t even getting the opportunity to purchase our beef because the politicians aren’t letting it in the country. When I look at how Canadian consumers continue to enjoy our product I suspect we don’t have a quality problem at all.

My Plan B would involve using NAFTA to remind the Americans that we are in a North American marketplace, that our BSE problem is their BSE problem too and if our beef is good enough for Canadians then it is good enough for Americans. It is well past time to get our beef and live cattle flowing across the 49th parallel.

[cowman]

The NAFTA thing might be the way to go but I suspect it could be dragged out for a long time. God loves the USA basically stated the new golden rule"He who has the gold makes the rules"! Let's face it the real winners in a North America Free trade deal were Mexico and Canada. America is the show! They really don't need our cattle!
The Canadian consumer stepped up to the plate amid assurances that it was "one cow." Will they be so gung-ho when the next one or next ten show up? I mean who wants to die of CJV? We are going to be testing a lot more cattle. Now our "experts" say it is probably only "one cow"...when the next one shows up they will probably say it is only "two cows"? Do you have a lot of faith in government experts? I can see a scenario where if it isn't stamped "BSE free" it won't be fit for dogfood.
If we don't test and when the next cow shows up that is the end of our cattle business. Never mind export markets, how about our domestic markets? We need food safety for our own people too.

[rsomer]

You are right, I agree with your comments throughout. A NAFTA dispute would be dragged out a long time, I see that is why we are working with the U.S. like we are. I do think they are deliberately dragging their heals.

Canada already performs far more than the recommended number of BSE tests. In 2001, Canada tested 1,581 samples and, in 2002, 3,377 samples. The investigation into the single case of BSE resulted in the culling of over 2,700 cattle. Among them, more than 2,000 animals 24 months of age or older were tested and found negative. These animals had a direct link to the BSE cow and still no positives were found.

I think more wide spread testing will be done but it is important that we stay harmonized with the United States. I know it is hard to tell right now but we are supposed to be a North American market with standardized meat quality and food safety requirements. It is reasonable to assume that as more testing is done that positives will be found although sheer numbers would suggest the next BSE positive will be in the United States. I too can see a scenario where if it isn't stamped "BSE free" it won't be fit for dogfood. I thought that was what was going to happen after May 20 but it didn’t. We do need to remember this isn’t Britain, it is not the same mess. For that matter Japan was also feeding animal protein all along even though the practice was banned in North American in 1997. Which probably explained why their crisis was far worse. I think the U.S. will hold off wide spread testing until the bulk of their cow herd that was born before the ban on feeding ruminant protein has disappeared. What Canada will end up doing in the meantime will be determined by the rule making process that is ongoing right now. It is not a decision Canada can make unilaterally. We very well might end up testing all our cows if that is what the politicians decide. And the U.S. may have to do the same. I believe our food supply is reasonably safe as is and no amount of testing will offer 100% guarantees.

Actually the U.S. really does need our cattle. They are not self sufficient in beef production. The U.S. needs to import our beef. And is it "He who has the gold makes the rules" or is it "He who has the oil makes the rules."? I think GLTUSA was wrong when he said this is a trade of goods for money. I think when countries trade it is a trade of goods for goods, barter if you will. NAFTA gave each country preferential access to each others markets. The U.S. cannot pick and choose which goods they accept from Canada and Mexico in order to protect important domestic markets. In exchange we cannot deny them access to our energy resources. The U.S. has to start living up to their end of the bargain.

[ValueChainFX]

The suggestion to improved quality is a continuous improvement effort. This is something we do all the time, in Canada and around the world. The suggestion to build a strategy would need to be based on the factors that influence the market place. We already have producers that raise what they call "Organic, natural product. The suggestion here is to ensure any "Value Added" step is able to be traced back to the producer OR the producer can improve profit through this process. It is a matter of "Adding Value" and giving choices to producers, marketers and consumers. There is added costs involved and to date any added costs always went to the producer. My suggestion here is to distribute costs across the supply chain! Can we do this, well we have a chance to do this if it's part of a strategy that has been balanced, but if we sit back and hope the coming costs will be balanced I think you (the producer) may be dreaming!

A product that has the checks and balances built in (food safety, quality assurance, testing, trace back / trace forward) has a better chance to be an acceptable export product (in the eyes of global governments, and global consumers). Will we still have to work to export product? For sure, exporting product is a constant battle but working on it is what we do, this is our business and we as producers need to be looking after our business and not leave it in the hands of a bunch of NON_STAKE_HOLDERS even though many of these folks think they are stake holders, I'm sure when farm incomes dipped through any of these challenges we had in the last number of years many of these so called leaders in our government and industry still got their FULL PAYCHECK!

I'm not looking at any of these folks as the enemy, but I have to say, no one has more of an interest in getting the most from your product than you do! So it makes sense that you have more of a say in how that product moves into the market place.

No matter what strategy Plan B follows it has to come from the producers.

[cowman]

Unfortunately I think you have it about 100% right valuechain! I say unfortunately because now the whole thing is a new ballgame...and I liked the old ballgame! We might actually have to do some work beyond the farm gate! BSE is the wakeup call that our system is not working(and hasn't worked for quite awhile) and we MUST make some fundamental changes or get out of this business. And that isn't just for beef...it is for all agriculture products. This is a huge change and a difficult one but it must be done!
I doubt governments will do much. They seem to always be a day late and a dollar short. I think you have converted me to your way of thinking...not too bad it only took three years, heh? But if it's possible to convert some old redneck like me then the skys the limit! Keep getting the message out my friend!

[rsomer]

ValueChainFX: The purpose of a Plan B is what action should producers take if the border doesn’t open to live cattle in the near future. Producers can’t form a value chain and just drive up to the U.S. border and say we’re proud Canadians, we know what your consumers want, we have tested, got trace back, got quality assurances, let us pass. The customs agents at the border don’t care, your beef ain’t getting through. Your words offer no solution, they are a pipe dream.

If you want to talk about adding value and distributing costs and revenues through the supply chain, lets talk about Lakeside Industries who actually went out and did it. Lakeside was a large, vertically intergrated feed milling, feedlot, packing plant at Brooks Alberta. This was, at least at first, a Canadian owned outfit that was doing exactly what you are suggesting is the solution to our industry problems. What happened to Lakeside is exactly what will happen to your dream. Lakeside was forced to divest its packing plant located on the north side of the Trans Canada to Iowa Beef Processors and concentrate on its feedlots which are on the south side of the #1. Why did it do this? The number reason I saw was Lakeside was hounded out of the packing plant business by politically motivated, over jealous inspections at the U.S. border. USDA inspectors such as Howard Lyman (remember him) turned back truck after truck coming from the Canadian owned Lakeside plant while beef from the newly formed American owned Cargill plant at High River was allowed to pass. Lakeside couldn’t afford to fight the U. S. government. No Canadian company would buy the packing plant after seeing the ugly reality of trading with the U.S.A. A Canadian dream was ended by politics. Iowa Beef Processors became the proud owner of our beef industry. U.S. ownership of our beef industry did not add any value to consumers, only to the U.S. government who today are calling the shots in the BSE crisis we are in.

Even though NAFTA was supposed to remove politics from trade, obviously the reality is different. You say "No matter what strategy Plan B follows it has to come from the producers." Given that the problem facing the Canadian industry is widely acknowledged to be political, that is the USDA is not allowing trade of live cattle to the U.S. from Canada it would seem very unlikely the solution will come from producers. Redefining the problem to be what you want it to be, that is some kind of marketing irregularity that can be fixed by producers forming value chains to be more consumer oriented distorts the reality of the crisis we are in.

Your message offers hope but has no substance for producers.

[cropduster]

Didn`t think you had it in you cowman.The previous response about coming from the producers is right on.Politicans want to lead parades and if we create one they will be there.Look up morealbertalessottawa.com .This forum is supposed to be for production not politics.Maybe you`ll have to talk to the moderators to create a forum for you.

[pandiana]

As usual, many of these posts ilicit more questions than answers. rsomer: " A NAFTA dispute would be dragged out a long time, I see that is why we are working with the U.S. like we are. I do think they are deliberately dragging their heals." A NAFTA dispute no doubt would take some time but shouln't we be exploring all our options? Starting two months ago would have put us that much farther down the road. And what about retribution? Shouln't we be looking for this?
Quality yes? Tell me what is it that Australian beef has that we don't have other than grass fed...cheaper.? Should we go back to grass fed cattle?
BSE testing on all cattle. No, I don't think so, totally unrealistic expectation unless is can be shown to create additional value equal to the extra cost.
BSE testing over 30 months? I like the idea of being able to label Guaranteed BSE Free but... what if?

I agree that this problem is and has been for the last 3 months totally polictically driven. I am sure there are some who are thouroughly enjoying our jumping through hoops in an effort to satisfy unrealistic expectations while they reap benefits at our expense.
I too would like to find different trading partners.

[rsomer]

ValueChainFX: I am concerned that my reply to you was too harsh. You are speaking to your dream of a solution to the long term chronic problem of low producer returns. In many aspects, I share your dream and I respect the power of a vision such as yours to make fundamental changes in an industry over a period of time.

I am speaking to the BSE crisis which we find ourselves in which demands rapid responses and solutions in order to get live cattle moving into the U.S. which all agree has to happen quickly if our industry is survive.

It is September 24. Most of the cattle sold in this country in 2003 will be sold in the next 30 days. There is still no significant beef or live cattle trade with the U.S. We need a plan b real fast.

[cowman]

We should never forget that this "quality beef" Australia ships us is their old cows. I remember about a year ago I was with a business associate and we had dinner in "Montanas" and we got these tough steaks...guess what...Australian beef! Well we complained and I never went back until they opened a franchise in Red Deer. I asked "Where do you get your beef now?" This was in July and no one would admit they got beef anywhere but Alberta! So I had a good Alberta steak! Tender and juicy!
If Australia has such a superior system how come they sent that kangaroo meat to us in the Jack-in-the-box affair? And I'd like someone to tell me how they can still compete against 10 cent Canadian cows? Why the freight must be at least twice that? Do the Australian farmers donate their cows? Or pay the packers to take them? Somehow that whole deal smells a little crooked?