I think what is missed by many is how CAISP is not going to protect many producers from the BSE crisis. The problem is not as much that CAISP or the previous programs, FIDP or AIDA, doesn’t protect producers from the loss in the value of their beef herd. The problem is that the program is not going to protect producers from the effect of the BSE crisis on their cash flows. It is like this.
Many producers, especially in Alberta, ended 2002 with the lowest inventory levels of hay, grain, straw that they have had in many years. For the typical cow calf producer these represent non cash inventories that were normally on hand for feeding the cow herd. Although 2003 had its challenges, more areas of the province had near average hay crops, the combines did come out of the shed in 2003 and some straw was baled. As a result, ending 2003 non cash inventories of hay, silage, straw and barley were closer to normal levels. These inventories are not for sale but are needed to feed the cow herd.
Even though fall 2003 calf prices were not as bad as some feared, they were well below the average of the last five years, much lower than prices would have been if there had not been a BSE crisis. In normal circumstances FIDP, AIDA or CAISP would have protected producers from this disaster and producer cash flows would have been restored up to 70% of the 5 year average.
However for many producers in 2003 the non-cash inventories of hay, silage, straw and barley which have merely returned to normal levels with no surplus available for sale will reduce or eliminate the payout the producer would have otherwise received from CAISP. How many producers would be in this situation is hard to say but I would venture a guess that it is the majority of Alberta’s 38,000 cow calf producers who are left facing a cash crisis. The effects of this crisis will be felt throughout Alberta by mid 2004.
Alberta’s cow calf producers are being told to look to CAISP for relief from the BSE crisis. But producers will find the CAISP program is not there for them. To be fair to all, there should have been a direct BSE payment to cow calf producers just like the support the feedlot operators received. The BSE crisis should have handled as the national crisis it was and let CAISP handle the disasters it was meant to take care of, drought, hail and production losses.
Many producers, especially in Alberta, ended 2002 with the lowest inventory levels of hay, grain, straw that they have had in many years. For the typical cow calf producer these represent non cash inventories that were normally on hand for feeding the cow herd. Although 2003 had its challenges, more areas of the province had near average hay crops, the combines did come out of the shed in 2003 and some straw was baled. As a result, ending 2003 non cash inventories of hay, silage, straw and barley were closer to normal levels. These inventories are not for sale but are needed to feed the cow herd.
Even though fall 2003 calf prices were not as bad as some feared, they were well below the average of the last five years, much lower than prices would have been if there had not been a BSE crisis. In normal circumstances FIDP, AIDA or CAISP would have protected producers from this disaster and producer cash flows would have been restored up to 70% of the 5 year average.
However for many producers in 2003 the non-cash inventories of hay, silage, straw and barley which have merely returned to normal levels with no surplus available for sale will reduce or eliminate the payout the producer would have otherwise received from CAISP. How many producers would be in this situation is hard to say but I would venture a guess that it is the majority of Alberta’s 38,000 cow calf producers who are left facing a cash crisis. The effects of this crisis will be felt throughout Alberta by mid 2004.
Alberta’s cow calf producers are being told to look to CAISP for relief from the BSE crisis. But producers will find the CAISP program is not there for them. To be fair to all, there should have been a direct BSE payment to cow calf producers just like the support the feedlot operators received. The BSE crisis should have handled as the national crisis it was and let CAISP handle the disasters it was meant to take care of, drought, hail and production losses.
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