New money rumour

[kato]

Heard on the CTV news this morning that there is about to be an announcement by Bob Speller about a feed assistance program of some type for cattle under 30 months. Probably aimed at stopping the fire sales that are going on now.

Keep your ears open. Who knows, it might be a good thing.

[almoy]

Probably be a loan guarantee. More debt to pay back with cheap cattle.

[smokey]

New money...ya right! Sounds like another carrot and stick routine...Offer the producers a few bucks then tell them the border is just weeks from opening. Have any of you heard this before? Have any of you received and government aid yet? Do any of you actually believe you will?

[rsomer]

The Alberta Government made this announcement yesterday.

Alberta Steer and Heifer Market Transition Program
How does the program work?
This program will compensate producers based on 60 per cent of the difference between the 93 cents per pound reference price and the greater of the producer's actual market price or the weekly average price on eligible animals sold between September 13, 2003 and February 15, 2004. Payments will be made per pound of net live weight sold.
The program is only open to producers who registered their animals that were on full feed on May 20, 2003. Animals not sold for slaughter by February 15, 2004 will require proof that they are legitimate May 20, 2003 'fat' cattle.
Eligible animals are steers with a minimum average net weight of 1,250 lb. and heifers with a minimum average net weight of 1,200 lb. Lighter animals are acceptable if they were sold directly for slaughter and graded Canada A or B. Both steers and heifers must have been on full feed on high energy finishing rations, in a terminal lot as part of May 20, 2003 inventory.
Animals owned by packers, or owned by businesses or partnerships that are non-arms length to packers, are not eligible for compensation under the program.

This will raise the Alberta direct contribution to the Alberta feedlots, 58% controlled by 33 feedlots, 80% controlled by 130 feedlots to $400 million since May 20, 2003. The federal contribution of $600 million would be in addition but as with the Alberta program the majority is still going to the same small group of wealthy mega feedlot owners such as Rick Pascal. The total to date would be at least $1billion dollars over half of which went to 33 wealthy feedlots owners who would have received a government cheque averaging $30million dollars each.

These are the same feedlots that are buying our calves at auction markets for $400 a head.

The remainder of the Canadian beef industry made up of 90,000 cow calf producers, grassers, and backgrounders have yet to see one penny of government aid. Shame!!!

[cowman]

On QR77 yesterday they ran the story about Bob Speller coming down with a "major relief" program for the cattle industry next week. They also had a quote from Shirley McClellan saying Alberta would not be participating in this new program as it was a 60/40 deal and Alberta had already spent $400 million and the cupboard was bare! Which was exactly what my source in Edmonton had told me back in late January...no more money from the Alberta government!
Now I'm not just too sure how the government of Alberta intends to finance the $180/cull cow thing but I believe it is coming out of some existing program? Which might explain why we've never seen any of that money?
I have no idea what the new federal program is. But I have to be impressed by Bob Spellers attempts? It couldn't have been very easy to pry some money out of the boss, the last few weeks, what with all the money scandals taking place? I don't think we would have seen Lyle accomplish this?

[cropduster]

Seems like some of those `wealthy` guys aren`t comfortable yet.Should have heard the squealing from Pascal and Van Raay yesterday in Red Deer.......

[grassfarmer]

"wealthy mega feedlot owners such as Rick Pascal."
"These are the same feedlots that are buying our calves at auction markets for $400 a head."

rsomer, I believe Rick Paskal lost $6 million in the first three quarters of 2003 - no longer wealthy. No longer buying cattle either on account of bad relations with the bank.
Sure, the cow calf man is hurting now but if we are honest we did a lot better last year than the feedlots. Personally I have no problem paying compensation to feedlot operators as they will spend that on calves given a chance. The crime here has been committed by Cargill and Tyson not the feedlots, many of whom have had their equity built up over twenty years wiped out.

[kato]

The sad fact is that if the guys who bought the calves lost money, why would they want to buy more? There is no such thing as a forward contract any more, no safety net, no protection at all.

It's a real problem. Without the calves there are no feedlots. (Unless they come from another country..gee, I wonder which one?)

On the other hand, without the feedlots, it is still possible to have fed cattle in this country...they will just be fed by the primary producer. How many cow calf producers want to go down that road is anyone's guess. We personally will do it if we have to, we've done it before.

I think the best thing in the long run for our industry is for both the feedlots and cow calf producers to get together and solve this whole thing. The packers (aka American interests) are probably sitting back and waiting for us to tear each other down, then we'll all be for sale, cheap.

[cowman]

I have to agree that we need to work with the feedlots and not against them. These guys have hung in there and provided us with a pretty strong market for calves last fall? Now they are really in trouble? If they are "squealing" it is because they are going broke?
Sure they got some money, while the cow/calf guy didn't, but then we never knew this thing would go on this long? When the government brought in the feedlot relief program we all hoped it would be a short term thing that was necessary until the markets returned to normal?
Will we all go back to feeding calves? I would say no? Your average cow/calf guy is just too old to do the work, make the long term investment, or take the risk? In fact I suspect if the government set up a program to provide the average cow/calf guy a way out the stampede to leave would be impressive?
But maybe the government won't need to put up any money? If it is dry this year the stampede could be impressive anyway? Get your ammo bought and book the trackhoe?

[rook]

Cowman, I respectfully ask what would a program look like that lets cattlemen leave the industry? Isn't that three phone calls - auctioneer, bank, and real estate agent? What exactly do you mean by a program to leave the industry?

[cowman]

Well yea, that is definitely one way to leave the industry. One that I suspect might be played out a lot if the border is still closed this fall or if it stays dry?
The really sad part of that scenario is it won't be the old cowman who will be packing it in but the younger ones who can't cut it. The ones with the debt?
Wouldn't it be better if they moved the old boys out with some sort of incentive plan? Maybe if we could reduce the cow herd down to a manageable level(fill the domestic supply) then we could get some stability?
One way or the other something has to be done with our cull cows? We can't increase the cow herd another 8.7% this year? What is the solution. The same one for foot and mouth?
If that cow border isn't open by this fall and especially if we get a drought, I would think 12 cents might look like heaven compared to what prices will probably be?
It galls me that a cow that was worth $1200-$1400 in 2002 will probably be worth $100 in 2004? Trade and animal health are government responsibilities and as far as I'm concerned they have not got the job done.
However perhaps CAIS will be helpful? Depending how they value the cow at the start of 2004. If they insist that cow was worth $1200 then when you sell her for $100 you should have a decent loss?
For me it doesn't really matter as I am done with cows. Already have the breaking plow booked for this spring. I'll be out of it and done with it whether I get $100 or not.

[johnnytill]

If feedlot guys have "lots of money" why don't you cow-calf boys feed your own calves and make all that money?

[rsomer]

grassfarmer: you said "Sure, the cow calf man is hurting now but if we are honest we did a lot better last year than the feedlots." That is a common misconception. Here are some facts.

At any given moment there are no more than 1.5 million animals on feed in Alberta. The Alberta beef cow herd is about 2 million head. Yes the huge mega feedlot operator did have calves on feed on May 20 that were bought anticipating a higher sales price than what was actually received. Without government payments, the average feedlot may have lost as much as $400 a head on those May 20 calves and that is a lot of money. About $600 million. The Alberta feedlot sector has received direct ad hoc government payments in excess of $800 million or over $500 per head. It would seem that the feedlots losses have been totally covered and possibly then some. If the feedlot industry claims to have lost more than that it would not have been from BSE, possibly changes in the Canadian dollar which were not properly hedged. But the price of barley dropped after May 20 and there were gains in a few other areas too like cheaper replacements after May 20 that the feedlots are not talking about. The feedlot industry is crying wolf, they may have had a cash flow problem but their losses in equity have been fully covered by huge government handouts in the order of hundreds of millions of dollars most of which went to the 33 huge mult million dollars feedlots that control 58% of the Alberta feeding industry.

Lets compare that to the cow calf sector which in Alberta had about 2 million cows plus 2 million calves on May 20. Equity losses on the cows amounts to about $800 million and the calves on those cows were sold in the fall for about $500 million less than the market expectation before May 20. That is a total of $1.3 Billion dollars the cow calf sector lost as a result of May 20. That is a lot of money too. But wait, you might say that the equity losses in the value of the cows was only a paper loss and only the value in the loss of the cull cow and the calf on the cow should be calculated. The drop in value of the cull cow was actually worse than the drop in value of the fed calf but there are fewer cull cows. The loss to the Alberta cow calf producer on his cull cows would be about $200 million for a total of $700 million direct cash loss due to BSE. Losses in other provinces would be in addition.

The feedlots did not loose any money from BSE, it was all covered by the government. The cow calf producer will get a small cheque for a grand total of a couple of thousand dollars if he/she is lucky for aid on about ½ of his/her cull cows, nothing compared to the up to $30million cheque some individual feedlot operators will receive.

No one is even pretending to cover the cow calf sectors losses.

Not to mention that the feedlots are lobbying to have much of that $30 million cheque recognized as revenue in 2004, not 2003, so their 2003 CAIS payment will be larger.

Yes, the cow calf producer’s loss due to BSE was greater than the feedlot sectors loss. And at some point there will be a realization that the drop in value of the cow herd due to BSE and for that matter the change in the value of the Canadian dollar resulted in a real loss of equity that will be cashed out at some point. The cow calf sector lost more money due to BSE and they are not receiving their fair share of the government assistance.

As for the feedlots buying the weaned calves, they expected to make a killing on those calves and still will. They weren’t doing the cow calf operator any favours at all.

[rusty1]

rsomer - my old man taught me a lesson along time ago when he said. "He who has all the answers dosn't know all the questions." And you sure are missing alot of information. If you can't be objective and get yer facts straight then I suggest you zip yer lips. Another piece of advice my dad gave me was "it's better to remain quiet and let others think you're a fool than to open your mouth and remove all doubt."

[cowman]

Now rusty, why be so harsh? What is wrong with someone expressing their opinion?
A whole lot of what rsomer says is true? Consider how much money have you or I recieved from the government? I don't know about you but I've gotten Zippo? And yet I have to hear Bob Speller and Shirley McClellan telling the whole world how much money they've spent "saving" the western cattle industry! Well the money went somewhere, right? We need to be able to talk about where it went?
I suspect the feedlots could be getting a bad rap about recieving the majority of this money. I suspect the two packer thieves syphoned most of it off? But the fact is I don't know and neither does anyone else? So we need to find out? Why who knows...maybe Cargill/IBP are innocent little lambs?