New money rumour

[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?

[rusty1]

Thanks cowman - you hit the nail on the head. Opinion is one thing - but to be so dogmatic about something as gospel fact without the fact is perposterous. Yes the packing houses syphoned off a huge part of the aid as got to chose whose cattle got slaughtered. But if (i've said it before to rsomer) he needs to go down to the Picturee Butte area and have coffee with some of the feeders. The feeders around Calgary are way too connected to Cargil to get the straight goods there.

[rsomer]

rusty1: I see no reason why the cow calf sector should keep its mouth shut when cow calf producers have been very seriously hurt by BSE yet the over $1 billion dollars in government support has been directed to the feedlot sector ignoring the cow calf operator.
If you believe I am missing a lot of information please enlighten me. What facts do I have wrong? That 33 feedlots control 58% of the feedlot industry in Canada. Or that these feedlots would have received the majority of the government support? It is difficult to know who owned the majority of calves in the feedlots on May 20, the 33 feedlots or the two packers, but based on the squealing the feedlot industry is doing it seems reasonable to assume they owned quite a few and they have received generous government support on each and every animal. Probably support on some animals that did not even exist.
I know that even though I owned cows and calves on May 20 I haven’t received one red cent of government aid yet individual feedlot operators would have received millions and that is the point of my comments. Although the entire cattle industry has been dealt a serious blow by BSE only one sector of the industry, the feedlot sector which is controlled by a very few individuals, has received substantial support by government. That is a fact.
Government support for agriculture is limited and it is important that these limited funds are distributed properly. When I see the most of the $1Billion dollars in government support going to only 33 feedlot operators while little or nothing goes to the remaining 90,000 cow calf operators that does not seem fair to me. If you take exception to my point of view that is your privilege. My old man taught me to stand up for what I believe is right and I am doing that.

[johnboy555]

rsomer is jar head................last summer some feedlots got up to 400 dollars from govt. per head, then got 500 dollars from market, which only left them about 5 to 600 dollars in the red. This guy is out of business in one turn. I feel for you rsomer as to your ignorance of the whole situation.

[rusty1]

I don't diagree that the problem is a industry problem. But you're numbers are way out of balance. I don't know for sure the numbers but I do know that the 3-packers who had the option to sell their own cattle when appropriate got the LIONS share of the aid packages. The CRUMBS went to a lot more than 33 feedlots, probably closer to 150 feedlots.
You're way out of balance in the big picture. I might remind you that most of the aid money that was received by feeders was re-spent to buy calves from the cow calf producers at INFALTED dollars because they had to bid against the packers with pockets full of money in order to keep their staff (and families) and cash flow their silage through their system.
I might add that if anything needs to be donw at the cow calf sector. The stupid bankers need to stop the fear mongering and "WORK WITH THEIR PRODUCERS" now like banks had to with the feeders since may. My son-inlaw's (who is very solvent with his dad) banker told him there was no way he would lend him any money now for $600 mother cows. And oh yes that same banker would lend him $1600 per cow a couple of years ago. Where' the cowboy logic?

[cowman]

Well I suspect the bankers are nervous? I don't think I would lend anyone any money to buy cows right now either? Would you?
We need to hear some positive news for a change to put the bankers back in a more friendly mood? Our government has not been very helpful at getting anything done that might encourage them? I mean it's getting close to a year now that the border has been closed and the cow/calf sector has recieved zero support? Should we expect either some cash support or a concentrated effort to get that border opened? Do you think it would be a reasonable expectation that they should be doing something?
How long will our government continue to dither before they realize they need to do something to either get that border open or start depopulating the Canadian cow herd?