CAIS IS USELESS!!!

[rusty1]

sorry i ment ABP. I went door to door with our local MP (Conservative) and I can't believe how many people didn't know there was an election on, and how many people are un decided and how many liberals there are.
rsomer - I don't know anything about CISA or what ever - that's not my call to comment however I think you're really unfair at you're finger pointing when it goes to you're fellow producers who are in as desperate a circumstanse as you confess to be. The ancient point of wisdom which you remember is "When you point a fingure there is 3 pointing at YOU!

dunin

[rsomer]

I am genuinely sorry to hear of your difficulties.

I do not think that by pointing out the effect that CAIS is going to have on Canadian agriculture I am pointing fingers at any particular sector of our industry. If someone disagrees with my point that raising the subsidy cap to $3,000,000 is going to give the big players a huge advantage and therefore the big players will get bigger and the small players will disappear then please, I would like to hear those comments and I sincerely hope they are right.

Even allowing a $100 per head margin for a feedlot operation, a $500,000 subsidy cap would have been enough risk protection for a 5000 head feedlot. That would have supported the majority of agriculture. If government is going to hand out $3,000,000 subsidy cheques to mega producers how can anyone else compete with that. K-Way is expecting $44, how long can any smaller farm survive?

Producers need to realize the impact that government programs have on the industry. Look at how the Crow Rate shaped the face of agriculture and how agriculture changed after it was gone. Now image how increasing the subsidy cap from $100,000 to $3,000,000 will affect things and you may have some idea of my concern. I am not talking just feedlots, but all sectors and players in the industry. We cannot just presume that the average sized farm will somehow survive anymore, especially faced with the reality that government is changing the rules to give the advantage to mega farms and agri-business.

[Willowcreek]

I am thoroughly convinced that Tyson and the other multi-national packer conglomerates have their sights set at total control of the beef industry the same as they now do the hog and chicken industry. We will no longer be owners- just managers for these world wide corporations that control production from conception to the plate. This will give them one more step in program.
And they are already so powerful that they control many nations governments- probably is no way to stop them.

[rusty1]

Willowckeek - you're not far off. I've said before in these threads that if our 2 packers here were to expand kill capacity we would move farther into serfdom. They control a large number of the cattle on feed and that will only increase.
If there is a bright light - you will find in the US a movment toward smaller special interest packers on the grow. The big guns are trying to expand control. However smaller independent are being sucessfull in opperating their packing plants through vertical integration and nich marketing c/w producer ownership. With producer ownership, and iformation sharing the producer in the chain are recieving sufficient benefits to remain committed to better ways. Lets do that here.

[cowman]

rsomer: You paint a fairly bleak picture but probably a fairly accurate one as well. Well CAIS is the ballgame and if a person can't play in the big leagues, then what can you do?...get out?
You are quite correct when you point out how killing the CROW completely changed agriculture forever in western Canada...in fact we wouldn't be in this pickle today if the CROW wasn't killed. Or at least not as bad? When they killed the CROW every man and his dog got into the cow business, thereby creating this over supply of cattle.
Maybe I'm too much old school but I still just hate to see good land feeding a bunch of useless horses or cattle when it could be growing a super grain or canola crop.
Now they claimed the CROW had to go because it violated some sort of international law, but why didn't they replace it with some actual support(ala America and Europe)that would have given us a viable grain industry? I do believe, with our climate, that grain production makes more sense than cattle...at least on the better land? Use the few cattle necessary to clean up the trash?
Maybe it is time for our government to start to look at getting rid of the cattle industry and start to reconsider export grain? Now maybe that isn't feasible either, as the world seems to be awash with grain? In fact it seems to me all farmers, around the world, just produce too much darned food?
Anyway if CAIS does the things you say it will(and I suspect you've read it pretty much right) then we are all living on borrowed time and need to start thinking about what we will do in the future? Might be time for some of you younger guys to start lining up some other skills?

[cswilson]

When does land become too good to raise livestock-I'm so damned glad I got my useless cows and horses and not a bunch of really useless canola and wheat growing on our place. You are making the right decision though cowman-I can tell ranching isn't for you. The most expensive land cows run on in Canada is still cheaper per cow unit than just about any you can buy in the U.S.A.

[poorboy]

rsomer,

There is a flip side to the CAIS money going to the big feedlots that you may have forgotten. When a feedlot gets a big payment, they tend to come right back and pay more for calves. Witness the fall of 2003. It was ridiculus for feedlots to pay that much money for calves. The gov't money that feedlots got and optimism that the border was going to open went right into propping up the price of calves. If you did not sell your calves in the fall and you normally do, then you were just plain greedy. The price was very good by historical standards. If you normally keep your calves and you did, then you genuinely got beat up.

So my take is that the CAIS money will trickle downhill from the feedlot to the cow-calf producer. A feedlot can't have steady claims or their CAIS margin will continue to drop and they will be in trouble also.

In looking at the cattle industry, the big loses are going to come this fall. If the feedlots do not see any aid money or have the price of fats go up, then calves in the fall will be 60 cents per pound or less. The cost of gain will be higher than the fat price, so the only way to have a margin will be to pay LESS per lb than the fat price. If you sold your calves in the fall each year, you have not been beat up very much yet (other than poor cull cow prices) as fall calf prices have been GOOD. This year may be the worst yet for cow/calf guys that sell calves in the fall. Just something to be aware of, hopefully the border opens and this all changes.

On grainland, the CAIS program may be the worst thing to happen to agriculture. With already thin margins it will cover guys who can't seed or harvest on time because they have too many acres. I do think it will be the end to medium size operations.


If all subsidies were to end it would help for farmers to know their costs. Most farms do not draw a wage for thier own labor and management, but look at the year end profit as what they made. When we buy stocks in big corporations, they pay everyone a wage or salary and then they have a stockholders return, which is hopefully in the 8-12% range. Most farms only make 3-4% on their assets without paying a wage. Maybe if farmers had to take more notice of these numbers we would be better marketers and managers. It is too bad that the profit is so slim that we even have to worry about these things!!!!

[rusty1]

poorboy - you said it better than I've been trying to tell everyone for a long time. The feedlot industry is mad at the cowcalf boys for their lack of understanding in that. Infact a large buying group told me Friday "( to %^$%^) with the cow man, what have they ever done for the feedlot industry." High prices for fats have always tricked back to the cc producer except when barley starts to climb.
The real big problem as we discussed in church today with some feedlot opperators is that The 3 packers currently hold about 75% of feeders in the feedlots right now. There is probably anothe 300,000 head of US owned cattle on feed. Plus suprise of suprises the packers are getting phone calls from c/c producers they have never heard of before who kept their calves and fed them out. Again packers capacity is killing all it can now so guess what. I listened to a feedlot operatore last week on his cell with a packer buyer. The message was that he had been told to buy 500 fats that day and he had 10,000 on the show list. The feedlot opporators are fully expecting to see fats go to $35 / cwt by summer. So guess whats going to happen to the price of calves this fall rsomer.

[grassfarmer]

Interesting guys, this is what I was alluding to in my "cattle numbers" thread a couple of days ago. If this is the case why are feeders now making considerably more money that they were in February? Surely 50-60cents /lb would be enough to pay if you are expecting $35 fats?

[rsomer]

I haven’t seen where any of the last government money the feedlots got trickled down. My take on the trickle down theory is if it works so good give the money to the packers who will pass it down the line. I don’t think anyone believes that will happen and I am surprised when people believe the 33 mega feedlots that control over 50% of the pen space act any differently. Just because they got manure on their boots does not mean they give their money away. They don’t pay any more for calves then they have to and certainly will never pay more for a Canadian calf then they can get an American calf for even if the calf is being paid for with their multi million dollar Canadian subsidy cheque. You had better believe that in the future CAIS dollars will end up in the pockets of the American cow calf producer now that the feedlots have unlimited access to U.S. feeders.

To be clear, Albertan cow calf producers benefit from having a nearby feedlot industry. I do not begrudge any of the money the feedlots got, they needed it. I do think however that the cow calf producer did not receive much benefit from the BSE payouts to date, the money never made it down to them. The feedlots cannot on one hand say the packers got all the money and on the other hand the feedlots say they passed the money all down to the cow calf man. Most likely what happened was what money the packers did not get the bankers did. The best way to get money to cow calf producers is to pay the money to cow calf producers which has not happened to date.

I have no idea what will happen to the price of calves this fall but even the most pessimistic predictions suggest the border will be open after the November elections in the U.S. I would expect that will get factored into calf prices.

The point of my comments was not to illustrate who is cheating who in this time of market failure. I was pointing out the policy toward agricultural subsidies in this country has changed in a manner that will see a competitive shift towards very large operations at the expense of medium and small producers. We already have way too much concentration in the feedlot industry and I would expect to see the same thing happen in grain farms with 50,000 acres being controlled by a single operator becoming common place. Obviously the government does not value the contribution the average producer makes to rural Canada and the economy of this country or they would not pursue policies that are sure to drive them out of business.