An Alternative Solution

[grassfarmer]

I tend to agree with cswilson on this one, nice idea but how likely is it ever to happen? Given the total lack of interest / backbone/ leadership shown by politicians thus far I can't see them pushing for this radicle proposal. The packers are unlikely to "do the decent thing" in opting for this deal given their bold faced cheek when dealing with government as seen in the request to look at their books fiasco.

[rsomer]

You are right. This might not happen for a number of reasons. Although governments have about 2 billion subsidy dollar reasons why they would want to see this happen so they don’t need to bail out the industry another time. The feedlot industry has about 2.4 million reasons why they need the markets to work and they all have 4 four legs. I have not heard of any other short term solution other than the border opening that would work.

This falls calf run is approaching, not the mention a backlog of fat cattle just waiting to come onto the market. The market thinks there are about 500,000 calves still being fed on the farm by the original owner. I do not think there is the optimism out any more that the border is going to open before the election and if Kerry wins the election the border may not open for a long while after the election.

We have been fortunate that producers have not been forced to dump cattle onto the market because of drought. We could easily see a situation develop where feedlots are forced to buy hook space by letting the packers have their fats at further discounts. Up to this point producers themselves have supported the market by holding back cattle from sale. That backlog is a tidal wave just waiting to come ashore.

I know my number one choice is to see the border open to live cattle. And being the eternal optimist I always see the possibility that it might. But it is just madness to pin our hopes on the border opening and not look after fixing our marketplace at home if it doesn’t.

[pandiana]

I would strongly agree that we are not in what could be called a 'Free Enterprise' situation unless of course it is defined as the Freedom to sell at a loss now or sell at a loss later and see which is the better loss. We have the freedom to own our land and cattle if the bank doesn't. We are free to sell our cattle at any time if we can find a buyer who will pay an honest dollar. I talked to a farmer the other day that has pens full of fats that can't even get a bid on them.

We are free to sell our natural resources and buy them back value added at 'fair market value'.

Frankly, I don't know what free enterprise means anymore. It certainly doesn't work in the way that it was envisioned by Adam Smith. This always happens when there is an unequal distribution of wealth. Farmers who think they are free enterprisers are delusional.

[cswilson]

Guess I'm delusional but I'm also realstic if the shoe was on the other foot and we were a drastically short of fat cattle I don't think any of us would be dropping the price to help the packers. When the feedlot guys bid big money for calves did anyone say-'that's too high I'll take 20 cents less' not likely. Having only two plants does suck but that is our reality till more are built-trust me two plants are better than no plants. The packing business is tough and cutthroat I guess were getting a bigger taste of it now than any of us would of invisaged.

[jensend]

i agree with cswilson. what's happening now is free enterprise in action. grain farmers didn't offer feed at cut rates when the drought was on and feeders don't raise their prices for calves just to share the profits. we've helped ourselves into this situation and we're the ones responsible for solving it so something like big c is just another step in the evolution of the industry.

[jensend]

Kind of hard to imagine those big bucks offers cswilson. What is 20 cents a pound, $120.00 for a 600 pound calf. Is that big bucks? $40,000.00 for a new pick up. Now that is big bucks. I am not saying you are wrong, just a comparitive.

I guess I have a question concerning this basis movement. Is there to be a similar maximun basis for the calves bought this fall? Have a hard time getting through my head how packers and feedlot folk trying to survive are not going to try and survive a bit more by grabbing some cheap calves whenever they get a chance.

[BWC]

This whole thing sounds like a great deal if it all goes through. But....
you take away my abilty to make money you also take away my ability to lose money. Does the political will have the guts to take on the big packers? Is this trade friendly? If so is it not the first step to supply management? This thing could save some people in the short term, but could also be very damaging in the the future, if such a thing exists.

[cswilson]

Ohh come on RP when calves were skyhigh we took our money and laughed-I'm sure you heard how dumb the feedlot guys were to be paying that much. I'm just saying you can't interfere in one sector and not others.

[cakadu]

BWC - supply management works only in a domestic system, so making the whole beef system fit into a supply managed scenario would be very difficult, considering we export about 80% of our beef - in total tonnage.

The US on the other hand, exports about 10% of theirs - again based on total tonnage.

There are big markets that exist for things like tongues, eyes and a few other things as well, so that is some of what is hurting us.

For years we have wanted to sell beef only one of two ways - live across the border to the US, or in boxes to customers around the globe. I remember several years back when a certain beef delegation went to Japan. Now, as has been pointed out in some of these threads the Japanese market is a huge market. At this particular time, the Canadian delegation wanted to sell beef in a box to a customer - the Japanese - that wanted to buy only a particular cut. The sad part is that no deal was made because one side wanted to only sell beef in a box. The Japanese wondered why they didn't want to take a look at how much they wanted to buy or how much they were willing to pay.

Unless and until we move ourselves from a production focus to one of a market focus i.e. giving the customer what they want - then we will be in a less than favorable position.

One of the good things that I believe will come out of this whole mess is that customer focus will finally be order of the day. The other good thing is that many solutions are being generated. Maybe one solution in it's entirety will not work, but a combination might.

It's time that the producer captured the value in what he/she is producing.

[cakadu]

Sorry wilson, just can't get my head around "sky high". If anyone has made any big money in the last ten years in the cattle business, please step forward.

Another thing I wonder about is this stuff about Canadian Exports. Sure beef leaves this country, however most of it has changed hands to American ownership before it makes that final leap across the border. Even our own consumers here in Canada pay the American equivilant price for wholesale beef less a bit of transportation and maybe export permit costs. Won't it be nice when we do have a Canadian owned Packer actually exporting Canadian Beef.