Are we truly Integrated

[cakadu]

Cedar brings up the point about being an integrated market and I'm curious to know how some of you feel about it. I'm sure that there will be many opinions on it and maybe the opinion has changed the longer the border has remained closed.

Are we well and truly integrated or are we integrated because we have been told that we are? I certainly don't know all the ins and outs of the beef industry - have learned a lot from all of you - but from what I can gather it seems as though that over the years Canadian producers have shipped any value that they have in their animals over the border because the animals were either killed here and boxed and exported or the older animals were shipped out and the value exported.

The other question I would have is the matter of the inegration being equal or has that balance been skewed as well? We shipped our older animals down there, the Americans wanted to send more feeders up here, so we relaxed our restrictions on various diseases to enable these cattle to have access to be fed up here. Were they being fed for the packers to buy, thereby regulating prices paid to Canadian producers?

It also seems to me that the integration works when it suits the US and we are dropped like the proverbial hot potato when it doesn't.

What are your thoughts?

[farmers_son]

When you ask are we well and truly integrated, I think you need to distinguish live cattle from the beef trade and raw resources from value added. I see evidence of integration when you consider the quantities of beef being exported to the U.S. But until such time as producers become integrated into packing plants and beyond we only deal in live cattle. "We" don’t export beef, "they" (Cargill and Tyson Foods) do. Until there is shipment of live cattle across the borders we producers are no longer integrated with that market. We became disconnected from our U.S. live cattle market and the competition it provided. As producers of live cattle we were completely dependent upon the U.S. for live cattle markets, competition, even risk management (hedging on the CME). We only thought we were integrated with live cattle, we found out different.

When you suggest that producers have shipped any value over the border I think it doesn’t make any difference if the beef was exported or not. The producers gave up any opportunity for further value when they sold the live animal.

So we have two markets, a beef market which is quite integrated with the U.S. and a live cattle market which is certainly subject to trade disruptions due to disease issues. I don’t think you will ever get past the disease problem with live animals and in hindsight we all see that. The international border will never be invisible when it come to live animal trade and our industry will need to adjust to reflect that reality. That not only means increased packing capacity on this side of the border but adjusted feedlot capacity that is more in line with the ability of the Canadian cow producer to supply it.

It is just as foolish to build feedlots on this side of the border to feed U.S. calves as it is to ship live calves to the U.S. to be slaughtered. Disruptions are bound to occur. If we need to increase our domestic consumption of feed grains so as to add value here in Canada we will need to increase the size of our cow herd to accomplish that end. I see that we are already doing that, even if not by choice. We will never achieve such a dependable and reliable degree of integration with the U.S. when it comes to live cattle that we can build our industry around it.

Integration works when it favours the U.S? Those packers in the U.S. who depend upon our live cattle are not benefiting so our present lack of integration is not working for all American interests either. Looking at the big picture Canada and the U.S. are each others biggest trading partners so that suggests a high degree of interdependency and mutual benefit. If you look where the trade disruptions occur it is with the raw resources, live cattle, hogs, wheat, softwood lumber. We can bitch about it or we can add value to the products here in Canada and ship value added goods south. Better all the way around. If the damn Americans don’t want our raw materials send them processed, packaged, value added products. Its like duh...

[farmers_son]

Up until May 20/ 03, some cattle feeders felt that there was some integration. They were offered forward contracts, and paid 4 or 5 cent premiums for cattle that Cargil and Tyson found 20 cent premiums for in the wholsale, or retail market. I guess you might call that integration.

Since May 20/03 ----------- 0 integration. Only profit taking on the backs of producers of this country.

I agree with farmer_son whole heartedly. Other than a few tiny integrated niche markets, there is a Beef industry in Canada, and a Cattle industry in Canada, and producers of this country need to wake up to this reality and quit sucking up to the bast^#^$ who are stealing our product.