XL and cows

[grassfarmer]

What's the deal here? I hear they are switching one plant over to killing cows as of tomorrow. Presumably this is getting ready to ship OTM beef over the southern border once it opens up again - but that's not until March 7th at the earliest is it? Are they starting to kill cows now to send them elsewhere or have they got storage space to hold them until March - if so it makes a mockery of the packers lobbying Gov. not to allow testing for BSE as they couldn't afford the cooler space to hold them for two or three days while the tests were done. Or do they anticipate the UTM cattle supply drying up as feedlots put their cattle on hold until the border opens and more competitive bids roll in?

[rkaiser]

Certainly a bit more potential for exports with Hong Kong coming on, and the Macau/China connection. I would say that part of this situation is also due to the fact that BIC has promoting the hell out of cow beef. Canadians are unknowingly eating more graded D1 and D2 cows than ever before.

Once again, great work by our producer funded BIC and CBEF however, all value added is going right into the packers pockets, as we have seen nothing in the way of fair market value for our cows (((or am I missing something)))

You may also be correct in assuming storage for the March 7th date, as it is clear in the new rule that OTM beef will cross the line.

Sure could use a Levy funded producer owned plant eh.

[kato]

We sold some fats to them last week, and our cattle buyer friend told us that would be the last fats, as they were switching back to cows. Apparently they've been buying up cows left and right, and have them all over the place just waiting for the line to switch to OTM's.

It'll be interesting to see if the cow price improves because of more kill capacity, and if the fat price drops because of less. As well, aren't the fat setaside steers due to come on the market soon? I wonder what they and the loss of one plant will do to the price of the UTM's.

[gwf]

The Beef Initiative Group has always maintained that for the last 19 months, the market for OTM cattle have been an issue that few have been prepared to address, and the opening of the border (if it really happens) will not make a significant difference for this type of cattle. In my opinion the ABP and the CCA have now played all of their cards and gambled that the border opening will be the salvation of the livestock industry. In another five years or so, we will know if the removal of SRM from our marketable livestock products and what effect the elimination of ruminant-to-ruminant feed will have on reducing or eliminate BSE in our livestock. Or, we will have to revisit Mark Purdey’s theory in earnest.

Please correct me if I have the wrong read on the rules, but OTM will have to go in a box?

The following is a press release issued this morning (Jan 5th/2005) by BIG-C.

__________________________________________________ _______________________________




BEEF INITIATIVE GROUP – CANADA
234, 5149 Country Hills Blvd. N.W. Suite #437
Calgary, AB T3A 5K8

News Release
FOR IMMEDIATE RELEASE


CATTLE INDUSTRY CRISIS WILL CONTINUE DESPITE BORDER OPENING

Calgary: January 5, 2005: Contrary to optimistic statements made recently by beef industry officials about the re-opening of the U.S. border to live cattle, Beef Initiative Group (or BIG, an organization made up of producers from across Western Canada) today announced that the March 7th opening does not solve long-term problems faced by Canadian beef producers. BIG is critical of industry associations like Alberta Beef Producers (ABP) and Canadian Cattlemen’s Association (CCA) for failing to pull the industry out of a crisis situation.

Beef Initiative Group cites the following examples of mismanagement on the part of established industry groups:
· The root of the crisis is not the closure of the U.S. border but over-reliance on the U.S. market for sales and slaughter of Canadian beef. Industry groups have not accepted this fact and have therefore provided bad advice to government. The result is 2.2 billion tax-payer dollars in beef industry aid which has accomplished little.
· Industry groups have focused all of their energies on re-opening the border at the exclusion of any alternative solutions. After the border partially re-opens on March 7th, there will still be very few places to slaughter over thirty month animals which are accumulating at a rate of 400,000 animals per year. Canadian producers will also remain dependent on American-owned packers to slaughter almost all of their under thirty month fed cattle.
· Since American-owned packers slaughter over 80% of Canada’s fed cattle, it is difficult for the Canadian beef industry to independently establish markets beyond North American borders. Also, American meat packers have representatives on advisory boards to both CCA and ABP.
· Alberta Beef Producers were presented with 76 resolutions from producers at their Annual General Meeting (December, 2004). Several of these resolutions called for discussion of producer-owned slaughter plants but ABP delegates voted against them.
· ABP delegates are elected by a mere 5% of Alberta’s beef producers and can no longer claim to speak for the majority of farmers and ranchers in this province.
· The recent discovery of another BSE infected cow in Canada highlights Canada’s vulnerable position regarding its ‘minimal risk’ BSE status. Canada will test 30,000 animals in 2005 as opposed to the 8600 tested in 2004. It stands to reason that other infected animals are out there and will be found through increased testing. What if several more cases are found? Will the U.S. border close again? How then will Canada gain access to international markets?

Beef Initiative Group is calling for construction of a large-scale slaughter plant to process beef over thirty months of age. The plant would be bridge-financed by the federal government with a levy, or check off applied to cattle sales in order to pay off the debt. Under this arrangement, producers would become owners of the plant on a share basis. In addition, the BIG proposal stipulates that all beef coming out of the plant would be BSE tested. “We know that there are international markets for over thirty month beef, but it has to be tested. We believe that this is a logical, long-term solution that strengthens Canada’s potential to market beef around the world,” explains Grant Hirsche, Vice President of Beef Initiative Group.

Beef Initiative Group has garnered support from thousands of producers across Western Canada and will continue to lobby government for a producer-owned packing plant. BIG will focus on Ottawa and provincial governments to garner an audience for the producer’s voice. “ABP and CCA have demonstrated their unwillingness or inability to convey the interests of the producer accurately to government so therefore, BIG will work around these groups rather than through them,” says Cam Ostercamp, President of Beef Initiative Group. BIG will be meeting with Federal Agriculture Minister Andy Mitchell early in the New Year.

- 30 -

[campbellc]

In response to the comment that Canadians have being eating more cow beef than thought ...... yes, they have and for some time. What animal do you think the $10 steak sandwich luncheon special originated from? It sure was not a "fat steer or heifer". For some time now well over fifteen plus years and quite possibly longer there has been a butcher cow trade. Whole muscle meat cuts from these carcasses has been finding its way into the high end restaurant trade. It hits the right price points to satify the restauranteur and provides the consumer with a satisfactory if not excellent eating experience. This trade originated primarily due to the mix of genetics in the cow herd the exotic cross females have the ability to muscle up and fatten and put a superb carcass up on the rail. With ample feed and proper handling of carcasses (ie - Aging), these cows have developed an niche for themselves of significant value.
XL is moving to become "the" cow killer in Western Canada because they would be basically unopposed until the border opens to the movement of live cows south, live cow prices will be "their" price and the margin in these carcasses will exceed the margins in fats. As it presently stands, the ruling in question in the US is open to the movement of cow beef ito the US. There is no quarantee that it will be allowed but if it is, Xl is in a very enviable position. This type of beef is in very short supply in the US and they are/will be the sole slaughter of cows in Western Canada (unless the US drops the requirement to segregate UTM & OTM cattle at slaughter by facility preventing Tyson from returning to the cow trade.
The cow calf guy in Western Canada will be over the barrel in terms of marketing cows and again be price taker until the border closure for live cow movement is lifted. XL has been complaining for some time now that they can not get sufficient numbers of cows. But as it was bluntly put to them, it was a simple equation to solve - offer more money. That was met with silence! And as we all know cow prices have not moved significantly. So why will it change???

[rkaiser]

In the summary of changes made to the final rule, #14, and #15 refer to OTM beef, and I read it as though they will allow plants to kill both OTM and UTM again.

Rule is available on the ABP website
http://www.albertabeef.org/

[grassfarmer]

rkaiser, was that the document that Pandiana said took a day to download? It took me a while but when I got it I can't see the rule #s you mention. Do they specify whether the cattle are allowed to be killed on different lines in the same plant?
This occurred in the UK too - our exporters thought they had been granted a good deed when a similar thing was allowed. In reality they were able to kill on one line but only on seperate days - the hassle of switching back and forth and sterilising equipment proved price prohibitive so they remain largely unable to export. As they say the devil is in the detail!

[greybeard]

A Heartland buyer told me today was thier first day killing cows at Moose Jaw. He said he thought other plants will switch over when fats start heading south.
I expect they will,as it will be much more profiable. They go to the money. They buy the cows at a Canadian only price and sell them at a North American or even a World price. They won't have a big advantage with fats anymore, so why keep running them?

[rkaiser]

Shoot grassfarmer, I couldn't copy and paste from the document.

Third page of the Federal register Rules and Regulations, Summary -#14 and #15 read -
#14
We are removing the proposed requirement that imported meat derived from bovines from BSE minimal-risk regions be derived only from animals less than 30 months of age when slaughtered.
#15
We are removing the proposed requirement that meat derived from bovines in a BSE minimal-risk region come from animals slaughtered at a facility that either slaughters only bovines less than thirty months of age or complies with an approved segregation process.

[kato]

What is Cargill and Lakeside doing now with those who fail the mouth inspection when they get to the plant?