Still the Apathy

[pandiana]

Like Randy and grassfarmer, I was very disappointed at the meeting attendance. There was probably thousand/s of people attending the trade fair. ABP could have done more to point to the Hall in which the meeting was held, but this doesn't account for the lack of attendance. I found myself asking the same questions about whether people are really interested in a solutions to this problem. If you go to an ABP meeting, packer capacity is near the top of the list of concerns. When talking to people at the sale barn, or neighbors on the phone, they talk packer capacity. When it comes to getting beyond talking, however, nothing happens.

Of the four packer proposals that were discussed at the meeting, many people didn't even stay to hear them all.
Cam Ostercamp as always gave a very clear picture of the problem, especially as it pertains to the primary producers. He indicated that he would support any packer project if he can't get support for the check-off proposal.
There is a very comprehensive update of all packer proposals in the Western Producer. It is rather overwhelming to think of how much money is being spend (or hours of free labor) by individuals trying to put together proposals and getting them funding. It seems such a waste of time and money when so few of them will likely be completed. Government support of one or more plants would have left a lot of energy in the industry to do what farmers do best...farm.

[farmers_son]

Sash: Re your comment that anyone who wants to invest has lots of options.

Doesn't that ignore the reality that a lot of primary producers will not have available cash or even room to borrow to participate in those options?

That leaves the opportunities that exist only available for off farm / non agricultural people. That ignores the competitive advantage that exists if it is primary producers who own the plants and are creating that unbroken value chain from producer to wholesale and beyond.

Pandiana: I hope Tony Saretsky got a nice tan on his visit to Cuba. I may becoming quite a cynic here but I don't get all that excited about the possibilities of more live cattle trade with Cuba. I really doubt the U.S.A will be swayed by what Cuba is doing. Live cattle trade is not where it is at. At best only a short term solution when I was hoping to see a long term strategy.

Noting the comment that India could be the world's number 3 exporter in the foreseeable future. I have pointed out in other threads that when it comes to world trade Canada is a net importer of beef if trade between NAFTA partners is factored out.

[pandiana]

farmers_son, you said"Could it be because the ABP/CCA steadfastly refused to accept there was a risk of BSE in Canada and pursued policies that saw our industry become ever more dependent upon live cattle trade across international borders while ignoring the risk to the industry if that border closed."
I am not sure how ABP acceptance of the BSE risk in Canada, a reality that cannot change, would affect the policy of re-openening the border. I agree that for many months, reopening the border was their primary target but what has that got to do with the "acceptance of the BSE risk in Canada".

Could it also be because the ABP/CCA are set upon maintaining the status quo, and have not articulated a vision for the industry post-BSE. Could it be because the ABP/CCA has not indicated that they are able to react to change. "

I would agree that the position of ABP/CCA seemed to be to maintain/resume US trade as their number one goal, possibly hoping that if the border opened to live trade, the need for packing plants in Canada would become a non-issue. The easiest but not necessarily the best solution.

I would have hoped that they would have seen the writing on the wall a little sooner regarding taking back some control of our kill capacity so as to reduce our vulnerability in a one market situation.

Nonetheless, I do believe they have recognized this an have certainly changed their stragegy. On the other hand, getting something accomplished has been difficult. In response to ABP's lack of communications (accountability) the Town Hall meetings were initiated. Is this a good thing, an opportunity for producers to express their concerns and opinions, or is ABP going to be accused of wasting time or reckless spending of producers money, or...?

One thing I have learned as I become more involved, there are many individuals that give up a great deal of time from farming to travel to meetings, etc. Individuals a that spoke at Rimbey and Edmonton probably spent 5 to 6 hours of their day in a car to get to these meetings.

[farmers_son]

When you say hoping the border would open is the easiest solution I would question easiest for who? The delay in the border opening has been a direct cost to producers in the magnitude of 2 paid for packing plants per month, nationally. That is a very costly solution for producers, not an easy solution. It has been an easy two years for the packers however.

I acknowledge there was a time when the border opening to live cattle seemed like the quickest solution but if we take our information from the ABP we are now looking at another 9-18 months at least before the border would again see live cattle cross. To me, that should have raised some alarms and been a call to immediate action.

To answer your first question…Our industry leaders have been and I believe still are focused on live cattle trade between borders while turning a blind eye to the reality that these borders can close due to health issues. And while you would think in hindsight we should have learned our lesson I am concerned that lesson is yet to be learned.

[farmers_son]

I should have mentioned the respect I have for the people you mentioned that drive for hours and take time away from their own operations to speak at these meetings and represent our industry. My hat is off to them and although sometimes I may not see eye to eye on certain issues they certainly have my respect and admiration.

[SASH]

Farmers_son wrote: Doesn't that ignore the reality that a lot of primary producers will not have available cash or even room to borrow to participate in those options?

I hear what you are saying, however, I was at a bull sale Saturday and guys were paying pretty decent money for some of those bulls. So the money has to be coming from somewhere. If producers felt that it was a priority, they would come up with the money.

[SASH]

Isn’t that a bit like saying farmers are paying more for fertilizer and fuel so why don’t they have the money to invest in packing plants?

Of course the money to purchase bulls and other inputs is coming from somewhere and that somewhere is either going be profits, debt or equity.

Alberta Net Farm Income including government payments declined by 126% in 2002 from 2001 levels and in 2003 declined by a further 525% so it would appear the money is not coming from profits.

Canada’s beef producers have experience equity losses estimated to be between $5-7 Billion due to BSE so the money is not coming from equity.

In Canada, 2003 average farm debt was $200,000 while average income was $25,000, income was 12.5% of debt or our level of debt was almost 3 times larger for every dollar of income than the U.S. Obviously we are keeping the farm going by borrowing more money.

Producers have little choice but to keep investing in bulls even if they have to borrow the money to do it. I do not believe producers are sitting on bags of money that they are just unwilling to invest in packing plants and other value added initiatives. The banks are not going to lend you money to invest in a packing plant, ain’t going to happen. There is no free cash flow on the farm to do anything but pay down bills and debt.
So the farmers are trapped between the packer monopoly and their own crushing debt.

Any solutions to the need for more packing plant capacity needs to keep in mind the reality of the predicament that producers find themselves in.

It is folly to suggest that producers are not investing in producer packing plants because they don't feel it is priority. Well I guess it is not as high of a priority as making their land payment or paying their feed bill or putting food on the table or even buying a bull. The simple fact of the matter is that the majority of cattle producers in this country just cannot afford to invest $100,000 in a packing plant venture.

[farmers_son]

Isn’t that a bit like saying farmers are paying more for fertilizer and fuel so why don’t they have the money to invest in packing plants?

Of course the money to purchase bulls and other inputs is coming from somewhere and that somewhere is either going be profits, debt or equity.

Alberta Net Farm Income including government payments declined by 126% in 2002 from 2001 levels and in 2003 declined by a further 525% so it would appear the money is not coming from profits.

Canada’s beef producers have experience equity losses estimated to be between $5-7 Billion due to BSE so the money is not coming from equity.

In Canada, 2003 average farm debt was $200,000 while average income was $25,000, income was 12.5% of debt or our level of debt was almost 3 times larger for every dollar of income than the U.S. Obviously we are keeping the farm going by borrowing more money.

Producers have little choice but to keep investing in bulls even if they have to borrow the money to do it. I do not believe producers are sitting on bags of money that they are just unwilling to invest in packing plants and other value added initiatives. The banks are not going to lend you money to invest in a packing plant, ain’t going to happen. There is no free cash flow on the farm to do anything but pay down bills and debt.
So the farmers are trapped between the packer monopoly and their own crushing debt.

Any solutions to the need for more packing plant capacity needs to keep in mind the reality of the predicament that producers find themselves in.

It is folly to suggest that producers are not investing in producer packing plants because they don't feel it is priority. Well I guess it is not as high of a priority as making their land payment or paying their feed bill or putting food on the table or even buying a bull. The simple fact of the matter is that the majority of cattle producers in this country just cannot afford to invest $100,000 in a packing plant venture.

[SASH]

Well, you know that I've advocated all along that the government set these packing plants up as a Crown Corporation and let us buy them back through an IPO later. Unfortunately, since we can't get any consensus from producers of what we want done, that is unlikely to happen. Everybody seems to stand around and criticize the government but I'm sure that there is some group of producers that is whispering in their ear telling them what they think should be done. I'm sure the people in the government just scratch their heads and think we're such a bunch of idiots because we can't seem as producers to get agreement on anything. JMHO.

[farmers_son]

There are countless ways a producer packing plant could be structured and funded. I do not exclude any of them. Included with crown corporations are what are called shared governance corporations. A notable example is the Canada-Alberta Beef Industry Development Fund which will be well known to the ABP/CCA.

Other examples include the Canadian Livestock Records Corporation, Canadian Farm Business Management Council (CFBMC), Bank of Canada, Canada Hibernia Holding Corporation, Northern Native Fishing Corporation, Cape Breton Marine Farming Limited, Cominco Ltd., Canada Lands Company Limited, Purolator Courier Ltd.


There is a list of Canadian Crown Corporations at:

http://www.tbs-sct.gc.ca/report/CROWN/02/cc-se-02-4_e.asp

If when you say producers need to form a consensus, you mean producers such as you and I, I believe that should not be expected.

Many tens of million dollars are paid by cattle producers throughout this country to their respective industry organizations and producers have every right to expect these leaders to come together and reach the necessary consensus on how best to see producers participate in needed packer expansion in this country. I am still waiting for that to happen.