Killing old cows

[grassfarmer]

"But until such time as a new case of BSE does not make international news, and for certain we are not at that point yet, the negatives of finding BSE outweigh the positives of more testing."

They are at that point in many places -eg the European countries (other than the UK) that are testing their cattle and still identifying new cases with no consumer reaction or International media outcry. BSE does get forgotten about in time if the consumer feels relaxed about the safety of their beef. Having a policy of not finding cases by not looking for them is a recipe for disaster. We are doing the right things so let's not jump ship for a possible short term gain only to find ourselves back to square one five years from now amid accusations of Government coverups and dishonest producers concealing cases of BSE from the consumer.

[kpb]

Farmers_son is right on the mark here. We simply cannot afford to find another BSE case here. His arguments are very well reasoned and presented so I will not add to them. But in reply to grassfarmer we still have lots to lose by finding another BSE case--namely our boxed beef trade. Think for a moment what our industry will be like with no export of beef. Grassfarmer, we cannot afford to be the lone soldier in front of the attack. That's where we usually are in Canada and that's why every tin-pot dictator in every half-pint country in the world and every interest group in existence takes advantage of us.

Make no mistake, if we look hard for BSE here we'll find it and you can kiss our export beef market good-bye. And our good reputation and good intentions won't mean a thing then.


kpb

[kpb]

Grassfarmer, one more thing--as farmer_son has said, finding the two BSE cases in the winter surely hurt the chances of getting the U.S. border open. In fact it eliminated the chances of shipping cows. Following your argument, finding those cases should have helped our cause for opening export markets. Do you really think this is the case? What evidence do you see that other countries will be willing to open markets to us as we discover more BSE cases? I think that is simply naive and has no basis in our experience over the past two years.

kpb

[grassfarmer]

Fair enough we will just have to differ on this one - but I'm trying to point out that Canada's 2 year experience of BSE is a very short one. We will find more cases even at the present level of testing - probably very few, and we will survive them. I just want you to see the problems the US policy could get into - read the posts someone put on last night about Taiwan and S. Koreas reaction to the latest US case - it is clear they are uneasy with trusting the US. So it could be said that the SSS policy isn't exactly working for them so why would we want to join them in that same policy?

[greybeard]

Farmers_son slam dunks this one. Korea and Taiwan use it as an opportunity for a trade barrier. They spin it up as a food safety issue as it is much easier to justify.
There is no consumer reaction or media outcry because the sky never fell like they predicted early in the British experience. Consumers have assessed the risk and don’t see any. Bears kill more people than BSE. It will be historically regarded as a trade barrier and is generally seen as one now.
Positive tests result in market disruptions. Some make money and some lose money when that happens. It has become very clear who looses. Why do the ones that loose keep feeding the cows into the system?
Forget the “ ours is safer than yours” argument. It just justifies the trade barriers.

[cowman]

grassfarmer: Yea I meant I agree with you...
The other day I had lunch with an older gentleman who is involved in a lot of business deals. He told me that he has invested some money in a company that intends to market a live BSE test! The press conference is tommorrow.
This test has been developed by a group of French scientists and is supposedly 100% accurate...requires 6 drops of blood...takes 20 minutes...and will cost in the neighborhood of $20!
He named some names of Alberta businessmen who are involved and these aren't lightweights!
He said the whole thing is sort of hush-hush until the press conference, but they expect a BIG reaction when they go public! He claims they have some very interested Japanese businessmen looking into it.
If this is legit, it just might revolutionize this whole BSE thing? I'm not saying one way or the other if I think this is the "real deal" or not...because I am a natural sceptic, but I do know this man is pretty savy when it comes to business!
I'll be watching for the press conference.

[grassfarmer]

I think I mentioned this new test a few weeks ago - I was under the impression it was a German team though? I may be mistaken in that part. Like you I heard it from a very knowledgeable guy that reckons this is the real deal.
How do we use it though? Farmers_son and all the other guys beating me up on this thread don't want to identify cases of BSE, ABP/CCA and the packers don't want to test to get new markets - is this breakthrough in vain? Do we outsmart and outmarket the Americans or do we let M.R. Coyote test them all in the bush?

[farmers_son]

From a Canadian producer standpoint, we can never “outsmart or outmarket” the Americans.

The best price a Canadian producer can ever hope to receive for live fat or feeder cattle will be the American price. Unless we individually are somehow vertically integrated beyond the farm gate into the packing side or beyond we will only receive the live price for cattle. Any benefits from any marketing initiatives that might come from BSE testing, finding new export markets and so on to increase the price of beef only accrue down the value chain as far as the packer. Not to us.

The price we as producers receive is not determined by what our beef sells for. Our maximum live price is determined by what it takes to either keep our live fats from going south of the border (when the border is open) or in the case of feeders, a price ceiling determined by what U.S. feeders could come into Canada. At the best of times we are in a North American market for live cattle and given the size of the American herd versus the Canadian herd there is little we as the smaller export dependent country can do to beneficially influence the price of U.S. live cattle. Other than to keep finding more BSE positives so the border remains closed to our live fats and unfortunately we capture none of the benefits from those resulting high prices.

Unless we as producers could somehow participate in the value chain beyond the farm gate no benefits from finding new markets by BSE testing or any other Canadian based marketing efforts, either internationally or domestically, will make into my pocket (assuming I only sell live cattle which by the way is the case as it is for most producers). Therefore I as a producer of live cattle receive none of the benefit from increased testing beyond what it takes to keep our boxed beef flowing into the U.S. but I am taking all the downside risk associated with finding a BSE positive.

[grassfarmer]

I'm disappointed farmers_son that you don't believe in the potential of Canada. Yes, we can accept the same crappy deal we have been getting as primary producers or we can get out there and be the best. All you guys that quote confidently that "Canadian beef is the best in the world" - when it comes down to it you obviously don't believe it as you are happy to be commodity sellers in the US market, even allowing them prior to BSE to retail this great Canadian beef stamped "US BEEF"

Why not have a little ambition? with the image of the Rockies and the vast expanses of clean air Prairies there are people all over the world that would pay top $ for Canadian quality beef.
I've said all along we need to break the US packing cartel that is strangling our industry here - unless we do we are going nowhere in terms of prosperity. Act on that and we have the opportunity to build our own future - producer owned plants, top quality exports to anywhere - the US included. If the product is good enough we will succeed. With the launch of the new live BSE test that promises a cheap test in 30 minutes let's be the first in the world to adopt it - we can outsmart and outmarket the Americans if we believe in ourselves a little. Why go down the road of lowering our standards (by adopting their SSS Bse policy)to crawl in the back door of live exporting to the US where our cattle are worth Nebraska price less $x at the whim of the mega-packers?
A look at the highly successful, export orientated Kiwi's could teach us a few things - producing top quality beef to customers specifications, not to what Cargill deems customers "must buy". NZ exports grassfed table beef that cuts with a butter knife or it doesn't go - have we really got a better product?

[farmers_son]

You mentioned the Kiwis. New Zealand and Australia as well are good examples to illustrate the point I am trying to make. And that point is Canada cow calf producers will not get paid significantly more for their calves as a result of efforts to market Canadian beef, through BSE testing or otherwise.

New Zealand/Australia are islands. Other than some breeding stock they would not import live cattle into their markets. Therefore producers in New Zealand or Australia effectively could increase demand for their live cattle by increasing demand for their beef either domestically or internationally. Packers are forced to have a supply of live cattle to keep their plants going and since their packers have no where else to go for supplies at some point packers would be forced to bid up. Live cattle prices in New Zealand and Australia would rise in the short term until domestic cattle producers increased their herd size. Prices would then fall to just slightly above cost of production to ration supplies.

Yes, Canada can promote its beef, Canadian producers are spending their checkoff dollars promoting Canadian beef right now and we could spend double, triple or more. We could BSE test every animal, we could go hormone free, we could do lots of things. And while those promotional efforts may well be successful in selling more beef, other than a small shift in basis between Canadian live cattle and U.S. live cattle, we would not see an significant increase in the returns to Canadian live cattle producers. Profits would remain in the hands of the packers.

Unlike New Zealand and Australia, Canada is not an island. Canada is part of NAFTA but even before NAFTA there was movement of live cattle both ways between Canada and the U.S. We would have to somehow short the supply of live cattle in Canada to drive up our live prices significantly above the price of U.S. live cattle to realize any benefit from those marketing efforts and the associated costs. Sure the price of beef would rise but the packers would not be forced to pass along any of those profits to cow calf producers, they would simply import more U.S. live cattle.

It is not a matter of a better product, or not enough initiative. It is a matter of being a part of a North American market. In normal times that means we have access for our live cattle to the largest beef import market in the world. The downside is the Americans have access to our market with their live cattle. Other than shifting the basis, Canadian producers will not be successful in increasing the price of our live cattle above the U.S. price as long as U.S. feeders and fats are free to come into this country to top up our supplies.

On the flip side of the coin U.S. producers who support COOL will not see increased prices for live cattle either as the U.S. system will find ways to access live Canadian cattle to keep from being forced to bid up for U.S. fats and feeders. Viewed this way, COOL would actually give Canadian producers a competitive advantage since we would not have the costs of COOL but would still have access to the U.S. market. Attempts by either U.S. producers of live cattle or Canadian producers of live cattle to somehow gain a competitive advantage over the other will never be successful as long as there is trade in live cattle between our two countries and any dollars or other resources spent in that endeavor will be ultimately wasted.

Now if you are talking about integrating up the value chain so producers sell beef not live cattle that is a horse of a different color. Then we could increase our profitability. But right now we sell live cattle and any benefits from marketing Canadian beef by BSE testing for foreign markets will not raise the Canadian price of live cattle.