So… Does the Border Open or Not?

[farmers_son]

Checked the CME Aug. Live cattle futures and in mid day trading they are up 70 cents to 80.60 after Fridays close of 79.90.

[cowman]

I suspect you are at least partly right, farmers son, about the US government "managing" the situation. However, when you get a group openly questioning the integrity of the USDA, then you might have a problem?
I have always said R-CALF was playing russian roulette when they were telling consumers that Canadian beef was diseased and had the potential to kill them? Now they have taken it a step further and said the USDA are a bunch of liars and you can't trust the AMERICAN beef supply!
It is a sad thing when a group hates the packers and Canadian beef producers so much that they will cut their own throats to prove their point!

[madcow]

It's been a rough old ride over the past two years.But wheather the border opens or not isn't the biggest issue here anymore is it?How do we claw back our fair share of thr retail $'s??.If the border opens and the U.S. short supply eases up demand ,then price drops, where does that leave us?

[cowman]

madcow: I get out and about quite a bit and I talk to a lot of people. The general consensus I am hearing is no matter what happens...the beef business will never be what it was prior to BSE.
I believe that is true.
I suspect if the border really opens to how it was pre-BSE, we will see a decent increase in prices, especially for the cow trade? This will allow a lot of producers to exit the industry...with the shirt on their backs! So many people are so sick of this business, they are just waiting for the chance to bail!
I believe we will see an exodus of producers very much like we saw in the hog business? Most of the little guys will decide to go?
I don't believe we will effectively reduce the Canadian cow herd...just the number of producers! The drive to big cow herds will really pick up?
Of course with the concentration of the cow/calf industry you will see a more efficient system evolving? The end of the small time purebred breeder will almost surely happen, except for the truly superior breeder of exceptional livestock. The big cowman will want to do all his bull shopping at one place and you will see the further rise of the large seedstock producer, who will offer a variety of breeds and crosses. And I also believe the prices will also come down to a more realistic number?
BSE will bring a revolution in the cow/calf business. In reality it will be just like what happened in grain production and the hog business? Oh well it sure was fun while it lasted!

[farmers_son]

Madcow: I do not think we have ever received our fair share of the retail dollar. Has nothing to do with BSE.

Yes, the last two years have been tough but not because of BSE. Our beef was trading for record high prices. However the U.S. closed the border to live cattle cutting us off from our source of competition allowing the packers to fix the price of live cattle just high enough to avoid intervention from the Canadian government.

Opening the border will help. I do not expect U.S. live prices to drop below where they are now. But no one should be fooled into thinking that the price we will receive will be “fair” after the border opens any more than it was fair before there was BSE in North America.

Remember the U.S. has a number of restrictions on live cattle moving into the U.S. under the proposed rule even if the border did open. Those restrictions put our industry at a disadvantage and will lower our price of live cattle even though the U.S. has admitted they have BSE too. There are no similar restrictions planned or announced on U.S. live cattle entering Canada. We would presume that at some point in the future all these BSE restrictions would come off but the reality they should be off today not next year.

Once the border opens Canadian cow calf producers still will not receive their fair share of the retail beef dollar. We will continue to receive just enough money to keep producing more weaned calves and that is all. A marginal break even situation. That is not going to change.

The packers will continue to pay us just enough to keep us raising more cheap calves and nothing more. The packers will pass their losses along to us but never their profits. If you can raise that calf $50 cheaper than the next guy maybe you make a little but a little is all you will ever make. If you want that share of the retail beef dollar you mentioned you need to get involved in the beef side, not the live cattle side.


If you want to share in the profits that can be realized by adding value and participating further up the value chain to the retail level you will not be able to do that by selling your calves in the fall at the local auction. It was that way before BSE, it is that way now and it will be that way after the border opens. Producers of live cattle will not receive their fair share of the food dollar. Their returns will continue to be marginal, break even and subsistence.

[madcow]

cowman & son farmers_son, you're not painting a very pretty picture of the future for the Atlantic region family farm.We don't have many land opportunities to have large operations,the average cow herd here (I think) is around 25 cows,I run 45 cows ,and going to about 100 ewes(45 now) 20 acres of blueberries,10 acres of Christmas trees and 40 acres of maple woods and another 90 acres of wood lot.Typical atlantic canadian farms are diversified and that will likely be the only thing that saves us.It also seems to keep us broke,good proping up the poor, and they change places from year to year,this is our biggest problem with the CAIS program not helping much here..A good thing we farm for the fun of it and the healthy lifestyle(can't afford any bad habbits Ha!)
A lot of our feeder calves are finished on PEI but the new plant ,as with the old Hub Meat Packers, pays on an Ontario minus trucking ie. Ontario last week was $1.43, PEI $1.36. We produce less than 20% of our local consumption ,so 80% costs us Ontario plus trucking.Many of us would be happy to be at par with Ont.But there is an arguement for the fresh, on the door step to be worth Ont .It is as you have said, BSE hasn't been our only problem and the border isn't going to fix it,but lets hope it helps.

[grassfarmer]

With supply and demand ratios like that madcow aren't you tempted to direct market your beef? get Ontario plus 20% prices into your own pocket less the kill charges. I would imagine with the diversity of operations you have you would be able to manage another enterprise (marketing).

[madcow]

Do I detect some sarcasm, we have some of that here too,home grown.But seriously.
Been there and tried that already,Had a truck on the road a few years back,carried pork,processed meat ,eggs and cheese.There are four other outfits in the county doing that, I had to rent a shop to work out of, it took a lot of time but made enough to pay its way,but not enough at this time to justify a shop of our own.Works fine if you don't have to run the farm,3 of the 4 don't farm ,just handle the meat, the other is a large family farm and they have the family members to do it.May be an option when my kids get older .Freezer beef trade isn't worth the hassle here ,alot of seasonal workers,order in the spring ,when its ready in the fall is about the time they get laid off,then comes the story---christmas is coming ,my UI hasn't started, I have to catch up on the power bill first etc,about 25% of the money you had to chase all winter and when the meat's all gone it's hard to get the money( I know ,,,don't deliver without the $, but I can only store so much and it led to hard feelings in the community if I held back for the $ ). It was easier to load the calves on a truck and go cash my check.Another problem we have here with direct retail is it seems you need to be about 25% below the average of the chain stores to keep people coming.
The 20-80 % ratio I mentioned earlier refers to the retail store's volume in the Atlantic region vs our production and does not take into account farm direct sales volumes.

[grassfarmer]

No sarcasm from me madcow, we started direct marketing some last year and are doing it again this year. As you say there are problems with it to - we offered a half payment on delivery/ half 6 months later as well as the regular cheque on delivery. Got stung with one customer which is a shame as the rest appreciated the offer. Most realised the position producers are in and were happy to pay on delivery. The customers we have are good ones, loyal and willing to pay you a fair price for the beef. At the same time it is only a sideline at the moment and we are not rushing to double our customer base. I think it is early days for direct retailing grassfed beef in Canada but hopefully it will grow the way it has in the US.

[madcow]

grassfarmer ,I hope your right and that the grass fed market takes off.How large and what type of outfit are you running ,and where abouts are you?
We do sell some to the locals we know and trust but that doesn't amount to much.We picked one up at the shop yesterday,a small cow that couldn't calve,about 300 lb hamburg,we'll have another to go in Sept,does't look like she is going to calve and she'll be fat by then.Most of what we depend on (as far as beef goes )comes from sending feeders to PEI feed lots though and that future doesn't seem any too bright yet.The blueberry crop looks good so far,been wet and humid,hard to make hay though.