North American Integration

[cakadu]

I have read your posts with respect to the varying views on this concept and/or reality of a North American beef market with great interest. Both sides have some very valid points that they make.

What I wonder about and would like to hear your responses on it - should we keep the N.Amer market integrated or should we go back to looking after our own - much as the Americans appear to have been since May 2003? Is it in any way possible to go back to looking after our own interests first, or in the alternative, should we look at doing that?

This is such a huge industry and business, with many spin-offs, so I wonder what we can do to protect our own future?

[grassfarmer]

I would very much like to go back to looking after our own industry. That would allow us to carve our own marketing identity and given that Canada is a lot more popular country than the US around the world I think that could only help us.
Sadly the talk of an "integrated N.American market" in my opinion means the industry in Canada is increasingly owned and controlled by Americans. It does not go both ways - they have total domination over us, we have no power to resist. Opening the border to live cattle doesn't change things - it lets 4 or 5 US companies kill 90% of our UTM total rather than the current two. To me accepting the "intigration" of the N. American cattle industry is accepting the taking over of our Canadian industry by the foreign and trade hostile US. I am not comfortable with this scenario.

[SASH]

In my opinion, knowing that the Americans can and will close the border down on a whim should be pretty good motivation to make sure that we have the capacity in place to process everything we grow. Canada's economy has traditionally been based on supplying raw materials to other countries so that they can process them and make money off them. I think that thinking needs to change. I don't care if the US border opens or not, getting packing capacity to a point where we can process everything we produce has got to be a priority.Of course like that Comedian says 'Canadians are so apathetic, but what're you gonna do?'

[wd40]

Those who aren't interested in MARKETING something we have to be proud of, should get out of the beef business!

Let the TRUE CANADIAN OLD PIONEERNG INDEPENDENT SPIRIT PREVADE once again.

A Canadian delegation who just came back from Washington and who met with the TOP were nicly told that the Americans arn't interested in Canadian woes.

So we better wake up!

[farmers_son]

Unfortunately I am not in the beef business. I sell live cattle. If I were in the beef business I would be receiving record high prices even without the border opening to live cattle. Until I am able to participate in a packing plant or else have a method of actually selling beef I am simply a producer, not necessarily a marketer rather a price taker, of live cattle.

I am not surprised that Americans are not interested in Canadian woes. However they are interested in their own problems of which they have a new one. However that is not to say that solutions to the problems of Canadian and American producers do not have common solutions. I for one would have no problem forming a producer packing plant coop venture with American producers if it created competition for both our live cattle and a viable means for us to participate further up the value chain.

[cakadu]

Part of what got me thinking about this were the comments regarding whether or not we were actually a true partner with the US. Wouldn't the live cattle versus beef be somewhat like splitting hairs? Seems to me you don't get one without the other.

It has been my understanding that about 70% of our cattle were going to the US (whether in a cardboard box or in a cattle liner) and that the bulk of our exports made up less than 10% of their total domestic needs, which would indicate that they do not need us anywhere near as much as we need them.

Believing that we have an integrated market seems to have held us back far more than it ever will the Americans. Either way - whether on the north or south of the 49th parallel, the Americans were getting our cattle/beef for a song. Was there ever a time when a good price was paid to the Canadian producer for the live cattle that were sent across the border? I know that our strengthened dollar affects exports of all kinds of goods. Were there periods when cattle were affected?

What sorts of challenges would there be to taking back the industry? How much of a reality could it be if the packing capacity were realized here in Canada?

[farmers_son]

You might be interested in this news clip titled "Canada, U.S, Mexico push for closer relationship"

http://www.cbc.ca/story/business/national/2005/06/27/econ-cooperation050627.html

It is obvious to me that NAFTA is not going away any time soon. It is up to Canadians to make NAFTA work for them. One way is to take our advantage of priviledged access for our beef products in the United States by building packing plants here.

[kpb]

As I have said in another post we are no more partners with the U.S. in cattle trade than we are with them in any other commodity. In Canada we generally sell raw commodities to other countries--quite often the U.S.-- that process them and re-sell them, either back to us or to other countries in the world. There are exceptions to this but it generally rings true.

The U.S. will always look after its own interests first as it should. The U.S. government is responsible to the people of that country not to other countries that may be offended by its stance.

Farmers_son has recently raised the most interesting point that I have read in this forum in quite a while--namely that increasing beef sales does not benefit the primary producer because of the stranglehold that the big packers have on processing cattle into beef. Farmers_son, I hope I have paraphrased this correctly--to me this point is absolutely vital. Consider what this means in terms of marketing efforts--if we sell more beef internationally we are, in effect, only benefiting the packers. They, ultimately, set the price to the producers and that price can really be whatever they want it to be.

Likewise until or if we get together with U.S. producers, any marketing efforts anywhere will eventually only benefit the packers who hold all the power since they control the means of processing our raw product.

I have become increasingly pessimistic about the outlook for our industry over the past two years. I believe the only hope for producers is to control the means of processing their product through packing house ownership. But I see no chance of this happening. Over the past two years, when all our thoughts and efforts should have been on developing our own packing industry we have in fact seen more concentration of packer ownership.

There can be no more galvanizing event than BSE to create more producer-owned packing plants, yet it has not happened to any extent and we have, in fact, lost ground. I see no chance of this taking place, no interest in the government in sponsoring it, no outside investors stepping in. As a result we will always be slaves to the packers, subject to the whims of international and corporate decisions beyond our control and, I suspect, see an inevitable shrinking in the number of people in our business over the next five years.

kpb

[cowman]

Linda: Of course there were good times for live cattle trade. In the year of the drought American feedlots stepped in and bought up 500,000 feeder calves at very good prices. This cross border trade has been going on for a long time.
The fact is before the death of the CROW Canada was a net importer of beef? And that at one time practically all our live cattle, as well as carcass beef, went to the east. When the CROW died the grain farmer had no recourse but to move into cattle and hogs in a big way, thus creating the problems we have today?
Practically every purebred breeder will tell you how important that American trade is/was? I can remember the American ranchers at the Calgary bull sale buying up the majority of the good bulls.
Packers are just like any other business? No different than Shell or Esso? The government sets the rules...the corporations play by them? So who is to blame?
The old "Canadian Packers" were not some sort of angels! They fixed prices, they used captive supplies to drive down the price, they used predatory business tactics and they blacklisted certain producers! Canada Packers was mostly owned by British interests! Until the government puts new rules in place does it really matter where the pirates come from? The other solution is a producer owned co-op type of deal...and that surely doesn't seem to be working too well?

[cowman]

cowman you can likely remember the huge investigation into a hog processing operation in Alberta that was alleged to be price fixing, that was several years ago and the name escapes me.

[blackjack]

...quote by kpb...see an inevitable shrinking in number of people in our business over the next five years...
...has that not been happening with our government's ag policies for years...I could be wrong but for the first time did ABP not actually say something about the Cargill's buying Better Beef in Ontario has not being good...maybe there is a glimpse of hope for them yet... our cattle orgs I think will need to change if we are ever going to put more pressure on government ... so far we all see that hasn't happened...again I could be wrong but I just don't see those of us in our early forties sticking around working for next to nothing..to many other options out here in Alberta...in saying that if our government lose us where will government find the next generation of farmers with the expertise of farming...

[grassfarmer]

kbp, It's not just f_s who recently thought of the packer being the only one gaining advantage from any new markets - I've said that for a long time. I stood up at a meeting in Nov. 2003 and challenged an ABP rep with that very topic - his response was to rudely put me in my place by telling me I knew nothing, the packers were our partners and we mustn't question their integrity or role in the current crisis.
Blackjack, they haven't really changed in two years - it took them over a month to backtrack on the Better Beef deal - organisations like the NFU made public statements denouncing the buyout the day after the announcement. ABP are always a deay late and a dollar short.
I thought that the mid point assembly of the organisation took place recently and if so it never featured here on Agriville or in the media that I saw. Is it so irrelevant to what is going on that no-one notices any longer? If so perhaps it is time to wind it up and give the levy to BIG - at least Ostercamp and crew understand the problems and even have a partial solution to the problem of foreign ownership of our industry.

[Horse]

I prety well agre with most coments here and go along with cowman ,until the govmt changes the rules and inforces them we are Screwed.