Another CAIS beef!!

[cattleman2]

Rose: the per acreage payment just doesn't work either. You have landbases in eastern AB or in SK (or any other province for that matter) that are required to be quite large to run livestock due to rainfall and production capabilites. Should that person get mote than myself who owns little land, but pays a custom feedbill to someone to grass my cows, while I am trying to build my land base?

We came up with a novel concept at work here for the $1.0B government money to be handed out. It should be on a percentage of Expenses instead of revenue. Everyone complains that revenue is low, margins are negative, therefore they don't qualify for funds like they should. Everyone seems to put in all their expenses though...

[mb_rancher]

Kato,


I took the higher coverage but still was unable to get a payment out of CAIS. They keep saying my inventory is tooo high, but really it isnt it just so happens when they slap their value on it they seem to be worth a lot more.

[grassfarmer]

Sorry to hear it's not worked for some folks that needed it. It worked for us - for 03 anyway. From the start my accountant advised to take the maximum coverage, which we did. Didn't any of you have NISA funds built up to pay a deposit? I only had a very small sum in it because I wasn't here for long before CAIS came in. Some times I reckon a good accountant is a wise investment.

[farmers_son]

I know of quite a few professional advisors who recommended taking less than 100% so professional advice from an accountant or business professional is not always the sure fire answer. I recall quite a few newspaper columnists in Grainews and other papers who recommended not participating in FIDP/CAIS at all. The program has changed quite a bit from when FIDP and later CAIS were first trotted out.

NISA was a good program in so far as you paid in a dollar and the government paid in a dollar. If you do not qualify for CAIS you get no benefit at all on good years and your reference margin is sure to decline, it is only a matter of when not if everyone runs out of reference margin.

For many, as feed inventories return to just normal levels after the drought years the positive change in non cash feed inventories will cause them to not qualify for a CAIS payment even though they suffered a cash flow disaster from BSE. Even keeping cows, a common BSE strategy, will reduce your CAIS benefits. CAIS has never paid cow calf producers for the loss in equity caused by BSE even though the CAIS advance program was partly based on equity loss. Those advances all too often had to be paid back, a debt trap if there ever was one. The CAIS program will never compensate those cow calf producers who hung onto their cows for the equity they lost as a result of BSE.

The best accountant cannot change the built in problems with the CAIS program.

[kpb]

farmers_son, Everything you wrote is right on the mark. And the worst part is that cow-calf producers believed the government when they said the program would compensate them for the loss of equity in the herds. And believed the government again when they were told that the advance payment based on equity loss would easily be covered by subsequent payments. Most have now been asked to repay their advance. This program is an absolute scandal and the repercusions will resonate through the government in the next election if it does not move quickly to scrap the program and not re-claim advances.

kpb

[kato]

As for NISA, we never had the cash at the time to contribute, so we didn't have an account to draw on. We knew it would be good to put money in, but just like the CAIS deposit, it seemed our suppliers and bank were a little more of a priority than a savings account at the time.

We did get money from CAIS in 2003 and 04, but it wasn't nearly what it would have been if we hadn't been misled by the deposit requirements. Who knows, it may have even been enough to be a proper benefit. We don't want to get rich from this, but it would be nice to be in a hole that's a little less deep than the one we're in now!

[grassfarmer]

I realise I risk being shot for this but I'm a little puzzled by your position Kato. My intent is not to be critical or derogatory more to understand your position. You start by saying that when CAIS began you were coming off 5 good years and were very happy with the way things were going. At the same time you didn't have the cash available to put in a NISA account. I find that incredible given that it was basically a money for nothing program, ie give the Government $100 and they added $100 to it to be drawn out when you needed it. Just like you need a certain level of management, or x amount of landbase to operate I think you also need a level of debt to assets to profit ratio to operate. If there is no money left over to make good investments with in the good years I can't see how you can maintain a longterm farming ambition.
Does no-one expect to make money in agriculture in Canada?

[madcow]

make money in agriculture??/// wow what a concept, I've been struggling and scheming and plotting on a plan just to break even, aiming for the elusive zero.,,,,sorry for the sarcasm, too many long hours lambing & calving,good night ZZZZZZZZ

[coppertop]

grassfarmer in some cases having a 'good year' means making enough money to service existing debt and pay operating costs, it doesn't necessarily mean there will be much left over to put into a savings account for a rainy day.

For most people in the cattle industry the herd was their 'rainy day' and when BSE hit, we know what happened to that equity.

[WoolyBear]

A good year.......... now thats something most farmers brag too much about when they do have one. As soon as we get a few dollars ahead, the input suppliers decide to take it to us and try to squeeze it out of us. Most of us on a good year are able to put a little back to the debts that we had accumulated in the numerous poor years. For those of us that have diversified, when one commodity is up, the other 2 are down. Money ahead........ usually goes to fixing the bandaids that were applied when times were short. My wife is Still waiting on new flooring in the house. That carpet looked like crap 3 years ago, and its only worse now.

[grassfarmer]

So, again not being cheeky, but who do all the new, shiny duallys with their big new aluminum trailers belong to at the auctions? Are there really two types of producer in the country - ones who are doing well and can afford these luxuries and those that can barely afford to keep a roof over their heads? Or do the "debts to their input suppliers" and bankers incurred by some of those who are really struggling involve paying for some of their fancy new metal?
I've never been one for shiny new metal - I run a '94 truck and a bumper pull trailer I picked up at an auction - total @$12,000 for the outfit. I know several guys close to me, on similar size operations, that have just got new trucks at $45-50,000 to pull their $7000 trailers. I question their judgement of a wise investment given what we read here about the profitability of beef cattle.

[Bez]

Good ole CAIS - the Chartered Accountant Income Supplement.

Reference margins mean nothing - unless of course you were in expansion mode prior to BSE. Then they become VERY important.

Expansion means debt means no profit prior to BSE - means NO CAIS cheques in the bank.

So we were forced to bail our own water - we're making it - just - screw the feds.

Bez