ABP latest move

[grassfarmer]

Reading through last months Cattleman magazine I noticed a little piece about the ABP negotiating with the Alberta Government to provide a financial incentive for producers to age verify their calves. I find this incredible for the organisation that preaches the virtue of "free enterprise and the trickle down effect". If the packers can make a lot of extra money by shipping produce into Japan as long as it is age verified let it be market led, I thought they already were paying a premium for such cattle? If they need more cattle and aren't getting them because producers can't be bothered age verifying they need to pay more money - that's how the free market works right?
Not in Alberta apparently - from the same organisation that refused producer calls (through resolutions)last Fall to lobby the Government to harmonise costs of RFID eartags between provinces and possibly reimburse producers to switch to RFID tags on breeding females as other provinces have done.
It's clear that the ABP will not fight for the producer interest but when the packers ask them to jump they ask "how high?"
This is nothing more than a move by the packers to increase the number of cattle they have available to export to Japan with the cost being externalised once again onto the Alberta taxpayer using the producer funded ABP as their negotiator.

[kato]

I agree with you totally. The one who is seeing the extra profit should be paying the extra costs. There needs to be a premium paid by someone for all this work, and I guess now it's a big game of seeing who will pay it.

We have yet to see a premium for ourselves by age verifying. I still do it, but have quit bothering to take the papers with the calves to the sale. Last time I sent paperwork along, the auctioneer didn't mention age verification at all when they went through. I think the papers got tossed. Any time I have seen it mentioned, I haven't seen a premium paid, at least in this area.

I guess if you are dealing directly with a feedlot or packer, it's possible to get a premium, but the auction marts in our part of the country are not getting behind this at all. Probably don't want the paperwork, because they aren't seeing any extra income from it either. How do you handle a bunch of fifty calves that all have papers, and then get split into different groups and sent off to different buyers? It would take all day just to match the papers to the cattle.

Wouldn't it be simpler to sign a paper when they are sold, verifying that they have been registered, and then have the database accessible by anyone who wants to check it? The auction mart could run a few numbers on sale day to verify it, if trust is an issue. It wouldn't take that long to do. I see no reason why a person shouldn't be able to put a calf's number in, and then have the birthdate show up. No need for any other information, just the birthdate. I know it would sure be nice to check the calves we buy for backgrounding. They may be verified, and we have no way of knowing it.

[grassfarmer]

Oh I'm not against age verification and unlike many of the ABP directors I've done it from the start. I personally think it is a cost of doing business in a post BSE scenario. I'm against the packers taking more profit from yet another part of the production chain with the taxpayer/primary producer being left with the bill.

If the auctioneer selling my calves didn't mention they were age verified, or any other calf health information I wanted to relay, within reason, I'd be taking my calves elsewhere. We pay commission for a reason, that's simple marketing.

You seem to have a different understanding of how the system works to me - there is no attempt or need to send your paperwork on from the auction with the calf - it is in effect just a signed declaration that you have age verified you are showing although it does include the tag numbers/D.O.Bs. It is the intent of the system for further on buyers to scan/read tags and pull the dates of birth off the database. You would be able to read some of the eartags of calves you buy put them into the system and print off an age verification certificate for them.

[smcgrath76]

I tend to agree with GF here. We deal with Dryland in Veteran and they announce our cattle and describe our management - age verified, non implanted, Prime Protection, etc. from the block.
We are very clear with them that this is part of why they have our business and that we appreciate it.
We also send an annual thank you to the buyers and a fax or letter a week or two ahead of our cattle getting there that describes our management and our genetics in some detail.
I hope age verification does not become mandatory as I am pretty sure we are seeing a premium because our calves are done.
We sell no horns, no nuts, no breds, pre-vacc, age verified from good genetics.
If I could figure out a good way to forward track our cattle I think I would even offer a guarantee on them.

[grassfarmer]

To get back on my original topic of the ABP apparently negotiating with the Alberta government to compensate producers for age verifying - is everybody reading this OK with that? Are we happy to have ABP going round with a subsidy begging bowl so that the packers can shaft producers still further?

Surely if the ABP were looking to stand up for producers on any age verification issue it should be that of the packing plants being able to choose whether to check the database rather than go with the dentition test? This is an area the government should really be pushed on in my opinion. How can the packers be allowed to over ride the database proof of animals age because they can steal a few more at half price by going with dentition? We either have a credible age verification system which we use or we don't.

[farmers_son]

I did not see the particular mention of this in the Cattleman magazine but my understanding is ABP is lobbying the province hard to keep age verification voluntary while the province is pushing to have it mandatory. If the province is successful in seeing age verification become mandatory then producers will not receive any value for age verifying their calves.

You said "If they need more cattle and aren't getting them because producers can't be bothered age verifying they need to pay more money - that's how the free market works right?" In my view, the free market is still not working in this part of the North American cattle market and that is a big part of the problem. Premiums for age verification are there but do not always make it down to the producer who is paying for the tag.

On our farm we solved that problem by keeping our own calves to slaughter and the $30 per calf premium we receive certainly helps us to do that. It does seem to me that producers may have to at least consider retaining ownership of their calves longer in order to capture more value from each and every animal.

There is no doubt age verification is being used to verify 20 months of age for the Japanese market. I am not sure if age verification is being used to verify 30 months or if they are still using dentition. I do think we have an advantage in Canada with our age verification system where in the U.S. my understanding they were using aging by the skeleton to qualify for the Japanese market. This was turning out to be really hard to qualify for and in that case no benefits at all would ever make it back to the original producer.

I would think our age verification system would really shine for producers when live cows and cow beef start going across the border. I would think age verification will be part of that process. Since many more producers keep their cows to slaughter than keep their calves to slaughter the primary producer will finally get paid the age verification premiums on those cows. In the meantime our free market system is still in a wheel chair until free and normal trade resumes with the U.S. which was a significant market for our cull cows.

Bottom line we producers need to keep age verification voluntary, not mandatory like the province is working for.

[grassfarmer]

Farmers_son, it was in the May edition in the Fence Lines article by Larry Thomas. "Discussions have also begun between the ABP and the province about some sort of dollar-per-age verified record paid direct to the cow-calf producer."
You say that if age verification become mandatory then producers will not receive any value for age verifying their calves - why so? The extra value will still in the carcases.Do you mean that there will only be be a premium paid as long as age verifiers are in the minority. With all this talk of value chains and partnerships from farm to plate wouldn't this be an opportunity for the packers to cough up several million dollars to reward producers for producing something they (the packers) want? Isn't that how it should work? Instead we have the ABP negotiating with the AB government about giving a cash payment to producers to get cattle age verified. It seems obvious to me that the government might go for this - if we agree to make it mandatory. So then we have the situation where the packer gets something they can sell for extra money which is paid for by AB taxpayers and facilitated by the ABP. What happens to producers in other provinces?

[smcgrath76]

I think FS is right here. If age verification is mandatory, then all calves would be age verified so what is special about age verified calves. The question of "should" vs. "would" a premium be paid is pretty relevant here.
Premiums are paid for things that are in demand because they are special (or percieved as) for some reason. Lexus cars, 20 year old (age verified) Scotch, organic food. There is not a premium paid for the average commodity such as undifferentiated feeder calves.

[kato]

Grassfarmer, you deal with a better auction mart than we do. I guess it's time to call ours up and have a talk.

Nevertheless, we still don't see a premium here for the ones that go through as age verified.

[DiamondSCattleCo]

I'm actually in favor of mandatory age verification and disagree that the premiums would suddenly disappear. They may be hidden, but the higher overall prices due to expanded Asian exports will be due to age verification. Hidden premium, but one thats available to ALL producers, not just a few.

Its my understanding that virtually all of our age verified cattle end up in the USA, where age verification makes no difference at all due to dentition aging being the norm. The big packers don't want expanded exports to Japan, at least not from Canada. Why would they, when they can service the Japanese market with lower cost alternatives from elsewhere in the world?

So that leaves the Asian market to be serviced by homegrown packers. And every single homegrown packer and analyst that I've talked to have all said they can't get enough reliable age verified cattle to even think about entering into supply contracts.

Rod

[smcgrath76]

The premium is available to all producers today. All they have to do is age verify. Why force someone to do something that they don't want to do? In that situation they surely won't do it very well.

[DiamondSCattleCo]

"The premium is available to all producers today."

Ah, we had this debate back on Ranchers a while ago. The premium is THEORETICALLY available to all producers, but in practice, it most certainly is not.

As has already been mentioned, many auction markets in Saskatchewan and Manitoba do not announce age verification on calves as they come through the ring. I believe in Sask there is exactly one that announces it. This market is another 3 hours away from my north east area, and historically, has lower prices than the 3 markets that we use up here. So not only does it cost me more to ship to them, I'm already starting off a couple cents/lb lower on my base price that I'm likely to get. So is the premium available to me? I spose, but it gets eaten up pretty quick by additional shipping and the lower average price at the market.

As well, the average cow herd size in Saskatchewan is 50 animals. This number is from pre-BSE days, so I suspect its come up somewhat since that time, but not radically so. Calves generally sell in groups of 10 or more, except at smaller markets where they can cross the scales in groups of 2 or 3. On 50 calves, you'd be doing pretty good to have 30 consistent calves that would sell in a batch. Then you've got 20 that need to be pieced in with other producer's animals, which may or may not be age verified. The auction is not going to take the time to sort those animals out. So now what you've got is that the average producer in Saskatchewan really only has the premium available on approximately 2/3s of their calf crop.

Retained ownership is another way to get access to the premiums, unfortunately this is not a reality for somewhere around 75% of cattle herds in Canada. These herds are held in mixed operations, and these guys simply don't want to feedlot animals while seeding or harvesting. Sure they could grass the animals, but why? The % returns on cattle get slimmer as the weight goes up. If these guys aren't grassing those feeders, they could have additional cow/calf units running on that grass.

As long as there are economic barriers to the age verification premiums, there are going to be few cattle age verified. Which means that the smaller packers who want to ship to Asian markets will never be able to open those markets up, which is where we sit today. Tyson and Cargill sure as hell aren't going to ship any substantial volumes of Canadian beef into those markets.

Rod

[DiamondSCattleCo]

"Why force someone to do something that they don't want to do? In that situation they surely won't do it very well."

This is a scare tactic used by the SSGA guys. "If we force them to do it, people will report the wrong ages and break down the integrity of the system".

Put some stiff damned fines on people who refuse to properly report ages. I know alot of guys who refused to CCIA ear tag their livestock until the auction markets started dinging them 20 bucks a pop to tag them. Then they smartened up and started complying. Its a weak arguement to use against something that is every bit as important as tagging your calves.

Rod

[smcgrath76]

I guess my thoughts on this are different. How about finding guys that operate in a similar fashion and marketing calves as a group, how about telling your auction market to get their A$% in gear and announce the calves, how about selling direct, how about custom feeding rather than keeping calves at home, how about 100 different options to get more money for the cattle?
There are opportunities out there but they don't come from traditional methodology. I think that if all calves are age verified, and there are fines in place for failure to do so, then the end result is that calves will be priced off the US, less the basis and packers/wholesalers/retailers will capture all of the premium as every calf will fit the requirement, so why pay a producer more when there are roughly 5 million other calves that are the same spec. If they are somewhat rare, they should be worth a bit more.
PS. I do not profess to be a fan of SSGA.

[kato]

As of this year, producers who vaccinate with Express vaccine can get that information linked to the CCIA database.

Is there any reason why ages couldn't be linked the same way? I wouldn't mind if the ages of our cattle could be retreived from the database when the numbers were entered. There is no need for any other information, just the birthdate. The information is there already. It just needs to be available to anyone who owns the cattle down the line.

This would do away with a whole lot of paperwork when the calves are sold.