NFU Report...

[smcgrath76]

Just plugging through this this morning.
All I can say is Wow!!!
I don't disagree with the sentiment but the solutions scare me to death. A single desk marketer for beef cattle?
I agree with the regional plant discussion to some degree, although I am not sure what we do with the capacity we have. Opening new plants would require closing some existing capacity (Cargill or Tyson). We currently have the opportunity for farmers to own plants. Most have chosen not to. We also actually have several regional plants that market locally, but can't export (even out of province). This is a large problem with a simple regulatory solution.
Eating local is probably a good solution for some of the production (unless you live in SK with roughly 1,000,000 people).
We are on a commodity production path. I think that explains the rate of return better than anything else. by failing to step into the value chain scenario and staying in commodity production the price becomes limited by the world market price of whatever commodity we produce (eg: Calves) and thus tends to be driven down over time. Trade with lower cost partners should accelerate this trend.
I think focusing on restoring a domestic industry can absolutely not be at the cost of exporting less. I firmly believe we need to export more value, not less and that to fail to do so is socially irresponsible. We are blessed with tremendous resources in Canada and I believe we have a responsibility to the other 6,000,000,000 inhabitants in terms of food production, although I concede we also have a responsibility to our own operations and our local economy.
As much as I vehemently disagree with some of the proposed soluations, I think the argument about whether or not cattle organizations have any better solutions is a valid one.
Cleaning up regulatory / legislative disadvantages to allow producers more freedom to pursue things like value chains and producer owned plants is really the only viable long term solution I see. The other option is opting out of being a large scale trader and moving toward a more protectionist and local stance.

[smcgrath76]

forgot to post the link to the report...
http://www.nfu.ca/briefs/2008/Livestock%20report%20FINAL.pdf
and for the record I do share concerns with captive supply.

[grassfarmer]

Thank you for raising the issue Sean, I wasn't aware that it was available on line yet. For those who are interested please go to the NFU website at www.nfu.ca and download the two PDF files entitled "The Farm Crisis and the Cattle Sector: Toward a New Analysis and New Solutions"

In reply to Sean I think most people will say Wow!! when they read it - but for different reasons. This is a landmark document in that it highlights the true causes of the farm crisis in the cattle sector. The historical data on cattle and beef pricing has never been done by anyone else in such detail and it makes for compelling reading. Central conclusion of the document is that, adjusted for inflation, producers are receiving approximately half the value for their cattle that they did in the long period from the great depression through to 1989. The document clearly ties the misfortune of beef producers to the arrival of the 2 US packers and our change of direction into a major beef exporting country. Global trading has not brought us wealth as producers but poverty.
I would suggest producers read the document in it's entirety before picking holes in some of the suggested solutions. Contrary to what Sean says a single desk marketer for beef cattle is not the central solution proposed.

[smcgrath76]

That is a true and fair commentary GF. I think my concerns about the proposed solutions lie more in what may be missing, including how to foster producers selling beef, rather than cattle (or at least being priced back from retail).
I think we should not scale back to domestic consumption, but that we should aggresively pursue growth in high value markets. For example, there was an interesting story in my enews today about a shortage of Kosher beef in the US. I also think that we need to focus on becoming more nimble and a little quicker to respond to potential customer needs.
I also agree somewhat with the position on implants and antibiotic use.
Some of the changes presented require a significant change in the structure of the industry. For example developing regional packing capacity effectively challenges the Big 2 and puts the brakes on the Southern AB area as the cattle feeding capital of the country.
I can't see a big influx of public funding (even if it is needed). That money will go to GM and Chrysler long before it comes to us.
The challenge I see is activating the individual rather than relying on government to do a lot of this stuff. Many of the solutions are avaialble now if producers would engage and work together. You are a good example yourself GF. My vision would be to be the beef supplier of choice to the world, but we can't do that with a domestic focus.

[grassfarmer]

Sean, I think what the NFU are trying to work towards is a system that rewards producers for producing cattle. I, and many of the other "agitators" who are involved in attempting to change the status quo with regard to the commodity industry just happen to be stepping outside the commodity mindset by direct marketing, niche marketing our own products.
I don't think that that is the only solution - I think that there should be a future also for producers who just want to sell cattle, whether they be feeders or fats. The facts in this document highlight why these producers currently aren't able to make any money - it has been stolen from under their noses by corporate concentration.
So to me the strongest conclusion to be drawn is that with appropriate Government intervention targeted at breaking up the packer/processor cartels the situation of primary producers could be reversed.

Now I will admit I got to read the drafts of this document and provide input as it was being finalised and you addressed one issue that also concerned me - the issue of reducing supply to meet the domestic market. The facts prove that we (producers) have not benefited from the export market so there is no logical reason for saying that we must continue to pursue it. The rate at which the herd is currently shrinking seems this will be academic anyway - we soon won't have enough to supply more than domestic. My concern was that unless we are successful in selling this solution to Government and have them act to break up the packer/retailer problem reducing our herd to a domestic supply size will not result in increased returns to producers. Conversely if we could somehow persuade the Government to act to break up this packer/retailer situation so that producers received even $300 a head more for their animals that they deserve this solution would also allow us to remain an exporting nation - only now producers might actually benefit from the high value of the meat we produce.

[smcgrath76]

My other challenge with this approach and I appreciate that it has issues is the concern with margins. Historically many of us have been great at spending our margins away. $300 a calf might well go on more land or a new tractor, rather than family income. The other issue is that if margins grow to say $100 per calf it will trigger expansion to the point the margin will disappear.

[grassfarmer]

That is another valid point Sean but one which I think is addressed in the document. If the biggest problem we had as producers, producer representative groups or Governments was how to deal with unheard of prosperity in the beef cattle industry I'm sure we would be 100% happier than we are today!
The document is careful not to raise the issue of supply management - not in my opinion because it wouldn't work but because it would be unsaleable to Western producers. But putting my twist on the document and the issue we discussed yesterday of intervention being necessary to break up the packer cartel and introduce competition to the packer/retailer sector before producers have a chance of seeing these enhanced returns. If, as I believe to be the case, this is crucial to the NFU solutions becoming a viable solution we would have nothing to fear from increasing margins, increasing cow herd. Unlike at the moment this success would be built on a sound foundation brought about by competition in a true marketplace.

[Sawbones]

Cudo's to the NFU
I don't often agree with the NFU but I'll give credit when it's due. The documentation of historical facts are well outlined and their conclusions as to the decrease in the beef producer's revenue is very plausible. I may not agree with some of the solutions but one thing is clear. To begin to solve a problem, you first have to agree that there is one. This has been a major stumbling block for those of us trying to bring about a change as the ABP, CCA and ABgovernment fail to recognize that our current packing plant system is a major problem. I am totally convinced that the beef slaughter monolopoly is the root of many of our beef marketing failure. There is no reason for us to be selling our beef into the US or anywhere else for that matter at a discount.