How to make CAIS work......

[kato]

Everyone is saying CAIS doesn't work, and they're right. But no one seems to have any ideas on how to fix it.

I've been giving it some thought. The way I see it, a program like this is OK in a fairly stable functioning market where there are ups and downs, not just years and years of nothing but downs. Even in the meltdown in 1996, the downside didn't last much more than one year. CAIS would have been a godsend then, and after the market got going again we'd get by just fine without it until the next down side of the cycle.

Since 2003, we have not been in a fairly stable functioning market. We have not been in a functioning market at all. Five years of solidly deteriorating conditions is more than any Olympic average can be expected to cover.

My suggestion is that in the case of a long term disruption like we've lived through, that the number of years used to come to a reference margin should be extended to reach beyond the abnormal years. The total collapse of the Canadian beef industry over one cow qualifies as abnormal.

I believe that if we had not taken the extraordinary beating of the years since BSE, we would be in a position to view the latest MCOOL trade issues as an irritant rather than as the final push that can destroy the Canadian cattle business.

So what I'm thinking is that in special cases like we are living with, CAIS margin calculations should use more than four years. Something like choosing the best four out of ten, and dropping the high and low from those four. That would include years from "normal" market years, and would stop the slow march to oblivion that CAIS is taking us down.

It would be a very simple fix involving only one calculation, and would make a complete overhaul unnecessary. We've even got nine years in the system already, so that makes it even simpler.

What does everyone else think? Is it too simple for a government to grasp?

[grassfarmer]

How about taking the figures from pre 1989 instead? that was when it really all started to go wrong. On the other hand why not just press the Government to act on the causes of the collapse in returns to producers. Anything else is a cop out in my opinion and you just know a CAIS type program will never be anything but a make work project for some pen pushers. There would be no need for disaster assistance to producers if we had anything that resembled a fair and functioning marketplace.

[grassfarmer]

It sounds like Mr Ritz is taking a leaf out of the Alberta example.
Mr Wildeman on the other hand continues with the delusion that increased access would "significantly improve the bottom line for Canadian producers, resulting in as much as $100 per head increase in values for Canadian cattle."
Why would Tyson or Cargill feel the need to pay any more for live fat cattle even if they can access better returns for the beef off them? With no competition in the processing sector it just isn't going to happen.

[kato]

I agree that all that fixing needs to be done too. It was the start of it all, and at a basic level things will really never improve until we do something about it.

In the meantime something quickly needs to be done just to make sure there is anyone left to save. Then we can get down to addressing how to rebuild a better working system than what we have now.

[dfarms11]

I think that is a great idea there Kato. I know that it would help me since in the last 5 years, my margins have just been getting lower and lower every year, except 1 year. The problem is, it is such a simple fix to make a nonfunctioning program work better, that the gov't would never go for it! Heaven forbid that they would actually have to give some real money to the producer.

[Sawbones]

Ditto grassfarmer..Until the industry comes to the realization that there is a fundamental problem with lack of competition of the packing sector and a sharing of the profits, increasing production/marketing of beef is not going to increase the profitability of the cow/calf producer

[kato]

I was just thinking where is it written in stone that four years was the only way to average anything? In the world of agriculture, four years is not a long time.

Most people probably had some decent reference margins to begin with, but you really need to have more than one good year in the past four, or else the margin drops pretty quick. Having one good one and three poor ones isn't going to cut it.

Besides, I don't know about everyone else here, but even in those long lost good years, I don't remember being wealthy. I also think that most people, after the past few years are probably a lot deeper in debt than before, so just making the average of any three years since 2003 isn't going to take care of regaining any lost ground. If someone was just getting by before, then how are they supposed to get by, and regain lost equity on the pittance that is being doled out now?

It just isn't possible.

[farmers_son]

Lets get real. Canadians of all people have seen first hand that lack of market access can ruin cattle markets overnight. Then it is a no brainer that improved market access can and will improve our live cattle prices, especially market access to the U.S. The only question is will the benefit be $100 per head. I believe it could be closer to $150-$200 per head and the difference between a viable healthy cattle sector or a cattle sector that is shrinking and in decline.

However I would caution this government is facing a confidence motion on January 27. I doubt the government can last long enough in its present form to see these promises through to completion.

The election promises have already started.

[farmers_son]

Could it be that CAIS is working just as it was intended and at least from a government standpoint does not need fixing?

I have always thought that CAIS was there to support large single enterprise farms with the no so hidden but very real goal of putting small and medium farms out of business.

Government is not going to fix CAIS... in a few years it will have accomplished its intended goal.

Seeking ways to fix CAIS is like the mouse seeking ways to fix the mousetrap. It is still a mousetrap with the sole purpose of getting rid of you.

Keep on voting for the same people and you should expect to get the same results. If you want to change CAIS you are going to have to find someone else to vote for this next election.

The way to fix CAIS is in the ballot box.

[grassfarmer]

Farmers_son, I personally don't believe there is a conspiracy by Government to put smaller size farms out of business - what would their motive be? On the other hand one only has to look back to see who has been lobbying hardest to raise payment caps in the CAIS program so that huge scale agribusinesses can get multi million dollar payouts - your friends at ABP and CCA!

From the ABP board meeting minutes September 20, 2007. "The safety net priorities identified by Cattle Feeder Council(a committee of ABP) include....(iii) removal of program payment caps."

And from the CCA 2007 Recommendations on Business Risk Management Options.
"The CCA does not support any kind of caps on programs and does not support safety net programs that provide preferential treatment to certain sized agricultural operations and
differential treatment of larger operations puts them at a distinct competitive disadvantage."

As you say - "Keep on voting for the same people and you should expect to get the same results." That would seem to apply to useless organizations like ABP/CCA which are funded by producer check off dollars but working against producer interests most of the time.