Which is Having a Bigger Impact on the Livestock Industry: MCOOL or US Ethanol Policy?

[charliep]

Lots of talk about ethanol but I think US trade policy
has bigger implications for the western Canadian
livestock industry.

Not a livestock analyst but actually kinda bullish cattle
and hogs. Would be watching the Texas and other
areas dry conditions. Has an impact on winter wheat
but also pastures. Cow numbers both sides of the
border will be not begin increase soon.

[jensend]

neither one is positive to the livestock sector. mcool is generally manipulated to whatever is best for the american beef (not cattle) market. the packers and feedlots got mcool watered down enough to make it less of a barrier. ethanol has raised costs and higher prices for corn will inflate barley prices even if to a lesser extent. i was told by one academic from the southern usa that ethanol mandate was the second worst thing bush did right behind the invasion of iraq. his reasoning was that it was just too expensive for too little benefit. i guess adm is still the major beneficiary of ethanol subsidies so they won't go away easily. it's a lot more politics than energy or economics. canada, as an energy exporting country, should only be dabbling in biofuels as a research exercise for possible future reference. the current mandate and subsidies are just money pissed away for no economic or environmental benefit.

[ASRG]

I suspect ethanol and bio deisel have a bigger impact right now as it is driving up feed prices....and which will eventually have to either drive down feeder prices or drive the meat consumer out of the market? Either one (or both together) of these scenarios doesn't bode well for long term survival of the beef or hog industry.
At the same time increased prices for grain/oilseeds, through ethanol/bio deisel demand, makes cropping much more attractive than raising cattle?
Because of the high Canadian dollar in relation to the US$ a good deal of the MCOOL pain has been removed, and as well the livestock industry in Canada has mostly taken the hit through reduced numbers, already?
I think the real crunch for livestock production in Canada will come when the "livestock infrastructure" starts to shut down (the sale barns, packing houses, trucking, products for livestock retailers,etc.) due to falling numbers of cattle/hogs?
If the numbers continue to shrink eventually the lack of the "livestock infrastructure" will make the livestock industry unsustainable?
This isn't necessarily a bad thing? Things change and what made sense yesterday might not work tommorrow? In the end the market(as it is at the time) will decide if we have a livestock industry in Canada.
That "market" might be distorted by bio fuel subsidies that don't make sense or by distorted trade rules....but one way or the other we will have to live with that "market"?

[Braveheart]

I think both have an impact. The ethanol policy has led to changing the number of cattle grassed as yearlings to put on weight and shorten the time on feed. The use of DDGs and higher inclusion rates in the rations has increased. Farmers and ranchers here are more and more looking at ways of reducing feed costs through summer calving, new wintering programs etc.

MCOOL's effect has been a lever for US packers and lots to ratchet down prices. Now though with numbers of cattle lower, that lever is not as effective. Prices haven't risen so much as to ration supply yet, but . . ., here's hoping.

There are so many other factors at play these days I can't keep track. Currency valuations and world economies are new fundamentals that we didn't used to have to deal with.

[burnt]

ASRG - a profound post.

A clear illustration of how screwed up government interferences in one sector can destroy an entire related industry.

As for your comments about eroding the viability of infrastructure - at one time (15 years ago?) our local sales barn had a weekly throughput of 12-1800 fats plus x# of butcher cows and 15 - 2000 stockers.

This past week there were 220 butcher hfrs and strs and 260 cows. A lot of the stockers are brought in by dealers so it's hard to get a good count of #s there, but around 1000 hd.

How long will that be viable? There are a pile of empty and wasted feedlots here in southern Ontario. I think the cattle industry is about done here.

[FarmRanger]

I hate to bring this up, but the inability to arbitrage feed prices between the U.S. and Canada has had a pretty big influence on prices as well.

A couple of years ago we were feeding #1 durum to cows here because designated area farmers had no other (legal) options. If anyone thinks that doesn't drive down local feed prices, then I have a bridge for sale.

[ASRG]

burnt: Consider also that the land your local sale barn sits on is probably worth a lot of money for developement if it is in town or near the edge? When business volume slows to the point where the profits are slim, that high property value starts to look better in houses than as a sales barn?
The owner of my local barn says he is losing money everyday by not knocking it down and building condos on it, and I am sure he is right! He's old and doesn't need the money...but when he's gone that sales barn will be gone.

[shaney]

I vote ethanol driving up feed costs as the biggest
issue.

[cropduster]

Charlie,did you only wish TWO subjects or could I add the CWB..........how long will it be before Stuart Thiessen and Co whine about having feed parity with US corn???

[newguy]

Maybe grain is up in price. But right now can not sell good 2010 tame hay for the price it cost me to bale it. Alot of pasture will also go unused this year. So that part of the livestock industry is seeing cheaper feed.