Is our Customer Right?

[TOM4CWB]

Charlie;

I see this on DTN MEAT INDUSTRY NEWS Feb 10 2004;

"JAPANESE SURVEY SHOWS PEOPLE DON'T WANT BANS LIFTED

An overwhelming majority of surveyed Japanese consumers support the government's policy of not lifting its ban on U.S. beef imports until the United States tests all its cattle for mad cow disease, according to a telephone survey compiled by Kyodo News on Tuesday.

The survey found 87.1% believe Japan should not lift the ban without full testing of U.S. cattle for the brain-wasting disease, or bovine spongiform encephalopathy (BSE).

Specifically, 28.3% called for the testing of all U.S. cattle while 58.8% said that in addition to such testing, the brain, spinal cords and other parts of cows considered as harboring the highest concentrations of the infectious agent for BSE should be removed.

Meanwhile, 8.2% of the respondents said the removal of such parts, called special risk materials, is the sole prerequisite for lifting the import prohibition.

Japan imposed the ban immediately after the U.S. announced Dec. 23 that its first case of mad cow disease had been found in the state of Washington.

Following the outbreak of BSE in the U.S. and the spread of bird flu in Asia, Kyodo News conducted a telephone survey on 1,473 households with voters, selected at random, last Friday and Saturday. Valid replies came from 1,015 people.

The survey confirmed consumers' strong concerns about the safety of food. In particular, more than 90% of women respondents in all age brackets other than those aged 70 and older consider it necessary to test all cattle before lifting the import ban. More than 70% of women in their 20s to 40s called for testing of all cattle as well as removal of the special risk materials."

Charlie, is this not a clear indicator that all exported beef must be tested for BSE if we want a beef industry in Alberta?

Further this was on DTN

"GOOD MORNING ONTARIO
2/10
BEEF BAN MAY LAST FOR YEARS

It will likely take years rather than months to get countries to reopen their borders to Canadian beef in the wake of the mad cow scare, says an internal assessment by the Canadian Food Inspection Agency.

The document, obtained by Canadian Press under Access to Information law, offers a bleak assessment of prospects for reversing import bans imposed by the United States and many other countries.

Restrictions on beef exports "are unlikely to change very quickly (years rather than months) since an international consensus will be required to do this," it says."



What exactly are we waiting for Charlie, can it not be any clearer what we need to do?

[charliep]

Will leave your question for discussion. I can provide the link to what Alberta is doing.

http://www.gov.ab.ca/acn/200402/15862.html

I will highlight the cost aspect of this decision.

"How much do the tests cost?

The approximate cost varies per sample. Each test in the rapid test kits cost $30, not including the total cost of accessing and processing tissue samples. Overall testing costs will range from approximately $100 - $150 including the costs of transportation, preparation and reporting of samples, as well as the quality assurance system that needs to be maintained."

Will the customer pay? Is this an opportunity to differentiate product based on committed tests/production methods? If they don't, should this cost be downloaded to cattle industry or paid by the tax payer?

Putting the shoe on the crop side, what would you do if someone required a pesticide test that used 5 to 10 % of your gross revenue? An example might be GMO canola down the road. If (for non scientific reasons) someone decided GMO canola was an evil, it would likely take 5 to 10 years to get this crop out of the system.

[parsley]

Those "someone"(buyers) DID require the GM canola test. And every test showed a % of GM positive, and every buyer folded his tent and bought in another country.

"No-sales" doesn't pay my phone bill.

That's reality. That's your alternative.

Parsley

[charliep]

I should know better than to bring up GMO. As a note, not every customer has walked away from canola. Canada still sells 6 to 7 MMT every year. Further, there are ways to grow non GMO oilseeds in an identity preserved system (polish canola, new mustards with canola properties, linola/solin, sunflowers/sunolas, etc).

My concerns is how we analyze risk in the new world (a one were testing is becoming more exact), who pays the cost of testing and the impact on competitiveness when competitors use technology to reduce costs that we don't have access to. What is needed is protocols that meet these customers needs and for which they are willing to pay premiums for.

[parsley]

Couldn't resist poking the old bull, charliep.

The trick for farmers is quessing what the consumer is going to buy in the future! I see pasta taking over the place on the plate from potatoes when it comes to the young marrieds.

I see some foods being shunned and others coming to the front, and not just fads either.

Twenty years ago, spicy hot food was an anomaly in the West, and now they are matter of fact.

Right now, expenses are killing farmers. Production practices that result in dependency over which there is no control, bodes ill for farmers.

Government regulations that look forward to download costs on farmers bode ill.

Parsley

[charliep]

Parsley

I need to have some fun.

I thought I would throw out the challege that we need to get customer focused as a individual business practice, not as an industry based commodity focus. We need processes to ensure customers that people in the value chain have met their commitments and are providing the product they said they would.

I saw a posting from someone in the beef side that indicated they were moving from cow calf to backgrounding and were now looking at finishing calves. They were asking about advice from the production side. Didn't go there but my question would have been what were they going to do from the marketing side. Observation from family is you can't rely on someone else to do this. You talk to friends and friends of friends. You tell them how you raise your animals and your commitment to producing a safe healthy product. Then you make the sale. Not easy for someone who is used to raising/growing something and having someone else do this role.

If customers require BSE testing, are there ways we can make this happen and get paid for it?

[magpie]

Charliep You ask if customers require testing and ask are there ways to make it happen and get paid for it? I say why not.It seems to go on in other sectors,only at producers level it rarely happens.I toured maple leaf hog plant in Brandon,they have loins that go to Japan that picked out for that market.Top colour,cut the way they want it and packaged in their language.This is sold at a premium dollar and there is a satisfied customer.Now i would hope that some of that money comes to the pimary producer.

[poorboy]

Charlie,

If we could go back to the pre BSE prices and deduct $130, it would still be way better money than we are making now. The world price of beef is not dropping, only the price of beef in North America.

If we tested every animal we would develop an infrastructure that would drastically reduce the cost of the testing, due to the sheer volume of tests.

When the local seed cleaning plants required fusarium testing of all seed lots the costs of the test dropped in 1/2 and the turnaround time went from 2 weeks to 4 days.

As to who will absorb the costs, the answer is easy, it will be the producer if there is a surplus of product.

We would definately want some kind of commitment that the customers would buy our beef if we tested it. The UK and Japan have been testing for a while, and yet Canada has not allowed imports of animals from either country. Just because we test does not mean they will buy, in which case it would be another financial burden to the industry.

All the gov't aid money should go to testing if it will work, otherwize it should go to purchasing animals from the marketplace and shipping them to some 3rd world country that normally does not buy beef and make it Canada's aid contribution. It is about time that we used our aid money to purchase food from CANADIAN FARMERS, instead of just sending money. Kill 40% of the cow herd immediately and remove it from our system, so it is not adding to the surplus of meat that we have. This will be the quickest way back to an equal supply and demand market, and would be a lot fairer than paying out aid money without reducing the excess supply problems. If the meat was jerked or pressure canned, it could withstand the poor sanitation conditions that exist in most 3rd world countries with poor refrigeration.

And hey if the markets reopen to our product, then we rebuild the cattle herd.

[cowman]

I have to agree with poorboy 100%! That is the solution. Our government and cattle associations have not bought into those ideas however, and it is unlikely they ever will! Or maybe they will after the industry is finished! That seems to be how they usually operate!
When you start to see the big feedlots go down we will be close to a meltdown. If we get another large spread drought in cattle country this year you will see a total meltdown. The reserves of feed and money are gone and all that will be left for a solution is depopulation or eradication.
If we experience a loss of the cattle industry where will all our feed grain go? When we grow barley here in Central Alberta most of it goes to feed lot alley. Now it used to go to the local feedlots and the hog barns but both are rapidly dissappearing! The hog industry is in basic freefall around here with barns being emptied that were only built a few years ago. Now those pigs ate a lot of grain, including a lot of CPS wheat.
Maybe we need to tell the CWB they need to find a lot more export markets?

[Incognito]

Why the dichotomy between GMO wheat and testing cattle?

Customers cringe at GMO wheat - everyone up in arms.

Customers ask for 100% testing - no one is onside.

Japan is a USD$1 Billion beef market - go to mandatory testing and go after it. The need the beef - first one to do this - wins.

What are we missing?

[charliep]

Good discussion.

Other issues that may be needed to be looked at as well.

1) Regulations around the feeding of animal by products. How far to go down this road?

2) Idenfication and handling of animals over 7 years (born prior to the 1997 feed ban). Wouldn't think there are many out there but I had a friend who went through his own herd and was surprised the number of productive older cows in it.

3) How we change the way carcasses are processed. I forget where, Cowman but you talked about still splitting carcass down the middle with spinal fluid dripping on meat/providing potential exposure (if present).

[grassfarmer]

What you are missing Incognito is that even if the Japanese decided to buy tested beef from us at this moment it would not pay us to sell to them. Why? as I see it we have only one problem - the packing industry which has a complete stranglehold on producers. Until the US border is open to live cattle we will not recover. Sure they could sell boxed,tested beef to the Japanese this summer but why should they pay producers over 40 cents/lb for it this summer once the glut of cattle hits the market? These parasites need to be stopped and stopped soon. This BSE crisis has never been about human health - it's been about politics and Corporate greed.

[Incognito]

Its always been about politics. So where are the politicians? Who is leading this cause?

Klein has to be feeling lonely about now. We have one person with enough media clout and the hands on taps to do something about and it's Klein.

We have no one leading the charge with vision nor balls at a national level. That goes for cattle and grain.

We suck as a country for lobbying efforts. Spend some time in Washington and watch the well-oiled machines do their wizardry.

The CWB debate has not been about economics with the US for 10 years, but it hasnt stopped the US from exploring every avenue possible and spending millions in farmer's pool accounts to defend frivilous actions.

I tried to talk to a pea splitter in the US today and he was too busy because he was filling out PL480 forms for shipments he can't keep up to.

The Americans are masters at subsidies in the disguise of food aid. The school lunch program in the US buys an enormous amount of beef.

Rather than Canada sending billions of dollars in monetary aid every year - why are we not sending beef then?

C'mon, there is enough talent in this country that we should not have to sit idly by and WAIT for the US to say, ok boys, the elections over - send us your beef!

The FTA and NAFTA agreements didnt mean we have to solely market our products within the boundaries.

We have to look for OTHER markets, because what do we do the next time a roadblock is thrown up?

In consideration on your statements re. packers, what is the alternative?

[TOM4CWB]

Grassfarmer;

If a new packing plant were to open today, owned by farmers... how much do you think fat beef cattle would rise?

A market for excess beef must exist before more can be paid by a packer for more marketings.

Hence the call for total BSE testing to open export markets up.

ONE huge problem is use of US futures that don't work... in the case where our border closes.

WE MUST get our own CDN futures market... to risk manage in the new world... for beef, hogs, and milling wheats.

IF we fail to recognise this simple reality... we don't understand the most fundemental point of management of risk... basis can totally negate a futures contract hedge... in a disaster situation.

For instance... a forward contract made by the CWB/us 6 months in the future... with a GMO discovery of wheat that contaminated US milling wheat.

Minni. futures could drop in half... while the CWB/we would still have to deliver the CDN wheat at the lower price... even if we had no GMO issue in Canada

SO what do we do?

RISK Management is key in making a profit... contract production instead of speculation on future prices has served my farm very well.

[boone]

incognito: our fearless leaders in the cattle biz are so in awe of the big players they defer almost to the point of kneeling and wetting themselves. You can say what you want about the left leaning radicals that built the UFA, Pools, Coops if you like, but they never saw themselves as anything but equals once organized. These little potentate feedlot owners and the spokespersons for the industry haven't got the guts to stand up for the rank and file cattlemen. Their grandfathers must be churning in their graves as they see them peeing on the floor every time either slaughter facility scratches themselves and asks them to victimize other farmers. sorry for being crude but they make me sick. Ultimatum time gents either open your _______border or we test them all at a farmers owned plant. Is there not a "MAN" left in the cattle biz to lead his people?