Alberta feels the heat in Winnipeg

by Karen Emilson

Early this summer, the Alberta government announced a $356 million strategy to assist cattle producers in their province.

That decision caused a rift in the industry that blew wide open during the CCA Domestic Ag Policy committee meeting in Winnipeg.

CCA President, Brad Wildeman was on the hot seat as Directors representing Ontario pressed him to explain what the Association is doing to help even out the playing field. Everyone there understood that ad hoc payments given to producers in one province, puts others at a competitive disadvantage - in this case more than $100 per animal.

Wildeman stressed that the Alberta government acted on its own; and that his discussions with the Federal government to provide similar funding to the rest of the provinces, were met with flat-out refusal.
Ontario pointed out that the CCA’s policy has always been to push for equality between all provinces.

“We know how unfair this is, I was just thinking if I didn’t live in Alberta, I’d be really mad,” said CCA past president, Hugh Lynch-Staunton, who sat in on the meeting. “And I am mad because not only is what Alberta done detrimental to the national industry, but it has inhibited my ability to be a credible critic of what happened.”
Discussions continued and Ontario grew more frustrated.

“Then you shouldn’t have cashed the cheque,” an Ontario delegate said to every Alberta producer around the table. It was a hit below the belt, but helped clear the air since many in the room were wondering.

Ontario’s comment rankled the Albertans but surprisingly, no one from the west asked what Ontario producers would have done if the roles were reversed.

Manitoba Director, Brian Sterling, put forward the best effort of the afternoon in trying to smooth things out between the opposing provinces.

“Around this board table we aren’t always going to agree, and things that are done are done and we have to move forward,” Sterling said. “I would like to see the CCA and the Alberta Beef Producers to make a concerted effort to find out for our producers the rules we have to play by before we begin marketing our calf crop this fall.”

After the meeting this is what John Gillespie, a feedlot operator from Ontario had to say:
“The Alberta program upsets us because we sit around the table with the Alberta producers who dominate. They have been going on and on for years, ‘let’s minimize government intervention in the industry.’ I would have thought the Alberta producers would have stood on principle, and sent those cheques back. But they fell. As soon as that cash was put in front of them, they went for it.

I would say the feedlots in Ontario are suffering more and not just because of the government inequities, the Ontario market place has not had it’s traditional basis premium over Alberta, but this last two years we have been par or a few pennies under, so as a result we haven’t made as much money. We buy western prices plus transportation so we already have a higher cost for our calves than in Alberta. We usually compensate for that because we get more money for our fed animals, but for the last two years we have worked on a negative basis relative to Alberta and that hurts. Equity has been eroded to the point that a lot of feedlots in Ontario are having a hard time with their financial institutions. Most banks like to see you have 20 percent cash in those cattle at any one time, well, it doesn’t take long to erode that. We’ve all been working with losses as high as $100 - $400 a piece. The Canadian dollar caused a lot of it and grain prices were at a low last year at this time, but doubled in value by spring.”

A struggling feedlot sector in Ontario is bad news for Manitoba cow-calf operators.
“Between Alberta pushing on Manitoba calves and us pushing, I think we create the value for those calves. We like the genetics here. Twenty years ago Manitoba calves were considered second class, but producers here did something about that, in both genetics and herd health protocols. We like your big, exotic-cross calves and want them.”

His final note on the day:
“I think a lot of the guys were interpreting that we won’t be happy unless they write us a cheque. What we want is for the government to come to the table and recognize we have an issue here. We just want them on side and stand up to Alberta and say they won’t tolerate it any longer, that there will be consequences if they do it again. Alberta can’t keep buying the industry.”

Alberta Beef Producers Chairman, Erik Butters from Cochrane and Vice Chairman, Rick Burton from near Claresholme are on the CCA Board. Both are cow-calf producers.

Erik: “The Alberta government’s strategy involves a lot of regulatory burden that falls mostly on the cow-calf industry. There is a feeling in Alberta that most of the money went to the feedlot sector and we got most of the grief.

“The government was heavily lobbied by certain people in the industry to do this. A lot of the rural MLAs who are also cabinet ministers, got a lot of heat in their home ridings from producers who said, ‘I’m dying here. You’ve got more money than you know how to count, what are you going to do for me?’

“We were expecting a little bit of money tied to certain things, then we found out it’s a lot of money. We had 300 mad producers at a meeting recently, and the more they learned about it the madder they get.

And there are aspects of the strategy we like, such as the research aspect, but as a whole, it’s causing divisiveness between sectors. ABP did a survey last fall and came up with a figure of $60-$75 of regulatory burden our industry bears. The strategy recognizes that, and said we need to address it, but then added more regulatory burdens.

Some of the concerns here today are very valid, others are over the top. As this unrolls some concerns may be addressed.

Rick: “One of the difficulties of the Alberta announcement is that we were immediately alienated from every other province in the nation, we recognized that right out of the gate. It wears heavily on everyone and continues to, and that’s not a comfortable position to be in.

I find it’s disappointing that we need to keep having these discussions. We’ve had them already. We’re trying to move on.

The Manitoba directors are very thoughtful, capable people and a credit to their industry and association.”

Erik: “It’s difficult because we’ve been beating the drum for a market driven industry and then our province is the one that does otherwise.

Rick: “As for what will happen with your calves this fall, there will be an announcement to clarify the government’s position soon. It is unrealistic to think Alberta can enforce the regulations in another province, but if calves come in from Saskatchewan or Manitoba of the same weight and quality, and they aren’t age verified, I suspect those will be discounted, so it only makes sense to age verify. But we’ll know more on that soon.”

Erik: “Alberta has long been a champion of breaking down inter-provincial trade barriers, so they can’t enforce it without ending up with egg on their faces.”

Rick: “What they are going to say is let the market determine the value of age verification on the price of out of province calves.”

Erik: “This whole situation has strained relations between ABP and the provincial government, to the point it is the lowest it’s been in my memory, simply because we didn’t embrace their whole strategy.

Rick: “The minister thinks this strategy is the right solution. He’s not trying to destroy the industry. We think he has overlooked some key issues, but in his heart, he thinks he’s doing the right thing. We can’t fault his enthusiasm - he takes his job seriously. And he wants to do the right thing. We just have some difficulty agreeing.

And there are a significant number of primary producers who have pause for concern. This is going to be a controvesial issue for quite some time.”

Erik: “I got elected in December 2002 - I had five months of bliss. But you know what, I’ve met and been able to spend time with some of the finest people I’ve ever met and I’ve got no regrets . . . and I’m also done in December,” he laughed.

“But seriously, the market is turning. I sold a cow and a bull the other day that brought me the highest dollars I’ve ever seen, taking into account the currency exchange. I got 68 cents for the bull, and that’s what I used to get before BSE with a 65 cent dollar.

The futures are up strongly and while we still have the issues of the dollar and the ethanol industry, the light is starting to come around after five bloody years. You’ve got a strong industry here in Manitoba and it’s strong all across Western Canada. We’re going to survive.”