COLUMN - Rationing

by Joe Bouchard

Last month I promised that I would write a shorter column but since there is so much going on that you need to know, Karen wouldn’t let me - so this is her fault.
So, it’s time for a cup of coffee and our monthly chat.


First, I’d like to talk about the headlines.
DISASTER AID
No program is perfect but the newest announcement for AgriRecovery payments and tax deferrals on income will go a long way to help flooded producers in the Interlake and Westlake regions. This issue is explained in more detail on the front page and on page 2. And while you may not benefit today in your part of the province, you may be glad for these efforts tomorrow because a precedent has been set for the future.
Some producers are asking why the Saskatchewan government is giving a per head payment of $40 per cow; while here in Manitoba we aren’t receiving anything. The MCPA did request approximately $100 per cow, but we want it tied to our Environmental Goods and Services proposal. That will keep it trade neutral and be a long term, annual payment for the good stewardship practises we do every day. This isn’t about alternative land use, but about best land use.
We have to be very aware of the risk of countervail due to ad hoc payments. This industry cannot afford a countervail - which would far exceed the cost of $40 per cow.
COOL will come into law on March 16th. Last month U.S. President Barack Obama put the COOL Bill (and all Bills) on hold so they could be reviewed.
Agriculture Secretary Vilsack had the option of opening up the Bill but he didn’t and that is positive for our industry. The way the rule is written now, it is law. Where the uncertainty lies is that Vilsack has suggested the packing plants follow his voluntary guidelines and said he will review it again in six months. Given all the pressure he is feeling from the U.S. cattle industry over this issue, my bet is COOL will stay as it is and we can live with that.
THE WTO CHALLENGE was dropped but there is talk that it may be filed again. COOL is still a violation of the NAFTA agreement and we have to make sure that the agreements that are signed are honoured. The CCA is currently discussing this with the federal government and we should hear soon if it will proceed.
FOLKS FROM THE NFU went on a romantic getaway to Billings, Montana and jumped into bed with R-CALF. Nobody needs an explanation of how much damage R-CALF has done to our industry and how much they will try to do in the future. The NFU’s recent report on the industry is about as well thought out and credible as their allegiance with R-CALF. The bottom line? We can’t let trade obstructionist groups like these take a negative hold of our industry.
SALE OF LAKESIDE PLANT IN BROOKS TO XL
A lot of people, myself included, are concerned about the recent sale of the Alberta packing plant to Nielsen Brothers. But the reality is Tyson was either going to sell the plant or shut it down. Considering your choice is only as good as your options - there really was no choice. Nielsen was either going to buy the plant or it would have been mothballed and we would have lost 5,000 head capacity per day in Canada, making us more reliant on the U.S. packing industry.
Nielsen’s strong presence in the industry has been brought to the attention of the federal government by the CCA and it is something that is being looked into.
What is the real message here? That all levels of government need to create a more competitive environment for business and industry in this country or the business will continue to go elsewhere. The fact that Tyson could not sell to anyone else—that the most aggressive beef company in the world, JBS, was not interested—underlines how difficult it is to make a buck packing here in Canada. Why? Because of the extra regulations, inspection fees, export permits, etc. that our industry has to absorb over what they have to in the U.S. In order to compete, we have to match the U.S. cent for cent and until we do, our industry will continue to lose feeding and packing business to the U.S.
TRACEABILITY
The $400,000 funding announcement made by the provincial government at the end of January will be used for the computers and technology needed to create a database that can hook into the CCIA database. The government has the responsibility to trace animals in the event of a disease outbreak and we are working with them to meet their needs, but at the same time, will make sure that the privacy and information supplied by our producers is protected. Producers are already premise identified when they buy their tags, so this is nothing new for the cattle industry. The Minister has assured us that farms will not need to be licensed. This ties in to:
THE FOOD ACT
We have made it clear to government that producers are willing to take responsibility for things they have control over when it comes to food safety, but not for mistakes that may be made further along the food chain. The Minister has assured us that we will be consulted as the act is being written.
THE RECESSION has brought to the forefront the value of agriculture. There are predictions that Manitoba and Saskatchewan will weather the recession the best because a bulk of the provincial revenues are generated through agriculture. When things are good, agriculture is taken for granted. But when the economy goes bad, agriculture becomes the foundation that is focused on. That’s because food producers are a tough bunch. We already know how to hunker down and we can do pretty much anything. There will always be work for honest, hardworking people who aren’t afraid to get their fingernails dirty.
Fortunately, beef prices have remained steady when everything else is dropping like a stone. There will still be a demand for the top cuts and hamburger, but I can see there will be pressure on the middle and poorer cuts which will be turned into hamburger to keep it moving out of the coolers during this recession. Which leads to:
AGE VERIFICATION
Right now only 15 percent of Manitoba calves are age verified. By the end of the year, all calves entering Alberta will need to be age verified. Many in the industry believe that calves not age verified will be discounted.
Calving season is the most enjoyable time on the farm. There is nothing nicer than seeing a calf ripping around the pen with an ear tag to grow into. As you put your RFID buttons into those calves ears, keep in mind that the foreign markets we are working hard to develop are not open to any part of an animal that isn’t age verified.
With the Federal Agriculture Minister committed to trade missions (he is three for three right now), we are seeing more markets opening up. He has made a commitment that whenever parliament isn’t sitting, he will go on more trade missions.
We appreciate all the work Minister Ritz is doing on our behalf. I had the opportunity at a Roundtable Session in Stonewall to talk to Minister Ritz about this issue and to congratulate him on the work he’s done on trade and asked him to keep up the good work. He said that he plans to continue.
The demand for age verified beef is increasing. The packing plants can’t find enough of it to fill the orders. We need volume to fill these orders or they will be filled by one of our competitors. Japan and South Korea will only buy beef that is age verified.
We have to remember that we are in the protein market. We have be competitive on cost, quality and implement all the food safety safe guards as our competitors - pork and poultry. To think we can just raise our price and move the product is a nice idea but in reality, if our product is too expensive, people will buy pork and poultry instead. We have to keep our meat moving off the shelves.
In this regard, it is the cow-calf guy who can help move our industry forward. And it is a lot easier to work on the baby calves when firstborn than when you are weaning right before you sell. Soon your efforts will be up in lights -
ON THE LED BOARDS in the auction marts. A description of your calves along with any value added information such as age verification, vaccinations, etc. will notify buyers of the extra work you have put into your calves. This should improve the marketability of the calves especially as age verification becomes mandatory in Alberta.
These LED boards were provided to the auction marts through the Verified Beef Program. This program is an industry led initiative along with:
THE LIVESTOCK CASH ADVANCE. This is a management tool that our counterparts in the grain industry have had for years.
This can be used as your operating loan and it helps with cash flow. You can save thousands of dollars in interest - unless you like giving money to the bank. The first $100,000 is interest free. The loan is paid back as you sell calves. This is a great business tool that I strongly recommend you look into and see if it can provide a benefit to you. The MCPA pushed hard to make this available for producers so go ahead and use it.
I took one out last year and will take out another this year. The office is in Winnipeg and you can find an ad with the number in this month’s paper.

I would like to finish off this month’s column by thanking Martin Unrau for the two years he served as our President.
I believe a good leader must be credible and knowledgeable about the industry he is representing. Successful leaders are positive, sincere, honest, hardworking and do what is best with no hidden agendas.
Positive thinkers create their own opportunities while those who are negative can only see what can’t be done.
Good leaders earn respect and do not take it for granted. They are in it for the long haul, not for 15 minutes of fame. No battle was ever won by a leader who believed he couldn’t succeed.
Again, I would like to thank Martin for setting an excellent example for us all to follow.