Industry in Crisis

“Stubborn will” at the grassroots is holding the Canadian cattle industry together right now. But how much longer can cash-strapped ranchers hold on?

by Karen Emilson

These are tough times in the cattle industry and right now producers don’t know which way to turn.

Herd dispersals and cows going to slaughter are at an all-time high and calves moving through the auction marts are at unusually low numbers for this time of year.

That’s because many ranchers can’t afford another money losing year. They are holding onto their calves as long as they can, hoping prices will improve before the snow flies and they are forced to bring the cows in off pasture. Once that happens and the calves are weaned, many will be forced to sell - particularly in the drought-stricken Southwest and the flooded Interlake where feed supplies are short. Holding calves over and feeding them until spring is not an option for many this year.

At the MCPA’s November Board Meeting, the crisis facing the industry was discussed at length. Martin Unrau began the discussion:

“We thought things were bad last year, but the reality is, calf prices are lower this year than last,” he said. “With the exception of the uncertainty surrounding COOL, earlier this year everything was pointing toward a more positive fall. And I really thought it was going to happen, but because of the credit crisis in the U.S. that hit in late September, the big feedlots and cattle investors can’t get money to buy our calves or have lost confidence in the marketplace.”

Joe Bouchard: Slaughter plants in the U.S. are running at about 75 percent of normal capacity at this time. Feedlots down south are under pressure because they don’t have enough calves to fill their pens, and they don’t know if they fill them with Canadian cattle, which plants will be killing them as fats.”

Martin: “The rules with COOL are changing constantly because the Senators in the U.S. are trying to do something to look after their producers, who are also struggling because of high feed and input costs, so it’s getting uglier every day.

I don’t have many answers because there isn’t too much any of us can do about rules set in other countries, except inform our MPs and get after our MLAs so that they understand how serious this is. This has gone far beyond extreme when you know the guys with 400-500 cows are in trouble and have to go out and get jobs to pay the bills.”

Joe: I think what you’re saying is what everyone is thinking right now, we’re going to have to push our MPs and put their feet to the fire. We have to make some headway on trade. The cattle producers, well, we’re doing our part and holding up our end of the bargain. Right now it’s the cattle producer who is holding this industry together, but the attitude from our government, quite frankly, stinks.

When the Americans or Australians go in to trade, they send their President or Ag Minister and don’t take no for an answer and they get the deal done. How serious are we and how do we look compared to our competition trading beef? We’re not sending the proper people. If they send their President we should send our Prime Minister. In some cultures its insulting to not send in your big guns and they think we’re not serious.
When they send their President and we send somebody from Winnipeg, it’s like sending in a kid to negotiate your operating loan at the bank.”

Martin: “You’re right, Joe. And there is a demand for the meat. The opportunities are there. Predictions are that in 10 years there will be 800 million more people in the world to feed. That puts in perspective how important food production is. To have people suggest we should be lowering our cattle numbers is insane. The frustration at the CCA level over government inaction right now is extreme.

Joe: That’s why the provincial organizations and the CCA need to push even harder. We need political will to get this done. Something has to be done to get our industry going again.

Trevor Atchison: “The CCA’s push to establish a trade directorate - where is our government on that?

Martin: “The CCA has had meetings at the highest level in the federal departments saying they want a Trade Director - a cabinet level MP who will be dedicated to beef trade.”

Trevor: Has there been any movement on trade action over COOL?
Martin: “It’s my impression that once a trade suit is filed, the rules are that everything stops. It will take years of litigation and in the meantime, nothing in the rule can change until the legal action is settled. And we don’t have that much time. I’m not convinced that the timing is right.”

Dane Guignion: So they are allowed to break the WTO and NAFTA rules and we’re just expected to sit back?”

Martin: “I know, it’s frustrating. There is a lot of controversy in the U.S. over COOL. It’s protectionist legislation that makes doing business difficult for their own packers and feedlots. Maybe now that their election is over, we’ll see a push from that end to get this thing changed. Let’s face it, pressure from their own businesses is going to be taken more seriously than a lawsuit from us. At least that’s my opinion, but I could be wrong.

The packing industry is huge in Iowa and Nebraska. Three of the largest plants are within an 18 mile radius of one another and employ approximately 18,000 people. If those plants start laying off people because of COOL . . .”

Jay Fox: What we need is some investment into Canada and to do that we need the government to back us. We need government to go to these meetings when trade talks go on, to sit down and say, ‘we’re trading with you guys what will it take?’ Our government has a wimpy ass attitude and they are walking away with nothing.”

Trevor: “Didn’t we hear earlier this year that China was interested in setting up a packing plant here in Manitoba? What happened to that? I don’t know if a packing plant owned by the Chinese is a good thing or not, but you’d think there would be no problem exporting the meat back to China.”

Martin: There were a few factors involved in why that didn’t happen.

Shane Sadorski - MCPA Policy Analyst: Bill 17 (hog moratorium) isn’t going to help. Other countries don’t like to do business with a province that has been known to change the rules mid-stream.

Jay: I think Minister Wowchuk is listening to us, but her government isn’t necessarily listening to her.

Art Jonasson: “I agree that we need processing here, but right now because of government regulations, the Canadian packing industry can’t compete anyway and are losing over $100 per animal, so they are passing those losses down to the line and they are being absorbed by the cow-calf guy.

The most pressing issues right now are: we are not getting enough for our calves, the lack of a bankable business risk program and COOL. What COOL is doing is taking away live cattle sales to the U.S., more for us here in Manitoba than other parts of Western Canada.

Right now it’s a race to the bottom and the trade neutral program that is supposed to help in situations like this (AgriStability), doesn’t work for cattle producers. The government is still telling us it will work but the Interim Advance payments sent in from the office came back that those producers would not receive payments even though they all have to buy feed this year.

I had a neighbour say jokingly that we’re going to have to legalize polygamy in Canada. It now takes more than one wife working off the farm to keep things going . . .”

Brian Sterling: “If I’ve learned anything from the meetings I’ve attended it’s that it is impossible for one province to do it alone. We have to have the federal government on side, working with the provinces. When does the CCA stand up and say, “Minister Ritz, you’re not doing your job. At some point we have to stand up and speak the truth as we see it.”

Joe: The Premier and Prime Minister have to show some leadership, and they have really dropped the ball. They have to support their ag ministers and agriculture in this country - especially in Western Canada where agriculture drives the economy.

Martin: “You are all right. There is a whole host of problems that need to be fixed. With some vision on the part of our government we can get this thing turned around.
Honestly, I don’t think they realize what is at stake. Cattle producers occupy 35 million acres of land in the country and most of that is in rural, Western Canada. I think the government wants to see some of us gone so they don’t have to make the effort.

Over the last five years, every glimmer of hope or bright spot we’ve seen has been squashed and the disappointment is really starting to get to some guys.

But I am also seeing a stubborn will rising up. Some guys are just absolutely refusing to quit and that’s what holding the industry together right now, both in the cow-calf and feedlot sectors. But when those guys start getting forced out, we’re all done.

So what is the message we are taking to government?

• Fix AgriStability so it will work for cattle producers. Listen to the recommendations that have already been made by the provincial organizations and the CCA.

• Streamline the regulations for processors and exporters and/or have the government absorb the costs because right now those costs are being passed down to the grassroots producer.

• Work with interested parties in the U.S. to temper the COOL legislation.

• Expand trade so that our industry is not so dependent on one market.