Close
Home » Articles »   By WLJ
 
 
Monday, September 20,2004

USDA: 11B bushel corn harvest likely

by WLJ
— Frosts ignored by agency; analysts still uncertain. — Grain price down early, but recovering last week. In its most recent crop production forecast, released Friday, September 10, USDA's National Agriculture Statistics Service (NASS) dismissed most fears about early frosts in several northern-tier corn states and projected an 11 billion bushel corn crop, a record by over 800 million bushels. The nearest-term corn futures, and current cash corn prices dropped around, or below, $2.10 early last week, in direct response to that report. However, as last week progressed corn prices rebounded again as several analysts indicated that there is still potential for some feed corn loss. Several cattle market analysts said it is too premature to figure in $2-or-lower corn, but that it is still possible, particularly if the top corn producing states go through the rest of September without a severe freeze. The most recent forecast was on the high end of analysts' pre-report estimates, and up almost 70 million bushels from USDA's August production forecast. This year's projected corn crop is eight percent larger than last year's record crop of just over 10.1 billion bushels. Yields have been forecasted at seven-plus bushels more per acre than last year, when a then-record per-acre yield of 142.2 bushels was reported. In its report, NASS said, "Yields are forecast at record high levels in all Corn Belt states, except Minnesota and Wisconsin, as weather conditions have been mostly favorable throughout the growing season. However, brief periods of freezing temperatures in the northern Corn Belt and adjacent areas of the Great Plains raised concerns about the crop being able to fully develop before a killing frost occurs." Of the top 10 corn producing states, eight are expected to show increases in both acres harvested and per-acre yields, compared to last year. One of the top 10 states is expected to show a downturn in both figures, while the other one is expected to harvest the same amount of corn, but at lower yields, than a year ago. Nationally, only seven states are showing potential declines in yields, compared to 2003. Those states are Alabama, Colorado, Michigan, New York, North Dakota, South Carolina and Wisconsin. Wisconsin is the only top ten producing state with a yield decline expected. Commodity analysts that projected a decrease in USDA's production forecast, compared to last month, were still uncertain whether or not yields would be near as high as the agency has indicated. "It's not the fact that there's not a record crop on the horizon, because there is, and that's not in question," said Barry Turner, market analyst and consultant with TL Agriculture Commodities Inc. "It's still hard to believe that the harvest will be that much larger than last year, particularly with unseasonably-cold summer weather being reported across the country, particularly major corn producing areas." Turner also said the report is a "good news, bad news" situation, with corn producers facing the prospect of very low prices, but livestock producers, particularly cattle feeders and commercial hog raisers, looking at even cheaper feed grain prices through the rest of the year. In addition, feeder cattle prices aren't expected to see as big of a downturn as was once expected because of the corn situation. "We usually see a reverse $1-1.50 move in feeder prices for every dime move in corn prices, and a corn projection of 10.6-10.7 billion could have meant an additional $3-5 decline in feeder cattle prices the rest of this month," Turner said. Instead of that, last week's feeder cattle futures movement was upward with the nearby contracts getting back up $113 per cwt. "And that was even in the face of a dime gain in the nearest-term corn futures contract (December)," said Turner. "It's amazing what an 11 billion bushel projection did for the psyche of cattle feeders in terms of getting back into the feeder market and filling up some empty pen space with cattle that could utilize cheap feed." Turner, and several of his colleagues, suggested, however, that any "significant" corn purchases be done now in the form of forward contracts in order to prevent any negative impact from a possible downward readjustment in the corn production figure. "There's still a good possibility several hundred million bushels of corn could be taken out by weather or other situations, and that could mean at least $2.50 corn later this year, which could be costly given the fact that feeder cattle remain at unheard of price levels," Turner said. Last Wednesday saw the December corn contract close at $2.18, after hitting $2.20 earlier in the day. In addition, March 2005 closed at $2.28 last Wednesday. In both cases, prices were up over a dime compared to Monday's closes. Most sources indicated that there is still some concern that USDA's forecast is too big for the current growing conditions and maturity levels. — Steven D. Vetter, WLJ Editor

Read more
Monday, September 20,2004

Missouri auction ahead of identification curve; more sales planned

by WLJ
— RFID program adds value to calves. While a large portion of cattle industry participants have been waiting on a nationwide program before starting to implement an individual animal identification system, one central Plains livestock auction took a more proactive approach and is ahead of the livestock ID curve. This past June, Joplin Regional Stockyards, Joplin, MO, held a special late week feeder calf auction when it offered up more than 6,000 head of calves and yearlings that were all fitted with radio frequency identification (RFID) ear tags. In addition to tagging the animals with RFID, the auction barn scanned those IDs three times before the animals left their facility. Auction barn officials said that allowed the animals to be logged into a database, which can be used to track their progress through the production chain and to trace back their history in the event a food safety or animal health issue arises. The animals' IDs were scanned once after being unloaded, once when they were sold and once when they were loaded out from the auction barn. According to Steve Owens, co-owner of Joplin Regional Stockyards, the company wanted to show producers that ID-taging isn't as intimidating as it appears, and that the amount of additional time, effort and money isn't that significant, particularly when the financial benefits are noticed. "We were very happy with the response to last June's sale," said Harmon. "There is definitely a need out there for this kind of program to already be in place, and we feel we are meeting that need and helping producers who want to be prepared when a national (ID) program is fully in place." One of the arguments against ID is the amount of additional expense to tag the animals with a special device and collect the data. Owens indicated, that on their end, the expense wasn't that great, and that the cost to producers wasn't noticed too much because of the premiums those identified cattle brought, compared to prices paid earlier in the week. "We were seeing cattle bringing $6-8 more during the special (RFID) Thursday sale, than similar cattle brought during our normal Monday sale," said Owens. "While quality of calves was very good, a lot of that premium had to do with the extra value we were adding to those cattle by equipping them with technology that will help them be tracked through the farm, feedlot and/or packing house." Not only are the electronic IDs able to help trace back the history of cattle, including ownership and origin, but they are also helpful in allowing producers collect information about their livestock, which could be beneficial in changing their breeding or management program to improve profitability in the future. "This is technology all producers need to be associated with, whether or not they decide to utilize it right now or not," Owens said. "We are facilitating the familiarity process and offering support in a situation that isn't easy to cope with." The Joplin auction barn has scheduled several more RFID feeder cattle sales, with 12-14 already planned between late October and March of next year. "We have been very happy with the result of our last value-added RFID sale, and look forward to similar results, and better, down the road," Owens said. "Things are looking to evolve even further, specifically were are looking at developing an even more comprehensive database for producers to access specific animal information on. "We do not have the program perfected, but we are working on improving the maintenance of individual animal data, as well as setting ourselves up as the first line of defense when it comes to attacking a potential animal health problem." Owens indicated that other auction facilities across the country have inquired about the Joplin's facility program, and that they are looking into possibly including animals sold at other facilities in their original database. "This is for the betterment of the entire industry, and that is something we can benefit from both directly and indirectly," Owens said. "A mandatory ID program is going to happen sometime, and it's better to be prepared now than being unprepared when the final program is finally put into place." In addition to the nationwide traceback situation, Owens said including RFID into its "value-added" cattle was simply a way to further advance the premiums to producers who are taking the extra time and effort to differentiate their cattle from others. "There are already programs in place that utilize individual animal ID, particularly when it comes to niche beef programs, and those programs pay producers for raising their cattle under a strict health management system. ID differentiates those cattle further, and gives potential buyers an idea about which cattle deserve that extra premium," Owens said. — Steven D. Vetter, WLJ Editor  

Read more
Monday, September 20,2004

Japan adopts 20-month exemption

by WLJ
— U.S. beef acceptance still down the road. — Japan's 12th case no factor. Japanese government officials last Wednesday formally announced that they would exempt cattle under 20 months of age from being tested for bovine spongiform encephalopathy (BSE). However, the entry of U.S. beef into Japan will be delayed until the two countries can agree on the science, or verification program, that will be used to factually establish the age of cattle. USDA officials' reactions varied widely as some indicated they were pleased to know the direction of the situation and others were disappointed that Japan didn't make their testing exemption 24 or 30 months of age. "We now know what we have to do, but it's disappointing because there is no international scientific standards indicating that cattle under 30 months of age are at ‘major risk' to contract the disease," a high-ranking USDA official told WLJ. That same official said there will be efforts to get Japan to at least raise the exemption age to 24 months, however, the likelihood of that happening is unlikely. Japanese officials were reiterating, last week, the fact that two of the 12 cases of BSE confirmed in Japan have been in cattle 21 and 23 months of age. "BSE has been found in cattle under 30 months of age, and not testing for the disease in those cattle risks the health of consumers and our cattle herd, Japanese officials have told us," the USDA spokesman said. "We still are adamant that the risk of younger cattle contracting the disease is near non-existent, however, the Japanese appear to think that any risk is too much." Two weeks ago, USDA officials indicated the agency might be open to lowering their 30-month exemption to 24 months, and using a combination of dentition and bone ossification to determine the age of cattle. Bone ossification in particular has been proven to determine cattle under 24 months of age and over that same age threshold, however, it hasn't been shown to be accurate on the specific age of individual animals. USDA and U.S. beef industry officials were showing some frustration with Japan's 20-month testing exemption because the Japanese weren't open to giving them options on how to verify the age of individual cattle. "They (the Japanese) are putting on a good show right now, but their protectionism is still shining through," a Washington, DC, beef trade lobbyist told WLJ. "How are we to move forward when they aren't giving us any specifics as to what technology or the kind of program to use that would allow us to move forward with accessing their market. It's hard to understand why they are being so hard to deal with when both (Japanese) consumers and restauranteurs are anxious to get U.S. beef back into their diets and menus, respectively." Japan's Ministry of Agriculture, Forestry and Fisheries has been asked to accept USDA's pending individual animal identification program as the verification tool for cattle age, however, a MAFF statement indicates it is skeptical of such a program's reliability. "Determinations of cattle age by ranchers on a voluntary basis lack credibility," a MAFF statement said. "We have asked USDA to provide proof of animals' ages in a scientifically valid manner and compensation be paid (to Japan) if problems arise." Last week's announcement that Japan had confirmed its 12th case of BSE was not thought to be of any consequence to the ongoing U.S., Japan beef trade discussion. Most officials said the fact the most recent case was in a five-year-old cow made it a non-issue in the broad scheme of things. — Steven D. Vetter, WLJ Editor

Read more
Monday, September 20,2004

Japan, Mexico prepare to sign Free Trade Agreement

by WLJ
Japan and Mexico are signing a Free Trade Agreement (FTA) this week, which will mark the first time Tokyo has made a comprehensive pact involving agriculture products. This landmark treaty is beneficial to both sides, giving Mexican farmers more export opportunities, and Japanese auto and steelmakers more access to the Mexican market with a reduction in tariffs. Over 300 agriculture products in total are covered in the agreement. Of particular interest is the new preferential tariffs for pork, especially since the Japanese border is still closed to U.S. beef. Mexican farmers will be able to export 80,000 tons of pork a year to Japan, a quota agreement that was said to be a sticking point in the negotiations along with orange juice quotas. At the present time, almost all of Mexico's pork goes to Japan. According to the agreement, Japan will also give Mexico no-tariff quotas for oranges, chicken and beef. Mexican Agriculture Minister Javier Usabiaga said in a press statement that he estimates Mexico's agriculture exports to Japan could grow by as much as 10.6 percent annually over the next 10 years as a result of the no-tariff quotas. Japan and Mexico have been working on this FTA for nearly two years. The inclusion of such a plethora of agriculture products is still somewhat of a surprise to the Japanese public, according to news reports, because Tokyo has zealously protected those products in the past, bowing to the political clout of farmers. Nonetheless, Japanese consumers are looking forward to enjoying cheaper agriculture products once the agreement takes affect. Mexico Ambassador to Japan, Miguel Ruiz-Cabanas said, "There are many people enthusiastic about selling products from the agriculture sector to Japan. One of the significant aspects of this treaty is that for the first time Japan has decided to open its agriculture sector." Ruiz-Cabanas added that he believes opening the agriculture sector was an important step in terms of long-term restructuring of Japan's economy. Japanese economists have estimated that the country is losing nearly $4 billion annually without the FTA with Mexico. The Japanese/Mexico FTA is set to go into effect sometime after January 2005. Mexico is the second country Japan has signed a FTA with—the first being Singapore. Japan has also recently initiated free trade negotiations with South Korea, Malaysia, Thailand and the Philippines, and is said to be considering launching negotiations with Indonesia and Taiwan. — Sarah L. Swenson, WLJ Associate Editor

Read more
Monday, September 20,2004

USMEF survey shows Taiwan's consumers demanding U.S. beef now

by WLJ
Taiwanese consumers are most influenced by television advertising when it comes to buying beef, in future the majority will want to know where the beef they consume comes from and 74 percent will or are likely to buy and eat U.S. beef after the import ban is lifted. These are the results of a consumer survey conducted by the U.S. Meat Export Federation (USMEF) at Taiwan's premier food show, Food Taipei 2004. The show provided an excellent opportunity for USMEF to survey the 50,000 attendees on their attitude to U.S. beef and the bovine spongiform encephalopathy (BSE) question. More than 1,000 people participated in the survey and the results showed that younger people were more likely to eat beef and a smaller number than ever, 18 percent, eat no beef as Taiwan's traditional eating patterns are changing. Less than half the people in the survey said that news reports on BSE strongly influenced their beef buying in restaurants and supermarkets. To entice Taiwanese consumers back to U.S. beef, the survey found that special offers on price (47 percent), cooking and tasting demonstrations (34 percent), and free giveaways (12 percent) would be the best inducements. Survey of Taiwanese consumers at Food Taipei 2004 Detailed results of the survey as are as follows: 1. How does the BSE related news influence your shopping for beef in a traditional market or supermarket? • Very highly: 19% • Highly: 30% • Average: 31% • Low: 11% • Very low: 9% 2. How does the BSE related news influence your shopping for beef in restaurants? • Very highly: 18% • Highly: 27% • Average: 33% • Low: 12% • Very low: 10% 3. Will you care about the place of origin while consuming beef in a restaurant, supermarket, or traditional market? • Yes: 53% • Probably: 26% • Not sure: 11% • Should not: 4% • No: 6% 4. Will you still buy U.S. beef in a supermarket or traditional market after being aware of BSE news? • Yes: 49% • Probably: 0% • Not sure: 24% • Should not: 15% • No: 12% 5. Will you still buy U.S. beef in a restaurant after being aware of BSE news? • Yes: 25% • Probably: 28% • Not sure: 22% • Should not: 13% • No: 12% 6. Will you continue to buy or consume U.S. beef after the ban on U.S. beef is lifted? • Yes: 39% • Probably: 35% • Not sure: 17% • Should not: 4% • No: 5% 7. What kind of activity do you think could enhance your willingness to buy or consume beef most? • A special offer on price: 47% • Free giveaway: 12% • Cooking demo/tasting: 34% • Charity activity: 7% 8. Which mass medium do you think has most influence on your beef consuming willingness? • TV advertisement: 75% • Newspaper advertisement: 14% • Radio advertisement: 4% • Bus/Metro advertisement: 3% • Outdoor billboard: 4% In 2003, the U.S. beef industry exported 19,225 metric tons valued at $76.5 million to Taiwan, its 9th largest export market. Annual U.S. beef exports to Taiwan have totaled between 5,000 and 20,000+ metric tons in the last decade.

Read more
Monday, September 20,2004

Hagata Ranch celebrates 100 years

by WLJ
A large crowd of nearly 400 cattle people attended the Hagata Ranch Centennial Celebration, September 4, Susanville, CA. Located some 100 miles north of Reno, NV, off Highway 395, Frank Hagata's father, John, founded the ranch in 1904 in Lassen County, one of the premier ranching counties in the state. In attendance was a big crowd of mostly ranch people. Everything for the day was perfect, weather, the delicious barbeque and some of the best live western music that can be heard. This is dry country but the Hagata's herd of some 500 mothers cows were content to graze in greener-than-normal pastures located nearby. Frank and Bernice Hagata, are a couple well known throughout the state. Bernice served for nine years as the range representative for the California Cattlemen's Association on the California Beef Council, starting in 1992. Their son, Daron, and his wife, Tatty, are their ranch partners. The father-and-son team does most of the ranch work. The cows are calved out in the spring and after the calves are weaned in November, are held until January and then sold. An average weight on the steers between 6-7 months is 650 pounds. All the calves are by Angus bulls and branded halfway down the left leg with a Box H. The Hagatas also have two daughters. The oldest is Darcy Hanson and her husband, Jack. The other daughter is, Teri, who is married to Joe Bertotto. Frank and Bernice celebrated their 53rd wedding anniversary September 1. Frank's father and his mother, the former Anne Bouret, no doubt took a lot of pride in their ranch and their family. There were five children and the survivors include Frank and two sisters, Marie Simmons and Henrietta Always. — Dick Crow, WLJ Publisher Emeritus

Read more
Monday, September 20,2004

Industry supporting auctions on ID program

by WLJ
Producer organizations and industry officials agree, implementing a National Animal Identification Program (NAIP) is not going to be an easy task. For producers to start tagging every animal, and for data to be collected and kept for those animals in every segment of the production chain, there's going to be challenges to face. In particular, auction markets may be given the largest share of the chores in making sure animals are properly tagged. Other components of the industry are prepared to support auction markets with these changes and even see it as an opportunity for the market to provide a service to the producer. Rick Stott, vice president of Agri Beef, a long-standing family-owned business that has cow/calf ranches, feedlots and processing operations across the Northwest and Midwest, said no one really knows yet what auction markets will be expected to do if a mandatory national animal identification program is implemented. Stott is hopeful the answer to that quandary will be found in some of the pilot projects USDA is conducting across the U.S. Agri Beef is a partial funder of the Northwest Pilot Project, an upcoming project in California, Idaho, Nevada, Oregon, Utah and Washington that hopes to develop, implement, and test a process that will allow tracing a livestock animal through multiple livestock industry segments, across state and national borders, to its herd of origin within 48 hours in an efficient and cost effective manner. The project will involve at least one auction market in each of the seven participating states, and probably two or three auction markets in most states. Stott feels that with a national animal identification program, auction markets are in the best position to profit and expand their service to customers because of the demographics of the cattle industry. Stott said in looking at the cattle industry, 80 percent of the ranchers have herds smaller than 40 head. "Most of them don't even know this animal ID thing is coming," said Stott. "A person who only has 20 head is probably not going to go out and buy any kind of technology of substance. Typically they are going to come to the auction yard and that auction yard then has the opportunity to provide a service to register the premise, put in an electronic ID to identify the animal, and charge a fee to cover the cost of the service." He admits, at first it will be a challenge, but once all the details are worked out, it could become an excellent added venture. Stott encourages auction markets to become involved in the pilot projects in their region to help them work out the details, as well as to pay attention to what USDA is releasing about a NAIP and participate in any public comment periods. "In any new thing, there are people that jump out in front and embrace it and there are people that will lag back and fight it all the way to the bank," said Stott. "I suspect there will be opportunities for those people that really look for the opportunities." Julie Morrision, Idaho Cattlemen's Association feeder council coordinator, was hired by the Northwest Pilot Project board to be the coordinator. If a mandatory ID is implemented, Morrison said she doesn't envy the auction market operator who will have to deal with small producers that may never have heard of animal ID and yet will bring their animals to the auction market to sell them. Morrison said it will be up to the auction market to explain it to them and bring them into compliance. "At least for producers, it is fairly straight forward what is going to be required of them," said Morrision. "An auction market will have to deal everything under the sun and it could get kind of interesting." Morrison does feel that auction markets could turn it into a money making enterprise, if they charge producers to assign them a premise ID number. Ben Higgins, executive vice president of the California Cattlemen's Association also has compassion for the auction market owners and operators. Higgins said he sees a variety of initiatives working together to implement some form of a national identification program—from producers with premise ID to government and packers on tracking. "The auction markets have to figure out what they have to be doing in the middle of these two efforts," said Higgins. "And that is going to be real tough." Higgins also commented on the technology aspect of a National Animal Identification Program. Auction markets pride themselves on moving large numbers of animals through sales at a very rapid pace and the present technology could impeded that. "Auction markets present, without a doubt, some of the greatest challenges towards implementing a mandatory national identification program," said Higgins. "Once they get the auction markets figured out, everything else will be easy by comparison." In terms of technology, there are a handful of tag companies that have been used in electronically tracking cattle from ranch gate to the dinner plate. USDA has emphasized the fact that they are technology neutral in the U.S. Animal Identification Plan, and do not endorse one company's technology over another. Recently, in a mandatory electronic ID cattle sale in Joplin, MO, Allflex tags dominated most of the selection used by producers. Central regional manager for Allflex, Marvin Scott said he understands auction market's concern regarding the technology and adds that they are working on a system that will operate with the speed of commerce. In the Joplin sale he said they sold 6,000 animals in a matter of three or four hours. Scott said they backed up a little bit since the tag readers can only read one tag at a time, but they are working on repositioning the readers and painting them, so as not to distract the cattle. Nine readers in total were used in the sale and the cattle were read as they stepped off the trucks, as they exited the sale ring, and as they were loaded back on trucks to exit the facility. In general, Scott said the basic thing sale barns will need to concentrate on with a national ID is to select a reputable tag company and a reader and to make sure that whatever brand they choose, the tags and the readers meet ISO standards, meaning approved tags will read on approved readers. "We feel there are tremendous strides that can be made in putting readers in alley ways, off sale rings, in inbound and outbound situations, where we can get much closer to cattle moving through an auction, at the speed of commerce," said Scott. "We're not there yet, but we're getting there." — Sarah L. Swenson WLJ Associate Editor  

Read more
Monday, September 20,2004

Push beef, not cattle

by WLJ
Last month's announcement that a moderately-large-scale Tama, IA, cattle and beef processing facility was being shuttered, at least temporarily, brought back a lot of not-so-fond memories concerning independent cattle producers and the hard time they seem to have getting started in the packing business. The most alarming thing to me about the 1,200-head-per-day-capacity Iowa Quality Beef cooperative's situation is that the closing happened just over a year after the plant, which was an existing facility, was renovated and opened for business as Iowa Quality Beef. It's eerily familiar with what went down with Future Beef Operations, which filed for bankruptcy and permanently closed its doors within 18 months of beginning its "ahead-of-its-time" slaughter and processing operation. Officials with Iowa Quality Beef indicated they would get the plant re-opened, however, no timeline has been given. It seems unlikely to me that the plant will re-open or that when it does it will experience a different result from the first stint of operation. The official reason behind the closing was significant industry losses, primarily due to BSE and its hindrances on the cattle/beef markets. Prices paid for cattle between last July and this July were anywhere between $5-12 above "normal expectations," and that led to a lot of extra procurement costs. It's hard for me to fathom that even under "normal conditions" that a new cattle packing facility can start to show much profit now days, particularly when startup costs, overhead costs and capital investments are at the forefront of issues to be dealt with. And, with the dynamics of the cattle market the past six months, that makes the proposition of making money by processing cattle almost impossible, it seems. I wish Iowa Quality Beef the best and hope that they prove me wrong, however, myself and several other onlookers had the same fears with Future Beef and several other startup cattle processors, and those fears turned into reality, unfortunately. Last week I was involved with a beef product research and development (R&D) seminar, hosted by the Cattlemen's Beef Board and National Cattlemen's Beef Association (NCBA). After setting through several presentations by wholesalers and retailers and watching a demonstration on cutting out some of the new "beef value cuts," it became more and more clear that beef processing goes way beyond slaughtering cattle, and that focusing on beef instead of cattle could be more lucrative. The problem with the cattle portion of the packing industry is that is where the most expense is. The largest portion of overhead costs comes from processing live cattle and getting the intact carcass through the processing chain, getting into storage and then getting it cut up into primal boxes. Last week's R&D symposium showed how lucrative the business of taking those primals and separating them out into various new products can be. For example, one of the hottest new products at the retail and restaurant level is the Flat Iron Steak, which is cut from the shoulder, normally an underutilized primal. According to Tony Mata, Ph.D, meat scientist and a lead researcher in the beef value cuts program, the whole shoulder primal has a wholesale value of $1.10-1.75 per pound. The flat iron steak costs anywhere between $4.50-7 per pound retail, and restaurants are selling it for anywhere between $12.99-19.99, and that is for a 10- or 12-ounce cut. It seems logical that it would be worthwhile to look into a business venture where raw primals are purchased and then further processed into more valuable, consumer-demanded products—call me crazy. While such a venture is not devoid of some capital and overhead expenses, it sure doesn't entail all the expenses associated with a live animal processing operation, and the amount of time to overcome those initial expenses before recognizing a profit is cut to a fraction, compared to live cattle packing. Why kill cattle when it appears to kill profits, at least in the beginning and when the market dynamics are irregular. Oh yeah, what's a "regular" cattle market, is there such a thing? — STEVEN D. VETTER

Read more
Monday, September 20,2004

Canadian gov't announces BSE aid funding

by WLJ
Canadian Agriculture Minister Andy Mitchell announced an aid package of almost a half a billion dollars September 10 for Canadian cattle producers devastated by the bovine spongiform encephalopathy (BSE), or mad-cow disease, crisis. Once consultations have been completed, Mitchell said, the federal investment will total C$488 million dollars. Analysts ahead of the announcement had been expecting new money in the area of one billion dollars. Mitchell said he wants to return the Canadian beef industry to profitability in case the U.S. border does not re-open. However, Mitchell added the Canadian government is still committed to try and find a way to re-open the U.S. border to live cattle exports. He said he spoke with U.S. Agriculture Secretary Ann Veneman in New York recently and talked with her again September 10 morning to discuss the new programs the Canadian government was attempting to put into place. He said there were three facets to the new program the Canadian government was attempting to put together. First, Mitchell said there would be funding to help increase ruminant slaughter capacity. That funding was expected to total C$66.2 million. In addition to preparing a reserve fund for infrastructure development, he said the government would establish what he termed a "one-stop shopping center" to help process infrastructure requests, information and so on. The Canadian government was also ready to institute a series of transition measures to help Canadian farmers. The transition funding was expected to total C$384.8 million. Mitchell said there would be changes made to the Canadian Agricultural Income Stabilization Program, or CAIS, that will make advances available to put cash in the hands of producers quickly to deal with liquidity issues. In order to bring some balance the marketplace over the short-term, Mitchell said the Canadian government was establishing a Set-Aside program for fed cattle and feeder cattle. The Set-Aside program is being implemented to help keep cattle prices at a viable level until additional slaughter capacity is made available. Mitchell said various advisory and management committees will work together to balance prices, slaughter rates, and other various risk factors. He said they will also be looking to find ways to efficiently deal with older cattle in Canadian herds. Mitchell also placed a high importance on the expansion of foreign markets that Canadian cattle can be sold into. In total, C$37.1 million in federal funding for market expansion has been allocated. "We're seeking to diversify our marketplace and working to gain additional foreign markets," he said. He said the expansion of foreign markets would be facilitated by the implementation of additional scientific measures, including improvements to Canada's tracking and tracing programs, in order to make them the safest in the world. Mitchell said there would be surveillance targets for cattle, which would be established through contact with the provinces and the industry. He added they would proceed with a long-term strategy of BSE research and the removal of specified risk material from feed materials. The program that will be implemented will consist of many component parts, Mitchell said. "The provinces can decide what they want to participate in based on their needs," Mitchell said. Cattle producers across western Canada have said their losses have passed C$2 billion since a single case of BSE was discovered on a northern Alberta farm in May 2003. Prior to this announcement, the federal government had divvied up more than C$950 million in BSE aid to the cattle industry. The U.S. border is currently only open to certain cuts of Canadian beef. It is closed to live cattle exports. There has been talk recently from political officials, including Federal Conservative Party Leader Stephen Harper, that the border may never re-open to live cattle exports. — John Nelson, Dow Jones Newswires

Read more
Monday, September 20,2004

Calgary delays meat plant vote

by WLJ
Calgary's City Council, on the night of Monday, September 13, deferred consideration until January 2005 of a meat-packing plant, which had already received technical approval from Calgary's planning commission. The decision came just days after the Canadian government pledged millions in aid for more slaughterhouses to deal with the glut of cattle from the BSE crisis. Few of the slaughterhouse opponents said they believe the $40-million project will be killed. "From a community perspective, we will become more adamant, more serious," said Grant Steiner. "We knew this was going to be a battle." That fight may soon spread across Canada. Canada's government announced recently it would provide loan guarantees to groups wanting to build new meat-packing plants and would also fast-track federal approval to increase slaughter capacity. Alberta Agriculture Minister Shirley McClellan has expressed frustration that the slaughterhouse proponents in northeast Calgary have faced obstacles from the community. "Maybe she should try living next to one," said Calgary resident Grant Galpin, noting that meat plants can impact the quality of local air and water. Galpin said he is pleased that city planners will have to come up with studies looking at waste disposal and the potential impact of the meat-packing plant on local environment. He said this shouldn't be viewed as a slight against cattle producers, who have been fighting to survive since international borders slammed shut on live cattle 16 months ago when an Alberta cow tested positive for BSE. "I'm supportive of the local farmer getting money for his beef," said Galpin. "But as far as building these plants, I think there needs to be a lot more thought. They've agreed to speed up the process on all of these plants and I think they really need to re-think that. Are we really doing our homework before we run out and build these things?" Agricultural economist Ralph Ashmead also appealed for caution from government officials, noting that he's aware of 20 groups across Canada looking to establish processing plants. "There's a risk that ... we could have too many plants and then we get a bunch of them going broke because we have a surplus supply or don't have enough markets," said Ashmead. Many of those proposals come from cattle producers who have banded together to try and create their own way of dealing with a huge glut of cattle. Statistics Canada has indicated there are one million more cattle on Canadian farms compared with a year ago. Most of the animals processed in Canada go through the Lakeside and Cargill plants in southern Alberta, which each kill about 4,000 animals a day. The one proposed in Calgary expects to slaughter about 400 a day. There is no estimate on when the U.S. border will re-open to live Canadian cattle, but economists stress it's important for any new processors to find a niche market so they aren't competing with the major slaughterhouses, which have lower costs because of volume. "Any new firms should be looking at different products and markets, anything from organic to specialized," said Ashmead. "Find a niche market so you're not in that same competitive market as the big boys." — WLJ

Read more
 
 
User Box (click to open)
 
SEARCH IN WLJ
Sign up for our newsletter!
   
 
S M T W T F S
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17* 18* 19* 20*
21 22* 23 24* 25* 26* 27*
28* 29* 30
 
 

© Crow Publications - Any reprint of WLJ stories, except for personal use, without permission, written consent and appropriate attribution is prohibited. 2008 Crow Publications. All rights reserved.