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Anonymous
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Looks like old Hugh don't agree with some of you that your not getting a fair price for your product!!! Says you are all in the same boat- cattleman/packer/retailer- and no one is profitting...
Also looks like besides developing some other export markets-- Canada needs an R-CALF....
I think it will get much worse before it gets better--GW/the neocons/the globalists will not stop gutting the dollar- until they can get all Americans and Canadians screaming for the NAU and the "amero"......
Also looks like besides developing some other export markets-- Canada needs an R-CALF....
I think it will get much worse before it gets better--GW/the neocons/the globalists will not stop gutting the dollar- until they can get all Americans and Canadians screaming for the NAU and the "amero"......
Cattle industry clobbered
Sector trying to work together through 'perfect storm' of high costs and profit-sucking loonie
David Finlayson, The Edmonton Journal
Published: 2:20 am
There are no villains as the perfect storm rages through the Alberta beef sector, most industry groups say.
While some ranchers feel they are getting stampeded by people higher up the value chain, everybody is being hurt by a combination of low cattle prices, high feed costs and the strong loonie, says Hugh Lynch-Staunton, president of the Canadian Cattlemen's Association.
"We've all been devastated by the rise in the loonie, right through the various sectors from the packers right back to the cow-calf operations," said Lynch-Staunton, who ranches at Lundbreck in southwest Alberta.
We like to find villains at times like this, but there aren't any. The U.S. is our biggest market and they set the price. A year ago the dollar was 85 cents and now it's around $1.07. We've lost 20 per cent right off our gross."
The different groups, from ranchers to packing plants, are trying to work together and not point fingers, Lynch-Staunton said.
He acknowledged it's not easy as each has a different view of the world and different solutions, he said during a break from meetings with industry stakeholders in Calgary.
"We can't do anything about the currency. In time some of the costs should come into line, but we don't know how long that will take."
Kevin Grier, senior beef market analyst at the George Morris Centre, a Guelph, Ont. agri-food think-tank, said usually when one sector's doing well, the others are not. "But I haven't seen anything like this, ever."
Everyone likes to kick the retailers around, and their margins on beef are quite good right now, Grier said.
But it ebbs and flows over the course of a year, and their overall margins have been squeezed over the last two years as consumers shop strictly on price, he said.
Grier said the high loonie has not only hurt exporters, but more beef is coming in from the U.S., where their feed costs are lower.
Canadian packing plants are not running at capacity because of labour shortages, feedlot owners have to bid lower on cattle because of high grain costs, and that hurts the cow-calf operators, he said.
Grier said the Alberta government has been throwing money at the problem as a bridge to better times.
"It could be a long bridge, as it looks like it's going to be a long time before it gets better."
The National Farmers' Union believes what it calls a dysfunctional marketplace is the result of a handful of large corporations dominating the industry.
Cargill, which has a plant in High River, owns half Canada's packing capacity and is able to heavily influence prices at the farm gate and at the wholesesale-retail level, NFU president Stewart Wells said.
"In the mid-1990s, farmers got 60 cents a pound for beef, while packers and retailers took a dollar. Now farmers get 35 cents and packers/retailers get almost $2.50 a pound."
Wells said Cargill's third-quarter profit rose 83 per cent to $917 million compared to the same period in 2006. And the Wichita, Kansas-based company had record profits of $2.3 billion in 2006.
"This profit is coming at the expense of farmers," he said.
Lynch-Staunton said the NFU's position plays well with farmers who want to feel sorry for themselves, but the main driver should be finding a better profit for producers.
Jim Laws, executive director of the Canadian Meat Council, said none of the packers are making money right now.
"The drastic change in the Canadian currency is affecting everybody, but particularly the packers."
Canada exports $1.6 billion worth of beef annually, and $1.1 billion goes to the U.S., so that makes it really tough for exporters."
The packing business is very labour intensive, and they are all facing worker shortages because they can't compete with the oil industry, Laws said.
The industry increased capacity to become more efficient after BSE, but you have to fill that capacity, Laws said.
"There has been some success bringing in temporary foreign workers, but it's difficult work in a cold environment using power saws and knives.
"Plants have to try to become more mechanized."
While the pork processors have started to use robotics to cut carcasses, it hasn't yet reached the beef packers, he added.
The packers do compete for animals at auctions, despite there being only a handful of players, Laws said.
They can only bid so much or they'd go out of business. But they have to go high enough to outbid U.S. buyers and keep the cattle in Canada, he said.
The U.S. plan to open the border to older animals and meat from animals of any age on Nov. 19 will help everybody, Laws said.
Since the BSE crisis of 2003, only animals 30 months and younger have been allowed across the border.
Timing wrong
But a new crackdown on animal feed in Canada comes at the wrong time, he added.
The Canadian Food Inspection Agency has banned bovine specified risk material (SRM) from all animal feed, pet food and fertilizer, not just in feed for ruminants.
And packing plants must identify SRM to ensure it's removed from the feed system, which adds a cost to each head of cattle.
That's not a requirement south of the border, and hurts our competitiveness even more, Laws said.
The new rules came after the U.S. pointed the finger at a now-bankrupt Rancher's Beef Ltd. of Balzac for being the likely source of bacteria-contaminated meat that made at least 40 people sick earlier this year in eight states.
The feedlots owners, who sit in the middle of the value chain, have not escaped the perfect storm, said Bryan Walton, general manager of Alberta Cattlefeeders Association.
"There's not one thing in our favour right now.
"The high cost of grains and the strength of the Canadian dollar mean it's tough to make a buck."
Bio-inflation
Walton said the growing biofuels industry has pushed up grain prices, but it's not going away so they have to find a way to work with it.
Making biofuels byproducts available as cattle feed, as they do in the U.S., would help, he said.
Walton said the low cattle prices have attracted U.S. feedlot operators to Canadian auctions.
About 600,000 cattle will go south this year, he figures. The last time it was anywhere near that was 2002, when 540,000 were sold to the U.S.
Walton agrees nobody's getting rich right now.
"Competition prevents it at every level. The packers' margins are not great, and look at the problems Loblaw's have had getting ready for the Wal-Mart Supercentres."
It's more important for the various links in the chain to work together to lessen the impact than throw blame around, Walton said. "It surprises me there's not more harmony, but I suppose it's the nature of the business. We each have our unique interests."
http://www.canada.com/edmontonjournal/news/business/story.html?id=1e95b4a5-d571-4e48-8aa3-475ba653d22f&p=1