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Mad cow disease delivers a lasting blow

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Well-known member
Feb 10, 2005
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Northeastern B.C.

Mad cow disease delivers a lasting blow
Many cattle ranchers lost all

A reopened border would be too late


PONOKA, Alta.—Standing in front of the house his family will soon be told to leave, just a stone's throw from hundreds of cattle now cared for by court-appointed receivers, Rick Bonnett is a poster boy for the economic hardship wrought by mad-cow disease.

A bank now controls the feedlot, big enough to fatten up to 35,000 cattle for slaughter, after Bonnett and his brothers spent 20 months — and millions of dollars — in a failed attempt to keep it afloat in the face of a closed border, fallen prices and increased debts.

In January, Bonnett Farms, launched in 1972, went into receivership. It's another grim statistic in an industry plunged into crisis by the discovery in May 2003, of an Alberta black Angus with bovine spongiform encephalopathy (BSE), or mad-cow disease.

"We were in the wrong place at the wrong time," Bonnett, 38, says of an operation that had three-quarters of its cattle destined for the United States when the border was closed. Instead of generating cash flow through sales to American packing plants, there was a $50,000-a-day tab to feed animals that could no longer be moved. Of those sold in Canada, losses reached up to $1,000 per head.

"The best thing we could have done was probably take all of them out and shoot them, put them in a hole and be done with them," Bonnett says. "But you keep going, thinking, hoping things will get better.

"They just never did."

The beleaguered Canadian cattle industry, which has lost an estimated $7 billion since the onset of BSE, suffered another setback this week. The U.S. Department of Agriculture's plan to allow the resumption of a major aspect of cross-border trade beginning Monday was scuttled by a Montana judge, who sided with an American rancher's lobby group, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, or R-CALF.

The group said it would be "insane" to reopen the border to live Canadian cattle under 30 months of age given the discovery of two new cases of BSE earlier this year. While officials in Ottawa and Washington called the court decision nothing more than a temporary delay, the reaction in cattle country was much less confident.

"There's a lot of uncertainty out there," says Blair Vold, owner of Vold Jones & Vold Auction Co. Ltd. in Ponoka, about 100 kilometres south of Edmonton. "People just don't know which way to turn anymore because there's been so many twists along the way."

Vold, who operates one of Canada's largest auction marts, says volume has fallen 30 per cent over the past 22 months. He's also been caught up in the financial woes of others, including the Bonnetts, and has watched as the pain reached the entire cattle industry.

"No one has ever seen anything like it in terms of the impact," Vold says. "Everyone has suffered, so there's going to be a great sigh of relief when trade gets going again."

No one here is willing to bet when that will be. This week's court decision is just the latest in a long series of false starts for the Canadian cattle industry over nearly two years.

In August 2003, the U.S. allowed Canadian boxed beef from animals under 30 months to cross the border. The move returned a key part of the market to ranchers and fuelled optimism that a full-scale reopening would happen by the end of that year or early 2004.

But in December 2003, a dairy cow with BSE was found in Washington state and traced back to a farm near Edmonton. In January of this year, after American officials had set March 7 as the date for the resumption of trade in live young cattle and beef products over 30 months, two more BSE infections were discovered in Alberta, two weeks apart.

U.S. Agriculture Secretary Mike Johanns last month confirmed plans for Monday's reopening but further delayed trade of beef products from cattle over 30 months. So, while frustrated at this week's court decision, few were shocked.

"We're disappointed but we're not surprised," says Gord Graves, who has a 200-head cow-calf operation near Lacombe, 125 kilometres south of Edmonton. "When you've been kicked in the shins so much, you begin to expect it."

Graves, 50, knows he's one of the lucky ones. In late summer 2003, prices for his Charolais-red Angus cattle rebounded from near-record lows on the expectation the border would soon be reopening. Last August, the market was way off, but a federal-provincial aid package helped offset much of the loss he would have incurred.

"The bottom line is that without consumers making a conscious choice to help us out by eating more beef and governments offering help, this industry would have been in even bigger trouble," says Graves, a third-generation rancher and father of four whose full-time job as an assistant principal supports the farm. "That helped a lot of people hang on.

"Everybody who was there when the market went down wants to be there when it rebounds."

But many won't be. Some ranchers have sold their entire herds and left the cattle business. Farmhands who were laid off have found other work. Truckers, who took animals south to U.S. packing plants, are now hauling equipment in the oil patch. And large feedlots, which had been preparing to ship cattle south beginning next week, face more uncertainty as they close in on two years of falling equity and rising debt.

For the Bonnetts, the spring of 2003 started with great promise. The droughts of the previous two years, which had seen feed prices — and, subsequently, operating costs — skyrocket, had given way to wet weather that would yield a solid hay crop and lots of pasture for grazing. Grain fields, used for silage fed to cattle over the winter, were promising an abundant and affordable supply of feed.

Cattle were fetching good prices, meaning the expansion the Bonnetts began in 2000 was finally going to pay off. And, while a typical year would have seen one-third to half of their animals shipped south, in 2003 the family put more of an emphasis on the U.S. market because it was suffering from a shortage of animals and would, therefore, offer higher returns at auction.

"We knew we had to make money that year or we were in trouble," says Bonnett, a married father of two and the youngest of eight siblings. "But everything was pointing in that direction."

That changed overnight — literally. The discovery of the first case of BSE in northwestern Alberta prompted the Americans to immediately close the border. The Bonnetts' forecast of up to $6 million profit in 2003 became a loss of nearly $15 million.

Throughout 2004, they tried to find an investor, as the bank had told them to do. "But who wants to buy a feedlot when you can't move cattle across the border?" Bonnett says, noting that one investor made an offer, but the bank rejected it as too low.

Finally, in early January of this year, the Canadian Imperial Bank of Commerce seized the feedlot for non-payment of debt, which totalled nearly $38 million. Since then, there have been public battles over who was responsible for the death of nearly 200 cattle due to incorrect feed rations, and allegations that the Bonnetts made bogus claims for mad-cow compensation and inflated their inventory levels to get larger bank loans.

The allegations, yet to be proven in court and denied by the Bonnetts, are part of the ongoing court process in the bankruptcy. That proceeding will also include the sale of the feedlot and central Alberta land the family has owned since 1952.

But Bonnett, one of three family members set to lose their houses on the farm, isn't bitter.

"At the end of the day, that's their job," he says of the bank. "We borrowed money and said we'd pay it back, and we couldn't do it."

For Steven and Janet Yule, it's been bad, but not as bad as they feared it would be. The young couple, who operate a 1,500-head feedlot near Gleichen, 100 kilometres east of Calgary, worried at the onset of BSE that they could lose it all. The price drop that followed the closed border saw them lose up to $80,000 when they sold at auction.

Since then, they've made some of it back by being on the right side of fluctuations in the market and offering room, board and health care at their feedlot to other ranchers' cattle. But they still had to rearrange some debts and were fortunate that Janet, 28, could take a job in administration at a college two hours away from home.

"It'll take us a long time to recover from all this," says Steven Yule, 32. "But it could have been a lot worse. We're down, but we're not out."

Many out here echo that refrain, showing that even after nearly two years of hardship, ranchers remain among the most optimistic of Canadian farmers. They say the industry has a lot going for it — more domestic slaughter capacity, a commitment to try to secure other foreign markets and enhanced food safety standards — since the onset of the crisis that will help them eventually enjoy a robust future.

For Bonnett, the future is uncertain. He's considered trying to land a job in the oil fields. An unsuccessful Liberal candidate in last June's federal election, he remains politically active and will work to make Ottawa more aware of the plight of farmers.

And, he admits, the family would entertain offers to once again become involved in the feedlot if that's what a new owner wanted.

"I'd like to hope we're not out of the business for good," Bonnett says. "But you've got to remember, agriculture burned us over the last few years, so are we up for that again?"

Take care.

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