Whatever it takes.
That’s the strategy being pushed by some desperate cattle producers to save the country’s ailing beef sector.
“I was frustrated watching the song and dance our governments and industry were performing trying to convince producers that opening the American border was our silver bullet,” says cow-calf producer Cam Osterman of Blackie, who says the time for talk and even hope has long passed.
“I believed then and I believe now that that is false.”
|Larry MacDougal, Business Edge|
|A ‘Made-in-Canada’ solution could reinvigorate the industry, say producers, including auctions such as Vold, Jones and Vold Co. |
A farmer most of his life, the 51-year-old emphasizes that the situation stands to break him.
Like Osterman, many producers are now pushing for a made-in-Canada solution that would see the construction of increased slaughterhouse capacity – and even the testing of all cattle for bovine spongiform encephalopathy (BSE).
Rancher and farmer David Pope of Pine Lake, whose family farm Argwen Angus Ranch has been in operation for close to 100 years, says he has never seen it so bad. This despite surviving a tornado, which wreaked havoc with equipment and pastures on his land four years ago, and the recent drought.
“People were originally optimistic the American border was going to reopen last Christmas,” says Pope. “But then it dragged on and now, especially with any cattle over 30 months (because of their increased risk for BSE), that (hope) got hit hard.”
Pessimism among producers is rampant even after a recent injection of $488 million from the federal government and an additional $230 million announced by Alberta to help the industry weather the mad-cow crisis.
Part of the money will go to a set-aside program that will keep some cattle off the market in order to prevent a further drop in prices, and also includes provisions to help bring more slaughterhouses on line.
In 2002, the last full year before BSE reared its head in Canada with the discovery of a case in Alberta, overall Canadian exports were valued at $4 billion – $2.2 billion in beef products and $1.8 billion in live cattle.
Today, live beef exports remain at a standstill, though processed meat sales to foreign countries are starting to rebound.
“We are unable to export any live cattle anywhere. As of May 2003 all of our markets, for all classes of cattle, were closed and they have not reopened,” says Herb McLane, executive vice-president of the Calgary-based Canadian Beef Breeds Council.
A second case of BSE, found in Washington state in the U.S. last December but traced back to Leduc, near Edmonton, did not help the situation.
“The United States as the sole driver of Canadian policy can no longer go unchallenged,” says McLane.
“Clearly, the lack of access to the United States is very problematic for our producers. Many of our purebred producers have developed meaningful trade networks in the U.S., and of course, that is now closed to them.
“As an exporter of quality beef, Canada will increasingly become stiffer competition. However, we shall not forget to continue to press the U.S. for rightful fair trade because it will always remain important.”
For live cattle, targeted priority countries include Mexico, China and Russia, and the U.S.
Mexico, says McLane, is in great need of replacement heifers, particularly dairy replacement heifers, and would be willing to import Canadian cattle – but they are blocked from doing so because of American policy.
“The reason is the U.S. has claimed that if Mexico were to take our breeding cattle under the present circumstances, it would necessitate a change in Mexico’s status for BSE by the U.S.,” says McLane.
On the processed beef side, though, there has been progress.
Since Jan. 1, 2004, Canada has exported processed beef – at least once – to 41 different markets. While down from a high of 71 markets prior to BSE, there has been a fairly substantial recovery, says Ted Haney, president of the Calgary-based Canada Beef Export Federation.
“We’ve had complete or partial openings in many of our markets. We’re still seeking to reopen key markets in South Korea, Japan, Taiwan, Hong Kong and China,” says Haney.
The latest statistics, covering the first six months of this year, show Canada exported 225,000 metric tonnes of processed beef, which is just about on pace with 2002, the year before BSE.
“By re-establishing trade with Asia, the Canadian industry would be able to produce carcass values in excess of pre-BSE levels as well as opening up significant new volume opportunities. Asia itself is approximately 800,000 tonnes short of its normal beef import needs,” says Haney.
“Our priority on re- establishing trade with these markets in Asia and other markets such as Russia and Cuba has become absolutely vital to the long-term success of our made-in-Canada BSE recovery strategy,” says Haney.
Other reasons for optimism, adds Haney, include:
* Japan initiating a process to revise its domestic BSE testing policies, which when completed will make it easier for Canadian and U.S. products to enter that market without universal BSE testing.
* Russia moving toward re-establishing trade in Canadian beef, likely beginning with a pilot project late in 2004.
* Cuban authorities will soon visit Canada in order to confirm the basis upon which to re-establish trade.
* South Korean officials stating that they have no technical concerns prior to opening their market to Canadian processed beef, though all detained Canadian beef there must be removed – a process that could be complete by the end of September – before initiating productive negotiations.
But it’s the closed door to live cattle that has Alberta producers concerned.
Still hanging on and with plans to diversify, Pope says, “I’m still optimistic it’s going to turn around, it’s going to take a little time. I’m still stubborn enough to keep with it. There’s an old saying, ‘If you hang onto a cow by the tail, she’ll eventually pull you through.’”
Nevertheless, more needs to be done, says Pope, who is advocating a Canadian solution and full BSE testing.
“If we have to test every animal for BSE we should get on with it, we’ve got to look for our new markets,” says Pope. “Nobody wants BSE and we want to make sure everything is safe. We need to do whatever it takes.”
For Osterman, the “whatever-it-takes” attitude has led him to become president of the Beef Initiative Group – Canada (BIG).
The organization’s proposal to build a slaughterhouse to serve the four Western Canadian provinces is the cornerstone of Canada’s answer to this crisis, says Osterman. “We believe that the slaughter plant proposal that we are pushing and promoting is the key piece of the puzzle that we’ve been looking for in the last 16 months.
“We are very much of the opinion that we’re languishing in the hole we’re in because of our dependence on the United States, both as a market and because of our dependence on American corporations to slaughter our production,” Osterman adds.
BIG is calling for a $120- to $150-million slaughterhouse that would process 1,500 head of cattle a day, with the plant in a central location to serve ranchers across the West.
It will be designed to BSE-test all export product to the standard required by each individual export market, adds Osterman. It would be bridge-financed by government with a producer check-off or levy applied to every animal sold, in order to pay down the debt.
A $3-a-head levy applied to every animal sold would pay down that debt and a sunset clause would remove the fee once the debt is eliminated. Producers across Canada would then own the plant on a share basis.
“The fact that this plant will be paid down from the levy from the side elevates it to a much higher level of security in terms of survival because paydown is coming from the side. The performance of the plant doesn’t have to satisfy black-ink requirements from 200 or 300 private investors,” says Osterman.
But BIG’s initiative is just one of many on the Canadian table. Another, this one with the backing of former Wetaskiwin MP Stan Schellenberger, seeks to create Ranchers Own Meat Processors This plant, to be located in Parkland County just outside Edmonton, would slaughter 800 head of cattle per day, but only mature animals over 30 months of age.
Schellenberger, a rancher and farmer for more than 30 years, has land that sits in both Spruce Grove and Keephills.
“We are now before various financial institutions seeking interim financing to start construction and we are continuing to get farmers to join the co-op to provide equity for the plan,” says Schellenberger. “We hope to have our interim financing in place within the next six weeks and then we can start the process of construction.”
Meanwhile, a slaughterhouse proposed for Calgary is facing stiff opposition. Rancher’s Beef Ltd., a concept backed by Acme-based Sunterra Farms, has hit a roadblock, with residents fighting against the operation of a plant in the city’s northeast sector.
While many are sympathetic to the situation the ranchers are in, community residents are worried about the plant’s impact on the local environment. A vote on the matter has now been delayed.
Rancher Erik Butters, with a cattle operation west of Cochrane, says the last he heard was that there were 50 proposals to build new beef slaughterhouses across the country.
While Butters, a director with Alberta Beef Producers, is in favour of increasing Canada’s capacity in this sector, he says too much of a good thing could pose a problem.
“Of course the black cloud is when the Americans do open the border, that huge American vacuum cleaner is going to buy all the cattle and drive the prices up,” Butters says. “Survival for some of these new plants could be challenging.”
– with files from CP
(Laura Severs can be reached at firstname.lastname@example.org)