Lakeside Beef Slaughter Increase in June

[cowman]

Well it is a good thing that John Tyson has enough faith in the border staying open to boxed beef, that he will invest $17 million in a plant expansion?
Ralph Klein recently said that he doubts the border will be open, to live cattle, for another two years. So I guess we need the added capacity to get them killed here and the only other ones I see doing anything seems to be Sunterra?
Ralphs advice to cow/calf producers....hunker down and wait it out! It would have been helpful if old Ralph could have seen his way to throwing us that 40% while we were hunkering...but I guess he figured enough was enough?

[cowman]

When I first saw this article I wondered why R-CALF would be so gung ho to have an early ruling? Is it because they think they have it in the bag and will also get a ban on boxed beef?
I saw a recent quote by Stan Eby that said if boxed beef was banned then the CCA would be pushing their "contingency plan"! He wasn't explaing just what that was, but one part of it was to ask the USA to allow Canada to ship cattle/beef to Mexico through the US! Yea right, like that is going to happen?
If R-CALF wins this next go around how long will Canadian beef/cattle be locked out of the American market?
Would anyone hazard a guess at the price of fats if R-CALF gets boxed beef banned? Personally if I owned a feedlot I'd be a wee bit worried!

[whiteface]

kpb your mind and depth perception of economics and business just amazes me. I see a future in the cattle industry that has more people like you actually treating it like a business. Thanks for the posts, have a good day all!

[grassfarmer]

kpb, my biggest argument that beef production will remain here is our land base. The huge populations of the world are in places that don't have the room / weather for extensive beef production. Europe is shutting down agriculture with the exception of some of the former Eastern Block countries, Australasia is about maxed out on production given their fickle weather conditions, Africa is of limited potential as a beef producer.
It really comes down to S America being the one place to expand beef. Japan, Indonesia, India, China all the places with the huge and increasing populations have no room for increasing beef production as well. One thing we can't make more of and that's land!
How much harder is it to get into feedlotting than ranching? By going to somewhere in the province where they still want feedlots a person could buy a half section and feed 2000 head at a time with minimal investment on land but plenty on corrals. How much more expensive is that than trying to buy enough land to run 3-400 cows year round?

[grassfarmer]

grassfarmer it's not as simple as going somewhere that still welcomes feedlots, anyone wanting to commence a feeding operation must make application under the Agricultural Operations Practices Act and meet the requirements of that legislation, one of which is that the land in question must meet with the Municipal Development Plan of the applicable municipality as it relates to land zoning.
You are certainly right on the mark about the available land for raising beef, although that land is going to be in more remote areas as urban developments increase .

[farmers_son]

kpb: I note your comment "I believe that all of our primary prodution industries will eventually be relegated to Third World countries where cheap labour is abundant. " You might be interested in checking out a past thread in Agri-ville http://www.agri-ville.com/cgi-bin/forums/viewThread.cgi?1111769715

Pandiana pasted a couple of items, one being a link to an article by Dr. Blank who thinks along the same lines.

I frankly do not agree. The third world countries export at the pleasure of the developed countries who could shut down the upstart competitors in the third world with subsidies and politics whenever they so desire.

You said "That is why I think that despite our abundant grassland and high-quality cattle, we face an eventual losing battle in producing beef for export..." Canada is already a net importer of beef when non-NAFTA trade is considered. Canada will never be a net exporter of beef beyond NAFTA. Within NAFTA, when compared to the U.S., Canada is a low cost producer of beef and could be thought of as a third world or poor cousin to the U.S. with a lower GDP per capita and a poorly developed industry infrastructure. Politically we are only a middle military power.

[kpb]

farmers_son, thanks for the reference to a previous thread which I will read. I have to disagree with you that Third World countries export at the whim of North American countries which could cut off their exports at any time through the use of tarrifs, etc. You have to remember that the companies in these Third World countries that are exporting to us are not, for the most part, Third World companies but, rather, North American companies that are located in the Third World to take advantage of low-cost and abundant labor. There is not a hope that these companies, which are the largest multi-nationals in the world, would ever let any government impose restrictions on their ability to export to the North American marketplace.

More important than that, however, the North American (U.S) government has no interest itself in imposing trade restrictions on multi's using foreign labor forces to produce cheap goods. The U.S. economic system is rooted, as I have said before, on continued and gross consumption. To deny the American consumer the ability to purchase low-cost goods on a continuous basis would be to destroy the banking and credit system in the country, decimate the stock market (through a collapse of the share prices of the multi's) and plunge the U.S. into a depression. The government is not going to do anything to cause that.

In fact the North American economies are addicted to borrowing to buy things. Strangely, in this strange world, our role as consumers is as vital as the Third World's role in production. I'm not saying it's right but neither can exist in the world economic system without the other.

Grassfarmer, I hope you are right about our abundant land base giving us a competitive advantage but I must say I believe otherwise. Africa used to have a large and thriving cattle industry before political upheavals destroyed it and presumably has the potential again. And there are other countries in the world--Brazil, Russia--that have the potential to produce a lot of calves.

But the point really is the land, in fact, does not give us an advantage on an economic basis even though we have an abundance of it, because it is so expensive to produce a calf here when compared to most places in the world. Yes we have a lot of land, but even our cheapest land is not cheap enough to produce a calf for $100 a year like they can in Brazil.

The abundant land argument in Canada is cancelled out by the fact we have a severe climate for half the year in my opinion. The pure fact is that we cannot produce a calf as cheaply in Canada as they can in Brazil--not even close. As harsh as that is for us to accept, I don't think, in the long run, that that is any different from the shoe factory in Canada that went bankrupt because shoes could be made more cheaply in Indonesia and exported back to Canada.

kpb

[farmers_son]

I did not say the third world exports at the whim of North America as the developed nations include Europe, Australia, New Zealand, Japan, Canada, U.S.A., and Israel, a few others. Mexico is not considered a developed country.

Brazil's competitive advantage is not its weather which in fact offers some challenges but its cheap labour. Brazil faces challenges with an unstable currency and economy, a history of military governments, uneducated work force, disparity between the rich and large poor populations. Brazil is South America's economic leader but remains propped up by the IMF. Even as recently 1998, the IMF (United States) injected 40 billion dollars to keep the Brazilian economy from collapsing in the middle of the 1998 election in Brazil. Brazil functions at the whim of the United States in particular and the other developed nations who support the International Monetary Fund.

[rkaiser]

I wonder what we should do with all of this land we have in Canada kpb?

I was on a bull delivery trip to southern Sask the other day. Coming up to my cutomers farm I noticed a lot of very nice farmed land. Clean as a whistle. Strip farmed with nice white stubble and recently seeded summerfallow. Stubble was substantial and clean. When I got to my guys place, I commented on the pride taken in farming this piece of ground. He went on to tell me how this fellow and a number of other neighbors had taken on the organic route, and that this clean beautiful ground was actually organically farmed. By the book costs for Canola in his area, he said, were up close to $200.00 per acre with seed, fertilizer, and spray. How many less bushels would it take this organic guy to make a profit from his land.

My guy ran a spread of 50 quarters of mostly native grass, and only a small amount of crop and hay land. Not certified organic, but operating on the same principles as his neighbors.

Who's pockets are we lining with input costs, and who's product are we simply overproducing with these inputs. Same thing with cows, fertilizer, and growth promotants. Call me loonie for talking natural, or low input, but it could solve more than one problem for this beliguered industry we call agriculture if we shorted the chemical companies in exchange for tighter supply.

Anywhooo, if we drop the cattle numbers, what do we do with the grain. If we drop the grain acreage, what do we do with the land. Bottom line is, the dinosaurs ran on this earth for thousands of years, and now it's the humans turn for a while. Why not try to feed the ones who have every bit as much right to be on this earth as us. We have the land, we have the time, we have the ability. And even though we all complain, we also have a pretty darn good life doing it.

[kpb]

rkaiser, it's not a question of what we do with grassland when there are no cattle to run or what we do with grainland when nobody wants to farm grain. That's like asking what do we do with factories when the textile industry leaves Montreal and heads for China (which has largely already happened). I think it misses the larger point which is losing the industry as a whole to another country.

If the calf price in Canada this fall and next fall is $200 a head--I'm not suggesting it is going to be but humour me and pretend that it is--how many guys would still run cattle? Not many I would say and who cares what is going on on the land.

What I'm suggesting is that the agricultural industry in Canada is no different than any other basic products industry. If, as farmers_son says and I agree, the Third World nations have an advantage over us because of cheap labor, those countries will be able to export beef cheaper here than we can produce it, regardless of all our land. Our abundant grassland is, in fact, irrelevant from a competitive economic viewpoint because our overall costs are so much higher than, say, Brazil.

Farmers_son, I think you are missing the point that the IMF props up Brazil and a multitude of other Third World nations not out of the goodness of its collective heart but rather because the developed world, namely North America and Europe, need these countries to remain solvent. And the reasons for that are two--the banking industry, largely centred in the U.S. but including Japan and Europe, would collapse if the IMF removed support and, secondly, the multi's, again largely based in the U.S. have huge interests in keeping the trade connections with the Third World open.

The IMF will never, never, remove support for major debtor nations like Brazil because it is to the banks of the devloped countries that a lot of the debt is owed. It is a symbiotic relationship and there is as much dependency by the developed world on the cheap labor and ample resoures of the Third World as there is by the Third World on the money of the developed nations.

Economic globalization is a form of imperialism whereby rich nations basically colonize the poorer nations to be able to provide cheap goods for the consumers of their countries. And that is so the companies in, say the U.S. that sell their goods can make money. Good or bad that's how it is and there's no way multi-billionaire Paul Martin or mega multi-billionaire George Bush even wants to change it.

Agreed there are companies in Europe and Japan that have the same mega-status as the U.S. but it is the American companies that have been the most aggressive about utilizing Third World resources for their benefit. The Americans have managed to wrap up capitalism with democracy and, now, religion, and because of that have a huge buy-in from their citizens to global economic expansion by their multi-nationals.

I don't see that expansion slowing down and my main point, a long rant ago, was that I'm not sure we should see beef production as immune from that philosophy of producing goods at the lowest price possible in some far-off land and importing the finished product to serve the domestic market.


kpb