BEEF QUOTA SYSTEM

[coppertop]

I attended an Ag Service Board conference yesterday where a resolution was put forward to request that AARD, and Ag Canada investigate the feasibility of a quota system for Beef Cattle.
The resolution did not pass, in fact it was soundly defeated, but not before some very interesting debate.

One fellow requested to have an ABP delegate speak, and he gave some background on what prices were when barley was $4.00 a bushel in the mid 70's and cows were selling for .14cents etc.

Someone took a run at ABP, and of course that sparked even more debate ! The suggestion accompanying the resolution was the need to downsize our cowherd to 40% of it's current numbers, then I gather once we only had 40% of our herds left we would be required to purchase a quota. Nobody ventured to give an opinion on what we were supposed to do with all our marginal lands that are now used for pasture and forage.
One sure thing if the quota system ever got hold in Alberta we would not have to worry about packers, because they would not be in business, nor would our feedlots !!!

The poor fellow that spoke in favor of the resolution was, like most of us in the cattle business, very dejected and likely fed up with where the industry is headed, but, for those attending the meeting yesterday a quota system did not seem very appealing.

[Bez]

CT

Of course he was dejected.

But at least he had an idea.

Idiots do the same thing day after day and expect a different result.

This industry to a great extent is run by a few self serving folks who give a damn about most. And we seem to keep putting them into positions of power.

Time for some real changes.

Before anyone knocks the quota thought, I put forward the following items.

1. Only folks who consistently make money in ag are the dairy and poultry guys. They are under supply management.

We on the other hand are not - how many of us are driving a new vehicle every few years, a new tractor - oh, and let's not forget the fact that those dastardly dairy and poultry guys all seem to be able to afford permanent hired managers.

How many beef guys could do that?

Whether you want to or not, it is still a sign of profitability!!!!!

How much are you guys making on cows today? Or should I ask how much are you losing?

2. Lets see the damned quota sytem designed before we call it down.

I for one might be interested in it.

3. Test 100% and own the markets. Science or not - it is the consumers of the world, not the friggin politicians and scientists who drive our market. They want it, or it is a selling point - then who are we to complain? Just DO IT!

4. No packer owned cattle. I expect I will get called on this one by some.

5. No hormones - now we can sell to Europe. I am sure there are some who would want to call me an ass for that thought as well.

6. Close the Yank / Canuck border hard both ways.

Hell, if things do not change, there will be no one under the age of 60 raising cattle.

Sigh - I expect there will be no changes because it worked for Gramps - so it must be a good system.

Some folks actually believe that bullshitzen.

Obviously most of the folks at your meeting did - proves we will go no where until they are booted.

Regards

Bez

[grassfarmer]

Interesting post. I think as Bez says the problem is we will never get to the stage of seriously considering this as an option before it is dismissed. I would like to see some really out of the box thinking taking place before a proposal were even drawn up.
Points that will arise against it are easy enough to see:

1. It will be considered "anti free enterprise" by the likes of ABP/CCA which rather overlooks the fact that the corporate concentration in the retailing and processing industries are already very much "anti free enterprise" and the root of many of our troubles.

2. It will be said that we must give up exporting if we had supply managed beef (I assume this is where coppertops 40% comes in)I don't know if we would have to give up exporting though - so it would upset a few people at WTO, NAFTA etc but lets face it these groups sole aim is to facilitate corporate commodity trading around the world not to ensure producers survive. Who says we can't have a supply managed sector for domestic and also sell cheaper non-supported beef for export? We might be the first country in the world to do it but why not? Most other countries don't abide by NAFTA/WTO rules anyway - the US certainly doesn't. I think we should stand up the corporate bullyboys of "global trading" - they are ruining primary producers livliehoods on every continent and are a threat to global food security.


Things I like about supply managed beef might be:
1. It puts a body in place between the producer the processing/retailing giants that would ensure producers got a cost of production based return. Thus far I have seen no-one come up with any ideas how else to remedy this problem. Most commodity groups are still in denial about this even being a problem.

2. If our herds did reduce in #s (not neccesarily by or to 40%) it would be an opportunity to move back to a greener, solar driven production model instead of a fossil fuel one. We could still use most of the pasture and free up some grain land in the process. With a world population increasing all the time we cannot afford to feed cattle high grain rations when they could produce off grass/roughage equally.

The biggest challenge with this or any quota system would be initial allocation. Who gets it and why? Is there a means to allocate quota without it becoming a highly capitalised tradable commodity?

[farmers_son]

Free enterprise? Our present system is far from free enterprise, not even close. The free enterprise system cannot function and exist in the presence of monopolies.

Without a very substantial amount of government intervention not to mention financial support cattle production and agriculture in general could not exist within North America. It is not just a feature of agriculture in Canada.

Supply management....not going to happen. It is not 1970 anymore. Supply management were part and parcel of wage and price controls (which by the way Nixon and the U.S. put in place first and the U.S. has supply management too only it is called something else.) Government, in all the major economies, now has different ways to manage the economy. Today Government manages agriculture through subsidies and regulation not supply management. In the U.S. too as well as Canada. The U.S. is more creative, for instance subsidized bio energy.

[farmers_son]

On Supply management in the U.S...See:

http://findarticles.com/p/articles/mi_qa4051/is_200604/ai_n17172158

[silverback]

The biggest and oldest ranches in this country will demand the most quota, and who would be able to say they should not get it?

Then what do you suppose would happen over the next 40 years?

Those ranchers would just get bigger and bigger and bigger and the little guys will disappear faster than they are now.

This isn't the chicken industry where if you get a little more quota you build another barn on your 20 acre building site.

If you think you want another 100 pairs, you need the land to go with them. Who do you think is in the best position right now to buy up the quota/land from the 100 cow neighbor down the road?

Who are the biggest supporters of the way things are right now? The big guys maybe? Be careful what you wish for.

[Willowcreek]

Good post Bez...
If someone wants to study how a truly open and free market can/will operate without any restrictions in this day and age they only have to look at Russia a few years ago...

With the breakdown of the Soviet Union- Russia went strictly to an open market system- and since the concept was new to them, they had absolutely no laws governing or regulating it...

Within a couple years the entire system was controlled by the Russian Mafia and the Black Market- with low prices to producers- high markup/margins for the mafia/retailer- and exorbitant prices for the consumer (which they had to pay since the Mafia controlled almost 100% of the market)-- not that much unlike the current system the multinatiional Packer mafia is operating under- altho they still have some laws regulating some of their thievery!!!!

This forced the Russian government (at the behest of the populace) to bring back many of the old communist doctrines/laws just to break the hold the Russian Mafia/blackmarketeers were able to seize...

Nope-- those proponents of free markets in todays globalist world are just blowing smoke--as a truly free market won't work anymore with the globalist set up where many countries doing the trading and producing still are ruled by strongarm power, sweatshops, and serf labor forces...

[rkaiser]

So let's hear how this quota system would work. It may be fine to say that dairy farms are making some money but in our area the only ones who are dairy farmers are those who could afford to buy in to the system a few years back. No more 20 or even 50 cow dairy herds any more and as far as the family farm - well immigrant Dutch Families yes - smaller old family three generation farm families - very few. It may be argued that this second group simply took advantage of a personal opportunity to exit, but how does this situation explain the fight of most of us to keep the family farm strong and viable for the next generation.

It seems that shrinking numbers of actual families on the farm is the way of the future no matter which way we turn - supply managed or free market.

I for one still want to give the free market a chance. And by free market - I certainly do not mean the mafia style control that I agree with Willowcreek is part of the system right now.

I believe that society is shifting away from globalism and even though we may be on the cutting edge and it may take more than our careers to instill change --- we are responsible to future generations to do the best we can.

Foreign investment and global economics will not be stopped, however laws governing control by a few can and will change.

Good Sunday morning everyone and keep up the good battle.

[coppertop]

Excellent discussion, which I knew would take place when I posted this topic.
One thing that was lacking with the resolution at the ASB conference, was some clear suggestions on possible outcomes if we decided to move toward a Quota System.

Years ago, long term poultry producers were grandfathered into the supply management system without having to purchase a quota, this info came from a past chair of the Turkey Marketing Board, but I suspect anyone wishing to have a quota in the Beef business would be required to purchase it.

I would suspect the incentive for younger producers to get into or stay in the beef industry in a quota system would be extremely slim. Getting set up in a beef operation is tough enough without buying a quota as well.

I suspect that this same resolution may appear at the Provincial ASB Convention in January even if it did not get support at the regional conference. If, in fact, it does get moved from the floor of the provincial convention, I am willing to bet that the debate will be a lot more heated,but the outcome will likely be the same.

[Bez]

The point is I have offered 5-6 options that will be entirely discounted before they are even developed - or thoroughly thought through by those in power. Put any three into action and we have a chance. Do nothing and we continue at the mercy of others.

Producers talk independence - I would actually like to see some for once.

It shows we are doomed to mediocrity simply because Gramps way worked for him - so it must be ok for us.

What other group has even gonne so far as to do this - usually they just ask for more government handouts.

That is why I have no truck with producer orgs other than to own a membership.

They are beyond help with their low brow, non-idea, let's stay the course thought process. Other than beg for support money from the public.

GF - Anti free trade? Only a fool would think the beef industry is free trade. It is so controlled the average producer is a price taker. What hardware store owner would ever get a job so he could support his store? What hardware store owner would sell product at a loss? How many hardware store owners are sucking the government support tits - or whining about how tough it is or begging for money on an annual basis?

Then compare ag - all but the "quota" guys are begging to the point it becomes old news. As it was put to me in a western city not long ago - "All you ag guys do is bitch about how tough it is. Get a job!"

We have lost the general support of most voters - from coast to coast. They hate payng their taxes as well. Despite the booming Canuck economy, the average Canuck worker has not seen a real increase in life style. And they are tired of hearing from us. They are concerned about us producing their food, but they do not want to provide tax dollars. I know the response to give them, but the taxpayer does not care.

SB - Who cares how much they get? As for dairy and poultry - there are new start ups. Is it tough? You bet - so be it. Life is going to get tougher too - the OPEC boys just met to dump the US dollar. Only one country is in disagreement - Saudi Arabia. When China joins in there will be seious probs for anyone in this country in the ag game. You ain't seen nothing yet.You are going to see a lot of your friends go down over the next few years and no one under the age of 50 coming in unless they come in under the family support network. No different in the quota groups now.

Kaiser - The only one who actually asked the question. Why am I not surprized. I do not know the answer - but before I would EVER discount it I would like to know more about it. It works for some groups - why not ours?

What about the other options? No one interested?

In the end nothing will change and certainly the other options I mentions will never get off the floor - proving to me that there is no such thing as free enterpise in our industry.

I am sure I will see the same response here as I would at any producer meeting.

No one wants to get out there and demand some damned real alternative action from their reps.

Bez

[rkaiser]

Bez -

One thing about this industry is that due to the predatory nature of the participants - transparency is not always the case. BIG C is out to change that and a lot of other things about the way things are done. Don't think we have any influence? This proposal was the most well received of 5 1/2 proposals at the round table meeting last Wednesday. It was also taken to the Federal level by our minister and is being carefully considered and molded as we speak.

Dont' give up on ALL industry groups just yet!



Further to our meeting at McDougall Centre on October 16th, I am submitting, as requested, Beef Initiative Group's perspective as to what this cattle industries forward looking strategy requires. Acknowledging recent events negatively impacting the entire Canadian cattle industry, with more fallout inevitable, I would hope that all levels of industry leadership now recognize the necessity to restructure our approach in shaping the future of this industry.
As our current situation clearly demonstrates, our approach to the many obstacles over this past four and one half years has failed. We have proven that harmonization of the North American market and industry is an illusion which at best does not have the wherewithal to deliver the economic stability necessary to assure the industry a viable future. Thus, we are condemned to shrinking the Canadian cattle industry by a large percentage in the very near future unless we are successful in changing our business approach. I am worried that we may well be too late to redeem all that we once thought of as normal in this industry, but we have no choice but to forge ahead and preserve what we can.


I therefore offer the following suggestions for your consideration:


[1] From where we now stand, it is imperative that we find someone as straight forward and result focused as for example a "Lee Iococca" CEO and a board of highly knowledgeable and aggressive industry personnel to work under him. This board would take the leadership role on the trade and govt policy side of industry affairs. This board could technically operate under the auspices of existing industry organizations, however, with the understanding that existing industry organizations would defer to this board on matters of trade and policy development. All future govt assistance to industry needs to be contingent on the implementation of this new board, and a new clearly thought out business plan focused on increasing trade in markets beyond the NAFTA territory. Industry will argue that this "Lee Iococca" were not elected, we were. My reply will be that Rich Smith, Dennis Laycraft,
and John Masswohl were not elected either. Our survival hinges on trade with non NAFTA markets, and we require emergency measures to achieve the same.


[2] I propose the reconstitution of CBEF with an enhanced mandate and with an Alberta govt presence on it's board. CBEF has been hamstrung by both industry leadership and packer domination for too long. Processors obviously favor north – south trade, thus we have made dismal headway in foreign market re entry. The new board handling trade and policy must have access to a workable CBEF like organization, virtually oriented and focused on the same objective. Such an organization does not exist as we speak.


[3] That both ABP and CCA be presented this new business plan and be required to accept these measures as a condition of future public support.




I am aware that the above described concept will not be acceptable to current industry leadership. The present state of the industry dictates the need for an immediate reassessment of industry policy and leadership. I will be happy to offer BIG's support and counsel in future discussion, however, we are at a crossroads now where controversy cannot be avoided. From my perspective, working on the ground in this present economic climate, we are only a short step away from watching this house of cards fall around us. Thank you.


Respectfully, Cam Ostercamp
Pres. Beef Initiative Group – Canada

[smcgrath76]

Considerations...
1. In the current environment a quota system needs a regulatory framework to exist. If we look at the current approach to WTO negotiations and the Canadian Wheat Board as examples it is unlikely to ever come to pass.
2. In terms of trade agriculture is important to Canada but probably not to the extent of several other industries, or industries combined. It is unlikely in my opinion that trade negotiators are going to let ag slip through the cracks.
3. While I don't entirely agree with how some corporations operate globally, I think it is important to realise that these low paying factory jobs and abhorrent labour conditions are in many cases actually the first steps on the road to a consumer society. For example look at the growth in China. The movement started with low paying factory/assembly/toymaking work and has moved into design and engineering, etc.
4. In a quota type approach, where does personal innovation and marketing fit. Does a direct farm marketer have to operate outside the quota?
5. Consider (within reason) that it is the responsibility of the individual to develop some of their own value. In other words if there is a market for hormone free then find it, produce it and if you need more volume find others with the same thoughts. Legislating things instantly turns them into a cost of production, rather than a market opportunity.
6. Did anyone make you have cows? why do you have cows? what do you want to accomplish with those cows? What are you doing about it? Why?

I don't know if there is a right answer, but I do think part of the common thread between free market and quota approaches is the message that at least some of us need to work together. Personally I would fall very, very, very strongly on the free market side, as I see a lot of opportunity. My personal viewpoint is that if no one wants to work together or change the way they do business that is their personal business decision. I am in total agreement that the system that exists today is broken, but not at all in agreement that things are hopeless.

[Bez]

Kaiser - I now do my own thing.

We developed our own markets because I was tired of the following:

1. Cattle producers begging for money,

2. Cattle producers sueing corn producers in Ontario,

3. Cattle producers complaining about how bad things are,

4. Cattle producers resisting VALID changes to evolve with the times.

4. No damned organizations DOING anything about the above - other than to beg for money and take nice trips to nice places on MY dollar.

So, if our plans do come to fruition, it will be this outfit that survives and makes it - no help from the reps and orgs.

Funny thing is - even with depressed pricing, higher fuel pricing and so on - we made money last year - and probably will this year. Despite having sold down to very few animals.

We developed our market and our system with no help from anyone.

We did this because we were tired of paying accountants and lawyers to get money from the chartered accountant income supplement funds. And usually getting nothing.

We were tired of age verification that gave - to the vast majority of producers - NO return.

We were tired of Quality Starts Here - that gave - to the vast majority of producers - NO return.

We were tired of programs that were asked for by the various cattle groups - provided by the various gov orgs and then watching the money go everywhere but where it was needed.

I have yet to see how a quota system would be designed - so I refuse to call it down. Seems I may be in the minority in that one.

I have yet to see an assistance program that truly works - so we opted out.

Having lost nearly $80K in real dollars about three years ago we needed to change - so we designed our own program and we did things that were completely foreign to us - out of the box?

Nope - for me there no longer is a box!

The rest of the producers can run with the herd - we are out of it.

We may not get rich, but we have certainly started climbing out of the hole - and faster than I thought possible.

Bez

[rkaiser]

Good for you Bez.

And on a personal front _ not only hear you but have been doing the same thing. Calving out over 200 cows now for years and buying feeder cattle besides - and have only used conventional marketing for less than a hundred head since BSE hit.

But - my marketings are still based on conventional - even though I don't like it. Bull buyers still have to deal with the screwed up system and our beef premiums are just that - premiums over and above that same screwed up system.

Thus my unwillingness to give up on change. Take another look at the document I posted Bez. It is only the beginning I guarantee you. Already conference calls with government this morning and it's not even 8:30 Alberta time.

Feel free to call any time (403) 783 - 8872

And once again good on you for your efforts.

[coppertop]

Randy, thanks for your willingness to really, represent beef producers. I hope that there is a new direction with ABP, and that some of the other delegates follow your lead.