Thinkin' like a packer again

[kato]

I've been thinking a bit lately over the miraculous recovery in the fat price over the past week.

Wasn't it just a couple of weeks ago that we had an incredible backlog of fats, would never get through them, and they were only worth 58 cents a pound? (in Manitoba anyway)

Now, like a ray of sunshine coming down from above we have fats that are in demand, and in the 70's. (80's in Alberta from what the ABP posted on their market report)

Now isn't that amazing! Where is the backlog? Where is the doom and gloom?

Like magic, it disappeared round about the day the announcement came out about a set aside that would short the market and drive up the price a bit.

Coincidence? I don't think so! More like, "We better pay a bit more for a while so the government won't set this program in place".

As I have said all along our fat price is set, not by competition, but by deciding how cheap they can be bought without consequences. This is just another example.

If the government was to announce tomorrow that now that the prices have stabilized we don't need the program, within weeks we'd be back in the tank.

While on that note, among those others like us who fed out their calves this year, have they also noticed that just about everywhere along that time frame, if you worked out what you could sell them for on any given day, and went backward over the feed costs etc. that you always come up with what they would have brought as calves last fall? We've figured it out on a regular basis, and always came to the same figure.

This whole business needs a good shake up.

[grassfarmer]

It certainly has picked up in the last two weeks - of course you are right this is all about price fixing. There has been an element of speculation too as feedlots held cattle back and bought calves strongly in anticipation of aid coming, it will be interesting to see how it pans out in the next few weeks. I can see Lakeside etc being strong buyers of smaller feeders given they are eligable for this aid like anyone else.
I think from experience with this kind of scheme that primary producers should claim their $200 and then sell the cattle - they will be discounted by the buyers but if you sell cattle unclaimed expecting to get a $200 premium you will be dissapointed.

[BFW]

Grassfarmer, although it is not clear in the backgrounder provided by the Alberta government, I doubt that anyone but the primary producer will be eligible for the $200/hd. I don't think that this program is all bad, it is not perfect but it does show that industry and governments are coming to terms with the fact that it may be some time before we see live cattle being exported to the US. The set-a-side programs (for both feeders and fats) are an effort to increase the price of live cattle while new processing capacity comes on line. They are realizing that these new facilities need help in the form of loan gaurantees and will begin to assist the beef industry in developing new products and markets. Overall a step in the right direction and certainly much better than doing nothing!

[cowman]

I have to agree with you BFW. Finally there seems to be a shift in thinking and a realization that the US isn't going to play ball. I would think a WTO challenge should be filed right away also? In lumber, grain, hogs we've won everytime and kept them honest, so why not beef? I know our leaders had hoped the Americans would do the right thing and we wouldn't have to go this route, but it is a good thing that we've finally realized that the USA is blatantly protectionalist and not interested in playing fair?
It is interesting, when you talk to people, about the border crisis how the attitude towards the US has changed? There used to be a lot of blaming Japan but that is no longer the case? We now know who is giving us the shaft...and it is the States!
I guess they take Canada for granted and figure they can treat us like their idiot cousin or something? For a lot of Canadians(especially farmers) this whole thing has been a revelation about what a bully the US is? Maybe helps us understand why most of the world hates Americans with a passion?

[cowman]

Grassfarmer: Just playing the devils advocate here or something...but what is to stop a person from putting in the RFID tags and collecting the $200 and then turning around and cutting some out and putting in "non-subsidized tags"? Tell the powers that be the darned calves must have died in the bush or something?
Now I'm sure we are all upstanding law abiding fellows here and would never consider doing anything like that...but I'm sure there are some old rascals who would? Are there any safeguards to prevent this sort of thing from happening? Are there any people hired to enforce this scheme?

[cowman]

Excellent point cowman. Looks to me as if this thing is somewhat based on integrity. We all know how that integrity thing worked in the last set aside program; trading cattle etc. I guess if it doesn't involve cashing in on another producers back like most of the other bailout money........ go for it.

[cswilson]

Cowman I think they'll probably resort to the same archaic way they identified the set aside cattle last summer-a 'Brand'. It's funny whenever the kaka hits the fan out come the hair detectives to sort things out. I agree with the idea completely of the I.D. tags but the @#$^^&*&$##$^*$% things just don't stay in. I've picked every make, model and size off the ground. Case in point I bought 100 slickhided heifers last spring(really smart in retrospect). They all had the proper tags when we branded-by breeding we replaced some-more at preg test-more again at calving. In the event of a disease outbreak as far as anybody knows those heifers that last tags came from my place. There's thousands of arguments against branding but the irrefutable truth is-if done right (we clip first) it is permanent and readable.

[grassfarmer]

Cowman, I've no idea how they intend to enforce this program but I assume some level of accountability will be insisted on by the AB government at least - they supposidly did checks on the last schemes didn't they? I mean checking on individual farmers of course not at the real thieves Cargill and Tyson - that would have been too easy.
Cswilson, I don't know why people have such problems with tag loss. We put in allflex tags on the calves at birth
(medium size ones) and have lost less than 1% thus far. The RFID's are so much better too as they don't have a dangle part. We had this problem in the UK as well when compulsory tagging came in first and there are definately 4 or 5 tags that have 98-99% retention if properly applied. I think in the case of your purchased cattle that lose tags you are supposed to note that down and the fact you replaced it with one of your own. In case of a trace back this information would help out.

[grassfarmer]

BFW, As you say the rules don't look too clear as yet on the calf hold over scheme but rule 7. "Who is eligible to receive payment on these animals?" says
"Owners of eligible animals who are Alberta taxpayers are eligible to receive payment under this program." I guess if a feedlot buys a small calf that hasn't already been entered in the scheme they are now the owner of an eligable animal. Looking again I note it says that it may be necessary to enter as much as 40% of 2004 calf crop in this scheme - no mention of limiting it to 40% of an individual producers output. This could make it look a very different scheme if feedlots can cash in directly. Lot's of questions for Alberta Ag on Monday morning!.

[cswilson]

So I make a note when I replace the tag but what good does it do unless the original owners brand is on it. I'm sire CFIA is going to buy the story that this animal with only my brand and my tag came from somewhere else. We buy cattle from quite a few guys and you can't tell me they allput tags in wrong. Maybe I'm a dinasaur here but never had a brand fall off yet.

[cswilson]

Some calves are going through the markets now, possibly the feedlots will pay a few cents more if they are the 'owners' that can claim the $200.00
It would have been nice if all the details would have been announced with the program. The way it is worded producers aren't sure if they will be getting $200 on 40% of their calf crop if they hold them over, or whether the 40% means that the program is cut off once 40% of the calf population are enrolled....

[BFW]

Even if the feedlot is eligible to set-a-side some of the calves that they have purchased already it would not amount to many head (remember you have to hold them back a year) and most calves that have traded would be heavier calves and positioned to go on to full feed fairly quickly. I know I won't be enrolling any of my calves just to collect the $200 even if they are eligible and I don't think that they should be either. My biggest concern is how will I as a buyer be able to identify which calves offered for sale are in the program as on certain weights of cattle having a restricted marketing date on them will effect whether or not we will want to own these calves or not. I don't think just a tag is good enough as they can be removed or fall out. Ithink a permanent mark (a brand ) should be required as was in the fat cattle set-a-side program last year.

[BFW]

A neighbour is selling 200 calves on Tuesday, and he is estimating that they will average around 710 on the steers, so holding them over would really mean a discount at the packer, as they could easily be finished by April/May of 05.
My guess is that lots of the producers that calve early will not be enrolling in the program.

[grassfarmer]

Which I suppose is fair enough. If the idea is to hold 40% of the calves back obviously it suits the later born and poorer early born ones. Your friend hopefully will benefit from selling into a feeder market with less cattle on it leading to stable or maybe higher prices.

[blackjack]

kato... it is very interesting how fat prices rose 20 cents/ hundred weight in the last 3 weeks... what I find interesting is how the feedlots all of a sudden that are struggling have found 150 $ a head to buy yearlings... maybe BFW can answer one...