Another CAIS beef!!

[farmers_son]

I know of quite a few professional advisors who recommended taking less than 100% so professional advice from an accountant or business professional is not always the sure fire answer. I recall quite a few newspaper columnists in Grainews and other papers who recommended not participating in FIDP/CAIS at all. The program has changed quite a bit from when FIDP and later CAIS were first trotted out.

NISA was a good program in so far as you paid in a dollar and the government paid in a dollar. If you do not qualify for CAIS you get no benefit at all on good years and your reference margin is sure to decline, it is only a matter of when not if everyone runs out of reference margin.

For many, as feed inventories return to just normal levels after the drought years the positive change in non cash feed inventories will cause them to not qualify for a CAIS payment even though they suffered a cash flow disaster from BSE. Even keeping cows, a common BSE strategy, will reduce your CAIS benefits. CAIS has never paid cow calf producers for the loss in equity caused by BSE even though the CAIS advance program was partly based on equity loss. Those advances all too often had to be paid back, a debt trap if there ever was one. The CAIS program will never compensate those cow calf producers who hung onto their cows for the equity they lost as a result of BSE.

The best accountant cannot change the built in problems with the CAIS program.

[kpb]

farmers_son, Everything you wrote is right on the mark. And the worst part is that cow-calf producers believed the government when they said the program would compensate them for the loss of equity in the herds. And believed the government again when they were told that the advance payment based on equity loss would easily be covered by subsequent payments. Most have now been asked to repay their advance. This program is an absolute scandal and the repercusions will resonate through the government in the next election if it does not move quickly to scrap the program and not re-claim advances.

kpb

[kato]

As for NISA, we never had the cash at the time to contribute, so we didn't have an account to draw on. We knew it would be good to put money in, but just like the CAIS deposit, it seemed our suppliers and bank were a little more of a priority than a savings account at the time.

We did get money from CAIS in 2003 and 04, but it wasn't nearly what it would have been if we hadn't been misled by the deposit requirements. Who knows, it may have even been enough to be a proper benefit. We don't want to get rich from this, but it would be nice to be in a hole that's a little less deep than the one we're in now!

[grassfarmer]

I realise I risk being shot for this but I'm a little puzzled by your position Kato. My intent is not to be critical or derogatory more to understand your position. You start by saying that when CAIS began you were coming off 5 good years and were very happy with the way things were going. At the same time you didn't have the cash available to put in a NISA account. I find that incredible given that it was basically a money for nothing program, ie give the Government $100 and they added $100 to it to be drawn out when you needed it. Just like you need a certain level of management, or x amount of landbase to operate I think you also need a level of debt to assets to profit ratio to operate. If there is no money left over to make good investments with in the good years I can't see how you can maintain a longterm farming ambition.
Does no-one expect to make money in agriculture in Canada?

[madcow]

make money in agriculture??/// wow what a concept, I've been struggling and scheming and plotting on a plan just to break even, aiming for the elusive zero.,,,,sorry for the sarcasm, too many long hours lambing & calving,good night ZZZZZZZZ

[coppertop]

grassfarmer in some cases having a 'good year' means making enough money to service existing debt and pay operating costs, it doesn't necessarily mean there will be much left over to put into a savings account for a rainy day.

For most people in the cattle industry the herd was their 'rainy day' and when BSE hit, we know what happened to that equity.

[WoolyBear]

A good year.......... now thats something most farmers brag too much about when they do have one. As soon as we get a few dollars ahead, the input suppliers decide to take it to us and try to squeeze it out of us. Most of us on a good year are able to put a little back to the debts that we had accumulated in the numerous poor years. For those of us that have diversified, when one commodity is up, the other 2 are down. Money ahead........ usually goes to fixing the bandaids that were applied when times were short. My wife is Still waiting on new flooring in the house. That carpet looked like crap 3 years ago, and its only worse now.

[grassfarmer]

So, again not being cheeky, but who do all the new, shiny duallys with their big new aluminum trailers belong to at the auctions? Are there really two types of producer in the country - ones who are doing well and can afford these luxuries and those that can barely afford to keep a roof over their heads? Or do the "debts to their input suppliers" and bankers incurred by some of those who are really struggling involve paying for some of their fancy new metal?
I've never been one for shiny new metal - I run a '94 truck and a bumper pull trailer I picked up at an auction - total @$12,000 for the outfit. I know several guys close to me, on similar size operations, that have just got new trucks at $45-50,000 to pull their $7000 trailers. I question their judgement of a wise investment given what we read here about the profitability of beef cattle.

[Bez]

Good ole CAIS - the Chartered Accountant Income Supplement.

Reference margins mean nothing - unless of course you were in expansion mode prior to BSE. Then they become VERY important.

Expansion means debt means no profit prior to BSE - means NO CAIS cheques in the bank.

So we were forced to bail our own water - we're making it - just - screw the feds.

Bez

[WoolyBear]

Some of the shiny machinery/truck trailer owners are doing well. They have their birds in a row, and are having fun doing their thing. Some of the others are in so deep that their belief is that they will have fun while it lasts, and then there is the next group that have the off farm jobs in the oil patch. I hope that the oil rush lasts long enough for them to pay for it all.

I don't begrudge anyone their possessions, I personally wish others wouldn't judge a man's (woman's) ambition by their belongins (or lack of).

[kpb]

grassfarmer, have you not realized yet that the guys doing well are the ones that don't farm or ranch full time? I'll bet you that fewer than one in four on this site are full-time, only-source-of-income-is-cattle ranchers. I've raised this on this site a few times and been thumped both times but I'll say it again--there is a world of difference between making your only living off the farm and supporting yourself and your loved ones and having a farm as a part-time job.

I don't begrudge anyone's opinion on cattle but the simple fact is that there are fewer and fewer people trying to make their sole living off the land. I think that agriculture should be a full-time job but it gets harder for people to make a decent living.

Anyone can post on this site and most have interesting and useful information but I confess that I read the ones that are in it full-time more closely, with more interest than the others. Why? Because these are the guys, like myself, that are in the frying pan. Like I said before it's the difference between a slaughter pig and a laying hen--the hen is interested in farming but the pig is committed. I suspect it is the hen-type who are owning the big, fancy trucks--along with 30 head of cows-- and calling themslves ranchers. All hat and no cattle.

kpb

k

[grassfarmer]

I didn't mean to turn this into counting who spends on new trucks and who doesn't - I couldn't care less if some guys like them wheras I don't.

Off farm income and oilfield money isn't the only reason for the machinery habit though kpb. I know one outfit here quite well, good tidy operators on 800 acres, 80-90 cows, sell weaned calves. Grow their own feed, sell a bit grain and hay in good years and have a couple of oil leases on their land. Father and son both have big new trucks and no off farm income. That is just an example and I know many in Scotland that were the same. Good all round operators but any money they make in good years gets spent at the machinery dealers in town. To me that's like not watching your input costs, buying hay at 5c/lb when you could get it for 3c/lb.

I'm not so sure any of us are by necessity making our living off the farm any longer. It's easy to categorize the guy that draws a pay check off farm but in reality are we any different kpb? You may think we are not but I have been through the process, sold the farm, had the cheque in my pocket and decided to reinvest it in agriculture. So I didn't have to make my living off my farm again - but I chose to. You know if you sold up you would get a cheque that you could invest wisely and make more than you will farming, yet you still farm. So technically you don't have to depend on making a living from the farm - you choose to.

[kpb]

grassfarmer, I think you're right--if I sell the farm down here I don't have to make a living farming. So I guess it is a choice I make.

Having said that, it is a choice that I've made. I am most interested in keeping farming and ranching as viable options in today's economy and I'm always interested in how my peers are keeping things together. It bothers me more than I can tell you that so many guys are obliged to work off the farm. We are in an essential industry and I hate to see society, in general, treat us with such disdain. It bugs the heck out of me. I don't want more handouts--I don't think they benefit us in the long run--I just want a decent and reliable price for my product. Cripes is that too much to ask?

kpb

[coppertop]

all hat and no cattle may in fact be more desirable than waking up every morning with the banker beside a person !!!

[cowman]

How much land, cattle, machinery...assetts do you need to make a viable, stand alone farm? For one person? A couple? A family...with perhaps adult children farming also?
How do you want to live?
There are about a million ways to make money in this old world and a job working for someone else is only one of them?
Example: Was talking to this kid down at UFA the other day. Needed to make money to get through college so started this little yard care business. A used truck, trailer, couple of lawn mowers. Made so much money last year that he now has two outfits on the road and three summer employees!
Now personally I have a hard time considering a hog barn factory "farming"? Don't know how much different that is than owning a welding shop or something similar?
Business is business and whether you need to call yourself "farmer" or "rancher" or "yardcare service" doesn't really matter as long as it is a business and you are making money?
Obviously people don't have a problem paying to have their lawns cut and yard taken care of, but they seem to have a problem paying enough for food for the farmer to earn a decent living? Quite frankly the returns in agriculture just aren't enough for the investment in time, labor and capital? So why do we do it?
I would never be too impressed by the big truck and shiny new trailer...in a lot of cases the bank owns them anyway! And being realistic, a good well maintained truck and trailer gets the job done just as well at a lot less cost? And in agricultural business it really is all about keeping costs low. Just my opinion.