How to make CAIS work......

[kato]

Everyone is saying CAIS doesn't work, and they're right. But no one seems to have any ideas on how to fix it.

I've been giving it some thought. The way I see it, a program like this is OK in a fairly stable functioning market where there are ups and downs, not just years and years of nothing but downs. Even in the meltdown in 1996, the downside didn't last much more than one year. CAIS would have been a godsend then, and after the market got going again we'd get by just fine without it until the next down side of the cycle.

Since 2003, we have not been in a fairly stable functioning market. We have not been in a functioning market at all. Five years of solidly deteriorating conditions is more than any Olympic average can be expected to cover.

My suggestion is that in the case of a long term disruption like we've lived through, that the number of years used to come to a reference margin should be extended to reach beyond the abnormal years. The total collapse of the Canadian beef industry over one cow qualifies as abnormal.

I believe that if we had not taken the extraordinary beating of the years since BSE, we would be in a position to view the latest MCOOL trade issues as an irritant rather than as the final push that can destroy the Canadian cattle business.

So what I'm thinking is that in special cases like we are living with, CAIS margin calculations should use more than four years. Something like choosing the best four out of ten, and dropping the high and low from those four. That would include years from "normal" market years, and would stop the slow march to oblivion that CAIS is taking us down.

It would be a very simple fix involving only one calculation, and would make a complete overhaul unnecessary. We've even got nine years in the system already, so that makes it even simpler.

What does everyone else think? Is it too simple for a government to grasp?

[grassfarmer]

How about taking the figures from pre 1989 instead? that was when it really all started to go wrong. On the other hand why not just press the Government to act on the causes of the collapse in returns to producers. Anything else is a cop out in my opinion and you just know a CAIS type program will never be anything but a make work project for some pen pushers. There would be no need for disaster assistance to producers if we had anything that resembled a fair and functioning marketplace.

[grassfarmer]

It sounds like Mr Ritz is taking a leaf out of the Alberta example.
Mr Wildeman on the other hand continues with the delusion that increased access would "significantly improve the bottom line for Canadian producers, resulting in as much as $100 per head increase in values for Canadian cattle."
Why would Tyson or Cargill feel the need to pay any more for live fat cattle even if they can access better returns for the beef off them? With no competition in the processing sector it just isn't going to happen.

[kato]

I agree that all that fixing needs to be done too. It was the start of it all, and at a basic level things will really never improve until we do something about it.

In the meantime something quickly needs to be done just to make sure there is anyone left to save. Then we can get down to addressing how to rebuild a better working system than what we have now.

[dfarms11]

I think that is a great idea there Kato. I know that it would help me since in the last 5 years, my margins have just been getting lower and lower every year, except 1 year. The problem is, it is such a simple fix to make a nonfunctioning program work better, that the gov't would never go for it! Heaven forbid that they would actually have to give some real money to the producer.

[Sawbones]

Ditto grassfarmer..Until the industry comes to the realization that there is a fundamental problem with lack of competition of the packing sector and a sharing of the profits, increasing production/marketing of beef is not going to increase the profitability of the cow/calf producer

[kato]

I was just thinking where is it written in stone that four years was the only way to average anything? In the world of agriculture, four years is not a long time.

Most people probably had some decent reference margins to begin with, but you really need to have more than one good year in the past four, or else the margin drops pretty quick. Having one good one and three poor ones isn't going to cut it.

Besides, I don't know about everyone else here, but even in those long lost good years, I don't remember being wealthy. I also think that most people, after the past few years are probably a lot deeper in debt than before, so just making the average of any three years since 2003 isn't going to take care of regaining any lost ground. If someone was just getting by before, then how are they supposed to get by, and regain lost equity on the pittance that is being doled out now?

It just isn't possible.

[farmers_son]

Lets get real. Canadians of all people have seen first hand that lack of market access can ruin cattle markets overnight. Then it is a no brainer that improved market access can and will improve our live cattle prices, especially market access to the U.S. The only question is will the benefit be $100 per head. I believe it could be closer to $150-$200 per head and the difference between a viable healthy cattle sector or a cattle sector that is shrinking and in decline.

However I would caution this government is facing a confidence motion on January 27. I doubt the government can last long enough in its present form to see these promises through to completion.

The election promises have already started.

[farmers_son]

Could it be that CAIS is working just as it was intended and at least from a government standpoint does not need fixing?

I have always thought that CAIS was there to support large single enterprise farms with the no so hidden but very real goal of putting small and medium farms out of business.

Government is not going to fix CAIS... in a few years it will have accomplished its intended goal.

Seeking ways to fix CAIS is like the mouse seeking ways to fix the mousetrap. It is still a mousetrap with the sole purpose of getting rid of you.

Keep on voting for the same people and you should expect to get the same results. If you want to change CAIS you are going to have to find someone else to vote for this next election.

The way to fix CAIS is in the ballot box.

[grassfarmer]

Farmers_son, I personally don't believe there is a conspiracy by Government to put smaller size farms out of business - what would their motive be? On the other hand one only has to look back to see who has been lobbying hardest to raise payment caps in the CAIS program so that huge scale agribusinesses can get multi million dollar payouts - your friends at ABP and CCA!

From the ABP board meeting minutes September 20, 2007. "The safety net priorities identified by Cattle Feeder Council(a committee of ABP) include....(iii) removal of program payment caps."

And from the CCA 2007 Recommendations on Business Risk Management Options.
"The CCA does not support any kind of caps on programs and does not support safety net programs that provide preferential treatment to certain sized agricultural operations and
differential treatment of larger operations puts them at a distinct competitive disadvantage."

As you say - "Keep on voting for the same people and you should expect to get the same results." That would seem to apply to useless organizations like ABP/CCA which are funded by producer check off dollars but working against producer interests most of the time.

[farmers_son]

ABP and CCA does support removal of caps so you are right when you say that. And the removal of caps does mean a greater portion of limited government spending on direct farm support goes to a handful of very large operators. I am not sure how a packer owned feedlot like Lakeside fits into that, if they participate in CAIS or not. One of the reasons there used to be caps on farm support programs was to keep that money out of the hands of packers and other very large organizations that had vertically integrated down to primary production.

I never thought of CAIS as a conspiracy. Yet the fact remains that farm gate margins have declined on a per unit of production basis since the 30s. Not a conspiracy but still a fact. So any farm program based on past margins will be expected to offer less and less support going forward.

While there may not be a conspiracy to put small and medium sized farms out of business the reality is those farms tended to be diversified and everyone agrees that CAIS does offer more support to single enterprise operations at the expense of diversified operations. And the removal of caps means more support for mega farms and thereby less support for family farms because government support money for agriculture is not a bottomless pit. Funds are always limited.

I think it is fair to say that CAIS has done nothing to slow the loss of small and medium sized farms and for that matter has done nothing to slow the loss of the Canadian cow herd. That I see CAIS as hastening the loss of average sized farms in rural Canada while offering more and more support to large mega farms is just my opinion.

One of the so called pillars of support was to be some kind of disaster program. While “disaster” is yet to be defined it would be burying our heads in the sand if we did not realize that 2009 has some potential to be a disaster year (assuming we have not yet seen the full impact of the economic crisis and make no mistake about it there is an economic crisis). Maybe the disaster component will serve a useful purpose because any program such as CAIS which is based on past margins is not going to do anything at all for a cattle producer in this country.

And I do think we need to make our vote count in these federal elections. We can chat about how to tinker with CAIS all we want but as long as we have federal politicians that think the declines in the cattle industry that we have seen in the past 10 years is OK then nothing will change.

At some point we hit the wall and I think that is going to happen in 2009. Maybe it is time we started our own conspiracy and conspire to make our votes count in the upcoming federal elections and we pretty well know the next election is not far off. If the MPs actually cared about our vote they would be falling all over themselves to do something about the crisis the cattle industry is in. If you want to make change happen in CAIS then change your vote for MP because right now your vote is taken for granted.

[dfarms11]

So who exactly are you saying we should vote for? The liberals? What the hell have they done for the ag industry during their last 3 terms? The only thing they have done is look the other way.

[grassfarmer]

Truth is it doesn't matter who we vote for in a Federal election. If every cattle producer in Canada decided to vote for the one party it wouldn't alter the candidate elected in a single constituency.
On the other hand if every cattle producer influenced their federal or provincial cattle organization delegates by actually voting that could have a huge effect. There is much talk of the need for beef producers to speak with one voice when approaching Government - unfortunately at the moment the prevailing voice funded by our compulsory levy is saying that beef producers support packer ownership of cattle, oppose BSE testing beef and back unlimited CAIS payment amounts to mega sized agri-businesses while the program continues to fail family sized farms.
As you say farmers_son, you get what you vote for. I did not vote for this type of representation - did you?

[kato]

I also believe there should be a definite cap on the size of payouts. The only operations who get these mega payouts are the very large single enterprises, who are actually really well disguised subdivisions of larger corporations. These bigger enterprises can be split into separate entities for disaster relief, yet they are not really single enterprises. They are actually smaller pieces of larger companies.

I agree that the one thing CAIS has done more than anything else is totally discourage diversified farms. It has gone farther toward encouraging single enterprise operations than just about anything I can think of. It's the reason we did OK for the first couple of years in CAIS. We had neighbours who took the same beating on cattle as we did, yet got not one cent because of the grain side of their operations.

This is not right. It's not good for a healthy agriculture sector, and it's not good for the future of family farms.

As for the vote, that's always been a problem for as long as I can remember. The election is usually over by the time our votes are even counted. The only way to affect a national election is to recruit help from the people who's votes do count. Consumers. This is where those votes we cast for our industry representatives can help us. It should be the responsibility of our associations to take our concerns to the next level, and if that means going directly to consumers, then that's what they should do. The government can choose to ignore us, but if they get the same pressures from the general public, it gets a little harder to ignore.

Canadian consumers have stood with us in the past. All we have to do is think back to 2003 for that. They're more dependable than politicians in my opinion.

[farmers_son]

In my constituency the vote has always, I mean always, been strongly for one particular party. It doesn’t really matter which one it is but you can guess. I see that the farm vote is not as important as it once was and part of that is there are fewer of us but part of it could well be that we can be counted on voting as we always have whether or not federal policies are in our best interest or not.

I am sure we all can think of special interest groups that are politically influential even though they have very few numbers. The reason is they vote strategically, they vote for the party that supports their views and all the parties know it. Agriculture is a special interest group too only we haven’t figured out that we can make our vote matter.

It is one thing to hang onto the cow’s tail but should we hang onto one parties tail all the way into oblivion? Minority governments are a fact of life in Canada. Parties tailor their policies to gain votes in those swing ridings whose vote can go either way. It is time that rural ridings become swing ridings too. A few people who vote with their heads and not their hearts can influence federal policy. If we want policies that support the average sized farm, if we feel the cattle industry is worth saving, then we need the federal government to pay attention to the cattle industry just like they pay attention to other interest groups. To do that we need to make them work for our vote.

Grassfarmer. You insist on making everything about ABP. I always vote at the ABP fall meetings. So do a lot of other people. I understand those delegates elected by hundreds of producers do not necessarily always reflect your unique point of view. And it is a challenge for agriculture to speak with one voice. However nationally the cattle industry does speak with one voice with a consistent message. The challenge is to have that voice heard in Ottawa over top of all the other voices and right now there are more voices than ever. I am merely suggesting the way to get our voice heard in Ottawa is to make government work for our federal vote instead of voting for a particular party year after year, election after election, no matter what.