Lunacy

[grassfarmer]

I thought I'd share this little snippet on farm profitability from my homeland. 2008 turned out to be a(relatively)good year for Scotland's farmers. In a survey it was discovered that 62% of the respondents pre-tax profits exceeded their personal drawings - and this was the best result in the 13 years the survey has been conducted!!
That does not sound a great result to me but it gets worse;
In 2005 all EU farm subsidies that had been previously been based on headage payments were replaced with the Single Farm Payment. Now instead of having to keep 200 cows to receive $x times 200 cows the Government would pay you 200 times the $x whether you keep the cows or not. You still have to manage the land to an extent but logic would tell you to reduce your cow numbers and take life easier because you are not chasing the headage payments. Apparently that has hardly happened as most farmers have kept on doing what they always did and the result is that only 4% of farms earn a pre tax profit greater than the Single Farm Payment handed to them by the Government.
Wow, 96% of farmers are prepared to lose money to subsidise their hobby of farming. That amazes me but I guess in Canada it probably isn't much different with all the guys working off farm to support their "habit".

[farmers_son]

First speaking of Scotland, hope you have time today to enjoy Robbie Burns birthday, born 250 years ago today, January 25.

Are the people working off the farm doing so to support their habit or are they working to build up a very good investment in land? Land is obviously a better investment than mutuals, given the events of the last few months.

It would be great if everyone could cash flow their operations from just farming but the reality is with better equipment, swath grazing and different management styles the farm provides extra time to work off farm where a generation ago it took all day to feed the cows and get the chores done.

And I do know some farmers who are visiting New Zealand and other nice places this winter. Alas I am not one of them. But if I had the money I would probably not go and just plow the money back into the farm so my family can earn a good living doing what I have been fortunate to do.

We did see a brief period this spring and summer where the grain guys were making a pure profit but it was sure short lived. And their good fortune was hurting the cow calf guy big time. And I remember the good old days when we were selling 1/2 blood exotic bred calves for a lot of money. Those kind of things do not last long.

If you want to talk about lunacy it is ethanol, making gas out of food.

Subsidizing agriculture is not the answer and in hindsight all the benefits accrue to agribusiness.

Keeping on the topic of lunacy and just for conversation I will make a statement that I may or may not agree with. In Canada you have to admit that the supply managed guys are the best off. Ultimately that is the model that will become accepted world wide. The subsidy approach has not worked, it is just a means to give money to the big players and buy our vote. It is being widely recognized that the free market does not work, and the U.S. will never allow global trade in food to function properly.

Supply management is the future of global food production. If the packers and politicians will not take steps to ensure a man or woman can make a decent return raising a cow then supply management is surely, without question, where we will be headed.

[grassfarmer]

f_s, I'll toast Burns later but sadly won't have haggis as the import laws won't allow it.
I agreed with your ethanol is lunacy statement. I also agree with your statement on supply management whether you did or not. The system that prevails currently in the Canadian dairy sector is the envy of dairy producers the world over. I totally disagree with your statement "Ultimately that is the model that will become accepted world wide." I can't see that in the short term anyway given how fast we are running in the other direction at the moment.
All the pressure being applied by the Federal and Provincial Ag ministers, grain organisations like Western Barley Growers, beef organisations like CCA and ABP is insisting that supply management must be sacrificed on the alter of free trade. That certainly is lunacy - sacrificing the few successful sectors of Canadian agriculture to further the aims of those who think they will get rich if only they can access the "free market". Imagine the sea change it would take to bring supply management to the beef sector though - all the guys that fight any Government involvement, insist on market forces being allowed to work - do you think they would exchange what we have now for the security and profitability of a supply managed system? I know I would but I honestly think the majority in the west would rather go bankrupt with the impression they were independent and free than co-operate with fellow producers to create a better future.

[kato]

Supply management is not government involvement the way I see it. Are the marketing boards not producer run? I always thought they were.

There's a reason that the big internationals are so determined to break the supply managed sectors of our economy. That's so they can move in and take over. The producer's have in the purest terms formed a union, and they don't like that one little bit. Just count the challenges to the Wheat Board to see how badly they want to own our grain industry completely.

As lunatic as subsidies to farmers seem, we have to admit that they are serving one purpose in that they are probably keeping actual farmers on the farms. They are keeping rural populations rural, and they are providing more diversity than if agriculture was run by a handful of corporations.

As for Robbie Burns Day, maybe this'll help a bit. (My family tree is Scottish from top to bottom.)

Address to a Haggis

Fair fa' your honest, sonsie face,
Great chieftain o' the puddin-race!
Aboon them a' ye tak your place,
Painch, tripe, or thairm:
Weel are ye wordy of a grace
As lang's my arm.

The groaning trencher there ye fill,
Your hudies like a distant hill,
Your pin wad help to mend a mill
In time o' need,
While thro' your pores the dews distil
Like amber bead.

His knife see rustic Labour dight,
An' cut ye up wi' ready slight,
Trenching your gushing entrails bright,
Like onie ditch;
And then, O what a glorious sight,
Warm-reeking, rich!

Then horn for horn, they stretch an' strive:
Deil tak the hindmost, on they drive,
Till a' their weel-swall'd kytes belyve
Are bent like drums;
Then auld Guidman, maist like to rive,
'Bethankit!' hums.

Is there that owre his French ragout,
Or olio that wad staw a sow,
Or fricassee wad mak her spew
Wi perfect scunner,
Looks down wi' sneering, scornfu' view
On sic a dinner?

Poor devil! see him owre his trash,
As fecl;ess as a wither'd rash,
His spindle shank a guid whip-lash,
His nieve a nit;
Tho' bluidy flood or field to dash,
O how unfit.

But mark the Rustic, haggis-fed,
The trembling earth resounds his tread,
Clap in his walie nieve a blade,
He'll make it whistle;
An' legs, an' arms, an' heads will sned
Like taps o' thrissle.

Ye pow'rs, wha mak mankind your care,
And dish them out their bill o' fare,
Auld Scotland wants nae skinking ware,
That jaups in luggies;
But if ye wish her gratfu' prayer,
Gie her a Haggis!

[grassfarmer]

Absolutely agree kato, single desk marketing of beef alone would put producers in a position of strength rather than their current weakness. Just don't try suggesting thoughts along these lines to our friends over on the commodity boards who have convinced themselves that the CWB is evil and the corporations will be their saviors if they could only free the shackles!
I suppose that Government is involved in supply management in dairy in that they have input into deciding what the current cost of production is and using that to impose the price that buyers must pay for the milk. Such a system works really well - in a drought year the hay price goes up dramatically so the regulators calculate how much this affects cost of production and move the ex farm milk price up by that amount. It allows the farmer the ability to pass on his production cost increases and maintain profitability rather than having to absorb the losses himself like those of us in non-supply managed sectors.
The results are remarkable - 1/4 or 1/2 section family dairy farms milking 70 or 80 cows, paying a dairyman $60,000 a year and still making a substantial profit over and above that. In short it is giving a fair return for the production of those acres whereas in beef we have guys working huge areas, running hundreds of cows, working off farm and still losing money. That is lunacy and it can't continue.

[smcgrath76]

So what does a single desk marketer look like?
What happens to producers that are already doing their own thing (eg= Prairie Heritage, Top Meadow, etc.)? Do they have to throw in with the lot?
What about organic or grassfed cattle? Is this simply a different contract or do they get to stay out alltogether?
What are the trade implications? If the formation of a single desk reduces trade, then we definitely have too many cows.
Do you make the desk voluntary? If so is there a market commitment for X number of years for those who join? How do you assign relative value?
There are a lot of questions around a single desk movement. I think the Northwest Consolidated movement is as close to an organized single desk as we are likely to see. I quite like that model.

[kato]

Here's a link to the Manitoba Pork Marketing website.

http://www.mpmc.mb.ca/history.html

It's producer run, and the hog producers in our province seem quite happy with it. I've never heard any complaints, anyway. It's not mandatory, yet it seems to have some clout in the marketplace, since most hogs in this province go through it.

[smcgrath76]

Thanks Kato. I do like producers developing marketplace clout, I don't like creating equality at the expense of innovation or personal skill sets. This is the fine balance that any marketing effort by producers of any product or commodity must face.

[perfecho]

Originally milk quota was nothing more than a contract between the plants and producers to guarantee that production and usage were reasonably balanced. Although I do agree with single desk, there seems to be some baggage (ego) that can lose its benefit to the producer.
What about a “contact’ with a basis for all locally consumed product….and hopefully done locally….with an open market, at this point, for exportable beef? In this way, we secure our own food supply, (and not let it be manipulated to a lower cost producing country) and yet have the “market risk and reward” scenario in play. It would also allow branded beef programs to continue and flourish. The contract would (should)have to be with the retailer and negotiations with the processing, so as all could make a reasonable return…and all live happily ever after…..;-)

[perfecho]

Sorry, should have been "contract", not "contact".

[Sawbones]

That should be a perfect scenario, Perfecho unfortunately we are in a situation where retailers can be blackmailed into remaining with the status quo. Canadian Legacy Partners tried to put such an arrangement together with Federated Coop but was met with a luke warm reception. There are 1.3 million shareholders in Western Canadam ,most of them in rural Saskatchewan (56%)Manitoba(16%)Alberta (15.5%). They currently have a 6.7% of the beef market share in Western Canada Federated officials told CLP that until they could supply all fresh beef products and guarantee supply, they would not be interested in changing suppliers. We cannot at this point in time get our branded products in our own local stores. We can't even eat our own beef unless we go to a local abbatoir. CLP has signed delivery contracts with producers, a brand, and several innovative products. We need a producer friendly plant that will give us guaranteed access and a guaranteed price of slaughter and then maybe we can get the retailers to work with us.

[perfecho]

Agreed Sawbones, it is frustrating.
During Camrose Bull Congress, I spoke to John Knapp who was there to expound on the ALMS(A) initiative.
My question was,” since we jumped on board with age verification and premise ID, when can we expect labels in grocery stores that show age and location?” His reply indicated that it that will be consumer driven. Great……how many years will this take? Consumers don’t even know they have this choice unless they are already purchase one of the branded label products.
Now my “beef” is not with John Knapp….he is only cleaning up the mess left by a minister that pushed producers onto the wagon, instead of pulling them, however I am getting tired of us, the producer, jumping through hoops to help others in the production chain to maintain their margins and we get the “dictated” price of the day.
The only way out of this mess, is to get the consumer on board. To have the consumer (voter) become aware of the situation, educate them on their choices and have them demand a change.
Out here in Leduc, we have a little “Ag Initiative” project being formed. I was pleasantly surprised by the positive response to “local” products compared to even a year ago. I do think now is the right time….but we have to get consumers on board? To bad check off dollars couldn’t be directed to this task, …oh, I forgot…this wouldn’t help the major packers. ;-)
Have a warm one,...at last!
Larry