Column # 704 26/01/09
When the railways collected sixty million dollars more than the
revenue cap allowed in 2007/08, they were gambling on their ability to
have their way with the Canadian Transportation Agency. The Agency had
been charged with determining how much money the railways were
spending on maintaining the fleet of government-owned hopper cars.
There was good reason to believe the amount was far less than the
railways had collected for this through their freight rates. If so,
the extra would be taken off the total of the revenue cap.
The dilemma for the railways was this: if they reduced freight rates
to stay under the revenue cap, and the Agency ruled against them,
there was no problem. But if they reduced rates and the Agency ruled
in their favor, they would be out the money they could have charged.
The railways must have known, despite their confidence in their
lawyers' abilities, that they would lose at the CTA. After all, they
really hadn't spent the money on the rail cars, and everyone knew it.
It would be no big deal to have to pay back the money they over
charged. After all, they would have the use of it for many months. But
the penalty, which at 15 percent came to $9 million, would be another
story. No railway wants to give up millions.
In the end, they appear to have rejected the prudent course and chose
instead to gamble on their own persuasiveness. They lost, and farmers
ended up the winners. Sort of, anyway. Of course, of the $69 million
the railways have to pay back, $60 million should never have been
charged. The $9 million penalty is the good news.
True to form, farmers have taken to arguing about what should be done
with the money. Federal legislation says it is to be paid to the
Western Grains Research Foundation, to be used for research. The WGRF
puts such monies into a trust fund and takes the earnings to fund crop
research.
The legislation hardly contemplated such a huge claw back from the
railways. In fact, those government bureaucrats who crafted the
revenue cap maintained the cap would scarcely be a factor since
intense competition between the railways would occur when the
individual regulated freight rates were converted to an overall cap.
Instead of this intense competition, the railways have maintained
freight rates as close to the maximum allowed as they possibly could.
Admittedly, this year's large overage was a result of a one-time
factor, and won't likely be repeated.
The large amount has made farmers and farm groups take notice. While
some are happy to see the boost given to crop research, others, like
the Western Canadian Wheat Growers, want the money returned to
farmers. There is some merit to the argument that farmers should never
have paid it, and should get it back. But the devil is in the details.
How do you determine how much each should get? Should a farmer in
Lethbridge, whose freight rate is half that of a farmer in Nipawin,
receive as much on a per tonne basis? How exactly do you determine
what freight was paid on open market crops, when the farmer doesn't
know the destination or final use?
One positive aspect of the debate is that it has reminded farmers how
necessary crop research is. Even the Grain Growers of Canada, a group
that usually trumpets the advantages of private enterprise controlling
all aspects of agriculture, has said we need more money poured into
Universities and government research stations. It also admitted that
seed companies don't do much of the agronomic research that farmers
need as badly as they need new varieties.
Maybe it's not such a bad thing if the money stays with the Western
Grains Research Foundation. But developing new crop varieties is only
part of the equation. Making those affordable for farmers is another.
And when seed canola hits over $300 a bushel, you have to think
something is wrong. That something is the way public money is used to
develop crop varieties that are then locked up with Plant Breeders
Rights and turned over to the private sector seed companies. These
companies in turn force producers into contracts that restrict seed
saving and impose conditions on marketing the crop. Many of the
advantages brought by a new variety are lost to farmers because of
this.
I would cast my vote in favor of money going to the WGRF on one
condition: that it take a few hundred thousand and invest in a study
that would determine the benefits to farmers if the WGRF adopted the
model employed by the Saskatchewan Pulse Growers. The SPG does not
allow Plant Breeders Rights to be taken on varieties developed with
farmers' money. It has worked well for them for decades.
© Paul Beingessner beingessner@sasktel.net
Tuesday, January 27, 2009
Sunday, January 25, 2009
Banish the Idea of Unfettered Capitalism
Column # 703 18/01/09
A recent editorial in the Western Producer, western Canada's largest
weekly farm paper, encouraged readers to "banish romantic ideas of the
small farm". While it seems to be a critique of very small farms in
poor countries, it implies that North American romantic notions about
small farms also constitute some kind of danger. It then tries to link
that romanticism with the situation in Africa and the Ukraine, where,
according to the editorialist, small farm size is preventing
agriculture from progressing.
Perhaps the problem I had with the editorial came from its lack of of
clear definitions. What exactly constitutes a small farm? What type of
progress does it forestall?
In North America, one of the most romanticized types of farming is not
the small farm, but rather the cattle ranch. Witness the periodic cult
popularity of "cowboy" costumes on the streets of major North American
cities, and the continuing fascination with "western" movies and TV
shows such as Heartland and Wild Roses. But cattle ranching is surely
on the ropes, as any cattleperson can tell you. Should we stop
believing in the romantic notion of the Marlborough Man - minus the
cigarette?
The history of western Canadian agriculture, brief as it is, tells us
that today's large farm is tomorrow's small one. When my grandfather
came here in 1905, a half section was a good sized farm. In my
father's time, two sections made you exceptionally large. When I began
farming it was three. Now? A large farm in our area could be anywhere
from eight to sixteen sections. Do we celebrate the fact that national
and global economics has forced us to the point where we need to farm
half the country to be viable? If you don't want to romanticize small
farms, but you want to romanticize something (where would we be
without some myths?) you will need to be able to hit a moving target.
Or should we try instead to romanticize the notion of serfdom, since
that is increasingly where agriculture is headed. If you doubt that,
ask the contract growers of turkeys, chickens and hogs in the U.S.
I could agree with the thesis of the editorial, that there should be
no romance in a small farm, if I thought a romantic notion was somehow
guiding government policy. That would be a mistake. But we are far
from that. What has guided government policy for at least three
decades has been the hallucination of Sammy Watson and his successor
clones - that there are too many farmers, always too many farmers.
This is indeed a policy, but it is hardly a vision. We haven't had a
vision for agriculture at the national or provincial level for at
least three decades.
Of course, the editorial was really a lead into a story about the
state of agriculture in the Ukraine. Here, farms too small to be
viable in an industrialized economy are the legacy of the end of the
Soviet Union.
But in much of the third world, small farms are not only appropriate,
but far better than the alternative - which is to become the poorest
of the poor in the cities, and to go from some measure of food
security to food insecurity. Nor are small farms intrinsically
unprofitable. In the early 1990's small cotton farmers in some of
Africa's most impoverished countries earned a substantial living. A
farmer in Mali, one of the ten poorest countries on earth, earned
about $1000 a year growing cotton. This was three times the national
average income. The foreign currency earned from cotton exports
provided Mali with money for health care, education and development.
When the U.S. government ramped up cotton subsidies to American
farmers in the years that followed, and to companies processing and
exporting cotton, the result was overproduction in the U.S. and a
crash in cotton prices. Small farmers in Mali did indeed end up in
poverty - not because their farms were too small but because ours were
too big and too powerful- at least where it came to obtaining
government handouts.
I wouldn't worry about the romanticizing of small farms. If you want a
romantic idea to banish, how about the romantic idea that companies
can self-regulate. Or the belief that the unrestricted, unencumbered
marketplace will bring prosperity to all. Or the idea that people who
run big companies (into the ground) are such geniuses they deserve to
become billionaires. What those romantic notions and the policies they
drove brought us was Enron, WorldCom, AIG, the Ponzi schemes of Bernie
Madoff and ultimately near economic collapse.
Worry too about the romantic notion that we will cure this recession
with more of the same - the "hair of the dog that bit you" school of
economic theory.
But leave the small farm alone. Is it so bad to be romantic for a time
when the country was full of people, when small towns were the
cultural, social and business hubs of the prairies? The present state
of rural Canada is surely not one to celebrate unreservedly. At least
not for this romantic.
© Paul Beingessner beingessner@sasktel.net
A recent editorial in the Western Producer, western Canada's largest
weekly farm paper, encouraged readers to "banish romantic ideas of the
small farm". While it seems to be a critique of very small farms in
poor countries, it implies that North American romantic notions about
small farms also constitute some kind of danger. It then tries to link
that romanticism with the situation in Africa and the Ukraine, where,
according to the editorialist, small farm size is preventing
agriculture from progressing.
Perhaps the problem I had with the editorial came from its lack of of
clear definitions. What exactly constitutes a small farm? What type of
progress does it forestall?
In North America, one of the most romanticized types of farming is not
the small farm, but rather the cattle ranch. Witness the periodic cult
popularity of "cowboy" costumes on the streets of major North American
cities, and the continuing fascination with "western" movies and TV
shows such as Heartland and Wild Roses. But cattle ranching is surely
on the ropes, as any cattleperson can tell you. Should we stop
believing in the romantic notion of the Marlborough Man - minus the
cigarette?
The history of western Canadian agriculture, brief as it is, tells us
that today's large farm is tomorrow's small one. When my grandfather
came here in 1905, a half section was a good sized farm. In my
father's time, two sections made you exceptionally large. When I began
farming it was three. Now? A large farm in our area could be anywhere
from eight to sixteen sections. Do we celebrate the fact that national
and global economics has forced us to the point where we need to farm
half the country to be viable? If you don't want to romanticize small
farms, but you want to romanticize something (where would we be
without some myths?) you will need to be able to hit a moving target.
Or should we try instead to romanticize the notion of serfdom, since
that is increasingly where agriculture is headed. If you doubt that,
ask the contract growers of turkeys, chickens and hogs in the U.S.
I could agree with the thesis of the editorial, that there should be
no romance in a small farm, if I thought a romantic notion was somehow
guiding government policy. That would be a mistake. But we are far
from that. What has guided government policy for at least three
decades has been the hallucination of Sammy Watson and his successor
clones - that there are too many farmers, always too many farmers.
This is indeed a policy, but it is hardly a vision. We haven't had a
vision for agriculture at the national or provincial level for at
least three decades.
Of course, the editorial was really a lead into a story about the
state of agriculture in the Ukraine. Here, farms too small to be
viable in an industrialized economy are the legacy of the end of the
Soviet Union.
But in much of the third world, small farms are not only appropriate,
but far better than the alternative - which is to become the poorest
of the poor in the cities, and to go from some measure of food
security to food insecurity. Nor are small farms intrinsically
unprofitable. In the early 1990's small cotton farmers in some of
Africa's most impoverished countries earned a substantial living. A
farmer in Mali, one of the ten poorest countries on earth, earned
about $1000 a year growing cotton. This was three times the national
average income. The foreign currency earned from cotton exports
provided Mali with money for health care, education and development.
When the U.S. government ramped up cotton subsidies to American
farmers in the years that followed, and to companies processing and
exporting cotton, the result was overproduction in the U.S. and a
crash in cotton prices. Small farmers in Mali did indeed end up in
poverty - not because their farms were too small but because ours were
too big and too powerful- at least where it came to obtaining
government handouts.
I wouldn't worry about the romanticizing of small farms. If you want a
romantic idea to banish, how about the romantic idea that companies
can self-regulate. Or the belief that the unrestricted, unencumbered
marketplace will bring prosperity to all. Or the idea that people who
run big companies (into the ground) are such geniuses they deserve to
become billionaires. What those romantic notions and the policies they
drove brought us was Enron, WorldCom, AIG, the Ponzi schemes of Bernie
Madoff and ultimately near economic collapse.
Worry too about the romantic notion that we will cure this recession
with more of the same - the "hair of the dog that bit you" school of
economic theory.
But leave the small farm alone. Is it so bad to be romantic for a time
when the country was full of people, when small towns were the
cultural, social and business hubs of the prairies? The present state
of rural Canada is surely not one to celebrate unreservedly. At least
not for this romantic.
© Paul Beingessner beingessner@sasktel.net
Wednesday, January 14, 2009
Seed Industry Wants Taxpayers to Fund Certified Seed
Column # 702 12/01/09
In December, 2008 the Canadian Seed Trade Association made a proposal
to federal Finance Minister Jim Flaherty that would give farmers a
greater incentive to use certified seed. Currently, the use of
certified seed in Canada varies widely from one crop to another.
For those not familiar with the CSTA, it is composed largely of
companies that sell certified seed, as well as some that do plant
breeding, like Monsanto and Pioneer Hi-Bred. It also includes seed
grower organizations like Secan and a small number of farmer groups
like the Saskatchewan Pulse Growers. Associate members to CSTA are
diverse. Among others, they include Manyan, a producer of jute bags,
and Agro Protection International Inc., which is described on the CSTA
website as "high-level investigative and evidence-gathering services".
Agro Protection International Inc. does not have a website but I
suspect that those farmers who've run afoul of Monsanto's seed patents
will be acquainted with the work of this company.
The CSTA proposal asked that farmers who use certified seed be given a
special deduction from income tax. Specifically, purchases of
certified seed would qualify the farmer for an expense item equal to
1.55 times the actual cost of the seed. According to the CSTA, that
would make the cost of using purchased certified seed about equal to
the cost of using one's own saved seed. The CSTA estimates that
increasing certified seed use from the current 30 percent to 50
percent would cause the government to forego about $90 million in tax
revenue.
In describing the benefits it believes would flow from such a move,
the CSTA says that increasing the use of certified seed would, among
other things, increase the amount of private research into plant
breeding. It claims that private sector research is highest in crops
where the most certified seed is used. It notes that canola, where 92
percent of seed is certified, receives 74 percent of private sector
investment. The CSTA also quantified the amount of money invested in
private sector research by its members at $56 million in 2007. It says
the private sector plans to "almost double" this amount over the next
five years.
There is no doubt the CSTA quest to increase the amount of certified
seed farmers use is self-serving. Members of CSTA, mostly companies
that sell seed, stand to benefit greatly if farmers can be cajoled,
compelled or incented to buy more seed and use less of their own crops
for seed. The CSTA has had several proposals in the past aimed at
achieving the same end. These have included the suggestion that
farmers who use certified seed should qualify for reductions in crop
insurance premiums and the idea that the need for Kernel Visual
Distinguishability (KVD) could be eliminated if farmers used certified
seed exclusively.
The CSTA maintains that there would be great benefits to the Canadian
economy if their tax incentive scheme were implemented. It says
farmers would benefit because new varieties would give higher yields,
greater disease and insect resistance and better response to inputs.
Processors would benefit from having better quality crops to process.
Consumers could have a healthier diet, and society as a whole would
benefit from a reduction of tillage and reduced use of pesticides and
fertilizers.
Some of these claims are difficult to quantify, and CSTA offers scant
evidence for the notion that new plant varieties are giving us
healthier consumers. (While you can't necessarily blame it on plant
varieties, today's consumers are obese, and largely less healthy than
a generation ago.) Also, claims that new varieties reduce overall
pesticide and fertilizer use have yet to be proven.
The CSTA proposal is part of an overall strategy to reduce farmers'
ability to save their own seed. CSTA has developed this strategy,
quite simply, because farmer use of certified seed only occurs where
choices are limited and where farmers perceive real benefits. For
example, farmers use mainly certified seed of canola because they
believe there are benefits to using herbicide tolerant varieties. If
they could get these without a contract binding them to buy certified
seed, they would save their own. With some crops, corn for example,
certified seed use is high because the varieties are largely hybrids
that do not breed true from seed.
With most cereal crops, like wheat, oats and barley, farmers save
their own seed because they don't believe the use of certified seed
provides enough benefits to offset the costs. If this is wrong, the
CSTA might be better off to show farmers the data that prove the
benefits. It is noteworthy that a tax incentive only helps farmers if
they are profitable. In a year where they lose money, the added cost
of certified seed would be just that - an added cost. The seed
industry might counter that there is a production benefit to using
certified seed. If so, show us the research and convince farmers. Then
they will buy your seed.
The CSTA is correct in saying we need more money going to plant
breeding. But its proposal would take $90 million a year from tax
revenues and return it to seed growers and seed sellers. This is twice
the entire amount spent by CSTA members for plant breeding. If the
government is going to "spend" that money, wouldn't farmers be better
off if the government invested $90 million directly in public plant
research, rather than see some small portion of it trickle through the
pockets of seed companies to their research sides? This would be a far
more efficient use of taxpayers' money.
© Paul Beingessner beingessner@sasktel.net
In December, 2008 the Canadian Seed Trade Association made a proposal
to federal Finance Minister Jim Flaherty that would give farmers a
greater incentive to use certified seed. Currently, the use of
certified seed in Canada varies widely from one crop to another.
For those not familiar with the CSTA, it is composed largely of
companies that sell certified seed, as well as some that do plant
breeding, like Monsanto and Pioneer Hi-Bred. It also includes seed
grower organizations like Secan and a small number of farmer groups
like the Saskatchewan Pulse Growers. Associate members to CSTA are
diverse. Among others, they include Manyan, a producer of jute bags,
and Agro Protection International Inc., which is described on the CSTA
website as "high-level investigative and evidence-gathering services".
Agro Protection International Inc. does not have a website but I
suspect that those farmers who've run afoul of Monsanto's seed patents
will be acquainted with the work of this company.
The CSTA proposal asked that farmers who use certified seed be given a
special deduction from income tax. Specifically, purchases of
certified seed would qualify the farmer for an expense item equal to
1.55 times the actual cost of the seed. According to the CSTA, that
would make the cost of using purchased certified seed about equal to
the cost of using one's own saved seed. The CSTA estimates that
increasing certified seed use from the current 30 percent to 50
percent would cause the government to forego about $90 million in tax
revenue.
In describing the benefits it believes would flow from such a move,
the CSTA says that increasing the use of certified seed would, among
other things, increase the amount of private research into plant
breeding. It claims that private sector research is highest in crops
where the most certified seed is used. It notes that canola, where 92
percent of seed is certified, receives 74 percent of private sector
investment. The CSTA also quantified the amount of money invested in
private sector research by its members at $56 million in 2007. It says
the private sector plans to "almost double" this amount over the next
five years.
There is no doubt the CSTA quest to increase the amount of certified
seed farmers use is self-serving. Members of CSTA, mostly companies
that sell seed, stand to benefit greatly if farmers can be cajoled,
compelled or incented to buy more seed and use less of their own crops
for seed. The CSTA has had several proposals in the past aimed at
achieving the same end. These have included the suggestion that
farmers who use certified seed should qualify for reductions in crop
insurance premiums and the idea that the need for Kernel Visual
Distinguishability (KVD) could be eliminated if farmers used certified
seed exclusively.
The CSTA maintains that there would be great benefits to the Canadian
economy if their tax incentive scheme were implemented. It says
farmers would benefit because new varieties would give higher yields,
greater disease and insect resistance and better response to inputs.
Processors would benefit from having better quality crops to process.
Consumers could have a healthier diet, and society as a whole would
benefit from a reduction of tillage and reduced use of pesticides and
fertilizers.
Some of these claims are difficult to quantify, and CSTA offers scant
evidence for the notion that new plant varieties are giving us
healthier consumers. (While you can't necessarily blame it on plant
varieties, today's consumers are obese, and largely less healthy than
a generation ago.) Also, claims that new varieties reduce overall
pesticide and fertilizer use have yet to be proven.
The CSTA proposal is part of an overall strategy to reduce farmers'
ability to save their own seed. CSTA has developed this strategy,
quite simply, because farmer use of certified seed only occurs where
choices are limited and where farmers perceive real benefits. For
example, farmers use mainly certified seed of canola because they
believe there are benefits to using herbicide tolerant varieties. If
they could get these without a contract binding them to buy certified
seed, they would save their own. With some crops, corn for example,
certified seed use is high because the varieties are largely hybrids
that do not breed true from seed.
With most cereal crops, like wheat, oats and barley, farmers save
their own seed because they don't believe the use of certified seed
provides enough benefits to offset the costs. If this is wrong, the
CSTA might be better off to show farmers the data that prove the
benefits. It is noteworthy that a tax incentive only helps farmers if
they are profitable. In a year where they lose money, the added cost
of certified seed would be just that - an added cost. The seed
industry might counter that there is a production benefit to using
certified seed. If so, show us the research and convince farmers. Then
they will buy your seed.
The CSTA is correct in saying we need more money going to plant
breeding. But its proposal would take $90 million a year from tax
revenues and return it to seed growers and seed sellers. This is twice
the entire amount spent by CSTA members for plant breeding. If the
government is going to "spend" that money, wouldn't farmers be better
off if the government invested $90 million directly in public plant
research, rather than see some small portion of it trickle through the
pockets of seed companies to their research sides? This would be a far
more efficient use of taxpayers' money.
© Paul Beingessner beingessner@sasktel.net
Tuesday, January 06, 2009
Governments Need to Decide on Livestock Support
Column # 701 05/01/09
God help the beleaguered cattle producers of Canada! As prices
plummeted like the proverbial stone in 2007 we were told it was
because of the high cost of feed grains and the soaring Canadian
dollar that briefly took on the American greenback and pummeled it.
Now the situation is nearly the opposite. Feed grains have tumbled and
the Loonie has resumed it humbled position beneath the feet of the
American eagle. But bad as cattle prices were then, they are worse
now. So, what's up with that?
One major difference is the American's implementation of Country of
Origin Labeling. COOL has scared most American packers off processing
Canadian beef, and this is now considered an important driver in the
downhill slide. It should also be noted, though, that cattle prices
have been more or less continuously falling since 1989, as an
excellent report by the National Farmers Union recently pointed out.
The inevitable outcome is a drop in Canadian cattle numbers as farmers
cull older cows and reduce replacement heifer numbers. Last July,
Statistics Canada released data that demonstrated this. Where the
losses are taking place is interesting. Overall, Canada's beef cow
herd shrank 4.7 percent from July 2007 to July 2008, but the pain was
unequally spread. Manitoba lost 1.8 percent, Saskatchewan dropped 4
percent, Alberta tumbled 5.8 percent and B.C's relatively small herd
fell by nearly 12 percent. Eastern Canada did not fare quite so badly.
Ontario's beef cow numbers declined 3.3 percent and Quebec lost less
than 1 percent.
The smaller declines in Ontario and Quebec may be a result of the much
larger domestic market in those provinces. Western Canada needs to
export much more of its beef production due to larger numbers of
cattle and a smaller population.
While the cattle industry wallows in misery, the federal government
has offered it a teaser. Finance Minister Jim Flaherty made a cryptic
reference to the problems in the livestock industry during a meeting
with provincial finance ministers. It was enough to inspire
Saskatchewan's finance minister Rod Gantefoer to offer his own teaser
- farmers should look to the upcoming January 27 federal budget for a
late Christmas present. Alberta's government didn't wait for the feds
to move. Alberta brought out a substantial assistance package for
livestock producers months ago.
Governments should indeed act. Livestock producers are losing equity
daily while they maintain their herds. Governments, both federal and
provincial need to decide what they want for a livestock industry. If
cattle producers are left to their own devices, the industry will
indeed shrink far more yet. If this is the decision of governments,
that the industry must shrink to meet the new reality, they should
immediately make that clear to producers so they can exit before they
consume their equity in a futile waiting game. Let them get on with
it, break up their pastures and hayfields and produce the annual crops
that are more profitable (I'm trying to keep a straight face as I
write that last sentence, given recent grain prices). Better yet,
provide a program to let producers exit the industry with dignity and
the cash to transition to something else.
But if governments support the industry, what is the endgame? Would it
be done with the belief that markets will one day turn around and the
industry will be there to take advantage of them? This is a pathetic
strategy at best.
One strategy, advocated by the NFU as one part of its overall plan to
revitalize the livestock sector, is to decrease the cattle herd to one
that matches domestic consumption. To many, that would be a hard pill
to swallow. Charlie Gracey, longtime observer of the cattle industry
in Canada, called this idea unthinkable. It would certainly mean a
reduction in the number of feedlots in Canada, and a shift out of feed
grain production in some areas. For ranchers, the decision to downsize
is often very hard, as the idea of being more profitable with fewer
cows seems counterintuitive.
A smaller industry makes sense though. Since current returns on calves
barely cover variable costs, a positive return on fewer calves would
have to look better. Fewer acres of pasture and hayland would be
needed for a smaller cowherd, but farmers could use these surplus
lands to background their calves, rather than selling them at weaning.
This would bring an even greater return per calf and provide less
disruption to cropping and land use patterns.
Much more would be needed to make this situation feasible, and the NFU
report contains many ideas. One thing is sure. If our governments,
provincial and federal, have a better idea, they should say so soon.
Canada's hard working cattle people deserve to know where they stand.
© Paul Beingessner beingessner@sasktel.net
God help the beleaguered cattle producers of Canada! As prices
plummeted like the proverbial stone in 2007 we were told it was
because of the high cost of feed grains and the soaring Canadian
dollar that briefly took on the American greenback and pummeled it.
Now the situation is nearly the opposite. Feed grains have tumbled and
the Loonie has resumed it humbled position beneath the feet of the
American eagle. But bad as cattle prices were then, they are worse
now. So, what's up with that?
One major difference is the American's implementation of Country of
Origin Labeling. COOL has scared most American packers off processing
Canadian beef, and this is now considered an important driver in the
downhill slide. It should also be noted, though, that cattle prices
have been more or less continuously falling since 1989, as an
excellent report by the National Farmers Union recently pointed out.
The inevitable outcome is a drop in Canadian cattle numbers as farmers
cull older cows and reduce replacement heifer numbers. Last July,
Statistics Canada released data that demonstrated this. Where the
losses are taking place is interesting. Overall, Canada's beef cow
herd shrank 4.7 percent from July 2007 to July 2008, but the pain was
unequally spread. Manitoba lost 1.8 percent, Saskatchewan dropped 4
percent, Alberta tumbled 5.8 percent and B.C's relatively small herd
fell by nearly 12 percent. Eastern Canada did not fare quite so badly.
Ontario's beef cow numbers declined 3.3 percent and Quebec lost less
than 1 percent.
The smaller declines in Ontario and Quebec may be a result of the much
larger domestic market in those provinces. Western Canada needs to
export much more of its beef production due to larger numbers of
cattle and a smaller population.
While the cattle industry wallows in misery, the federal government
has offered it a teaser. Finance Minister Jim Flaherty made a cryptic
reference to the problems in the livestock industry during a meeting
with provincial finance ministers. It was enough to inspire
Saskatchewan's finance minister Rod Gantefoer to offer his own teaser
- farmers should look to the upcoming January 27 federal budget for a
late Christmas present. Alberta's government didn't wait for the feds
to move. Alberta brought out a substantial assistance package for
livestock producers months ago.
Governments should indeed act. Livestock producers are losing equity
daily while they maintain their herds. Governments, both federal and
provincial need to decide what they want for a livestock industry. If
cattle producers are left to their own devices, the industry will
indeed shrink far more yet. If this is the decision of governments,
that the industry must shrink to meet the new reality, they should
immediately make that clear to producers so they can exit before they
consume their equity in a futile waiting game. Let them get on with
it, break up their pastures and hayfields and produce the annual crops
that are more profitable (I'm trying to keep a straight face as I
write that last sentence, given recent grain prices). Better yet,
provide a program to let producers exit the industry with dignity and
the cash to transition to something else.
But if governments support the industry, what is the endgame? Would it
be done with the belief that markets will one day turn around and the
industry will be there to take advantage of them? This is a pathetic
strategy at best.
One strategy, advocated by the NFU as one part of its overall plan to
revitalize the livestock sector, is to decrease the cattle herd to one
that matches domestic consumption. To many, that would be a hard pill
to swallow. Charlie Gracey, longtime observer of the cattle industry
in Canada, called this idea unthinkable. It would certainly mean a
reduction in the number of feedlots in Canada, and a shift out of feed
grain production in some areas. For ranchers, the decision to downsize
is often very hard, as the idea of being more profitable with fewer
cows seems counterintuitive.
A smaller industry makes sense though. Since current returns on calves
barely cover variable costs, a positive return on fewer calves would
have to look better. Fewer acres of pasture and hayland would be
needed for a smaller cowherd, but farmers could use these surplus
lands to background their calves, rather than selling them at weaning.
This would bring an even greater return per calf and provide less
disruption to cropping and land use patterns.
Much more would be needed to make this situation feasible, and the NFU
report contains many ideas. One thing is sure. If our governments,
provincial and federal, have a better idea, they should say so soon.
Canada's hard working cattle people deserve to know where they stand.
© Paul Beingessner beingessner@sasktel.net
Gifts of Another Kind
Column # 700 22/12/08
I don't usually write a Christmas column. Well, I usually write one
around Christmas time but I don't recall ever having written one with
a Christmas theme. It turns out, though, that this week's column is
significant for two reasons. It coincides with Christmas, and it is my
seven hundredth column, so I've decided to break with my tradition and
do a Christmas theme. After seven hundred weekly columns, I figure I
should be able to do whatever I darn well please - at least this once.
I haven't neglected Christmas due to some enmity toward the season.
Quite the contrary. I like Christmas a great deal. In my small farming
community, we still celebrate a very traditional Christmas, with a
community Christmas party, complete with a play presented by the young
folks in the area. We still go to church on Christmas eve or Christmas
day, and we have a whopping huge dinner with turkey, potatoes and
gravy, and not a speck of tofu in sight.
We also do presents, though the season of consumption gets awfully
wearying. The older I get, the less I want to receive more stuff.
Christmas being a time of giving, we try to send off a batch of
cheques to charities that we support. The relative success of the year
on the farm determines the size and number of those cheques.
Presents that involve laying out cash aren't the only type, however.
There are presents I would love to give, but money simply can't buy
them. It doesn't prevent me wishing, though, and if I could, the
following is a list of gifts I would give to some significant folk in
Canada.
To Prime Minister Steven Harper, my gift would give a better
perception of democracy. The PM seems to have inverted the usually
definition. He believes that the only valid government is one that is
elected by a third of the people. Hence a coalition elected by two
thirds of the population is invalid in his mind. This odd view of
democracy explains his position on the Canadian Wheat Board. Since
eight of ten farmer-elected directors support the single desk, Steven
believes it is illegitimate. The other 20 percent of directors
represent, in Steve's mind, the majority of farmers. Remember the song
about cowboy logic? This is Harper logic at its best.
To Michael Ignatieff, the new leader of the Liberal party, I would
give mass amnesia across western Canada. Ignatieff says he wants to
regain the trust of western Canadians. The quickest way to gain the
trust of the agriculture community would be for that community to be
stricken with a massive and overwhelming epidemic of amnesia that
would cause it to forget the Liberal years with Lyle Vanclief as
Agriculture Minister. Since the Liberals forgot about western farmers
during their long reign, it seems only mass amnesia will allow us to
forget their legacy.
To Jack Layton, federal NDP leader, I would give the ghost of Tommy
Douglas to be his speech writer. Maybe then Jack could overcome his
reputation as Canada's most boring political leader.
To Saskatchewan Premier Brad Wall, I would give a cow. Actually, a
whole herd of cows. Brad, you see, has never heard of cows himself. At
least that is the conclusion I've come to, considering that he is
oblivious to the pain in the farm community caused by cattle prices
that seem to have no up-side. Brad can have my cows, provided he puts
that large brain of his to use figuring out a way to make them
profitable.
For CN and CP, Canada's national railway monopolies, I would give a
winter with no snow in the mountains, no cold on the prairies and no
excuses. (Don't hold your breath waiting for any of those.)
And for Western farmers, a return to the good old days of, say, early
2008. Remember? It was that brief period when prices were high and
hopes were higher?
And finally, for the readers who have long endured my columns, I give
my thanks, for all your support, your criticism, your comments and
your friendship. You have given me the encouragement to continue, at
least for another seven hundred. Christmas blessings to you all.
© Paul Beingessner beingessner@sasktel.net
I don't usually write a Christmas column. Well, I usually write one
around Christmas time but I don't recall ever having written one with
a Christmas theme. It turns out, though, that this week's column is
significant for two reasons. It coincides with Christmas, and it is my
seven hundredth column, so I've decided to break with my tradition and
do a Christmas theme. After seven hundred weekly columns, I figure I
should be able to do whatever I darn well please - at least this once.
I haven't neglected Christmas due to some enmity toward the season.
Quite the contrary. I like Christmas a great deal. In my small farming
community, we still celebrate a very traditional Christmas, with a
community Christmas party, complete with a play presented by the young
folks in the area. We still go to church on Christmas eve or Christmas
day, and we have a whopping huge dinner with turkey, potatoes and
gravy, and not a speck of tofu in sight.
We also do presents, though the season of consumption gets awfully
wearying. The older I get, the less I want to receive more stuff.
Christmas being a time of giving, we try to send off a batch of
cheques to charities that we support. The relative success of the year
on the farm determines the size and number of those cheques.
Presents that involve laying out cash aren't the only type, however.
There are presents I would love to give, but money simply can't buy
them. It doesn't prevent me wishing, though, and if I could, the
following is a list of gifts I would give to some significant folk in
Canada.
To Prime Minister Steven Harper, my gift would give a better
perception of democracy. The PM seems to have inverted the usually
definition. He believes that the only valid government is one that is
elected by a third of the people. Hence a coalition elected by two
thirds of the population is invalid in his mind. This odd view of
democracy explains his position on the Canadian Wheat Board. Since
eight of ten farmer-elected directors support the single desk, Steven
believes it is illegitimate. The other 20 percent of directors
represent, in Steve's mind, the majority of farmers. Remember the song
about cowboy logic? This is Harper logic at its best.
To Michael Ignatieff, the new leader of the Liberal party, I would
give mass amnesia across western Canada. Ignatieff says he wants to
regain the trust of western Canadians. The quickest way to gain the
trust of the agriculture community would be for that community to be
stricken with a massive and overwhelming epidemic of amnesia that
would cause it to forget the Liberal years with Lyle Vanclief as
Agriculture Minister. Since the Liberals forgot about western farmers
during their long reign, it seems only mass amnesia will allow us to
forget their legacy.
To Jack Layton, federal NDP leader, I would give the ghost of Tommy
Douglas to be his speech writer. Maybe then Jack could overcome his
reputation as Canada's most boring political leader.
To Saskatchewan Premier Brad Wall, I would give a cow. Actually, a
whole herd of cows. Brad, you see, has never heard of cows himself. At
least that is the conclusion I've come to, considering that he is
oblivious to the pain in the farm community caused by cattle prices
that seem to have no up-side. Brad can have my cows, provided he puts
that large brain of his to use figuring out a way to make them
profitable.
For CN and CP, Canada's national railway monopolies, I would give a
winter with no snow in the mountains, no cold on the prairies and no
excuses. (Don't hold your breath waiting for any of those.)
And for Western farmers, a return to the good old days of, say, early
2008. Remember? It was that brief period when prices were high and
hopes were higher?
And finally, for the readers who have long endured my columns, I give
my thanks, for all your support, your criticism, your comments and
your friendship. You have given me the encouragement to continue, at
least for another seven hundred. Christmas blessings to you all.
© Paul Beingessner beingessner@sasktel.net
Government Bailouts Bypass Livestock Producers
Column # 699 15/12/08
Cattle and hog producers watching the growing list of industries
slated for infusions of cash by the Canadian government must be
wondering what they have to do to convince politicians of the worth of
their industry. In addition to promising aid to the Canadian auto and
aerospace industries, Canada's free enterprise government is now
talking about assistance for the forestry and mining industries.
Livestock industries? Well, no. With the exception of Alberta throwing
a whack of money at its cattle farmers, other provinces and the
federal government appear ready to turn a blind eye to an industry
sinking into the ground.
It's interesting to compare the situation of livestock producers to
that of auto workers. The auto industry in Canada exists largely
because of a trade agreement with the United States, known as the Auto
Pact. It shifted some auto manufacturing from the U.S., where most of
Canada's cars were made, to Canada, mainly Ontario. The Pact required
that for every car sold in Canada, one had to be built here.
The cattle and hog industries in Canada, with their present levels of
production, exist largely because of the North American Free Trade
Agreement. Prior to this, Canada's beef industry was mostly sized to
fit domestic needs and the hog industry was similarly small. When
Canadian livestock were allowed into the U.S. tariff-free, our
production began to grow. That was further accelerated by poor grain
prices in the 1980s and 90s. Marginal lands were converted back to
grass and feed grains were cheap.
Both industries are in huge trouble today, and the government is
bailing one of them out. Guess which one?
So why do provincial and federal governments in Canada see the auto
industry as worth saving and the livestock industry as so much waste
to flush down the toilet? The answer may lie in location and politics.
The auto industry in eastern Canada means seats for any government
that wants to rule or keep ruling. Ontario voters will go Liberal,
Conservative or even NDP at the drop of a hat (or a dollar). Western
voters, particularly rural ones, vote Conservative no matter what. The
federal government seems totally uninterested in agriculture, with the
exception of dumping the Canadian Wheat Board. Equally, in
Saskatchewan, the governing party seems assured of rural votes. In
return, it is ignoring Saskatchewan's large livestock sector.
Here's the awful irony. When the Liberals ruled Canada from an eastern
base, they ignored western agriculture. Commentators would often say
we should not expect good treatment from a party we refuse to vote
for. Now the party we vote for is in power, and we still get nothing
because they expect we will always vote for them.
The same dichotomy seems to be playing out in Saskatchewan. The NDP
was largely estranged from rural Saskatchewan during its long reign.
Now the Saskatchewan Party, solidly entrenched in rural Saskatchewan,
categorically says it has no help for the livestock industry. (And the
Saskatchewan Stock Growers Association president Jack Hextall says,
darn it.oh well.okay.)
The exception to this perverse rule is Alberta. The reigning
Conservatives have doled out big bucks to the livestock sector to keep
it afloat.
To compound the situation, it is unlikely that pouring money into this
industry would do much good in the long run anyway. A recent study by
the National Farmers Union shows that livestock returns, which were
relatively constant for many decades, took a tumble with the advent of
NAFTA and the consolidation of the packing industry. The example of
calf prices illustrates this. Prices for 500 to 600 pound calves today
are just over half their 1942 to 1989 average.
So, following the advice of governments and the economic dictates of
the time, farmers increased livestock production and packers
consolidated. When the system fails, as it has today, governments are
quite prepared to dump the farmer. But then, that has been the way of
thinking in government for a long time. Farmers are the problem, the
solution is to get rid of more of them and leave only the efficient.
It's so much easier than challenging the conventional wisdom about
business and trade.
© Paul Beingessner beingessner@sasktel.net
Cattle and hog producers watching the growing list of industries
slated for infusions of cash by the Canadian government must be
wondering what they have to do to convince politicians of the worth of
their industry. In addition to promising aid to the Canadian auto and
aerospace industries, Canada's free enterprise government is now
talking about assistance for the forestry and mining industries.
Livestock industries? Well, no. With the exception of Alberta throwing
a whack of money at its cattle farmers, other provinces and the
federal government appear ready to turn a blind eye to an industry
sinking into the ground.
It's interesting to compare the situation of livestock producers to
that of auto workers. The auto industry in Canada exists largely
because of a trade agreement with the United States, known as the Auto
Pact. It shifted some auto manufacturing from the U.S., where most of
Canada's cars were made, to Canada, mainly Ontario. The Pact required
that for every car sold in Canada, one had to be built here.
The cattle and hog industries in Canada, with their present levels of
production, exist largely because of the North American Free Trade
Agreement. Prior to this, Canada's beef industry was mostly sized to
fit domestic needs and the hog industry was similarly small. When
Canadian livestock were allowed into the U.S. tariff-free, our
production began to grow. That was further accelerated by poor grain
prices in the 1980s and 90s. Marginal lands were converted back to
grass and feed grains were cheap.
Both industries are in huge trouble today, and the government is
bailing one of them out. Guess which one?
So why do provincial and federal governments in Canada see the auto
industry as worth saving and the livestock industry as so much waste
to flush down the toilet? The answer may lie in location and politics.
The auto industry in eastern Canada means seats for any government
that wants to rule or keep ruling. Ontario voters will go Liberal,
Conservative or even NDP at the drop of a hat (or a dollar). Western
voters, particularly rural ones, vote Conservative no matter what. The
federal government seems totally uninterested in agriculture, with the
exception of dumping the Canadian Wheat Board. Equally, in
Saskatchewan, the governing party seems assured of rural votes. In
return, it is ignoring Saskatchewan's large livestock sector.
Here's the awful irony. When the Liberals ruled Canada from an eastern
base, they ignored western agriculture. Commentators would often say
we should not expect good treatment from a party we refuse to vote
for. Now the party we vote for is in power, and we still get nothing
because they expect we will always vote for them.
The same dichotomy seems to be playing out in Saskatchewan. The NDP
was largely estranged from rural Saskatchewan during its long reign.
Now the Saskatchewan Party, solidly entrenched in rural Saskatchewan,
categorically says it has no help for the livestock industry. (And the
Saskatchewan Stock Growers Association president Jack Hextall says,
darn it.oh well.okay.)
The exception to this perverse rule is Alberta. The reigning
Conservatives have doled out big bucks to the livestock sector to keep
it afloat.
To compound the situation, it is unlikely that pouring money into this
industry would do much good in the long run anyway. A recent study by
the National Farmers Union shows that livestock returns, which were
relatively constant for many decades, took a tumble with the advent of
NAFTA and the consolidation of the packing industry. The example of
calf prices illustrates this. Prices for 500 to 600 pound calves today
are just over half their 1942 to 1989 average.
So, following the advice of governments and the economic dictates of
the time, farmers increased livestock production and packers
consolidated. When the system fails, as it has today, governments are
quite prepared to dump the farmer. But then, that has been the way of
thinking in government for a long time. Farmers are the problem, the
solution is to get rid of more of them and leave only the efficient.
It's so much easier than challenging the conventional wisdom about
business and trade.
© Paul Beingessner beingessner@sasktel.net
Farmers Show Strong CWB Support in Director Elections
Column #698 08/12/08
One of the most contentious CWB director elections to date ended on
Sunday, with a result sure to have the federal government gnashing its
teeth. Supporters of the CWB's single desk won four out of five of the
districts holding elections. The exception was District Two, in
Alberta. Three of the five elected directors are new to the board, as
incumbents in these three districts were not eligible to run again.
In the four districts that elected CWB supporters, the margins of
victory were large, with 60 percent of voters, on average, voting for
single desk supporters. The largest margin fell to Bill Woods, in
District Four. This was formerly held by Ken Ritter, who could not run
again. Significantly, the two Conservative MPs whose ridings cover
most of District Four are Agriculture Minister Gerry Ritz and David
Anderson, the MP with responsibilities for the CWB. Both Anderson and
Ritz have been vocal and aggressive opponents of the CWB, claiming
that their own electoral victories showed that farmers want to see the
single desk eliminated.
Woods took the district on the first ballot, with 63.4 percent of the
vote. Wood's main opponent, Sam Magnus, held several positions with
the federal Reform and Conservative parties, including a stint on the
national council of the Conservative Party. Magnus' status within the
party didn't help him much as he garnered only 28.5 percent of total
votes. If Ritz and Anderson have a vestige of honesty, these MPs will
drop the pretense that their schemes to neuter the board are supported
by a majority of farmers.
Several other points stand out from the election. The Conservative
government continued its overt interference in the election, including
pruning the voters list further and sending letters to a select group
of farmers, telling them how they might obtain ballots.
The culmination of government interference came when five prairie MPs
used their parliamentary expense accounts to send personal letters to
farmers on the voters list, telling them to vote for anti-single desk
candidates. One of these MPs was David Anderson. As Wood's substantial
victory demonstrated, this strategy failed miserably. Hopefully, when
Parliament resumes in January, in whatever form it might take,
Anderson will be required to account for this misuse of Parliamentary
money, and to explain how he acquired the voters list. That list is
supposed to be confidential to the candidates.
Another of the four MPs, Andrew Scheer of Regina-Qu'Appelle, used his
expense account to send a personal attack on re-elected CWB director
Rod Flaman. Flaman was Scheer's Liberal opponent in the federal
election. Scheer claimed that Flaman "shamelessly shirked his
responsibilities to the farmers who elected him and spent the last
year campaigning for federal office while collecting his CWB pay
cheque".
Apparently farmers trusted Flaman more than they trusted Scheer, whose
closest connection to agriculture is being an insurance salesman in
Regina. Flaman won the district with 60.3 percent of the vote on the
third ballot.
Currently, the CWB board consists of fifteen directors, with ten
elected by farmers and five appointed by the federal government. Eight
of the ten farmer-elected directors support the single desk, but the
directors appointed by the Conservative government in Ottawa line up
directly with the government in its opinion of the CWB. The very
strong showing by pro-CWB candidates calls into question the
legitimacy of the directors appointed by the government. Clearly they
do not represent the wishes of farmers who want the CWB to continue
its current mandate. As such, their role at the board table should be
minimized to any specific areas of expertise they might have.
Obstruction is not considered an area of expertise.
On a positive note for those candidates who were defeated, the
Saskatchewan government seems to have a home for anti-single desk
defeated candidates in Enterprise Saskatchewan. The Agriculture Sector
Team has a couple on its board, including the chair, Gerrid Gust.
While the province has aligned itself with the federal government's
anti-board stand, maybe it's time for the Saskatchewan Party to
reconsider its support of a position farmers' clearly do not support.
On a final note, the rate of return of ballots reached 54 percent, a
very good return for a mail-in ballot. The Conservatives have yet to
find a way to manipulate the voters list that will give them the
result they want.
© Paul Beingessner beingessner@sasktel.net
One of the most contentious CWB director elections to date ended on
Sunday, with a result sure to have the federal government gnashing its
teeth. Supporters of the CWB's single desk won four out of five of the
districts holding elections. The exception was District Two, in
Alberta. Three of the five elected directors are new to the board, as
incumbents in these three districts were not eligible to run again.
In the four districts that elected CWB supporters, the margins of
victory were large, with 60 percent of voters, on average, voting for
single desk supporters. The largest margin fell to Bill Woods, in
District Four. This was formerly held by Ken Ritter, who could not run
again. Significantly, the two Conservative MPs whose ridings cover
most of District Four are Agriculture Minister Gerry Ritz and David
Anderson, the MP with responsibilities for the CWB. Both Anderson and
Ritz have been vocal and aggressive opponents of the CWB, claiming
that their own electoral victories showed that farmers want to see the
single desk eliminated.
Woods took the district on the first ballot, with 63.4 percent of the
vote. Wood's main opponent, Sam Magnus, held several positions with
the federal Reform and Conservative parties, including a stint on the
national council of the Conservative Party. Magnus' status within the
party didn't help him much as he garnered only 28.5 percent of total
votes. If Ritz and Anderson have a vestige of honesty, these MPs will
drop the pretense that their schemes to neuter the board are supported
by a majority of farmers.
Several other points stand out from the election. The Conservative
government continued its overt interference in the election, including
pruning the voters list further and sending letters to a select group
of farmers, telling them how they might obtain ballots.
The culmination of government interference came when five prairie MPs
used their parliamentary expense accounts to send personal letters to
farmers on the voters list, telling them to vote for anti-single desk
candidates. One of these MPs was David Anderson. As Wood's substantial
victory demonstrated, this strategy failed miserably. Hopefully, when
Parliament resumes in January, in whatever form it might take,
Anderson will be required to account for this misuse of Parliamentary
money, and to explain how he acquired the voters list. That list is
supposed to be confidential to the candidates.
Another of the four MPs, Andrew Scheer of Regina-Qu'Appelle, used his
expense account to send a personal attack on re-elected CWB director
Rod Flaman. Flaman was Scheer's Liberal opponent in the federal
election. Scheer claimed that Flaman "shamelessly shirked his
responsibilities to the farmers who elected him and spent the last
year campaigning for federal office while collecting his CWB pay
cheque".
Apparently farmers trusted Flaman more than they trusted Scheer, whose
closest connection to agriculture is being an insurance salesman in
Regina. Flaman won the district with 60.3 percent of the vote on the
third ballot.
Currently, the CWB board consists of fifteen directors, with ten
elected by farmers and five appointed by the federal government. Eight
of the ten farmer-elected directors support the single desk, but the
directors appointed by the Conservative government in Ottawa line up
directly with the government in its opinion of the CWB. The very
strong showing by pro-CWB candidates calls into question the
legitimacy of the directors appointed by the government. Clearly they
do not represent the wishes of farmers who want the CWB to continue
its current mandate. As such, their role at the board table should be
minimized to any specific areas of expertise they might have.
Obstruction is not considered an area of expertise.
On a positive note for those candidates who were defeated, the
Saskatchewan government seems to have a home for anti-single desk
defeated candidates in Enterprise Saskatchewan. The Agriculture Sector
Team has a couple on its board, including the chair, Gerrid Gust.
While the province has aligned itself with the federal government's
anti-board stand, maybe it's time for the Saskatchewan Party to
reconsider its support of a position farmers' clearly do not support.
On a final note, the rate of return of ballots reached 54 percent, a
very good return for a mail-in ballot. The Conservatives have yet to
find a way to manipulate the voters list that will give them the
result they want.
© Paul Beingessner beingessner@sasktel.net
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