Column # 721 25/05/09
It might not make me very popular in some circles, but the imminent
demise of the hog industry in Canada leaves me kind of cold. Oh, I'm
as worried as anyone about the job losses in communities that rely on
hog barns for local jobs. But the industry itself isn't one that I
brood over.
I thought about this the other day when I was discussing farm animals
with my three-year-old grandson. He had seen cows, he told me, and
horses and dogs, cats, chickens and sheep. But he had never seen a
pig. Pictures yes, and the little piggies on the ends of his feet, but
not a real live hog. And, living in Saskatchewan, I reminded his
parents, he wouldn't be likely to see one. I couldn't think of anyone
in this area who raises hogs the way my father, and most of his
neighbours did four decades ago. The closest thing to a hog around
here is the odour that drifts in occasionally on the south wind from
the huge complex of barns 20-odd miles south of here. And if I did
want to take him there to see a pig, we would be unlikely to make it
past the bio-security layer around the barns.
As I said, there used to be lots of hogs raised on diversified farms
in the prairie region. Pigs had the title of mortgage lifters. Many
farmers were in and out of pigs frequently. It was easy to ramp up
numbers when prices were high, since pigs reproduce early, often and
with large litters. It was just as easy to reduce numbers to a minimum
when prices were low. Hence the notion of the four-year hog cycle.
When factory hog farms came along, the dynamic changed. Instead of
reducing production in times of low prices, they doggedly kept on
churning out pigs. They had to do something to cover their huge fixed
costs. Prices responded by sinking and remaining low. Toss in the
occasional closed border due to real or imagined disease threats, and
hog farms have lost vast sums of money for over a decade. Of course,
the low prices that battered the huge hog barns destroyed the little
ones. Hogs disappeared from the prairie landscape, to be sequestered
in massive, sealed complexes.
No doubt the state of the industry is a surprise to many in government
and elsewhere who saw factory hog production as another tool in the
belt of rural development. Fifteen to twenty years ago, government
bureaucrats and agricultural economists were lauding the development
of the massive hog operation. Saskatchewan, we were told, would soon
be producing three million hogs per year. Markets were expanding world
wide. Canada, especially the prairies, had the lowest production costs
in the world. We only had to build them, fill them, and prosperity
would come.
The early barns looked good. What the public seldom knew was that they
were propped up by government subsidies for everything from water
development to building construction. Almost all of those early barns
are gone now, and gone are the community dollars that poured into the
pockets of the early entrepreneurs. The government of Saskatchewan
still owns huge hunks of one hog empire, and loans from many years ago
remain unpaid for many barns. These loans were to be repaid when
profitability returned. Profitability remains elusive.
The truth is, we were never a particularly low cost producer. American
corn always had us beat. And every hog added to our inventory had to
be exported, with most of these going to the U.S., to a country
already a huge exporter itself. Other countries, with cheaper and more
plentiful labour, were also increasing production. It isn't surprising
then, that it took the bubble only a decade and a half to burst.
Now, hog farmers across Canada have asked the government for a billion
dollars in ad hoc payments to drag them through the worst crisis
they've faced. What urban Canadians won't know is just how few people
actually raise hogs. They also won't know that there is no light at
the end of the hog tunnel, only a lot of desperate people hoping for a
miracle.
Driving twenty-five miles south of Regina last week, I got a huge
surprise. Rooting around by some wooden granaries near the road was a
herd of footloose pigs, older sows by the look of them. I have no idea
where they came from, or where they went. But as I went by, I gave
them the thumbs up. At least for a short while, they were the only
lucky ones in a sad industry.
© Paul Beingessner beingessner@sasktel.net
Monday, May 25, 2009
Monday, May 18, 2009
Deer Populations Reach Epidemic Numbers
Column # 720 18/05/09
Hay was pretty scarce in my part of southern Saskatchewan last fall. Then came a cold winter that went on forever. Hay supplies were stretched to the limit, and many farmers fed extra grain and purchased hay. This spring looks better, with lots of rain, following a winter with more snow than we've seen for a while. Now, if it would just warm up, the grass might even start to grow in earnest.
As I was seeding a field tonight, I noticed the great potential in a low-lying hay field that provides one of my neighbours with a good deal of his winter feed. As dusk approached, I also saw the herd of whitetail deer that began to swarm out of the surrounding chokecherry and Saskatoon bushes. Well before the sun set, they covered the field and were spilling out onto my wheat stubble. It began to look doubtful if there will be any hay there come summer.
Saskatchewan Environment says whitetail deer populations are near the all-time high for the province. Milder winters and lower hunting pressure mean numbers are still increasing. My own experience bears this out. In the 40-odd years I've hunted around my home, I have never seen so many whitetail deer. It was easy to go out for a half-hour toward evening in late winter and count hundreds of deer without going more than a few miles from our place. In addition to the whitetails, we also have an ample number of mule deer, and moose have even begun to populate this farming district!
While deer have increased, the number of hunters has gone the other way. In the late 1960s and early 1970s, Saskatchewan regularly saw 70,000 to 80,000 hunters take to the field for whitetail deer. By 2004, this had declined to 30,000. Only in the last couple of years have the numbers slowly begun to increase. Though it might be tempting to attribute the reduced number of hunters to the fervent anti-hunting segment of the animal rights lobby, it is more likely that the decline in rural population and the increasing age of those that remain have played a larger part.
Bourgeoning wildlife numbers, while nice to look at, are creating increasing conflict with farmers and ranchers. Our herds of deer did some real damage to neighbours' feed stacks this winter. Coyotes have been pruning our sheep flock with great regularity. The vast numbers of geese that pass through each fall are just waiting for the late harvest that will eventually, inevitably come. Vehicle accidents involving deer and larger ungulates cost Saskatchewan taxpayers millions each year. The situation is much the same in Alberta and Manitoba.
Hunting has an important role to play in mitigating this damage, but there is little indication that hunting will increase as a pastime. One new measure by Saskatchewan's government is to open up hunting on Sundays, which will begin this fall. If urban hunters can look forward to two days when they can hunt on the weekend, more might return to the sport they abandoned to the pressures of Monday to Friday jobs.
A hopeful sign in our area has been the increasing number of girls taking hunter safety courses. When I was a kid, girls who hunted were scarcer than hen's teeth. Not any more.
While many of my urban friends simply can't see the allure in killing animals for sport, it is usually not that simple. Hunting is a way to spend time with family and to learn to appreciate nature. Hunters generally enjoy wild meat, and sausage making is a family event at our house, and many others. It's also a way to get some benefit out of these animals that farmers feed for free. And if you can't find time yourself to process a deer, many food banks are more than glad for the donation.
© Paul Beingessner beingessner@sasktel.net
Hay was pretty scarce in my part of southern Saskatchewan last fall. Then came a cold winter that went on forever. Hay supplies were stretched to the limit, and many farmers fed extra grain and purchased hay. This spring looks better, with lots of rain, following a winter with more snow than we've seen for a while. Now, if it would just warm up, the grass might even start to grow in earnest.
As I was seeding a field tonight, I noticed the great potential in a low-lying hay field that provides one of my neighbours with a good deal of his winter feed. As dusk approached, I also saw the herd of whitetail deer that began to swarm out of the surrounding chokecherry and Saskatoon bushes. Well before the sun set, they covered the field and were spilling out onto my wheat stubble. It began to look doubtful if there will be any hay there come summer.
Saskatchewan Environment says whitetail deer populations are near the all-time high for the province. Milder winters and lower hunting pressure mean numbers are still increasing. My own experience bears this out. In the 40-odd years I've hunted around my home, I have never seen so many whitetail deer. It was easy to go out for a half-hour toward evening in late winter and count hundreds of deer without going more than a few miles from our place. In addition to the whitetails, we also have an ample number of mule deer, and moose have even begun to populate this farming district!
While deer have increased, the number of hunters has gone the other way. In the late 1960s and early 1970s, Saskatchewan regularly saw 70,000 to 80,000 hunters take to the field for whitetail deer. By 2004, this had declined to 30,000. Only in the last couple of years have the numbers slowly begun to increase. Though it might be tempting to attribute the reduced number of hunters to the fervent anti-hunting segment of the animal rights lobby, it is more likely that the decline in rural population and the increasing age of those that remain have played a larger part.
Bourgeoning wildlife numbers, while nice to look at, are creating increasing conflict with farmers and ranchers. Our herds of deer did some real damage to neighbours' feed stacks this winter. Coyotes have been pruning our sheep flock with great regularity. The vast numbers of geese that pass through each fall are just waiting for the late harvest that will eventually, inevitably come. Vehicle accidents involving deer and larger ungulates cost Saskatchewan taxpayers millions each year. The situation is much the same in Alberta and Manitoba.
Hunting has an important role to play in mitigating this damage, but there is little indication that hunting will increase as a pastime. One new measure by Saskatchewan's government is to open up hunting on Sundays, which will begin this fall. If urban hunters can look forward to two days when they can hunt on the weekend, more might return to the sport they abandoned to the pressures of Monday to Friday jobs.
A hopeful sign in our area has been the increasing number of girls taking hunter safety courses. When I was a kid, girls who hunted were scarcer than hen's teeth. Not any more.
While many of my urban friends simply can't see the allure in killing animals for sport, it is usually not that simple. Hunting is a way to spend time with family and to learn to appreciate nature. Hunters generally enjoy wild meat, and sausage making is a family event at our house, and many others. It's also a way to get some benefit out of these animals that farmers feed for free. And if you can't find time yourself to process a deer, many food banks are more than glad for the donation.
© Paul Beingessner beingessner@sasktel.net
Wednesday, May 13, 2009
Raining on the Railway
Column # 719 11/05/09
Nobody likes rain on the day of a parade. And so the metaphor about raining on someone's parade is pretty apt. You don't get to be the crowd favorite if you're disrespecting an idea the crowd cherishes.
So I write this column with some hesitation, because the parade I am going to sprinkle on is getting lots of positive press right now. And no one seems too concerned about the implications.
Short line railways haven't been too far from the news since they had their western Canadian beginnings in 1986. That was when colorful and outspoken Alberta entrepreneur Tom Payne began Central Western Railway in, well, central western Alberta. Three years later Saskatchewan had a humble start in the short line business when Southern Rails Cooperative took over short sections of CN and CP track in southern Saskatchewan.
While Southern Rails is still operating, though not with all its original track, Central Western has gone the way of the dinosaur. The difference? Central Western was privately owned and failed to return enough to its investors to justify its continued operation. Southern Rails is community owned, and its owners benefit by its operation, not from a return on investment.
The story has repeated itself several times in western Canada. Perhaps the worst and most striking example came when a company from Salt Lake City purchased the Miami and Hartney subdivisions in southern Manitoba in 1999. Local governments and farmers had organized tentatively to look at buying the line but never coalesced into anything substantial. The Tulare Valley Railway, owned by rail salvager A&K Railroad Materials, convinced CN it could run the lines as a short line. By 2007, the track was gone and customers on the line were crying the blues.
It's an interesting truth that neither Manitoba nor Alberta has a short line railway operating on a grain dependent branch line at this time, while Saskatchewan has many, and the numbers increase yearly. As in the early beginnings, the difference is in ownership. Saskatchewan's successful short lines are all community based. None are seen as investment vehicles. All are rather a means to an end - the end being the continuation of rail service for the benefit of the farmers and communities involved.
I won't dwell on the lack of entrepreneurial spirit displayed by farmers in Saskatchewan's sister provinces. That would be a cheap shot. And I won't mention the failure of governments in either Alberta or Manitoba to support community-based short line ownership, compared to Saskatchewan's many efforts in this regards. That would simply be taunting the less fortunate. Besides, if recent news is any indication, that may be changing, at least in Manitoba.
The newly formed Boundary Trails Railway Company is the first short line in Manitoba to be largely owned by producers. It also received substantial aid from the provincial government, in the form on a $615,000 forgivable loan. Everyone involved, from farmers to the province have waxed eloquent about the benefits of a producer owned short line.
All this is good. And it's about time Manitoba farmers followed the successful model from Saskatchewan. But now for the rain. The railway will be operated by another company, cited in press stories as the Central Canadian Railway, which will provide "car hauler, maintenance services, links with major railroads on traffic and delivery issues, snow clearing and basic administrative services".
Most Saskatchewan short lines do this work themselves. Not all mind you, but where a Saskatchewan short line contracts outside work, it is generally done by a short line that has an immediate presence in the area, and is another producer-owned entity.
The simple fact is that there is seldom enough money available in moving grain on branch lines to afford extensive services from outside contractors. Many Saskatchewan railways learned this the hard way. It is a bit of an odd way for farmers to do things. Few would consider hiring custom operators to carry out every bit of their farm operation, from seeding to bookkeeping. There would be very little left over if they did. The short line railway isn't much different from a farm, and requires similar management. If times are tough, you watch every penny. Outside contractors have a different expectation, and often simply want to maximize their involvement and return.
I hope the new and optimistic owners of the Boundary Trails Railway have considered this. It may work for them, and I wish them many days of sunshine.
One a related note, rumour has it the same company that consumed the Miami and Hartney subdivisions is poking around the Alliance subdivision in Alberta, and wants to talk to producers on that line, which CN has up for sale. Now that's a parade that deserves a thunder storm.
© Paul Beingessner beingessner@sasktel.net
Nobody likes rain on the day of a parade. And so the metaphor about raining on someone's parade is pretty apt. You don't get to be the crowd favorite if you're disrespecting an idea the crowd cherishes.
So I write this column with some hesitation, because the parade I am going to sprinkle on is getting lots of positive press right now. And no one seems too concerned about the implications.
Short line railways haven't been too far from the news since they had their western Canadian beginnings in 1986. That was when colorful and outspoken Alberta entrepreneur Tom Payne began Central Western Railway in, well, central western Alberta. Three years later Saskatchewan had a humble start in the short line business when Southern Rails Cooperative took over short sections of CN and CP track in southern Saskatchewan.
While Southern Rails is still operating, though not with all its original track, Central Western has gone the way of the dinosaur. The difference? Central Western was privately owned and failed to return enough to its investors to justify its continued operation. Southern Rails is community owned, and its owners benefit by its operation, not from a return on investment.
The story has repeated itself several times in western Canada. Perhaps the worst and most striking example came when a company from Salt Lake City purchased the Miami and Hartney subdivisions in southern Manitoba in 1999. Local governments and farmers had organized tentatively to look at buying the line but never coalesced into anything substantial. The Tulare Valley Railway, owned by rail salvager A&K Railroad Materials, convinced CN it could run the lines as a short line. By 2007, the track was gone and customers on the line were crying the blues.
It's an interesting truth that neither Manitoba nor Alberta has a short line railway operating on a grain dependent branch line at this time, while Saskatchewan has many, and the numbers increase yearly. As in the early beginnings, the difference is in ownership. Saskatchewan's successful short lines are all community based. None are seen as investment vehicles. All are rather a means to an end - the end being the continuation of rail service for the benefit of the farmers and communities involved.
I won't dwell on the lack of entrepreneurial spirit displayed by farmers in Saskatchewan's sister provinces. That would be a cheap shot. And I won't mention the failure of governments in either Alberta or Manitoba to support community-based short line ownership, compared to Saskatchewan's many efforts in this regards. That would simply be taunting the less fortunate. Besides, if recent news is any indication, that may be changing, at least in Manitoba.
The newly formed Boundary Trails Railway Company is the first short line in Manitoba to be largely owned by producers. It also received substantial aid from the provincial government, in the form on a $615,000 forgivable loan. Everyone involved, from farmers to the province have waxed eloquent about the benefits of a producer owned short line.
All this is good. And it's about time Manitoba farmers followed the successful model from Saskatchewan. But now for the rain. The railway will be operated by another company, cited in press stories as the Central Canadian Railway, which will provide "car hauler, maintenance services, links with major railroads on traffic and delivery issues, snow clearing and basic administrative services".
Most Saskatchewan short lines do this work themselves. Not all mind you, but where a Saskatchewan short line contracts outside work, it is generally done by a short line that has an immediate presence in the area, and is another producer-owned entity.
The simple fact is that there is seldom enough money available in moving grain on branch lines to afford extensive services from outside contractors. Many Saskatchewan railways learned this the hard way. It is a bit of an odd way for farmers to do things. Few would consider hiring custom operators to carry out every bit of their farm operation, from seeding to bookkeeping. There would be very little left over if they did. The short line railway isn't much different from a farm, and requires similar management. If times are tough, you watch every penny. Outside contractors have a different expectation, and often simply want to maximize their involvement and return.
I hope the new and optimistic owners of the Boundary Trails Railway have considered this. It may work for them, and I wish them many days of sunshine.
One a related note, rumour has it the same company that consumed the Miami and Hartney subdivisions is poking around the Alliance subdivision in Alberta, and wants to talk to producers on that line, which CN has up for sale. Now that's a parade that deserves a thunder storm.
© Paul Beingessner beingessner@sasktel.net
Wednesday, May 06, 2009
XL Closure Predicted By Smart Cattle Guy
Column # 718 04/05/09
Regular readers of this column will know I wasn't too enthused about
the sale of Lakeside Packers to XL Beef. The Competition Bureau
decided that Canadian farmers would be well enough served by having
two companies controlling 95% of beef packing in Canada. It blessed
the sale with the proviso that it would "watch" and if competition
wasn't sufficient in the future it would have to act. (What the bureau
could possibly do a few years down the road, other than wring its
hands, is beyond me.)
Readers will also know that I lambasted some of the groups claiming to
represent cattle producers for their unwillingness to oppose the
consolidation in the industry. One such representative defended this
by saying that the packers (XL and Cargill) write good cheques, so why
would we criticize them? (They may be good but they are so darn
small!)
The columns I wrote about this brought me probably the largest
response since I began writing, more than 700 columns ago. While some
of it was negative, most was positive. There are a lot of angry cattle
farmers out there. Angry at governments, and angry at the leadership
of farm organizations.
One large cow-calf producer who phoned me surprised me a bit when he
said that now that XL was going to own Lakeside Packers, it would soon
close XL Beef in Moose Jaw, and likely its plant in Calgary. Even for
someone as jaded as me, that seemed a bit much. "Of course," he said.
"Lakeside is operating below capacity, so why would they keep the
other two plants open?"
Geez, what a cynic, I thought. But, of course, it turns out he was
right. XL announced on April 24 that it is "temporarily" shutting the
Moose Jaw plant down, with a likely resumption of operations in
September. One employee was less optimistic, saying the September
re-opening was more a wish than a likelihood.
The Western Producer reported the reactions of the Canadian Cattlemens
Association and the Saskatchewan Stock Growers Association. Neither
appeared upset with Nilsson Bros., owners of XL. CCA president Brad
Wildeman said, "If there's nothing to slaughter, you can't expect to
keep it open". SSGA president Ed Bothner was equally sympathetic.
"It's out of their control." Even the head of the union at XL bought
the argument. "Who would think in Saskatchewan we'd have no cows?"
Since the plant at Brooks has been operating at about 75% capacity,
and Moose Jaw has had a reduced kill lately, the logical assumption is
there just aren't enough cattle to go around. Of course, during BSE,
with the border closed, prices were low because there wasn't enough
slaughter capacity in Canada to kill all the animals available. Now,
that the border is open (at least for now) cattle are again heading to
the U.S. and Canadian plants are short.
The thing about this is that cattle are being shipped to the U.S. In
other words, there are more cattle available to kill, but someone
else, in the U.S. is willing to pay more for them than the Canadian
plants. So there is something to slaughter, and it isn't out of XL's
control. Just pay more and you'll have more cattle. And the cow
numbers in Saskatchewan are down, alright, but only a bit over two
percent from six months ago. There are still cows in Saskatchewan.
And, if there are less cattle overall, it is because farmers stopped
raising them, and began to sell off their cows because there was no
money in it. Let's face it. The packers made a killing during BSE. If
they had passed more of that back to the farmer, there would be more
cows now, and no one would be talking about shortages of animals. So
the packers are victims of a problem of their own making.
Now, I know that the market doesn't work that way. The packers will
never pay more than they have to, because they are business people,
not charitable institutions, and they mainly think short term. To get
money out of them, we need to have competition. That is the nature of
our economic system. Rob Leslie, senior analyst at Canfax, knows that.
The Western Producer article quotes him saying the closure will mean
lower prices for feeders and fat cattle. "We're reducing capacity and
the plants don't have to go out there and be quite as aggressive on
their bids to procure cattle."
Of course, that will reduce cattle producers' profitability even more,
leading to fewer of them raising cows. Which may lead to more plant
closures, or fewer re-openings.
Now if XL had not been allowed to buy Lakeside, and another buyer had
been found, would Moose Jaw have closed anyway? Maybe. Or maybe not,
since it is expected there will be more cattle available in the fall.
So tell me again why the cattle organizations figure consolidation in
the packing industry is okay. I haven't had a good laugh in quite a
while.
© Paul Beingessner beingessner@sasktel.net
Regular readers of this column will know I wasn't too enthused about
the sale of Lakeside Packers to XL Beef. The Competition Bureau
decided that Canadian farmers would be well enough served by having
two companies controlling 95% of beef packing in Canada. It blessed
the sale with the proviso that it would "watch" and if competition
wasn't sufficient in the future it would have to act. (What the bureau
could possibly do a few years down the road, other than wring its
hands, is beyond me.)
Readers will also know that I lambasted some of the groups claiming to
represent cattle producers for their unwillingness to oppose the
consolidation in the industry. One such representative defended this
by saying that the packers (XL and Cargill) write good cheques, so why
would we criticize them? (They may be good but they are so darn
small!)
The columns I wrote about this brought me probably the largest
response since I began writing, more than 700 columns ago. While some
of it was negative, most was positive. There are a lot of angry cattle
farmers out there. Angry at governments, and angry at the leadership
of farm organizations.
One large cow-calf producer who phoned me surprised me a bit when he
said that now that XL was going to own Lakeside Packers, it would soon
close XL Beef in Moose Jaw, and likely its plant in Calgary. Even for
someone as jaded as me, that seemed a bit much. "Of course," he said.
"Lakeside is operating below capacity, so why would they keep the
other two plants open?"
Geez, what a cynic, I thought. But, of course, it turns out he was
right. XL announced on April 24 that it is "temporarily" shutting the
Moose Jaw plant down, with a likely resumption of operations in
September. One employee was less optimistic, saying the September
re-opening was more a wish than a likelihood.
The Western Producer reported the reactions of the Canadian Cattlemens
Association and the Saskatchewan Stock Growers Association. Neither
appeared upset with Nilsson Bros., owners of XL. CCA president Brad
Wildeman said, "If there's nothing to slaughter, you can't expect to
keep it open". SSGA president Ed Bothner was equally sympathetic.
"It's out of their control." Even the head of the union at XL bought
the argument. "Who would think in Saskatchewan we'd have no cows?"
Since the plant at Brooks has been operating at about 75% capacity,
and Moose Jaw has had a reduced kill lately, the logical assumption is
there just aren't enough cattle to go around. Of course, during BSE,
with the border closed, prices were low because there wasn't enough
slaughter capacity in Canada to kill all the animals available. Now,
that the border is open (at least for now) cattle are again heading to
the U.S. and Canadian plants are short.
The thing about this is that cattle are being shipped to the U.S. In
other words, there are more cattle available to kill, but someone
else, in the U.S. is willing to pay more for them than the Canadian
plants. So there is something to slaughter, and it isn't out of XL's
control. Just pay more and you'll have more cattle. And the cow
numbers in Saskatchewan are down, alright, but only a bit over two
percent from six months ago. There are still cows in Saskatchewan.
And, if there are less cattle overall, it is because farmers stopped
raising them, and began to sell off their cows because there was no
money in it. Let's face it. The packers made a killing during BSE. If
they had passed more of that back to the farmer, there would be more
cows now, and no one would be talking about shortages of animals. So
the packers are victims of a problem of their own making.
Now, I know that the market doesn't work that way. The packers will
never pay more than they have to, because they are business people,
not charitable institutions, and they mainly think short term. To get
money out of them, we need to have competition. That is the nature of
our economic system. Rob Leslie, senior analyst at Canfax, knows that.
The Western Producer article quotes him saying the closure will mean
lower prices for feeders and fat cattle. "We're reducing capacity and
the plants don't have to go out there and be quite as aggressive on
their bids to procure cattle."
Of course, that will reduce cattle producers' profitability even more,
leading to fewer of them raising cows. Which may lead to more plant
closures, or fewer re-openings.
Now if XL had not been allowed to buy Lakeside, and another buyer had
been found, would Moose Jaw have closed anyway? Maybe. Or maybe not,
since it is expected there will be more cattle available in the fall.
So tell me again why the cattle organizations figure consolidation in
the packing industry is okay. I haven't had a good laugh in quite a
while.
© Paul Beingessner beingessner@sasktel.net
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