Archive for the ‘stability programs’ Category

SiemensSays.com – Jim Long President of Genesus Genetics – Our Observations

August 19, 2009

The following article was originally from SiemensSays.com. I think it is a very insightful analysis into the recent announcements in the pork industry.

  • Loan guarantees will help some producers. But, what is the criteria for a viable hog operation? The Canadian industry is currently losing $30 million a week. The situation is deteriorating daily.
  • The Hog Farm Transition Program of $75 million will help if it effectively pays people to get out of the business. This would cut production. No details yet, but it appears it’s like the U.S. dairy buyout where producers will bid to leave the industry for three years. If it only pays existing producers, not ones that already quit, it can significantly cut production. For example: ‘At $500 per sow bid the $75 million would cut 150,000 sows out of production.’ If it pays people already out of business, the plan will do little to cut supply.
  • The Government says detailed information will become available over the next few weeks. The industry is in crisis; they have been working on this for months – it’s too bad the Government is not ready. Not sure what the point is to gradually reduce supply as the Government proposes; gradually will lead to further attrition in the potential survivors. We need them out fast! Get it over and move on.
  • Not a stellar day for the Canadian Pork Council. The cattle industry got billions for Mad Cow. The Canadian Pork Council came up short on their $800 million want list for compensation for H1N1 effects and the economic crisis.
  • At the press conference, Minister of Agriculture Ritz assured he had talked to the U.S. Secretary of Agriculture Vilsack. All was good with the plan. Loan guarantees are allowed.
  • Not to think that only Canada supports producers, Agriculture Secretary Vilsack, announced last week that USDA rural development and the Farm Service Agency – FSA, were to help use all available means to help producers hit by worsening economic conditions. $1.7 billion from the American Reinvestment Program and Recovery Act has been made available. FSA has been instructed to increase efforts to provide loan assistance to livestock producers. The agency sent a letter to direct borrowers outlining the options and tools available to help ease financial stress. The letter encourages borrowers to contact their local county offices. Options available include rescheduling, reammortization, deferral, and in extreme cases reducing debt.
  • Bottom line – Canada and USA are liquidating. Both countries governments are stepping in to help out. We doubt that it’s enough to stem the tide of liquidation. We do not expect Canadian liquidation alone will cut supply to profitable levels without the US doing likewise. Both countries need and are getting liquidation.

This Is Bad
Our industry is losing $40 to $50 per head currently. USA – Canada aggregate weekly hog marketing are 2.6 million and making a weekly loss of $100 to $130 million. It’s dismal. It’s been almost two years of constant losses. This past week we travelled the U.S. Midwest. Our observations:

  • Producers are shell shocked. The question, “When will this end?!” is asked repeatedly.
  • Sow liquidation has picked up. Reports are the sow plants are taking all they want; before, they had capacity. Sow prices have dropped in the range of almost $100 per head. That’s a reflection of supply.
  • We saw lots of corn and soybeans on our tour. Indiana, Illinois, Michigan, Iowa, Missouri, and Nebraska crops look great (except where it hailed). Every ditch for 2400 miles was green as could be. This is the middle of August! Rain and now warm weather. We are no crop experts, but everywhere we went the crop was described as excellent by the locals. U.S.D.A. last week predicted 12.7 billion bushels of corn. We might have lots of other problems right now in our industry, but feed availability is not one of them.
  • Lean Hog Futures have hit multi-year lows. There are no hedge opportunities for profit. We expect the non Ag funds will begin to look at the historical lows and this coupled with sow liquidation will start driving up spring 2010 futures. We believe the U.S. is liquidating (combination of gilt retention and sow slaughter) 10-15,000 sows per week.
  • We received several emails last week encouraging us not to talk about liquidation. Like people out of money and out of faith will stay in the business because we give some optimism. When you are out of capital (cash) and courage, it’s over. No words or optimism will keep you in business. Cash is king.

Summary
Some Government Aid, but in an industry losing $100-$130 million a week, it will do little to stem the tide. In the last two weeks the collapse of cash and futures has broken the spirit and future of many. We are liquidating. We expect deferred lean hog futures will gather steam soon. There is no way next spring and summer hog supply will not be seriously cut. One packer told us last week that we need to start talking 90¢ hogs again. H1N1 destroyed this summer’s market, but it will be over by then. Does anyone in their right mind believe small pigs will be $4.00 each a few months from now? We expect $60.00 in January. The retail price of pork is higher than a year ago as supply demand adjusts. Our prices will recover. The retail price of pork, higher than last year, tells us we are producing a product people want. We are not making wagon wheels. There is, believe it or not, a future for many.

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Hog Support is a Struggle in Manitoba

June 16, 2009

Talking to hog producers in Manitoba, there is a real head scratching issue taking place. Hog producers are strongly criticizing the provincial government for not stepping up to compensate hog farmers for this terrible economic environment. The province think that it is a Federal government issue but others disagree. My friend journalism friend Harry Siemens has a great audio monologue about how H1N1 has really affected producers in the short term but also has long term consumer affects. In Harry’s opinion the provincial government must step up and create a strong stability program to help hog farmers leave the business while enticing others to commit long term. Please check out Harry’s commentary.

Alberta To Launch Cattle Price Insurance Program – Susan Crump of AFSC

June 3, 2009

I have been getting a number of calls from feedlot producers to discuss the new Cattle Price Insurance Program (CPIP) that will be launched by AFSC this summer for Albertan cattle feeders. I talked to Susan Crump, Senior Project Manager, Program Development and Policy at AFSC about some of the preliminary details of the coming program.

Shaun: What choices will the producer have? Will the feedlot have to decide 100% or none of his feedlot.

Susan Crump: The feedlot owner will have the option to insure as much as he or she wants on a lot by lot basis. Some lots could be insured while others not. This program is not mandatory.

Shaun: What is the premium per head to participate in the program?

Susan Crump: I cannot give you an accurate number at this point. I can tell you that the premium will fluctuate with the volatility of the futures market. The lower the beta of the futures price the lower the premium.

Shaun: Is this a program accessible by non-Albertans feeding in Alberta feedlots.

Susan Crump: This is a insurance program that is backed by the Alberta government and so it is only open to residents of Alberta. People from outside the province and feeding cattle in Alberta feedlots will not be able to participate in the program.

Shaun: Do you see other production based insurance riders coming in the future. For example, death loss insurance on calves.

Susan Crump: It has been something that has been talked about but the reality is that the demand would be quite low so at this time it will not be a focus.

A special thank you to Susan Crump from AFSC for taking time for the interview.

Last weeks press release discussing the programs background and future launch.

Gerry Ritz Visits Lethbridge for a Producer Roundtable

March 7, 2009
Yesterday, Rick Cassson, MP Lethbridge hosted Federal Agricultural Minister, Gerry Ritz in Lethbridge.  On top of serving at the Farm Credit Canada Breakfast at Ag Expo and meeting with a farmer round table, Ritz also announced 15.5 million in funding for the Canadian Triticale Biorefiniery Initiative. 
I participated in the farmer round table where all twenty of the producer participants had a couple minutes to voice their opinion on any given subject.  This is the first time I have met the Honorable Mr. Ritz but I have to say that he appears to be a very fast on his feet, intelligent and has a very firm grasp of the subjects at hand.  Based on his opinion of the Canadian Wheat Board alone I think that we are in good hands.  I cannot say that I agree with him on all subjects but you should never expect that. 
The issues brought up at the round table were country of origin labeling, the creation of the certified seed tax incentive, farmers wanting a choice on how and where to market their grain, the inability of the Canadian Wheat Board to manage its finances, the inadequate rail system in Canada, consolidation of the beef industry, how to create a long term sustainable sugar beet industry, the need for public plant breeding, the need for own use allowances on certain animal drugs and crop protection products, pollination research needs, wildlife control as it pertains to sheep production, transgenic wheat and many questions about the need for government stability programs to be bankable going forward.  
Afterwards I reflected to a good friend that it was great to meet Gerry Ritz and get some of his candid feelings on the issues as he really encouraged to be challenged and given ideas on how things can be improved.  Thank you Mr. Ritz for taking the time to come to Lethbridge and listen to our Southern Alberta concerns.  

Tiffin Conference – Larry Hicks – Managing Risk in the Beef Business

January 23, 2009

Larry Hicks of Cattlehedging.com was one of the keynote speakers at the Tiffin Conference yesterday in Lethbridge. Larry spoke about the necessity of risk management in the beef business. Larry very clearly outlined what hedging is and that there is much more involved than calling your broker to buy or sell futures contracts. He emphasized that you must have a hedging plan in order to really obtain success.

I had a chance to sit down with Larry before his Tiffin speech to discuss some of the pressing issues in the beef business and get a better idea of how he views the beef business going forward.

Tiffin Conference – John Knapp – Alberta Agriculture Refocuses

January 22, 2009

Alberta Agriculture Deputy Minister, John Knapp, spoke to producers about how Alberta Agriculture is putting a strategy in place to reconnect with rural Alberta and help to enable success for members of the livestock value chain.

Two examples that he gave were:

  1. Creating an irrigation department that focuses on improving the efficiency of water application and improving crop production in Alberta. With the use of irrigation Albertans are able to produce high value crops.
  2. Attaching a specialist to every Ag service board in the province. This will increase the two way communication so that initiatives can move forward and allow for change to happen at a faster rate.

John Knapp focused most of his discussion on the Alberta Livestock Meat Strategy (ALMS) which is an integral part of bringing livestock producers back to profitability which will lead to sustainability in the sector.

ALMS is the big umbrella strategy which includes Alberta Livestock Meat Agency (ALMA) and certain programs of the Alberta Financial Services Corporation (AFSC). ALMA will be the catalyst and funder to make sure the industry moves forward. John Knapp said that Alberta has to move forward by improving the cattle genome and improving barley yields by investing in feed grain research. There are also cost issues between Canada and the US. Our American friends have a $64 a head cost advantage over Canadian producers. Much of that cost is due to the slow drug registration system in Canada. Knapp said that we need to reform the time it takes to get new advantageous drugs approved in Canada in comparison to the US.

The one characteristic about John Knapp that I really like is that he is very approachable and willing to at least have the discussion about what needs to change to improve agriculture in Alberta. In the couple times that I have met John Knapp, he is willing to talk to producers and not just fly in and fly out like some other politicians tend to do. The one thing that I completely agree with the Alberta Government on is that all beef industry groups and all members of the value chain need to finally work together and stop pointing fingers and work together to make sure we have a successful industry going forward.

Hon. George Groeneveld Discusses 2008

December 23, 2008

Yesterday on Call of the Land, an Alberta Radio Show, there was an interview with the Honorable George Groeneveld, the Alberta Agriculture Minister. Known for his straight forward answers Mr. Groeneveld discusses the highlights of 2008. In the interview he discusses trade with Asia, the implementation of ALMA and ongoing issues with the WTO.

This has been quite a turbulent year for Alberta Agriculture in the fact that commodity prices have been volatile, credit markets are shrinking while the beef and pork business are fighting new legislation that threatens it’s very existence. Whether you agree with the Minister or not you have to respect the massive job that is in front of him and his department. Issues not mentioned in the interview were COOL, industry consolidation, BSE, AFRP I & II, Alberta Bio-fuels strategy and the future of the Canadian Wheat Board just to name a few.

If you want to provide feedback to the minister directly you can email him at george.groeneveld@gov.ab.ca or call his office at (780)427-2137. If you have some strong feelings in support or in contradiction to the policies and strategies taken, I encourage you to contact the minister’s office and let your feelings be known. Even if you are out of province I would think that it is important to let the province of Alberta know how their policies are affecting your role in agriculture, wherever you live in the world. Let me know if you get a response from the Minister’s office or add your results to the comments section of this post. Good Luck.

Tom Vilsack is Appointed Ag Secretary

December 17, 2008

It is official, Tom Vilsack is the new Ag Secretary in the United States. Vilsack is the former governor of Iowa and Presidential candidate. Iowa has the second largest agricultural output value in the country, second to only California. If you want to intimately get to know the new secretary, check out his My Space page or Wikipedia page.

According to a report from MeatingPlace.com:

“He also has been interested in cutting subsidies for agricultural commodity crops in order to better fund initiatives to improve environmental practices…”

Coming from a “corn” state, Vilsack’s record on beef issues are mixed. Accordingto the website http://www.change.gov/,Obama’s priorities have been laid out very clearly. With change continuing to be the mandate of the President Elect it would make sense that Vilsack shares those same directional change feelings. The one issue that Vilsack and Obama have not agreed upon in public is the speed as to which the troops should be pulled from Iraq as well as Vilsack initially supporting Hilary Clinton after he withdrew from the Democratic race.

According to http://www.firedoglake.com/
“Vilsack has been criticized for being to supportive of the efforts of the bio tech industry.”

Other sites such as the Iowa Independent claim:
“Expect the incoming Secretary of Agriculture to achieve tangible results that are easy to explain, because that is Vilsack’s style. He will immerse himself in a few specific issues, come up with a few policy ideas, and set to work building a political consensus, diluting the original ideas when necessary. Don’t expect Vilsack, a consummate pragmatist, to turn America’s food system upside down anytime soon.”

For more reaction to the Vilsack selection read this Iowa Independent story where you can find out who is happy and who is dissapointed in Obama’s choice.

Only time will tell how this appointment will affect Canadians. I think just like the President Elect, Canadians will nervously await the ripples of change as they come north.

NFU is Critical of Agricultural Trade

December 16, 2008

Sometimes when you are trying to get a point across you stretch the fabric of reality to invoke thought.  Many speakers and writers do this everyday in order to make a point.  Well I think the NFU has crossed the line this week as Darrin Qualman made statements regarding Canada’s focus on trade to better agriculture in the long term.

“World Trade Organization agreements have been harmful to Canadian agriculture according to the National Farmers Union.  Director of research Darrin Qualman argues our country places too much emphasis on foreign trade.—Darrin Qualman”

Canada is a nation that needs exports in order to survive long term due to the abundance of arable land and lack of population.  Not focusing on trade to become self-sustainable in food is like the US trying to become self-sustainable in oil.  It sounds great but is virtually impossible.  We cannot allow ourselves to dream that we are going to go back to a time where one out of four people farmed.  I would advise that it is foolish to think that making farming operations in Canada smaller is the ideal scenario for Canadian agriculture.  I also want to note that the same goes for creating a system where there are 4 farms in Canada.  Somewhere in the middle is sustainability for farmers across the country.  This sustainability includes domestic use and international trade. 

“Rather than looking at maximizing foreign trade, he argues we need to create a system that provides consumers with food that has been produced locally, using sustainable practices.—Darrin Qualman”

Not focusing on trade would devastate the already hurt beef industry.  Saying no to trade on the beef industry would affectively cut our fat cattle production in half.  Cutting the cattle industry in half would decimate many communities across Canada whether they include small 50 head cow calf operations and 10,000 head feedlots.  Another vantage point is to look at grain farming.  If there was not a focus on trade what we do with all the durum that is grown in Canada.  Or what about malt barley exports? 

If we are going to have debates on how to fix agriculture lets at least be serious and have a conversation that is within the realities of today not dreaming of a return to the 1800’s. 

More Time To Repay CAIS Overpayments

December 11, 2008

Jay Whetter, Editor of Grainews, wrote on his blog this week about some recent announcements from the Growing Forward administration. I think that it is important that you read it and make sure you are abreast with the current stability programs. The post is entitled “More Time to Repay CAIS Overpayments.”

I also encourage you to add Jay’s RSS feed to your google reader to make sure that you don’t miss his future posts.