Cattle_crisis

Jeff Green | Jan 27, 2009

Author of the NFU's cattle crisis report Darren Qualman

A groundbreaking report was released in November 2008 by the National Farmer’s Union of Canada. It addresses today’s devastating income crisis in cattle farming that is bankrupting farmers across the country, especially those in Ontario, who, according to the report, have been some of the hardest hit.

Darren Qualman, Director of Research at the NFU, who authored the report, presented a summary to the NFU’s Local 316 meeting held on January 20 at Trinity United Church in Elginburg during the Frontenac Cattleman’s Association AGM. His presentation was one of many across the country in an effort to explain the causes of the crisis and to offer doable solutions that we as Canadians “just need to do to catch up”.

According to Grant Robertson, Ontario coordinator for the NFU, Darren Qualman, a former farmer from Saskatchewan “has started asking the questions that no one has wanted to ask.” And he’s come to some startling conclusions.

First off, for those of us who may know nothing about what has been going on for years now, the current prices for beef cattle today, which range, roughly, from $75-$110 per hundred weight, after taking inflation into account, are equal to those during the great depression of the 1930’s. Sound grim?

It is. For roughly 50 uninterrupted years between 1942 and 1989, beef prices fluctuated in a “normal range” between $130-$280 per hundred weight despite the fact that, compared to today, packing plants were less efficient, workers were paid 22% more, consumers were less affluent and the market was much smaller. So why is it that farmers, for 50 years prior to 1989 still managed to earn twice as much money as they do today?

All of Qualman’s data points to the year 1989, which marked the beginning of the end to beef prices in Canada. Qualman dubs the major causes of the post 1989 collapse as the “C-5 Syndrome” and explained each as follows:

CARGILL, a huge beef packing plant, opened in High River Alberta and began the transfer of control of the beef sector from many large independent Canadian packers to the sole 2 major US based corporations that exist today.

CUSTA, (the Canada-US Free Trade Agreement) was implemented and created the continental integration of these two markets with drastic consequences for Canada.

CONTINENTAL INTEGRATION caused the sector to expand and refocus on exports mostly to the US and as a result the Canadian market became over dependent on the US market, resulting in major losses.

CAPTIVE SUPPLY began, since packers now began owning and controlling huge supplies of cattle, thereby controlling prices nation wide by deciding whether or not to buy from independents

CORPORATE CONCENTRATION built as the smaller packing plants of the 70s and 80’s disappeared leaving 2-3 major Canadian packers who control 89% of Canadian cattle.

Analyzing the causes led Qualman to find specific solutions, though he admits that, “There is a lot of bad news up on this screen, but it‘s still very hopeful.”

Qualman suggested a total of 16 solutions, focusing on 4 major areas: dealing with packer and retailer power, increasing farmers’ power, refocusing the sector and pursuing an alternative vision and pursuing immediate needs and process issues.

Qualman’s report is getting a very positive response country wide. . “The response has been excellent and you don’t always get that. Most people seem open to new ideas and new analysis.”

According to Qualman, the reason that it’s taken as long as it has to get to this point of formally analyzing the issue and proposing concrete solutions is that, “The packers and the retailers have a lot of power in the country and it’s hard even to find a report in Canada that names the names”. He added, “There’s a big push in America to pass laws banning captive supply; we just need to catch up.”

When does he expect that to happen? ”I don’t know how long it’s going to take. Politicians will respond when farmers really get together on this and issues like corporate power and captive supply.”

Qualman’s report was positively received by Local 316 members in Elginburg who wasted no time and acted immediately.

Dave Perry, a cattle farmer and owner of Local Family Farms in Verona, immediately following Qualman’s presentation brought forth a resolution to the FCA to eliminate the use of captive supply in the Canadian beef sector. The resolution will be brought to the next FCA meeting in Toronto this coming February.

It’s a start for sure and as Perry pointed out, “Now we can lobby the government and hopefully the government will move on it.”

This is the kind of reaction that Qualman was hoping to see. He explained, “Understanding what’s causing the cattle crisis is only of use if you’re going to turn it into some solutions so that months or a year from now, the prices are higher and the profits on the family farms are larger.” Now armed with the facts and figures its hard to imagine things not turning around, especially since it appears there is nowhere to go from here but up.