Money allocated | Alberta feeder associations have reached the $55 million cap
A recent doubling of feeder association loan limits to $1 million a person and a doubling of calf prices will likely leave some producers unable to borrow money through the popular lending program.
Producers who haven’t bought their calves through the feeding program will have to find different and more expensive financing for cattle, said the chair of the provincial Feeder Associations of Alberta.
“They’re out of luck. They’re on their own to see financing elsewhere,” said George L’Heureax.
The $55 million in government-backed cash to buy feeder calves has been allocated to all 80 feeder associations across the province.
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“We’ve never reached that cap before,” said L’Heureax.
Each association is allocated a specific amount of the $55 million. No more money is available once they have loaned their money to members.
L’Heureax said the provincial association lobbied the government to raise the loan from $55 million to $80 million this fall because it knew calf prices were set to rise and that the individual loan limit had in-creased.
“We’re hoping for an answer as soon as possible.”
Cattle producers traditionally borrow money from feeder associations to feed 20 percent of the calf crop born in the province. Without the ability to borrow money easily, L’Heureax is worried Americans will buy the feeder calves and truck them to U.S. feedlots.
“If we can’t buy them here, they will go across the line. It will put the feedlots and the packing plants in jeopardy if we can’t retain the cattle here.”
Feeder association loans aren’t the only way to borrow money, but they are the most “user friendly,” he said.
Unlike banks, which require a 20 to 25 percent down payment to buy calves, feeder associations require only five percent down. The feeder association loan covers trucking, branding and other costs associated with buying calves.
Leonard Schmidt, chair of the Barrhead Feeder Association, said there is a lot of demand for his association’s allocation of funds from members.
“Locally, quite a few guys have gone to the limit,” said Schmidt.
“It’s a bit scary for most of us here.”
Some associations insist that producers who borrow money must insure all or part of their cattle purchases through the Cattle Price Insurance Program.
“We insist they at least insure the price of the animal,” said Schmidt.
Daryl Skaret, supervisor with the Battle River Feeders Association, believes his association’s $12 million allocation will be snapped up quickly.
“I think we’re going to be way short,” he said. “Once it’s gone, producers are not able to access more money.”
Lyle Miller of the Acme Feeder Association said his association would likely have more requests to borrow money than money to lend.
“Associations are running out of operating line for its members,” said Miller. “We will be tapped out.”
Miller estimates that 40 percent of his members won’t be able to borrow money.
“It will take some people out of the market.”
Acme is working with neighbour-ing feeder associations to access some of their unused money.
Rod Morrison, chair of the Calgary Central Feeder Association Co-op, said his association traditionally loans money for grass cattle in spring.
“I can’t see it being an issue with the association.”
