EDMONTON – A $460 million federal and provincial aid announcement for cattle feeders, who are losing millions of dollars a day, has been received like a lifeline thrown to a drowning man.
“The intent wasn’t to ensure everyone recoups all their losses, but to ensure the industry’s survival and this program goes a long way to do that,” said Strathmore, Alta., cattle feeder Jeff Warrack during a June 18 news conference to announce the province’s share of the aid program.
Under the compensation program, producers will be paid for fat cattle they have owned and sold since May 20, the day a case of bovine spongiform encephalopathy was discovered in a northern Alberta cow. The program will compensate producers on a sliding scale, based on American cattle market values.
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The program compensates producers to a maximum of 90 percent of their losses, and it removes uncertainty for feedlot operators, said Warrack.
“We’re the ones on the front line. We’re the ones that have to sell inventory at really depressed prices without any real way of knowing how we’re going to earn that money back. What we’re hoping is that this kick-starts the whole system and allows the system to be functioning again and get our packers killing at a more normal capacity.”
The program isn’t the solution to the cattle industry chaos, but is a short-term fix accompanied by the “hope and desire” the border will open quickly, said Alberta agriculture minister Shirley McClellan when announcing the province’s $100 million commitment to the national BSE compensation program.
“We say very clearly this is not a solution to the crisis. Opening the border and regaining the markets and market access is the ultimate answer for the industry,” said McClellan. She said the program would be re-examined if the border isn’t open by July 31.
On June 23 Alberta premier Ralph Klein visited Washington, D.C., to lobby U.S. vice-president Dick Cheney.
As part of the aid program, the provinces will contribute to a $30 million package to empty the backlog of meat, offal, fat and poorer cuts of meat from packers’ freezers.
Canadian packers have dramatically cut their kill because they can’t get rid of parts of the carcass they normally sell overseas. Since the discovery of BSE, 33 countries have closed their borders to Canadian cattle and beef.
Arno Doerksen, president of Alberta Beef Producers, said the program buys feeders time.
“It’s very difficult to say exactly how much time it buys,” said Doerksen.
By encouraging packers to empty freezers and speed up the kill, Warrack hopes pressure will be relieved from the fat cattle accumulating in feedlots. He is worried that once the border opens, feeders will dump their cattle on the market and depress prices even further.
Ron Glaser, public affairs manager with Alberta Beef Producers, said the group has received calls from cow-calf producers wondering how the program will help them.
Glaser said if the feedlot sector, the industry first hit by a border closure, doesn’t survive there will be no market for calves in the fall.
“There is nobody happy here. There’s no perfect solution to the situation.”
Warrack said many feedlot operators felt a flat 90 percent compensation payment based on the pre-BSE price was the fairest way to deal with the backup of cattle.
