The Cattle Options Pilot Program ends Oct. 23.
The program was offered to producers to protect cattle prices. An advisory committee of cattle producers and government agreed the program should wind down because of low participation and delays in listing on the product on a commodity exchange.
New COPP options will be available up to Oct. 23. Following that, outstanding options will be honored by the program. Prices will still be quoted allowing option holders to sell back the options or hold them until expiry throughout the phase-out period ending June 5, 1998.
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A revised program will be offered by the fall of 1998, said Bobby Matheson, of the policy branch of Agriculture Canada.
It will likely be an ordinary option that anyone can trade. It is hoped the revised option will be listed on an electronic exchange to make it most effective for producers, said Matheson.
A small group of 138 producers used the program to trade their cattle. By the time the program ends they will have traded $1 million worth of options, said Matheson.
Some thought the program came at the wrong time of the cattle cycle. It offers price protection when the market is sliding downwards. However, prices have strengthened and the original need may not exist now.
The program failed to take hold for two reasons, said Matheson.
Larger producers were not attracted to it because no brokers were involved. They felt it was took up too much time to handle themselves and preferred to turn it over to their brokers, said Matheson.
Training needed
Smaller to medium sized producers said they needed more than a half-day training session to get a handle on how the markets work and how they could take advantage of the information.
More than 4,000 producers attended the trainings and in their evaluations, said it gave them a greater understanding of currency and price basis but not enough to feel confident to buy contracts.
In addition to offering a revised options program, the government has asked the Canada Farms Business Management Council to set up courses to teach interested producers about futures, options and cash contracts.
COPP was introduced as a risk management program after the wind down of the national red meat tripartite stabilization program. Tripartite was dismantled because cattle producers feared trade repercussions from the United States, which claimed it was an unfair subsidy.
