The shock waves caused by a ban on Canadian beef exports are affecting business far beyond the Canadian farm.
Ron Scarth, the Canadian salesman for Merritt Equipment Co, of Denver, Colo., said business has dropped of 85 to 90 percent since the closing of the American border on May 20. Merritt builds most of the cattle liners that haul cattle across North America,
“It’s affecting us horrendously,” said Scarth.
In a normal year, he sells as many as 100 cattle or hog liners across Canada. Since May 20, he’s sold two hog trailers.
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Some owners of cattle liners are having trouble making payments of roughly $1,800 a month and are in danger of having the cattle trailers repossessed.
“Morally they’re good people. It’s not that they’re bad managers,” said Scarth, who has been working with banks and finance companies to help negotiate different payment terms for the owners.
“Where does the money come from when you have no work?”
A new cattle liner costs about $100,000. A good used trailer is $80,000. If the finance companies were to repossess the liners, they’d be lucky to get $20,000 for them, said Scarth.
“Where are you going to sell them?”
Canadian cattle and beef have been banned by 34 countries including the United States after a cow in Alberta was discovered with BSE.
In the trucking business, cattle liners are usually owned by a livestock transport company that arranges to have the animals moved in its trailers. An independent operator generally owns the truck, but with no cattle to haul, the drivers are taking their trucks and finding business elsewhere.
“When the border opens, the trucking company will have no one to pull his trailers,” said Scarth.
Ryan Sorgard of Travelers Financial Group, the Calgary finance company that writes most of the finance agreements for Merritt trailers, said he’s had a number of clients calling about payments.
Normally, finance companies have a clear policy. If two payments are missed, the vehicle or machine is repossessed. Some of the liner owners are getting close to missing their third payment and the finance companies are pondering their next move.
“Right now cattle liners aren’t worth a lot,” said Sorgard, adding the owners have historically had one of the lowest delinquency rates in the industry.
He has delayed payments from some clients and allowed others to make partial payments.
“This is our way of thanking the customers, but there comes a time when you can’t go on.”
Even if the liners were repossessed, they couldn’t be sent across the border and resold to Americans who are still able to move cattle. The trailers are triple axle and specially designed for Canadian roads and transport regulations. The American liners are built with a tandem axle.
Some of the trailers can be converted to haul hogs, but there’s a limited number of hog liners required.
Sorgard has also had calls from owners of corral cleaning equipment, hay and grain haulers, refrigerated trucks and a trailer designed to haul hanging beef on meat rails.
He said it would be easier to rewrite loans if there was a clear date for reopening the border. The uncertainty has created the hardship.
