The sight of almost 200 dead cattle in a central Alberta feedlot after the bank foreclosed gave a clear picture of the consequences of BSE to Canadian farmers.
With the prospect of the American border opening now in doubt, the possibility of more feedlots or farms going bankrupt is real.
“This is the tip of the iceberg. There’s a lot of feedlots in trouble,” said Rick Bonnett, spokesperson for the Bonnett family feedlot where the animals died after the receiver Deloitte & Touche, acting on behalf of CIBC, took over the feedlot.
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When the border closed, the Bonnett feedlot lost $12-$15 million overnight because the lot was full of older cows, animals that became worthless.
Through government BSE-aid programs, the feedlot got about $5 million, but it wasn’t enough to keep it from spiralling deeper in debt. In the end, the feedlot owed the banks and other creditors about $38 million.
Looking back, Bonnett said the family should have followed its first instincts, sold the cattle and closed the lot immediately. Instead the family, like everyone else, believed the border would be closed only a few weeks, not almost two years.
“Do you jump ship and run away or do you try to survive?” said Bonnett.
The first year after the border closed, the bank took a hands-off approach, but as the prospect of the border opening became dimmer, the bank started to take a harder look, said Bonnett.
“It’s putting everyone in a corner and they’re getting desperate. The more this thing drags on, the harder it is,” said Bonnett, whose feedlot was hit hard by drought before BSE.
“Everyone’s in a survival mode. If you had land paid off, it’s signed over to the bank.”
While the bankruptcy has taken a personal toll on his family, Bonnett knows they will survive.
“Remember, I ran for the Liberals in Alberta. I’ve got pretty thick skin,” said Bonnett who ran as a federal candidate in the central Alberta riding.
Farm Credit Canada took back Lisa and Rick Anderson’s Cam-A-Lot Feeders near Lamont, Alta., last June. A combination of expensive environmental permit requirements when the feedlot was built in 1999, two years of drought and then BSE was too much for the feedlot to handle.
“There were too many blows that were out of management control and BSE was fatal,” said Lisa Anderson, whose family was awarded Alberta’s outstanding young farmer award in 2000.
When the feedlot was built, it was seen as a valuable asset to the community and an outlet for the area’s grain and calves.
“It was built to add value to our community. It was definitely a good news story for our community, adding value to Alberta agriculture.”
Anderson also put some of the blame on financial institutions that are quickly losing their appetite for high-risk agricultural operations.
“The banking policy toward agriculture has shifted dramatically in the last five years. There was a shift in philosophy. We had done nothing wrong. Our lender simply didn’t want to fund agriculture. The banks are no longer supporting the agriculture portfolio,” said Anderson.
She said the banks had a different attitude when they won the outstanding young farmer award.
“We were wined and dined,” she said. “Our bank has forced us to leave and this was a fifth generation farm and we poured our heart and soul into our farm.”
Now, her husband Rick is working away from the farm.
Anderson has also stepped back from her role as vice-chair of the Canadian Young Farmers Forum, an organization created to encourage and support young farmers.
“Quite frankly, I don’t have the heart to encourage anyone to follow their dreams in agriculture right now.
“I’ve been bit too hard. I have serious fear about the future in agriculture. I don’t think our situation is unique and I know many other young, aggressive farmers who can no longer farm,” she said.
“The risk involved in individual agriculture operations has become too great for the return. Without support from the lending institutions, without the faith and backing from the lenders, we cannot exist.”
Larry Martina, vice-president of operations for Farm Credit Canada for Alberta and British Columbia, believes the lender been supportive of agriculture through the BSE crisis.
“By and large we’ve supported the industry because agriculture is our only business,” said Martina.
About 40 percent of FCC’s Alberta portfolio is beef related. Since BSE hit, the agency has increased its beef portfolio in Alberta by more than $40 million.
“We’re still supporting the industry,” said Martina.
Ron Axelson, general manager of the Alberta Cattle Feeders Association, said feedlot operators tell him that the banks have been extremely accommodating, considering the situation.
“The banks could have brought the industry to its knees.”
Rod Scarlett, executive director of Wild Rose Agricultural Producers, said the feedlots that have publicly stated their financial problems are not alone.
“Certainly they’re not the only ones,” said Scarlett, who knows some industry groups and cattle producers have met with their bankers to get assurance they won’t pull the plug on agriculture.
Anderson said producers must join together, like the Quebec farmers, whose general farm organization has real clout with government when it speaks on behalf of farmers.
“One of our major downfalls in agriculture is that we are independent and we are proud of being independent, but when something like this affects our industry so dramatically, the fact we don’t have a unified voice means that we don’t have a way to band together and fight this to improve our individual situations within the industry.
“We are all separated and are almost seen as being against one another. We’re in this together,” she said.
“No individual farmer should take this degree of failure as a personal failure. This is an industry failure and has to be treated as such.”
