MORINVILLE, Alta. – Low cattle prices will cause more fraud in Alberta’s cattle industry.
RCMP Cpl. Emil Smetaniuk told Feeder Associations of Alberta delegates to tighten up their rules to prevent future financial disasters.
Smetaniuk, who is in charge of the RCMP’s Alberta livestock division, said lower cattle prices have led to criminal activity.
“As far as fraud-related activity within the industry, a drop in prices has probably been a major cause,” said Smetaniuk, who attended the group’s Feb. 10 session.
In late January, the mounties appointed a second officer to deal with livestock crime. The RCMP are investigating two cases involving financial improprieties with cattle. Smetaniuk addressed the convention after four local associations revealed contract irregularities with longtime members that developed into lawsuits.
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Ken Solverson, chair of the Battle River Feeders Association, said desperate times force some honest men to turn to crime.
“The problem is out there when a guy is close to bankruptcy – when his back is against the wall – he will be up to taking advantage of people,” said Solverson, who runs a cow-calf operation with 700 head on 3,000 acres near Camrose.
“When things get tough, there’s going to be casualties.”
The associations are co-operative ventures among cattle producers. Banks lend money to the associations. After members put down a security deposit, the association gives loans to members to buy cattle. At the end of the loan term, the rancher must sell the cattle and pay back the money.
Solverson said the industry must police itself better to prevent major shortfalls in the number of cattle delivered on contracts.
The four lawsuits involve multiple contracts with families. When producers fell behind on a contract, they borrowed cattle from a future contract to make up the shortfall. After continuing to do this over a period of time, the gap grew to the point where regulators became suspicious and discovered cattle were missing.
But Solverson said the industry doesn’t need tougher rules.
“We don’t need any new regulations. We just need to follow the ones in existence more closely,” said Solverson, whose association lost 279 cattle.
“Although the cattle industry is based upon trust it’s like one delegate said, ‘you can’t trust anyone.’ “
Vigilant enforcement on rules about branding, proper documentation on shipping manifests and running regular in-depth credit checks on longtime members will catch discrepancies sooner.
Smetaniuk echoed Solverson’s call for a more bottom-line approach to running the associations that feed 25 percent of Alberta’s cattle.
“You have to run the associations like businesses” he said. “They seem more like families.”
