Saskatchewan, Canada, March 29, 2004:
Desperate times require desperate measures, or so the saying
goes. And it darn well must be true. How else can you account
for the statements coming from cattle producers across Canada
as the mad cow crisis washes them away like a rogue tsunami?
The first of these statements found its defining moment when
the Alberta Cattle Feeders Association passed a resolution
at its annual meeting calling for a limit on packer ownership
of cattle. By a wide majority, association members demanded
that packers be forced to purchase 90 percent of their cattle
on the open market. Currently, packers get much of their supply
from cattle they own or cattle they have locked in with contracts.
Since the advent of BSE, many cattle feeders have expressed
concerns about their industry. The obvious problems were exacerbated
when government programs to subsidize the industry were captured
by packers and a small number of feedlots that the packers
seemed to favor. Feedlot owners have recently been expressing
concern over the power held by the very small number of companies
that kill the vast majority of the cattle in Canada.
What is amazing is not that feedlot owners should lash out
at packer concentration, but rather that it has taken them
so long to do so. Packer concentration has not previously
been much of an an issue in Canada, but it has in the U.S.
for about a century! In 1921, in fact, the U.S. government
passed the Packers and Stockyards Act to deal with concentration
in the beef packing industry. At that time, the industry was
far more decentralized than it is today.
Almost since that Act was passed, American farmers and cattlemen
have been asking for it to be properly enforced. The latest
court battle dealing with the issue passed its first level
a couple weeks ago when a court in Alabama found in favor
of a group of cattlemen and independent feedlot operators
in a class action suit against meat-packing giant Tyson Foods.
The lawsuit, like several others still underway, was launched
in frustration at the government's refusal to enforce the
Act as some cattlemen desired.
Canadian law does not have an equivalent of the Packers and
Stockyards Act. It does, however, have some incredibly weak
competition legislation and a competition bureau that wants
no part of an inquiry into the power of the packing industry.
Canadian ranchers and packers could take a few lessons from
their American counterparts on this issue.
Canadian cattlemen are, however, going where American farmers
fear to tread in at least one instance. The president of the
Ontario Cattlemen's Association, Ron Wooddisse, took the startling
and unprecedented step for a cattle organization of suggesting
that Canadian ranchers should consider single desk selling
as a means of countering the market power of the meat packers.
In doing so, he sounded more like a Canadian Wheat Board promoter
than the proverbial redneck cowboy. (Don’t expect much
support in Alberta for this suggestion, as Alberta's government
despises the CWB.)
Wooddisse commented on the lack of ranchers' power in the
current situation, which sees 90,000 producers competing to
sell their product to four meat packers. In doing so, he was
acknowledging an obvious economic reality: farmers' market
power has dwindled as their suppliers and customers have consolidated
and gained near monopoly control over the industry.
Wooddisse shied away from the other controversial option
that could be examined – that of supply management.
In a market where cattle cannot be exported, shrinking the
supply to meet the domestic demand is inevitable. Some form
of supply management could see that a smaller beef herd at
least generated decent returns.
While Canadian cattlemen are shaking up their laissez-faire
roots with talk of single desk selling, they are not yet prepared
to talk about supply management. Instead, they are still clinging
to the hope that American and world markets will soon reopen
and governments will keep coughing up cash until that happens.
A bold few are even still predicting that we can prosper when
(if) that happens.
Whatever the future might bring, Canadian ranchers need to
keep thinking outside the box. Packer concentration and captive
supplies are critical issues. Now that we appear to have recognized
it, we should take steps to deal with it. And we should look
at all options.
© Paul Beingessner, email@example.com
. The author is a columnist, transportation consultant and
third-generation farmer in Truax, Saskatchewan.