Letter from Saskatchewan
Disengaged farmers have created a land
where a few packers rule

By Paul Beingessner

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Saskatchewan farmer Paul Beingessner has missed only a handful of deadlines in writing a weekly column during the past eight years. He covers Canadian agriculture from a High Plains perspective. His straight-talk style informs readers about corporate influence in national and international agriculture, national ag politics on both sides of the border, and why some farmers do the things they do. Click here for more information about Paul.

TRUAX, Saskatchewan, Canada, February 17, 2005: There are some interesting parallels between what is going on in the beef industry today and the bid by a coalition of farm groups to purchase the government hopper cars. The Farmer Rail Car Coalition (FRCC) has been actively pursuing car ownership for more than a decade. From the start, the FRCC said it had several goals in mind. One was to give farmers ownership of a major transportation asset so they could have a "seat at the table" in discussions about grain transportation. A second was to ensure that there would always be an adequate car supply to move prairie grain.

The FRCC feared that grain transportation, if left to the devices of the railways and grain companies, could once again find itself in the situation that prevailed in the 1960s and early 1970s. At that time, the railways were operating a fleet of obsolete box cars, while other bulk commodities were moving in hopper cars.

In the wake of BSE, the cattle industry in Canada has had a slap up the side of the head. Since then, farmers have moaned loud and long about the system that evolved over the last several decades. In that time, with no farmer involvement in the packing industry, it came to be dominated by two major players. Cull cow slaughter left the country, and commercial meat users, like fast food restaurants, began to source their meat from other countries, since manufacturing beef wasn't available in Canada.

For the most part, Canadian farmers and ranchers were fairly happy with the situation. Calf prices were pretty good, and the American market sucked up whatever cows we threw its way. Canadian farmers and farm organizations, with the exception of the National Farmers Union, were oblivious to the concerns being expressed in the United States about the problem of packer concentration. While farmers there launched lawsuits, our industry was concentrated in even fewer hands than theirs was.

The advent of BSE showed we were living in a fool's paradise. Unknowingly, we were but one sick cow away from disaster. When it struck, the packers took full advantage of it to exploit Canadian farmers. (Before you dispute that one, note that retail prices have not moved downward to any great degree, and packers are shipping more beef than ever to the U.S.)

Nor was the situation limited to cattle. Well known sheep industry watcher Peter Schroedter recently blasted lamb processors in Canada for the "ruinous pricing policy" that "put a lot of people out of business". He said it would be "a long time, especially in the west, before producers forget or forgive the packers for the miserable pricing policy imposed on the industry after the U.S. border closed".

The hand wringing that followed eventually evolved into determination to take back the beef industry. A press release issued February 3 by the Agricultural Producers Association of Saskatchewan shows the depth of this concern. APAS President Terry Hildebrandt called for farmers to "take back control of our industry". In speaking of farmers concerns, he said, "The most common message we have heard is that producers must take ownership and control of the packing, processing, and marketing aspects of the beef industry."

It is a far cry from the hands-off attitude the beef industry trumpeted for the last several decades. It is also a far cry from the philosophy of some of the commodity groups that claim to represent growers of various crops. The debate over the Canadian Wheat Board (CWB) is a case in point.

Groups like the Western Canadian Wheat Growers and the Western Barley Growers Association have long insisted that grain marketing should be left in the hands of the grain companies, and that grain transportation should be the sole business of the railways. In that regard, they tried a couple years ago to force the farmer-controlled CWB out of its position of managing transportation logistics for Board grains. They wanted the Board to take possession of grain only as it was leaving the port terminal and entering the ship's hold.

That kind of thinking would give us a grain industry like the cattle industry - a hundred thousand small producers at the mercy of a tiny handful of grain companies.

There are many other examples where some farm groups have tied to keep farmers from controlling any part of the industry past the farm gate. Producer car loading facilities are another example. It took the BSE crisis to teach cattle producers they can't rely solely on the benevolent hand of the free market. The market just isn't that free any more. What will it take to get grain producers to realize what they've lost in the grain industry?

© Paul Beingessner (306) 868-4734 phone 868-2009 fax beingessner@sasktel.net

© Paul Beingessner, beingessner@sasktel.net . The author is a columnist, transportation consultant and third-generation farmer in Truax, Saskatchewan.