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Ontario Beef Producers urged to contact political representatives   

Mike McMorris, Executive Director of the Ontario Cattlemen’s Association, said that he would encourage all of Ontario’s 21,000 beef producers to personally phone their Members of Federal and Provincial Parliaments to explain the crisis facing the Canadian beef industry.

Said McMorris, "There simply must be a compensation plan that addresses the immediate need to get the market restarted and cattle moving. Producers naturally do not want to sell and lock in a loss rather than hold on as long as possible with the hope of a border opening and a return to normal prices. No one can predict the longer term needs for compensation but it could involve unprecedented amounts. The lack of immediate funding will only make the longer-term picture more grim and the need for compensation much greater."

McMorris added that he has spoken with Minister Helen Johns in advance of the federal / provincial agricultural ministers’ meeting in Vancouver tomorrow and said he is confident that she’ll emphasize that the BSE crisis is a national problem – not a western one. OCA President Ron Wooddisse will also be travelling to Vancouver for the meeting.

Wooddisse asked farmers contacting their political representatives to stress the following points:

• The crisis is a national problem. The situation affects producers equally across the country
• The situation will not go away and in fact will get worse
• There is a danger of the beef industry infrastructure collapsing beyond the farm gate
• Across Canada, there are only about 30,000 cattle being processed weekly (down from approximately 90,000 normally). That means that the system is backing up by 60,000 head each week.
• The risk management program being discussed under the Agricultural Policy Framework is only a proposal at this stage. It is a long way from becoming a reality and will not meet the immediate financial needs of the cattle industry.
• The cattle industry is asking for temporary government assistance for cattle that were on feed as of May 20, 2003. This could be in the form of deficiency payments based on losses incurred by producers of cattle that have been marketed or will be marketed in the next few weeks.

Beef is the second largest commodity in Ontario in terms of annual farm gate receipts with a value of approximately $1.2 billion. Beef exports from Ontario to the U.S.A., in 2002, were valued at $354 million in live cattle and an additional $292 million in beef product.

Backgrounder: BSE COMPENSATION- KEY ISSUES

June 13, 2003

It appears that the federal government is concerned with the precedent that any funding for BSE through the Federal Disaster Act would set for other cases. There is a clear desire to flow funds through an existing program. Although not yet formalized, the Agricultural Policy Framework (APF) is viewed by some as the appropriate mechanism to cover losses in agriculture in situations such as this. Based on the existing crisis in the beef industry, there a strong rationale for compensation outside of APF.

1. Interim Payments

Interim payments are required in order to inject cash into a stalled market in order to keep cattle moving and prevent a much larger problem from developing over time. However, there are issues with potential repayment at year-end at time of reconciliation through final NISA calculations.

2. Caps

Current producer payment caps are far too low to be meaningful in the current situation. The possibility of any cap of funds through APF in a given year could also pose a serious flaw in the use of APF in a crisis of this magnitude.

3. Producer account balance

Under the proposed NISA, producer eligibility for funding is based on their account balance. Many beef producers have no NISA account currently and few, if any, accounts would be sufficient in this case.

4. Negative margins

The use of production margins is unlikely to provide sufficient coverage for risk in normal times, and is wholly inadequate in times like this. This is a critical issue and has been raised repeatedly by industry with AAFC. We are at a critical time and funding cannot wait on program design. On this basis alone APF is not an appropriate mechanism for funding in this situation.

RELATED ISSUES

1. Bridge Funding

There is the fund of $600 million for APF bridge funding available. However, to date the federal government has not demonstrated leadership in re-allocating these funds to the BSE crisis.

2. Trade Implications

There is concern that any funding delivered to the beef industry may become cause for a countervail initiative and/or a further delay in the opening of the US border. While these concerns may be valid, the priority now is the immediate funding to ensure protection of a national industry.

Key message: Failure of government to recognize the scope of this issue and lack of immediate funding will lead to an industry catastrophe. The future of thousands of farm families and many rural economies hang in the balance.