031159 Canadian Gov’t Details Cattle Cull Program

Calgary - The $120 million in federal aid being offered to cull older cattle nobody wants because of mad cow fears will require goodwill from slaughterhouses to be effective, Agriculture Minister Lyle Vanclief said Friday.

Vanclief said he hopes packing plants won't drop prices for slaughter cattle even further than they've already fallen because operators think the federal government will make up the difference.

"I will be very disappointed if they say, 'Now we're going to pay less and let the taxpayer pick up the rest of it,' " the minister said in a conference call from his riding office in Belleville, Ont.

But immediate industry reaction suggested Vanclief is naive to think the collapse of prices won't continue. Some said the federal proposal will create a glut of animals forced into an already-packed slaughter system.

The new aid program stipulates the animals have to be slaughtered to collect full payment.

"It's a supply-and-demand driven thing," said Will Irvine at the Calgary Stockyards. Packing plants "can drop the price to a nickel a pound, to two cents a pound, because cows have to be slaughtered if the (producer) is going to collect any money."

The value of cows and bulls over 30 months old has plunged from about $800 an animal to $180 since bovine spongiform encephalopathy (BSE) was found in an Alberta breeder cow last spring. There are no international markets for beef from older cattle, believed most likely to get the disease, which has created a backlog of animals.

Farmers across Canada send 700,000 such cull cows to slaughter annually. Almost half were processed into hamburger in the United States before mad cow disease hit.

But one of the largest slaughterhouses in Canada says it has a vested interest in treating Canadian cattle producers fairly.

"We want them to succeed since we rely on them to provide us with most of the cattle we need to operate our plant," Lakeside Packers said in an e-mail late Friday.

"This means (we) will offer a fair price for their available livestock, based on supply and demand."

Lakeside's plant in Brooks, Alta., has been handling cull cows for more than a month.

Vanclief said Ottawa will provide $120 million in base funding for a cull that would be worth $200 million if all provinces signed on. That would work out to as much as $320 per cow or bull, including a dollar a day to help offset winter feed costs.

Vanclief said he realizes the aid package won't make everyone happy, but notes the Dec. 31, 2004, slaughter deadline is a four-month extension on the original plan.

"The purpose of this is to move animals through the system," he said. "It gives 13 months for an individual to make the decision of how long they want to feed the animal and how long they want to keep it after that."

The program would cover up to eight per cent of a producer's beef breeding herd and 16 per cent of a dairy herd. There is no limit on how much could be paid out in one province.

Darcy Davis of the Alberta Beef Producers said the federal proposal has the potential to extend low prices for cull cattle through to the end of 2004.

"The problem is our slaughter capacity is jammed up with young cattle as they are more profitable," said Davis.

Alberta, home to more than half of Canada's 13 million cattle, won't take part in the federal program because of the slaughter requirement, said Agriculture Minister Shirley McClellan.

The province, which has announced $100 million in funding to deal with older animals, will on Monday announce details of its own program designed to be "market neutral," she said.

Producers would be able to apply for both programs.

The Manitoba government said it isn't sure if it will sign on.

The Canadian Cattlemen's Association was disappointed with the federal package.

"What we needed in the industry was some cash to winter the cow and let you determine when the best time is to move the animal," said president Neil Jahnke, who represents 90,000 producers.

"If the money was paid up front, then people would market their cattle at the best possible price."

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com