BRIEF FROM THE SASKATCHEWAN
CATTLEMEN’S ASSOCIATION
Thank you for the opportunity to present our views on a number of
issues important to the cattle industry in Saskatchewan.
The Saskatchewan Cattlemen’s Association (SCA) promotes the well
being of all production sectors of the Saskatchewan beef cattle industry,
including cow-calf, backgrounding and feedlot operations. The SCA’s main policy
priorities are:
1. Protecting the existing cow herd and cattle feeding infrastructure
2. Reducing barriers to business
3. Advancing market opportunities and strategies
4. Sustaining effective research and development capacity
Three topics I would like to raise today:
1. Research and Development
Currently, a very small portion of research dollars is directed to
the livestock sector and an even smaller portion to the forage and cattle
industries. Any long term strategy for sustainability, profitability or growth
is built on applicable research and development funding. In order for
Saskatchewan’s cattle industry to remain competitive, funding needs to support
applicable research that will maintain and grow the industry in the future.
A recent research project by Dr. John Cranfield, “Evaluating the
Economic Benefits from the Canadian Beef Check-off”, evaluated the economic
impact of investing in marketing and research activities. The analysis showed
that Canadian cattle producers gain net economic benefits from investment in
marketing and research activities. Specifically, between 2005 and 2008 the
benefit-cost ratio (BCR) associated with investment of producer check-off
dollars in marketing and research activities grew from 7:1 to 11:1, with an
average of 9:1 over this time period.
This means that on average from 2005 to 2008, every check-off
dollar invested in marketing and research activities earned $9 for Canadian
cattle producers.
Subsequent analysis showed there has been under-investment of
check-off dollars in marketing and research. Results show that investing one
additional dollar in marketing and research activities returns between $9 and
$15 in additional producer benefits. Had investment been optimal, the return to
this marginal investment should have yielded one additional dollar in producer
benefits. This means there has been under-investment in marketing and research
activities, and investment in these activities should increase in order to
maximize producer benefits. Moreover, the extent of this under-investment has
been larger for research activities than for marketing activities.
2. Redesign Business Risk Management
Current risk management tools were developed in an era of chronic low
incomes in the grains and oilseeds industry. We are in a new era of more
profitable agriculture driven by strong foreign demand and a rapidly growing
bio fuels industry. Within this new environment, price volatility has become
the main risk for the livestock industry and a significant risk for the grains
and oilseed sector as well.
Currently, a price and basis insurance program is available to
Alberta cattle producers. This program is not linked to cost of production but
rather the futures market. Although it may require some tweaking, it could form
the basis for a national cattle risk management program. Currently,
Saskatchewan Cattlemen’s Association and Canadian Cattlemen’s Association
policy support this objective.
Federal and provincial governments’ investments in the current crop
insurance programs are a necessary and important part of the risk management
strategy for the grains and oilseeds industry. However, we must be very careful
to ensure the design of the program does not negatively impact the growth and
development of the cattle industry. Both sectors compete for the same land but
are not treated equally in terms of government dollars paid out to that sector.
3. Redesign Agri Stability
Where do the funds come from to fund the above programs? Perhaps
support for Agri Stability should be reduced. Programs before Agri Stability (CAIS,
CFIP, AIDA) were developed for disaster mitigation. During the years of chronic
low income, they were enhanced to provide income support. Perhaps it is time to
return the program to its original intent, disaster mitigation, and reduce the
burden on governments’ treasuries.
In summary, the Saskatchewan Cattlemen’s Association would like to
see beef cattle and forage research given a higher priority to ensure the long
term growth of the industry. And the business risk management tools need to be
redesigned to address the risks in the cattle industry.