A Continuation from the August issue of Ontario Beef.
The next decade of the Feeder Cattle Co-op Program was certainly full of
challenges and changes for the industry and the Co-ops. Despite BSE and
its aftermath, and the increase of the Canadian dollar to par, and
hovering just below par for the last three years, the program still
experienced growth in the first part of the millennium.
2001-2002: As Co-op business grew, there was much discussion at
provincial meetings about the management of the multi-million dollar
businesses and it was actually agreed that all Co-ops receive Director
training. 2002 was a record year for the number of members in the
program peaking at 754. Cattle numbers climbed to 59,315 as of December
31, 2002 and it took another four years before we saw this kind of
activity again. The registration of the Co-op’s interest in cattle, by
ways of a personal money security interest, became a recommended
practice due to a court case that questioned the security of one Co-op.
2003: No one needs to be reminded of what the Industry experienced in
2003 after the announcement of BSE in May. From the program’s
perspective, meetings were held and “what if” scenarios were discussed
as program officials were busy clarifying the guarantee process.
Government support of a per-head payout was a benefit to the program and
viability was maintained among the Co-ops.
2004: This was a dull year in the program as membership dropped by 200
members and principal borrowed fell by $20 million. A very special
provision was put in place to allow for extensions beyond the 15 months
as feeding regimes were juggled to extend the finishing period in hopes
of the border reopening. Given the change in the lending environment,
the Co-ops encouraged the government to look at an increased loan level
from $125,000 to $200,000 as a means of supporting the industry.
2005: With less activity Co-ops discussed the need for costly audits and
insurance and whether amalgamating was an option. By the end of 2005,
there were two less Co-ops operating.
2006: A year of many changes for the program. Carm Hamilton retired
after 13 years as Provincial Supervisor and was replaced by myself and
John Cumming, Policy Advisor. I would love to say it was the new blood
that was successful in getting some long wanted changes to the Order In
Council on June 15th, 2006. It was welcome news to all Co-ops that they
could lend up to $250,000 per member and members could have up to four
loans, allowing them to benefit from equity gains on a smaller group of
cattle. However, one long standing policy of the program did not change;
anyone feeding less than 100 head in the previous 12 months was still
limited to up to $50,000. Prior to this change in the Order in Council,
survival of all 19 Co-ops was a concern, as a set level of activity was
needed to maintain a positive income. The other big change to the
program came via federal legislation in May 2006 that allowed for the
Advance Payment Program (APP) to be extended to livestock. It was agreed
by all parties involved in the Feeder Program, that if Feeder Finance
was not able to deliver the $100,000 interest free loans, then the
program would lose members to those administrators that could. A series
of meetings with government and lenders were held to determine if and
how we could administer the program.
2007: The Ontario Feeder Cattle Co-op Program was the first in Canada to
deliver the APP for livestock producers. First advances were done in
March 2007 for four of the Co-ops and by September all Co-ops had the
ability to offer it. To date, the Federal Government has paid out over
$1.7 million in interest on behalf of the members in about three and a
half years. APP was one feature that attracted over 180 new members to
the program, purchasing a new record of 102,774 head of cattle, with
79,952 head on inventory as of December 31st, and loans outstanding of
$55.4 million. This boost in lending put the constraint on some Co-ops
as they couldn’t accept any new members because of their allotment under
the 3rd Party Agreement was maxed and the total $80 million was fully
distributed. This led to further discussions of the pooling of funds and
a formula for distribution of loan limits. Discussions patterned those
of 1996 when the limit was $35 million.
2008: The Canadian dollar continued at, or near par, and cattle prices
and enthusiasm in the industry tumbled. Demand on the $80 million loan
limit lessened, but the Feeder Finance Committee still felt an increase
was needed.
2009: A record setting year in the life of the program for the number of
head purchased. 794 active members purchased 103,056 head. Revised
director training was supported with funds under the Ontario
Horticultural, Beef and Hog Program and was held across the province
with two Co-ops having 100% of their directors attending. With five
Co-ops lending over $5 million, Directors need to be well aware of their
responsibilities. Also in 2009, TD Canada Trust joined BMO, CIBC and FCC
as a lender to the program.
2010: This may not be a record setting year for activity, as several
members explore their options for continued involvement in the Industry.
However, it is record setting in the fact that:
- The program has never had to call on the government guarantee.
- Program has maintained six Co-ops for 20 years and 13 Co-ops for
at least the last 10 years
- There has been minimal usage of other members’ assurance
accounts and where it did happen, fraud was involved and most funds
have been paid back to members.
- The program has attracted many young producers. Over 20% of the
members are under 35 years of age.
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