Volume 2 Issue 12 • June 7, 2010

In This Issue ...

 

Loonie falters as Bank of Canada raises key lending rate


As widely expected, the Bank of Canada (BoC) last week raised its key overnight lending rate 25 basis points to 0.5 per cent. The rate hike is the first since July 2007 and marks Canada as the first of the G8 countries to raise rates since the global economic meltdown began.

Canfax Market BriefsPerhaps less expected was that the loonie tumbled as a result, falling 0.95 of a cent to 94.88 cents US, as the central bank expressed extreme caution in its outlook, citing the increasingly uneven pace in which the global economic recovery is proceeding.

What this means in terms of future rate hikes -- July 20 is when the bank next meets – and the impact on the loonie remains to be seen. Meantime, skittish markets have momentarily cooled the loonie’s flirt with par with the greenback.

This comes even as Canada’s strong GDP growth factored into the BoC decision to raise rates and to re-establish the normal operating band of 50 basis points for the overnight rate.

Statistics Canada reported May 31 that real GDP grew 6.1 per cent in the first quarter of 2010 – the highest growth in a decade -- buoyed by residential investment and consumer spending on goods and services. That’s twice the rate reported in the U.S.

In a research note, BMO deputy chief economist Doug Porter said the cautious tone expressed by the BoC indicated the central bank was “almost bending over backward to indicate that this is not necessarily the start of a relentless campaign to crank rates higher.”

In April, the CCA President Travis Toews sent a letter to BoC Governor Mark Carney asking the bank to consider the impact of a high Canadian dollar on the cattle industry before raising interest rates ahead of the U.S.

 

Canadian Beef Grading Agency makes its mark


The Canadian Beef Grading Agency continues to be self-sustaining more than a decade after taking on the privatized delivery of beef, bison, and veal grading.

The achievements of the Agency, which marked its 14th anniversary in April, are a two-way street. In addition to the not-for-profit Agency successfully operating without government grants or funding, estimates show that privatization has saved the beef industry more than $1 million annually. This savings grows to $33 million when considered since inception, based on raw figures of the number of carcasses graded versus Agency revenue*.

In this era of increased government spending and bailouts, the ongoing success of the privatization of beef, bison and veal grading in Canada stands out. But its success is also measured by the unified approach industry achieved to structure the Agency in the first place.

Back in the early 1990’s, the government assessed that the service of grading, deemed a private good, required eventual full-cost recovery and if not, then their withdrawal from the service. Recognizing the value of a national grading system for commerce**, but unwilling to accept the vagaries of government full-cost recovery, industry came together and initiated a scheme for privatized delivery for the grading of beef, bison and veal in Canada.

In 1996, the responsibility for the delivery of beef, bison and veal carcass grading services was transferred from the government to the accredited Canadian Beef Grading Agency. The Agency structured its fees based on the government’s pre-privatization estimated fee for service to cover full costs at $1.40 per head.

However, after two years of delivery under this cost structure, the Agency was in jeopardy of losing its not-for-profit status as its bank account exceeded more than three months operating costs -- a parameter for not-for-profit -- by more than $500,000. At the direction of its board, the agency reassessed the rates and in subsequent years brought revenues in line with expenses.

Agency General Manager, Cindy Delaloye said today, the CBGA “continues to focus on its mandate to deliver cost effective, accurate, and consistent grading.”

 * without any indexing of the original government full cost recovery of $1.40 per head.
** In a modern industry such as the cattle production, processing and distribution industries there is a need for a reliable reference point to regularize the transfer of ownership and the transmission of relevant information between buyer and seller. The transactions themselves are private contracts but in our industry the language of the transaction involves two factors that must be standardized, namely ‘weight’ and ‘grade.’

 

Interest in Verified Beef Production™ (VBP) program grows


Producers continue to attend VBP workshops or take online training, as interest in Canada’s beef on-farm food safety program grows. This is due in part to equipment purchase assistance available at times in B.C., Alberta, Saskatchewan, Manitoba and Quebec.

More than 14,300 producers have now taken training in the VBP program offered by provincial VBP coordinators. Estimates reveal that this represents 35-45 per cent of beef production in Canada.

Growing Forward funding by federal/provincial governments have assisted this in all areas except Ontario, said the VBP national manager, Terry Grajczyk.

 

Improving a D grade


National Check-off funded research from the University of Guelph indicates that changing how carcasses from mature cattle are managed at the packing plant can make cow beef nearly as tender as youthful beef. Click here to read more.

 

2010 CCA National Convention and Semi-annual registration underway


Cattle producers and industry partners: circle Aug. 10-13 on the calendar. Those are the dates for the 2010 CCA National Convention and Semi-annual Meeting, being held in Calgary this year.

The convention, “Raising Optimism. Global Strategies.” on Aug. 11, is being held in partnership with the International Livestock Congress (ILC). The ILC website www.ilccalgary.com has more information about the convention and is the place to register to attend.

Click here for more information and to attend the CCA annual golf tournament and tour on Aug. 12. Opportunities for hole sponsorship for the golf tournament still exist. Please contact herbertt@cattle.ca to donate prizes.

Always a crowd favorite, the CCA’s annual BBQ, entertainment evening and live auction is on Aug. 11. All of the proceeds from the auction will be donated equally to the Canadian 4-H Council and Alberta 4-H. Donate a product, service or artwork to this important fundraising event. Download the donation form here.

Questions? Contact the CCA office at 403.275.8558, ext. 410 or email herbertt@cattle.ca. See you in August!

 
CCA Action News

Staff Contributors: Cindy Delaloye, Terry Grajczyk, Reynold Bergen
Written, edited and compiled by: Gina Teel and Tracy Herbert



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