About Us   Current Issue April 2005 Behind the Lines Cover Story Letters Coming Events Short Takes Stories Crops Business Research Letter From Europe Rural Roots   Contact Us

COPING WITH CRISIS.... Some strategies to help you cope when times are tough For some farmers, it means having a clear game plan and sticking to it. For others, it involves paying more attention to the details, rigorously prioritizing capital expenditures and talking regularly to your bank manager. Here is how some Ontario farmers are dealing with today's agricultural woes by SUSAN MANN Even before the BSE crisis hit the cattle industry 21 months ago, Kim and Charlie Sytsma followed a philosophy of spending money on what they call the five 'Fs' on their cow-calf operation near Brockville. And sticking to that plan has enabled them to survive. The five 'Fs' are females, fathers, fencing, fertility and fit calves for sale, says Kim, who serves on the board of directors of the Ontario Cattlemen's Association (OCA). "We've been working hard at the genetics for 17 years. It's helped us weather the storm." BSE is just one of the storms that has struck Ontario agriculture in the last few years. Some have been commodity-specific, as in poultry and pork. Others have been widespread, such as the general malaise in cash crops that deepened in the last year. On their 800-acre farm in Leeds County, the Sytsmas calve out 150 cows in March and April. They grow mostly forage crops, which they use to feed the cattle. In addition to the cows, they have five Charolais and two Red Angus bulls. "You've really got to do your homework," Kim says. "Get the best genetics you can. Feed the best that you can feed. You've got to prepare those calves for market and you've got to search out your market." Since the BSE crisis began on May 20, 2003, Ontario's 21,000 beef farmers have lost more than $450 million as a result of the world closing its borders to exports of Canadian beef and cattle. That figure would have been a lot higher without government assistance, says Kelly Daynard, a former OCA communications manager. Just how do farmers manage their operation through a crisis? There are as many ways as there are farmers. For the Sytsmas, it means sticking to their plan and to the five 'Fs.' For fathers, they shop for Beef Improvement Ontario-tested bulls from across Ontario. "We really don't care where the bulls come from so long as they have really good genetics," Kim says. In 2004, the Sytsmas expanded their herd to offset rising costs for hydro, insurance and fuel. "We bought good young cattle that will be in the herd for the next 10, 12 maybe even 14 years from now," she explains. The cows came with a genetic story behind them. "They cost a little more than the average sale-barn cow, but they will last longer and they'll pay for themselves quicker." Their fertility plans include both the land and the cattle. They vaccinate their cows with a live vaccine before they go out to be bred. And they use the best minerals and feed they can give them. Land is fertilized by moving the cattle feeders every day so the cows spread the manure themselves. In addition, they use commercial fertilizers on the hay land because they feel they get out what they put in. They've also been working at fencing the farm so they can move the cattle around to different pastures. For example, their son Will bought an 80-acre farm last year that didn't have any fences. After putting up some fencing, the Sytsmas walk their cattle the two miles to that farm so they can graze. About a mile-and-a-half in the opposite direction, they rented a 250-acre farm where they also put up fencing. After spending a week at that location, the cattle are on the home farm for three weeks and then they go back again. The Sytsmas believe they get more bang for their buck by putting up fencing instead of buying machinery to haul the hay to the cows. "We let the cows walk to the grass," she explains. The calves are raised under the Source Qualified Ontario Calves (SQOC) program so the age and source are verified. A feedlot buyer also has access to the birth date. The Sytsmas guarantee their calves are dehorned and castrated and the buyer knows what they used for vaccinations and when that was done. Calves are vaccinated twice, once in the spring and once in the fall. The SQOC program is run by Beef Improvement Ontario (BIO). Buyers can check the database on the BIO Web site to find the calves' sires, birthdates, vaccination, dehorning and castrating protocols. To background the calves, the Sytsmas give them a simple ration of cracked corn with a protein supplement. Generally, they market them when they reach about 650 pounds. For the past number of years, they have sold their calves at Cookstown. "We sell at vaccinated sales, preferably at a SQOC sale." On Nov. 5, 2004, there was a SQOC sale at Keady, near Owen Sound, and an empty truck going in that direction was available so they loaded 85 calves. "The sale was looking for the kind of calves we have." Kim says they did very well at the sale with their calves getting the highest prices that day. Closer attention to feeding For his part, beef feedlot operator Dale Pallister is managing his way through the BSE crisis by paying more attention to the details and rigorously prioritizing capital expenditures. Pallister farms in the south end of Grey County near Dundalk and represents the Ontario Cattle Feeders in the feedlot sector on the Ontario Cattlemen's Association board of directors. His wife Lynda and grown children Chris and Lisa are all involved in the operation. In addition, they have four full-time, year-round employees, plus two seasonal workers. They grow mainly barley, corn, hay and pasture and it's all used to feed the cattle. They farm about 3,000 acres with about 1,000 acres used as pasture. The Pallisters produce about 3.5 million pounds of beef a year with all their cattle going to an Ontario packer for slaughter. Their production is 10 per cent less than before the borders were closed in 2003. They have also paid closer attention to feeding since the BSE crisis began. "You have to know your feed costs, so we spend a lot of time doing feed testing and making sure the rations are balanced." He's also talking to his bank manager more often, probably once a month or more. "You have to be pretty open and communicate with them often," he notes. "The whole banking and agri-business community knows that when BSE hit, there wasn't anyone in the beef business who wasn't affected." Another strategy the Pallisters use is to be more aware of communication. "When you work in a family business, it's very easy to take your frustrations out on people that are around you," he says. Sharon Rounds, who grows hay and cash crops on 100 acres in Lakeside, Oxford County, and also has 18 purebred Herefords she is breeding to produce cattle for the show ring, is also no stranger to tough times. Sharon and her husband Clarence were married in 1960 and began in the dairy business. After going through low milk prices and a fire that destroyed their dairy barn in 1967, they left dairy farming and decided to set up a beef feedlot, starting with a couple hundred head of cattle. They did quite well in the feedlot business, bought more farms and undertook more cash cropping, bringing home all the feed for their cattle. By 1975, they had everything paid off and added a grain elevator to their operation. But recession and high interest rates in the early 1980s took their toll. Sharon and Clarence lost the elevator and about 580 acres of land, which they had signed as collateral for the loans on the elevator. Eventually they were able to buy the elevator back at a reduced price by both taking off-farm jobs. The Rounds also made a deal to retain the home farm of 100 acres. To get through this crisis, Rounds says she just kept getting up in the morning and putting one foot in front of the other. "I did a lot of praying and my husband and I did a lot of fighting. The frustration was just unbelievable." Sharon, a former director of the Ontario Federation of Agriculture (OFA) whose husband died in 1995, says the high interest rates forced many farmers across Canada into bankruptcy and some to suicide. One group that helped farmers at that time was the now-defunct Canadian Farmers Survival Association. They were there if farmers were being foreclosed. "They'd stand up for you at the farm gate and they'd go and negotiate with the banks and try and cut a deal for you," recalls Rounds. Collapse of Premium Pork Geri Kamenz of Spencerville also went through what he calls an "unsettling" experience in his farming career. Kamenz farms in partnership with his wife, Heather, and have one full-time and two permanent part-time employees working 1,000 acres of land plus livestock. They grow corn, soybeans, grains and hay, raise gilts in a pork production loop and have a beef cow-calf and finishing operation. Kamenz, an OFA vice-president, had been raising 3,000 breeding gilts at a time on contract for Premium Pork. "We were doing everything at our end to ensure that our farm enterprise was successful," he recalls. "It was well managed and we had a good handle on costs, labour, disease and everything else." Kamenz spent $1 million to build a pig barn and service roads to Premium Pork's specifications and started raising the gilts in October, 2000. He supplied the company with a bundle of services and was paid monthly. In 2004, Kamenz began to notice that the regular cheques from Premium Pork were often delayed. That August, he called the Premium Pork office to find out what was happening and a receptionist told him, "Oh, I guess you haven't heard. We're in receivership." Recalls Kamenz: "It was the last thing anyone expected, but it was no different than the border slamming shut and seeing the bottom drop out of prices. At that point, it becomes a crisis" After hearing this devastating news, Kamenz says he called just about anyone he could think of to get more information. "Of course, I also had my lender calling me and asking what was going on." Kamenz says his saving grace was that he had a barn full of pigs, which he was able to sell. Now Kamenz is raising 2,700 gilts in a production loop that's part of a company formed by former Premium Pork people. But he's doing it without a contract. The animals from his farm that are identified as having good productivity are sold into sow barns, while the substandard animals go to an abattoir. Spreading the risk Will Nap of Thornton in Simcoe County, who was chair of Ontario Pork's board of directors during the 1998 price crash, echoes Pallister's advice about talking regularly to your banker when times get tough. "It's very important not to hide anything from your banker." Even though pork prices recovered after two years, Nap says the crisis in the industry continued for a time after that. "After such a horrendous price decrease, you are left with large debts that need to be looked after. Of course, you have to re-mortgage or possibly extend your operating loan." Nap also agrees with Pallister's advice about reaching out and talking to people, particularly other farmers to see how they're coping, but he admits it's a hard thing to do. "Financial difficulties are a hard thing to handle. You don't know whether to share or whether you're unique." If things get really bad, Rounds says the best thing farmers can do is negotiate their own deal with their creditors. "You can go to all the lawyers and accountants you like, but they'll never get you through it unless you sit down and figure out something that you can make work." Spreading your risk is another strategy for dealing with a crisis, says Kamenz. "We're in cash crops, we're in cattle and we're in pork. For us, it has been a really good way to structure our business." The most important thing to remember, though, is not to think that it is your mistakes that are causing the problem. Farmers who are struggling during BSE aren't having difficulties because of bad management, Pallister stresses. "No individual caused this. It was something that the whole industry was thrown in to." BF © copyright 2005 AgMedia Inc.. top back How King Cole Ducks survived SARS by DON STONEMAN Ducks sold into the local ethnic markets around Toronto "are our bread and butter," says Patti Thompson, who handles most Canadian sales for Aurora-based King Cole Ducks. King Cole sells 12,000 birds a week to butcher shops serving the ethnic Chinese communities around Toronto. When the SARS crisis hit the city in 2003, tourism plummeted and the restaurants and stores in Chinatown were empty. Local sales for King Cole dropped to almost zero within a few days. Fortunately, the local market isn't King Cole's only outlet. "We have a really varied customer base and that helps a lot," says Thompson, granddaughter of the company's founder, 92-year old Jim Murbey. King Cole, which began business 54 years ago, is vertically integrated with its own feed mill, hatchery and both a provincially inspected plant and a federally inspected plant. The vertical integration was King Cole's saving grace, Thompson says. With local sales curtailed, production was funneled into the federal plant, which "worked double duty" to move market-weight birds through the barns. Production was sold outside the province and outside the country. Customers were also glad to hear that King Cole had control over both the processing and the feed mill, she says. King Cole raises 2.5 million White Pekin ducks per year, between 60 and 65 per cent of Canada's production. A duck is ready for market when it weighs about seven pounds at six and a half to seven weeks of age, and dresses out at four and a half to five pounds. Birds are mostly raised indoors, though some are raised outdoors in the summer "to give the barns a rest" and because outdoor raising is also a selling feature for some products, Thompson says. While Toronto sales were hard-hit by SARS, Vancouver and Montreal markets were also affected to a lesser degree. The company was braced for falling sales to the United States "but it was okay." It might have helped, Thompson admits, that Aurora and not Toronto is on the label of the birds sold into retail stores. King Cole sells whole dressed birds through supermarket chains such as Sobeys and Zehrs. Retail is about 30 per cent of the sales, but the Asian sales are counted as part of the food service part of the business. King Cole can't keep up with demand for ethnic delicacies, such as duck gizzards and duck legs, she says, while smoked duck breast is another hot item on the food service side. Duck sales ramp up before the Chinese New Year. "We sold 40,000 ducks within a few days," she says. BF © copyright 2005 AgMedia Inc.. top back