backEBI loses $3 million
Despite the excitement surrounding last month's amalgamation of Western Ontario Breeders and United Breeders, Eastern Breeders Inc. (EBI), at Kemptville, south of Ottawa, isn't tempted to join the party. At press-time auditors were putting the finishing touches on the breeder-owned co-operative's December 1995 year- end statements. Keith Drummond, field services manager, says losses for the year total about $3 million. He predicts EBI will break even in 1996.
Semen income plunged last summer following release of bull proofs showing number one-ranked Prelude slipped to number 89 on the Lifetime Profit Index.
Prelude was put down in July for humane reasons. Proofs released Jan. 16, 1996, brought him back to number 29. Many predict further improvement when next summer's proofs are released. If that occurs, Prelude semen, which has just been reduced from $150 to $35, may be a bargain.
Drummond says this year EBI has cut expenses by $900,000 through elimination of 17 staff positions. Both Drummond and EBI president Terry O'Gorman are optimistic that EBI's embryo transfer program will soon become another profit centre.
"Last year was our busiest ET year," Drummond says. His records show 607 donors were super-ovulated and conception rate was a respectable 62 per cent for fresh embryos and 51 per cent for frozen.
Artificial insemination (AI) services performed by EBI technicians decreased 3.4 per cent last year. "That's only about half what the decline in the cow population would be," Drummond estimates. Semen sales to on-farm tanks in Ontario and New Brunswick are up 10,000 doses during the same period. There is opportunity to boost inseminations and semen sales in the eastern counties served by EBI. Only 55 per cent of dairy animals and 20 per cent of beef cows are bred artificially. Drummond is encouraged by the number of new dairy operations coming on stream in the area.
Still, EBI needs more than this for a successful 1996. "It will depend on how well the bulls we have on our sheets sell, and what bulls we might come up with on the July round of proofs," O'Gorman says. "There's a lot of luck in having a new bull strike it rich."
EBI will also need some luck when expected changes to the province's Artificial Insemination Act are announced by Agriculture Minister Noble Villeneuve some time in the next few weeks. Villeneuve could throw open EBI's exclusive territory to competitors. -RI
DHI warns against cutbacks By DON STONEMAN
Take a look at your Ontario DHI invoice now, and imagine 50 per cent more tacked onto it.That's what Ontario's 5,000 farms on milk recording would face if provincial and federal governments withdrew their subsidies immediately, warns DHI manager Neil Petreny. Government announcements to do just that make plans to cut costs and implement technological efficiency more urgent.
Ontario DHI ran up a $16,000 deficit last year, much less than expected, on income of $12.1 million. This year's projected deficit is $470,000, even though the province and the federal government are still kicking in $1.8 million and $1.3 million respectively.
Revenue this year is predicted to be $11.2 million and expenses are likely to reach $11.7 million. DHI is looking at other sources of revenue, and Petreny points out that while there are 5,000 Ontario dairy farms on milk recording another 3,000 are not. There is a constant search for efficiency at Ontario DHI, but there isn't a lot of room for cuts.
Administration, communication, the board and delegates, and system development cost 15 per cent of the budget. Field services, which also raise revenue, account for 64 per cent of costs. This year considerable capital will be spent on portable computers to make the field staff operations more efficient.
Meanwhile, Ontario DHI and the Prairie Dairy Records Processing Centre have agreed to create a joint processing centre in Guelph involving agencies in Alberta, Manitoba, Ontario and Saskatchewan, called the Dairy Records Centre. A new entity, known as Promark Technologies, will consolidate the two record processing systems by the middle of this year and co-ordinate the participation of all four provinces in the Canadian Milk Recording Information Project, an effort by all Canadian DHI businesses to develop a single standardized core milk recording program for producers.
Record processing now takes up four per cent of Ontario DHI's budget.
Overall, said Ontario DHI chairman Chris Buchner, Brownsville, the genetic improvement industry costs Canadian dairy farmers $120 million annually and ways must be found to bring down those costs.
Here comes another checkoff
By LEE CHRISTOPHER Special to Farm & Country
HALIFAX - As cash-strapped governments reduce spending, Dairy Farmers of Canada (DFC) is looking at a national checkoff on milk production and other methods that might be available to fund dairy research.Delegates to DFC's recent policy conference in Halifax supported a resolution that put up an estimated $350,000 for a research fund immediately to show that the organization is serious. This money will come from savings on 1995 operating expenses.
The one-time fund will let DFC's research committee start work immediately on long-term objectives. The committee will also look for partners to advance dairy production research. At its annual meeting in July, DFC's General Council will examine a concrete proposal for more permanent funding. The organization's board of directors will develop the proposal between now and then.
In Halifax, Barron Blois of Nova Scotia, DFC vice-present, told delegates that the Canadian dairy industry needs to maintain and improve its competitive position in the face of increased trade pressures. Research can help ensure farmers have the tools they need to compete with the U.S. and Europe. While Canadians can adapt some technology developed elsewhere, some conditions, such as long, cold winters, require domestically-developed solutions.
The Canadian Agri-Food Research Council (CARC) estimated that public and private spending on dairy research in 1992 totalled $147 million, Blois said. To be technologically advanced, CARC suggested the industry set a target of $240 million annually, based on 1992 dollar values.
Getting involved directly in funding would give dairy farmers some say over what research is done, he said. DFC could look at how research results could be made directly available to farmers. One idea is to have provincial organizations publish results in their newsletters and magazines.
Earlier in the conference, federal Agriculture Minister Ralph Goodale said his department faced tough decisions in cutting $51 million from its research budget over the next three years. It has made the savings mostly by closing seven smaller research stations and consolidating operations.
He felt that this approach saved money without compromising the research quality. The department, which still has a $275 million annual research budget, is making each remaining research station "a centre of excellence".
Goodale also referred to a new government program that matches private research funds dollar for dollar. Funds available will rise every year for the next several years.
DFC's annual policy statement, developed during the conference, calls for making the program more flexible. It wants to ensure the program addresses industry priorities.
Goodale's long-term milk plan
HALIFAX - A long-term federal dairy policy, mapping out the industry's future for five years or more, has been promised by Agriculture Minister Ralph Goodale.Speaking to the recent Dairy Farmers of Canada (DFC) policy conference in Halifax, the minister said that a long-term policy "would be an asset to [dairy farmers] and to the government." It would include pricing, program and budget issues.
Goodale also invited farmers to participate in the policy-making process. "We want more than your opinions and suggestions," he said. "We want your partnership."
During a brief question and answer period, Ontario's John Core said DFC's executive members would like to meet with the minister to identify and develop policies the industry needs. Both the government and the industry are currently pre-occupied with the dispute panel set up under the North American Free Trade Agreement (NAFTA). Once that process is complete, Goodale suggested, it would be "useful if we could fix the way ahead for five years or even longer."
The NAFTA panel, hearing a U.S. complaint about Canada's dairy and poultry tariffs, got underway late January. Washington contends that Canada has no right to impose tariffs, negotiated during the last round of the General Agreement on Tariffs and Trade.
Goodale told his audience of dairy farmers that he had turned down U.S. attempts to negotiate access to the Canadian market. Canada is entitled to use the tariffs, he said. "Canada will not blink."
The government will vigorously defend Canada's position, he vowed, because the government promised to do so and "we believe we're right".
Goodale promised that Canada would not trade off one commodity to benefit another. "There will be no horse trading," he said. He also warned dairy farmers that "all Canadian economic sectors" gradually will be exposed to world competition. "It's difficult to tell what the trend is, but I think what I see as a trend is toward more trade liberalization," he said. The process won't be uninterrupted, he said. There will be detours and stops along the road. - LC
WOBI and UBI to form WUBI
It's now official. Delegates to both Guelph-based United Breeders Inc. (UBI) and Woodstock-based Western Ontario Breeders Inc. (WOBI) voted overwhelmingly late last month to merge the two units June 1, sharing books, assets and liabilities. All 62 delegates from UBI and 80 of 85 of WOBI's voted in favour of amalgamation.For now, the new corporation will be called Western-United Breeders Inc., with an interim board setting direction until June 1. By then there will be a new name and logo. Regardless of what the amalgamated unit is called, the head office will be located in Guelph.
The new chairman is Gary West, Shakespeare, past president of WOBI and current president of Ontario Animal Breeders. The vice-president is Jack Fraser, Brampton, and executive members are Wayne Somerville, Stayner, and Dave Dyment, Dundas.
"We were quite pleased to have that kind of commitment," said Steve Dolson, Atwood, Perth county, past-president of UBI, immediately after the vote. "Everyone fully understood what we were doing."
UBI goes into the amalgamation on a profitable note. Profits in 1995 exceeded $1 million for the third consecutive year, and cash reserves total $7.4 million, up from $4.8 million in 1992. Revenues last year were up $500,000 over 1994 with a 14 per cent increase in semen sales largely responsible for the revenue increase.
Two bulls played a big role in UBI's semen market. International sales of Lieutenant were $2.9 million with Linday not far behind with $2.2 million.
By comparison, WOBI barely squeaked through the last fiscal year with a profit. A deficit had been predicted. Dolson said it became evident last June when the administrations of the two organizations were merged that "we are so much the same there is no need to have two boards." He said the combined unit will provide a leadership role for the rest of Canada. "There is a great need for industry to draw together stronger than we have before."
Pressure is growing throughout the industry to make sharing agreements, he said. He hopes that Quebec will soon fall in with Ontario and the Prairie provinces with dairy herd improvement programs. Because Quebec now works with the Maritime provinces a nearly national program for dairy recording would be achieved. "These things are starting to come together. There will be a lot more of this happening over the course of two or three years," he predicts.
Dolson said AI units are looking at marketing bulls on a more national basis. He said the new Western-United organization is watching Eastern Breeders Inc. in Kemptville go through a restructuring. "We are still interested in helping them out."
There's a big challenge ahead to meet the competition from overseas, Dolson said. This became clear when the MACE conversion formulas were first used a year ago. There was also what Dolson calls "the Prelude effect". Last July, Prelude's ranking fell from number one in Canada to the 90s, almost off the scale, an indication that there was a weakness in Canada's sire-proving system. With the drop in Prelude's proof, the entire Canadian AI industry had a drastic drop in sales. Those sales are crucial to maintaining the studs in Canada, Dolson stressed. "Many of us have more than 50 per cent of sales coming from Semex."
While in terms of type, Canada is the world leader, he said, in production per cow, "it's a challenge to convince the rest of the world that balance is something they should be striving for."
Meanwhile, Prelude's ranking has improved and he is now 25th on the active LPI list. Last July, he fell to 99, almost off the scale.
Dolson doubts Prelude semen sales will recover their former lustre, in spite of the improvement in ranking and the cut in the price of semen.
"When you fall like that it is hard for people to come back. There is a tendency for people to do something different." Having said that, Dolson noted he has seen some really nice milking two-year-old Prelude daughters. "There's a lot of them out there and they calved early" and got put in the milking line at a young age. - DS