Feeder association lends edge

Times Contributor 

 

Remaining competitive and sustainable in the cattle production industry has become more challenging over the past 10 years. 

Don Wegener of the Wheatland Feeders Co-operative Association (WFCA) said one business advantage cattle producers can employ is to belong to a feeder association. 

“It is a definite benefit to producers,” said Wegener.”We have been in the area for 25 years and have provided service to over 500 paid members. The system works really well.” 

Feeder associations primarily offer cattle producers a co-operative financing source, under the Feeder Associations Loan Guarantee Program. Membership provides leverage through membership numbers that gain a loan for individual farmers at prime plus ¼ per cent interest rate, with a 15 per cent government guarantee. 

Farmers who are at least 18-years-old, reside in Alberta, own or lease land, and are approved by a local feeder association are eligible for financing. 

The purchase price of the cattle is provided by the loan, less a 5 per cent pooled security deposit.  The associations’ pooled security deposits give significant protection for the lender against loan default and in turn, increase the prospects for cattle producers in securing loans. 

The contract between the individual feeder association member and the local feeder association is for a term of one year or less for feeder steers and heifers, and 120 days or less for feeder cows. 

New feeder association members can have up to $100,000 worth of livestock purchased by the feeder association on their behalf. After six months, feeder association members are eligible to obtain financing for up to $500,000 worth of livestock. 

New members to the program may have to accommodate a change of mindset regarding ownership, as they place the local feeder association brand on the cattle they feed and produce, as well as registering the association name on the cattle at the time of sale. This ensures payment is made to the local feeder association, who then credits sales to the member’s individual account. The day-to-day decisions on feeding, management and marketing are left with the individual producer and the profit for their effort is still theirs, after their membership accounts are paid. 

Benefits of belonging to an association are the low interest rates, better odds at securing the loan, financial administration of the loan and maintenance of financial records, consults with beef inspectors, input into industry issues and services, contact and networking opportunities with other organizations and producers in the province, and a way to collectively give back to the community.

WFCA is one of 51 feeder associations that belong to the Feeders Association of Alberta (FAA), which also puts the power of membership to work in the role of advocating for supportive government policy and regulations. 

Their advocacy role was addressed at the April 2013 Standing Committee meeting for Alberta Economic Futures. FAA had asked for an update and increases to the Feeder Associations Loan Guarantee Program. 

“We have had a number of meetings with them. My recollection is that this program is something like 70-years-old. You’re also correct that even though we’ve been guaranteeing these loans to feeder associations, who then in turn assist, you know, local farmers to buy cattle…I think there have only been a couple of instances over the years where those guarantees have actually been called on; so it’s been a very, very effective program and done a lot of good helping farmers get into the business and buy stock. But any program that’s that old, probably deserves to, you know, have a review done and some consideration as to how the industry has changed, how the marketplace has changed, and we certainly are open to that kind of a discussion,” said Minister of Agriculture Verlyn Olson, in reply to a request for future increases to the program.

The FAA also gives back to the rural community. Every year, at their annual convention in January, they hold an auction in support of STARS ambulance, which is an important part of farm safety for rural communities. This year they raised $31,190, which brought their overall contribution to STARS to $381,791. 

Weneger said anyone in the Wheatland area interested the program, can get more details by calling him at 403-934-3947 and arranging an appointment. Wenegar expressed optimism that this year could show good gains for cattle feeders and he hopes to see more cattle moving to market.