‘Exorbitant’ CAN packer profits

[Econ101]

'Exorbitant' CAN packer profits

Packer probe finds 'exorbitant' profits

By Barry Wilson & Mary MacArthur

Ottawa, Camrose bureaus

Western Producer

December 7, 2005

Canada



A Parliament-ordered partial audit of beef packer profits in the months after the BSE crisis proves that Canada's major packing companies made "exorbitant" profits at the expense of producers, says the former chair of the House of Commons agriculture committee that oversaw the investigation.



Packers lost $40 million in the month following the announcement on May 23, 2003, that BSE had been discovered in Canada, according to a report tabled in Parliament Nov. 28 hours before the government fell and the election campaign started.



During the next 12 months, those companies made almost $600 million in net profits while the livestock industry lost billions in income and equity.



"I believe this report will verify what Canadians have long come to believe, that the packers made exorbitant profit on the backs of Canadians, not only the primary producers but certainly the consumers of Canada," committee chair Paul Steckle said as he tabled the report.



Steckle is now running for re-election in the cattle-heavy riding of Huron-Bruce in Ontario, seeking his fifth consecutive mandate as a Liberal MP.



Robert Meijer, director of public affairs with Cargill, which owns a large packing plant near Calgary, said the problem wasn't with large packing plants, but with a combination of factors from the BSE crisis, such as lost markets, closed borders and too much supply for the demand.



The report, based on evidence accumulated in confidence by Parliament-appointed auditors, deals only in aggregate numbers to avoid revealing confidential information.



It reported that during 2002, the average net packer margin per head slaughtered was $42.73. During the next 12 months after government BSE aid money began to flow, the average net margin per head soared to between four and six times the 2002 average, almost $180 per head in the first half of 2004.



Steckle said in an interview it is clear that packers manipulated the market to their benefit and it went beyond market rules of too much supply chasing too little demand.



"As tax dollars flowed to producers, packers just lowered their price to effectively receive that money on their bottom lines," said Steckle. "We have to figure out a way in future to make sure tax dollars get to the people we are trying to help. The evidence is clear that major corporate profits were being made, sometimes with the help of taxpayer dollars, at a time when farmers were losing enormous amounts."



He repeated earlier charges that the companies were profiteering, even though they were doing nothing illegal.



"I guess it was the market working and it is the way the government allows the market to work," he said. "Everyone makes as much profit as they can. But the situation is different when there is no competition on one side of the equation."



Meijer said he doesn't think anyone is surprised to hear the packers made money.



"We never denied that and in fact we worked very hard to allow the committee and its auditors to have access to as much information as possible," he said.



"At the end of the day the most important message is that there wasn't found that there was any wrongdoing. The market acted the way the market was acting and that's the way an open and free market does operate."



Steckle said the affair also shows how useless the government's competition policy is.



"We have no competition policy, Competition Bureau, in this country that means anything," he said in the interview. "I don't know why we keep it around."





More Canadian Ag news:

www.producer.com

 

[Mike]

Just for those that might wonder.......this is a picture of Jason when he read the article that Econ101 posted.

 

[Econ101]

Mike, now he has a brown nose.

 

[rkaiser]

With time folks, everything passes. Jason and SH will fight to prove Mr. Steckle wrong. The amount will be wrestled with for a little bit longer (It's election time in Canada). Everyone will resort to "It was perfectly legal" and life will move on.

What ever the amount is, it certainly helped Tyson and Cargill gain the current 85% of Canadian slaughter capacity and left them with a hefty war chest to make sure any new packer initiative struggles to gain a foot hold.

Oh and by the way Econo, the taxpayers only paid a small protion, the Canadian beef producer bore the brunt of this.

 

[Mike]

Mike, now he has a brown nose.

How's this?

[/img]

 

[Sandhusker]

They needed to do a study to tell them that? :lol:

I wonder why Tyson didn't point out that they lost more money than what they scalped Canada for in their two NW plants? :lol: :lol:

I think this shows that R-CALF is not the villan up there. Probably not anybody's favorite, but not the one gouging pocketbooks and leading your industry by the nose.

Kaiser is right, the legality if it will be the crutch and it will be dismissed. The tragic part is that Canada was set up for this debacle with their packing industry mostly US owned and with only one major customer (again, the US) for an over-produced product - and now the same setup is not only still present but even larger. It'll happen again.

 

[Jason]

$600,000,000.00 divided by $180.00 is 3 and 1/3 million head killed in 1 year.

What was the real number killed in 2004? And the $180 suggested in the article was for maybe 6 months. What was the profit level the other 6 months?

Did packers make money? You bet. Would we have been better off without them? You decide.

 

[Econ101]

$600,000,000.00 divided by $180.00 is 3 and 1/3 million head killed in 1 year.

What was the real number killed in 2004? And the $180 suggested in the article was for maybe 6 months. What was the profit level the other 6 months?

Did packers make money? You bet. Would we have been better off without them? You decide.

Just think if all that money went into Big C. Would Canadian cattlemen have been better off?

You need to ask your representative in Canada if those numbers are correct. Much of the information was "private". Do you want to bet Sandhusker on a "private" information deal?

 

[Jason]

What good would giving millions of dollars to BigC do? They don't even have a plan for a slaughter house. How many cattle would they have killed?

My question stands how many cattle were killed in Canada in 2004?

 

[Murgen]

This poll doesn't make any sense. It was not the taxpayer that paid for this profit. There was an amount that was paid to the packers through subsidies, that should not have been, but it was not the $600 million!

And I'm not siding with the packers, but will it be an outrageous amount when producers make $180/head in the next couple of years?

 

[Jason]

Read the article again, it is based on partial numbers, aggregate numbers, those the Tyson union used to say they were making $240 per head.

I will wait until better numbers are available to pass judgement.

Tyson kills 35-40% so they would have earned 210 - 240 million. What did their financials say for 2004?

A little common sence can find a closer number than an MP throwing out election slogans.

 

[Murgen]

Actually, I know Paul Steckle. He's not one bit worried about getting re-elected. He doesn't have to be, he will be re-elected.

This is an issue he cares greatly about, and I will ask for some concrete numbers. I'll see what I can dig up.

 

[fedup2]

From http://www.statcan.ca/Daily/English/050224/d050224a.htm
Since the US border remains closed to live cattle and calves, producers have responded by sending more animals to domestic slaughter. As a result, the number of slaughter cattle and calves marketed in 2004 climbed 26.2% to a record 4.4 million head. (For more information, see The Daily, February 17, 2005: Livestock estimates.)

 

[rkaiser]

Jason -

Did packers make money? You bet. Would we have been better off without them? You decide.

This is where reality hits hard. The border opend to boxed beef less than four months after it closed.

HOW DID THIS HAPPEN SO FAST?

My goodness gracious Jason. Do you really think that the USA would have sat back and watched two of their mighty packers forced to leave Canada and leave the most amazing CAPTIVE SUPPLY in the history of the beef industry in North America.

For crying out loud Jason, please admit that this salmon run thing was legal but was also very very wrong.

 

[frenchie]

I think this shows that R-CALF is not the villan up there. Probably not anybody's favorite, but not the one gouging pocketbooks and leading your industry by the nose.

.

Yeah R-Calfs just the group that prolonged it.

 

[rkaiser]

Don't get me wrong frenchie, I think that Leo and the Gang at Rcalf are about the most backassward bunch of goofs on the planet when it comes to the Canadian border issue and BSE, however I also believe that if the packer directed USDA would have seen fit to open the border to live UTM cattle at any time during thid debacle, they would have, just as they opened it to boxed beef.

Rcalf just happened to open their mouth at the right time and become the scapegoat that USDA needed. And open it wide. Like I said, backassward bunch of goofs; talking about food safety etc. Makes me sick.

STAAAY Focused Rcalf. Canadian producer not enemy. Focus of western governments on communist business approach of mutinationals - Enemy!

 

[frenchie]

Don't get me wrong frenchie, I think that Leo and the Gang at Rcalf are about the most backassward bunch of goofs on the planet when it comes to the Canadian border issue and BSE, however I also believe that if the packer directed USDA would have seen fit to open the border to live UTM cattle at any time during thid debacle, they would have, just as they opened it to boxed beef.

Rcalf just happened to open their mouth at the right time and become the scapegoat that USDA needed. And open it wide. Like I said, backassward bunch of goofs; talking about food safety etc. Makes me sick.

STAAAY Focused Rcalf. Canadian producer not enemy. Focus of western governments on communist business approach of mutinationals - Enemy!

Scape goat or not ..they are lower than cow crap beneath my boots..

 

[Sandhusker]

Don't get me wrong frenchie, I think that Leo and the Gang at Rcalf are about the most backassward bunch of goofs on the planet when it comes to the Canadian border issue and BSE, however I also believe that if the packer directed USDA would have seen fit to open the border to live UTM cattle at any time during thid debacle, they would have, just as they opened it to boxed beef.

Rcalf just happened to open their mouth at the right time and become the scapegoat that USDA needed. And open it wide. Like I said, backassward bunch of goofs; talking about food safety etc. Makes me sick.

STAAAY Focused Rcalf. Canadian producer not enemy. Focus of western governments on communist business approach of mutinationals - Enemy!

Bullard has said the exact words "The Canadians are not our enemies".

 

[Econ101]

What good would giving millions of dollars to BigC do? They don't even have a plan for a slaughter house. How many cattle would they have killed?

My question stands how many cattle were killed in Canada in 2004?

I would much rather have seen Cargill and Tyson close their business operations in Canada and head south instead of the Canadian taxpayer subsidy to these companies and then watch them rape the Canadian ranchers. 600 million could have bought out these two market manipulators' facilities and made the packer's grip on Canadian captive supply lessened.

Why do you have to let someone else think for you all the time, Jason?

 

[frenchie]

Don't get me wrong frenchie, I think that Leo and the Gang at Rcalf are about the most backassward bunch of goofs on the planet when it comes to the Canadian border issue and BSE, however I also believe that if the packer directed USDA would have seen fit to open the border to live UTM cattle at any time during thid debacle, they would have, just as they opened it to boxed beef.

Rcalf just happened to open their mouth at the right time and become the scapegoat that USDA needed. And open it wide. Like I said, backassward bunch of goofs; talking about food safety etc. Makes me sick.

STAAAY Focused Rcalf. Canadian producer not enemy. Focus of western governments on communist business approach of mutinationals - Enemy!

Bullard has said the exact words "The Canadians are not our enemies".

:liar: :liar: :liar: :liar: :liar: :liar: