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Canadian Packer Profits

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Jason

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Agman previously you said you would be helping out some Canadian counterparts to help organize orderly marketing.

Maybe you have had a chance to study some Canadian packer profits?

Randy seems to take exception to my asking that any ventures here be sound business plans. He claims obscene profits from Cargill and Tyson, but no one is saying actual numbers.

The boxed beef price in the US would be the starting point but all expenses would have to be deducted. Transportation costs are much higher with recent fuel rises, wages haven't gone down and neither have utility costs.

Any insights?
 

rkaiser

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You're on a roll now Jason.

"Randy seems to take exception to my asking that any ventures here be sound business plans. "

That is certainly what I said now isn't it. :roll: :roll:

I have asked the question about packer profits of agman myself Jason, and would truely like an opinion other than yours.

I guess you can;t take the word of a man who was probably the best CCA manager this country has ever know eh. Is Charlie Gracey simply another packer blamer whiner in your books Jason?
 

Jason

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I don't know the man. I do know Agman has predicted accurately cattle prices and trends much ahead of the pack.

I don't know what your problem is Randy you seem very bitter and upset if anyone dares to say things are not as black and white as you say they are.

I tend to sit back and reserve judgement before I jump, you have jumped all over me several times and then claim I am only supportive of the big boys. I question everything equally.

If you can provide me some numbers that show the big boys are raping the Canadian producer I would like to see them. Just because its easy to take shots at them doesn't mean it is true or warranted. On the other hand maybe they are. If they are there should be some proof.

I know what price I can get for freezer beef, what it costs to get it there, and how much I can move. I also know it is a lot easier to call a packer and set up a delivery time and move a pile at once.
 

agman

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Jason said:
Agman previously you said you would be helping out some Canadian counterparts to help organize orderly marketing.

Maybe you have had a chance to study some Canadian packer profits?

Randy seems to take exception to my asking that any ventures here be sound business plans. He claims obscene profits from Cargill and Tyson, but no one is saying actual numbers.

The boxed beef price in the US would be the starting point but all expenses would have to be deducted. Transportation costs are much higher with recent fuel rises, wages haven't gone down and neither have utility costs.

I am all for new ventures that are properly managed. History and my own experience have taught me that it is much easier to raise money and build a new facility than it is to sustain profitability. Some of these ventures will not last five years. Many will be out of existence in ten years.

Canadian packer profits are high at the present time. But these situations are short term abberations just as record profits were in the U.S. in 2003 and the first-half of 2004. The best business plan will fail because of lack of good management.

Which of the new ventures in the U.S have been profitalbe? One of the newest ventures is already in trouble. I forwarned people on this forum to do the proper due dilligence into ownership and management.
 

Maple Leaf Angus

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Jason said:
If you can provide me some numbers that show the big boys are raping the Canadian producer I would like to see them. Just because its easy to take shots at them doesn't mean it is true or warranted. On the other hand maybe they are. If they are there should be some proof.

No one will be able to prove to you what you don't want to believe. Give your head a shake, Jason.
 

rkaiser

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:roll: Have to chuckle about your reserved judgement Jason. What the heck to you think I went all balistic about. I don't like the fact that the packers are making enormous profit in a dysfunctional marketplace. Does that make me a blamer and a whiner like you have said.

Why don't you ask your ABP rep to give you a profit picture for Cargil and Tyson, or talk to someone at Can Fax. It would be ridiculous for me to put a number up because your reserved manner would flip and you would tell me that I know nothing and can only "blame the packers". Our marketing team sells conventional beef as well as our own, and the price lists are available for myself whenever I request. Pretty simple math, but obviously not the math that you use.

When you are talking to those folks at ABP, why not ask them what they think of the Cargil takeover of Better Beef. I hear they have some major concerns and are preparing a challenge of their own.
 

Jason

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rkaiser said:
: It would be ridiculous for me to put a number up because your reserved manner would flip and you would tell me that I know nothing and can only "blame the packers". Our marketing team sells conventional beef as well as our own, and the price lists are available for myself whenever I request. Pretty simple math, but obviously not the math that you use.

Try a number and see. You don't have the numbers because they are all speculation. All we can deduce is what they pay (80 cents right now) and what they possibly sell it for. Remember the beef sent to the US doesn't always fetch the published boxed beef prices there. The buyers in the States know Canadians have to move this product.

The gross margin from retail back to live seems high. What are the costs?

Agman has just said new ventures are more than likely doomed to fail. Not great news, but reality.

A $2/hr increase in wages at a plant the size of Cargill in High River adds $10 to the cost of 1 carcass. What does a 200% increase in utilities add? How about a 100% increase in the cost of transport? How about offal that used to fetch $200 and now has to be disposed of at a cost of roughly $50 per carcass?

Read the reports that came out in 2004 and tell me that allowing the 2 major plants to take profits and get the cattle moving was worse than shutting them down.

Fall 2003 was one of the strongest calf runs in recent history. If the packers had been closed more ranchers would be in trouble now.

Go back and read the farm income sheets, ranches and farms in Canada were in trouble before BSE. Most rely on off farm income to survive.

I don't know if I will be able to ride this one out or not, but I am in better shape this year than last. If I survive it will be because of hard work and watching my pennies, if I don't it will have nothing to do with what profits the packers made. The cattle in my control are marketed when I feel it is best, that is reality.
 

rkaiser

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If the packers had been closed we would have no industry now.

Where the heck do you get the idea that I wanted any packers shut down?

Like I said before Jason, your knowledge would be an asset if you were able to do anything but defend the packers.

Of couse producers in this country were in trouble before BSE. Now you tell me why that was. I say skinnier margins for feeders led to lower prices for primary producers. Tell me how I am wrong there. I would love to keep this up all day Jason, but my work in the office is done for today and jumping back to see what you have to offer is getting old on me real fast.

Chow
 

agman

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Jason said:
Agman previously you said you would be helping out some Canadian counterparts to help organize orderly marketing.

Maybe you have had a chance to study some Canadian packer profits?

Randy seems to take exception to my asking that any ventures here be sound business plans. He claims obscene profits from Cargill and Tyson, but no one is saying actual numbers.

The boxed beef price in the US would be the starting point but all expenses would have to be deducted. Transportation costs are much higher with recent fuel rises, wages haven't gone down and neither have utility costs.

Any insights?

Fed cattle packer margins in Canada are approximately $65.00 U.S. per head at the current time.
 

agman

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Jason said:
rkaiser said:
: It would be ridiculous for me to put a number up because your reserved manner would flip and you would tell me that I know nothing and can only "blame the packers". Our marketing team sells conventional beef as well as our own, and the price lists are available for myself whenever I request. Pretty simple math, but obviously not the math that you use.

Try a number and see. You don't have the numbers because they are all speculation. All we can deduce is what they pay (80 cents right now) and what they possibly sell it for. Remember the beef sent to the US doesn't always fetch the published boxed beef prices there. The buyers in the States know Canadians have to move this product.

The gross margin from retail back to live seems high. What are the costs?

Agman has just said new ventures are more than likely doomed to fail. Not great news, but reality.

A $2/hr increase in wages at a plant the size of Cargill in High River adds $10 to the cost of 1 carcass. What does a 200% increase in utilities add? How about a 100% increase in the cost of transport? How about offal that used to fetch $200 and now has to be disposed of at a cost of roughly $50 per carcass?

Read the reports that came out in 2004 and tell me that allowing the 2 major plants to take profits and get the cattle moving was worse than shutting them down.

Fall 2003 was one of the strongest calf runs in recent history. If the packers had been closed more ranchers would be in trouble now.

Go back and read the farm income sheets, ranches and farms in Canada were in trouble before BSE. Most rely on off farm income to survive.

I don't know if I will be able to ride this one out or not, but I am in better shape this year than last. If I survive it will be because of hard work and watching my pennies, if I don't it will have nothing to do with what profits the packers made. The cattle in my control are marketed when I feel it is best, that is reality.

All these folks who complain about packer profits will soon find out how difficult it is to sustain a profit in a packing plant. Using gross margins only shows one's ignorance of the total situation. The cost structure is much higher in virtually every instance. Thinks of all the foolish comments that have been made regarding packer and retail margins. Some of those comments defy all logic and common sense. Yet there are those who broadcast this nonsense. Most of these folks have no clue how difficult it is to make a profit in these businesses. How many of you run your business on a GROSS margin estimate? If you do it won't be long and you will be out of business. If you do not know your cost structure then it is fair to say you know nothing.
 

rkaiser

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So what kind of business do you run agman, or are you simply an expert for all to listen to. If you are so informed and in tune with business you must be very wealthy along with wise.

Do you think it impresses every one of us dumb asses on here when you make business sound so much more than it is?

Canada and the USA are two comletely different situations when it comes to live and dead cattle these days. Tell us how you came up with the 65 bucks. In fact today is a pretty good day to spout those kind of numbers since our fat price bid has held while the US has seen a drop due to the MAD COW. Show us a number when American fats were over 90 cents, and Canadians were offered less than 70.

You know what, who cares. Defending packer profits may be your game, but trying to find a way for Canadian producers to survive is mine.

We all agree that the packers actions are legal, but hell will freeze over before you can convince me that these actions have been anything but harmful to the pocketbook of Canadian ranchers.

Yes the initial problem is BSE, and then Canadian Slaughter Capacity, but competition has also been a problem, and the reason for Cargil's profit at High River today being over a quarter million dollars. Your 65 times 4000 head processed daily. Or are you going to tell me about the overhead costs and depreciation etc. etc. that haven't been accounted for in your $65.00. Lots of play in there however for the 80 cent dollar we have hey.
 

agman

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rkaiser said:
So what kind of business do you run agman, or are you simply an expert for all to listen to. If you are so informed and in tune with business you must be very wealthy along with wise.

Do you think it impresses every one of us dumb asses on here when you make business sound so much more than it is?

Canada and the USA are two comletely different situations when it comes to live and dead cattle these days. Tell us how you came up with the 65 bucks. In fact today is a pretty good day to spout those kind of numbers since our fat price bid has held while the US has seen a drop due to the MAD COW. Show us a number when American fats were over 90 cents, and Canadians were offered less than 70.

You know what, who cares. Defending packer profits may be your game, but trying to find a way for Canadian producers to survive is mine.

We all agree that the packers actions are legal, but hell will freeze over before you can convince me that these actions have been anything but harmful to the pocketbook of Canadian ranchers.

Yes the initial problem is BSE, and then Canadian Slaughter Capacity, but competition has also been a problem, and the reason for Cargil's profit at High River today being over a quarter million dollars. Your 65 times 4000 head processed daily. Or are you going to tell me about the overhead costs and depreciation etc. etc. that haven't been accounted for in your $65.00. Lots of play in there however for the 80 cent dollar we have hey.

After you buy into a new plant and understand even the basics of their cost structure then we can discuss this issue. If you buy-in make certain you have alot of cash in reserve. You will need it for a further infusion of funds to keep the facility afloat. That is the history of these new plants. With the right management they will eventually succeed. The problem is the lack of good management expertise. Do you really believe those who exited the market did so because they tired of making too much money?

I am not defending packer profits. However, it is readily apparent your knowledge level in that area is sorely lacking. There is a vast difference between short-run excessive profits and long term profitability.
 

rkaiser

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By short run excessive profits, are you refering to the Canadian situation.

You are right about my knowledge about the packing industry Agman. And I will not be investing in a plant myself. We have our product custom killed, and would never entertain the idea of owning even a portion of a plant. Packing and processing requires high volume to be profitable, and I agree that most plant proposals will fail. The BIG C paln is for very high volume, and investment from all Canadian Producers in a Right Wing competitve corporation to create competition, and look beyond the American consumer for sales.

As far as long term viability. Excessive profits like those made in Canada over almost two years will guarantee long term viability for Cargil and Tyson for year to come.

While we cry a river over watching these profits while our farms burn up equity trying to survive, we have to listen to you cry the river full of reasons the packers need these profits to stay afloat. Some sort of stability is all I would ask, if I could ask.

I guess Cargil is one of the largest corporations in the world for reasons other than the packing industry which you say is so very hard to deal in.

If my posts make me a total fool when it comes to the packing industry Agman, tell me, which words have you ever posted that show anything but ignorance towards the production end of the beef industry.

Whether your dear Cargil and Lakeside survive or not, tell me how you think the producers of America and Canada are supposed to. Should we stand back and watch Cargil buy out Better Beef in Ontario, and then maybe Tyson foods at Brooks? Should we just go out and feed our cows, and leave the rest up to experts like you?
 

agman

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rkaiser said:
By short run excessive profits, are you refering to the Canadian situation.

You are right about my knowledge about the packing industry Agman. And I will not be investing in a plant myself. We have our product custom killed, and would never entertain the idea of owning even a portion of a plant. Packing and processing requires high volume to be profitable, and I agree that most plant proposals will fail. The BIG C paln is for very high volume, and investment from all Canadian Producers in a Right Wing competitve corporation to create competition, and look beyond the American consumer for sales.

As far as long term viability. Excessive profits like those made in Canada over almost two years will guarantee long term viability for Cargil and Tyson for year to come.


While we cry a river over watching these profits while our farms burn up equity trying to survive, we have to listen to you cry the river full of reasons the packers need these profits to stay afloat. Some sort of stability is all I would ask, if I could ask.

I guess Cargil is one of the largest corporations in the world for reasons other than the packing industry which you say is so very hard to deal in.

If my posts make me a total fool when it comes to the packing industry Agman, tell me, which words have you ever posted that show anything but ignorance towards the production end of the beef industry.

Whether your dear Cargil and Lakeside survive or not, tell me how you think the producers of America and Canada are supposed to. Should we stand back and watch Cargil buy out Better Beef in Ontario, and then maybe Tyson foods at Brooks? Should we just go out and feed our cows, and leave the rest up to experts like you?

As far as production agriculture I have a lifetime invested in this business just as I expect you do. The difference is I have taken every opportunity to learn what makes things tick upstream-all they way to consumers. I work with every segment that comprises the beef industry. There are very few amongst us that can make that statement. I view that as a blessing. You learn more working with people than against them. Unfortunately too few people in agriculture who know anything beyond their level of production, yet they complain about upstream businesses which they know nothing about. So who is better off, me or them, you tell me.

Misinformation is the enemy of any business and no sector of agriculture is more misinformed than those at the producer level. Some of this is of their own making as they refuse to learn, rather they choose to blame others. Those that are unwilling to learn will soon perish. Those that are willing to learn can; the opportunity is there each day. You have to decide which group you want to join. I learned at a very young age that complaining accomplished nothing. As such I do not waste time complaining or associating with complainers. There is too much to learn and too many bright and successful people who are willing to teach if you are just willing to listen. Ironically these types of people don't complain either-they just get it done.
 

rkaiser

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Now it's time for Philosphy is it agman. I will not disagree with you about learning, but your judgement of people who sometimes have very good points disappoints me.

What makes you think you know so much that you can run people down for efforts that you yourself do not understand.

It's been a very easy offence for you, and some of the people who trust you, to use the word blamer, or whiner. There may be misunderstanding, but adding complexities to issues like you do does not make you anything but an egotist.

Life is pretty simple Agman, and we humans including yourself, are only a small step above a dog or a cow. All the learning we do will be less than someone else has done.

Business is also fairly simple, and fortune has as much to do with business as knowledge most of the time.

All this talk about packer profits is fair conversation. It is not blaming in most cases. It is trying to understand how something could be so terribly out of balance. (Especially in Canada these last 2 years)

I wonder what all of these minds you talk of that (GET IT DONE) in Canada are getting done. Or are Canadian producers and industry leaders all blamers and complainers Agman. There are a few bright minds up here getting it done on the backs of someone down the line, but overall this countries beef industry is a joke.

Why not share some insight into what the industry needs rather than spend your time waiting to identify or judge another uninformed misguided soul, or, your usual defense of everything the packers of this continent do.

I know you already know this but my customers are housewives, iron chef's and basic consumers as well. Our business is small with 12 to 15 head killed per week, but it has taught me a thing or two about the business of beef, and it isn't all about defending the mutinationals from blaming inept farmers who do nothing but blame.

I imagine your life is a busy one and ranchers.net is only a place to vent and sometimes be entertained, however your role here has been defined agman as the defender of packers and I have seen little else in the way of offered knowledge from the life of learning that you boast.
 

agman

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rkaiser said:
Now it's time for Philosphy is it agman. I will not disagree with you about learning, but your judgement of people who sometimes have very good points disappoints me.

What makes you think you know so much that you can run people down for efforts that you yourself do not understand.

It's been a very easy offence for you, and some of the people who trust you, to use the word blamer, or whiner. There may be misunderstanding, but adding complexities to issues like you do does not make you anything but an egotist.

Life is pretty simple Agman, and we humans including yourself, are only a small step above a dog or a cow. All the learning we do will be less than someone else has done.

Business is also fairly simple, and fortune has as much to do with business as knowledge most of the time.

All this talk about packer profits is fair conversation. It is not blaming in most cases. It is trying to understand how something could be so terribly out of balance. (Especially in Canada these last 2 years)

I wonder what all of these minds you talk of that (GET IT DONE) in Canada are getting done. Or are Canadian producers and industry leaders all blamers and complainers Agman. There are a few bright minds up here getting it done on the backs of someone down the line, but overall this countries beef industry is a joke.

Why not share some insight into what the industry needs rather than spend your time waiting to identify or judge another uninformed misguided soul, or, your usual defense of everything the packers of this continent do.

I know you already know this but my customers are housewives, iron chef's and basic consumers as well. Our business is small with 12 to 15 head killed per week, but it has taught me a thing or two about the business of beef, and it isn't all about defending the mutinationals from blaming inept farmers who do nothing but blame.

I imagine your life is a busy one and ranchers.net is only a place to vent and sometimes be entertained, however your role here has been defined agman as the defender of packers and I have seen little else in the way of offered knowledge from the life of learning that you boast.

Evidently you are not knowledgeable enough to discern that I discuss many subjects that never involve packers. My defense of packers is against misinformation-nothing more. Some people choose to learn from it while you choose to complain. If you think you can refute what I post on any subject please have at it.
 

rkaiser

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Evidently you don't want to discuss any of the issues that I talkd of in my post, just want to call me a complainer. And ask me to come into your world which I am not arguing you know a bit about.

So you like to show your knowledge in areas you study Agman, is that supposed to impress me.

Get off your high horse for a minute, and tell me which religion you follow that allows you such judgement.

Want to keep trading insults all night? Call me a complainer or a blamer again.
 

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I think the only fair way to criticize packers is to look at year end returns and get a fix on costs. Then you can equate that to cost per head. Could also be tracked on a monthly basis, but info is hard to get from packers be cause every thing is confidential. However, I would think that up in Canada they would look at income records for tax purposes. I think we need a uniform taxing code through out the world or all our US plants will move out. Profits at the plant should be able to be accurately quoted, however, since ownership of the meat is retained through the marketing chain it is possible to hide profits through packer confidientially. Personally feel that most of the hidden profit comes from secondary wholesale market. This is where the "jobbers" really take advantage of the higher quality meat. Don't know whether all the jobbers are mafia or not, but bet some of them are still around, especially around Chicago. Chicagoians can't even get a drink of water without paying off the mafia. So I feel all the price paid by consumers is not reflected back into the live cattle price.
 

rkaiser

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:) It's unfortunate that yesterday turned into a name calling nightmare.
I take full responsiblitity for my part in it. I never could handle being labeled and fight back with similar weapons in the all too typical human fashion.

I don't understand why there can not be logical converstaion about the excessive profits(which agman himself admits) are going on in Canada in the packing industry.

I contend that the economics behind this are not that complex.

1. The consumer does set the retail price. This price is based on demand and to a certain extent quality.

2. The US consumer generally sets the price for most North American products just simply because of volume of purchase.

3. This US consumer has set the price of North American beef throughout this BSE (Bull **** Economic) situation. This price may have been curtailed for a month or two following the border closure in Canada, but has been THE price ever since the opening of the border to boxed beef.

4. All of the economic predictions and evaluation done by folks like agamn are valuable when a market is functioning properly.

5. BSE Bull **** Economics has thrown all talk of supply and demand out the door.

6. The Canadian producer was locked out of a major part of the industry by this ridiculous event.

7. Everyone has their own excuse for the border closure but there is simply no excuse that relates to human health.

8. Every link in the beef production chain above the Cattle producer has taken advantage of this situation handed to them on a silver platter, and to their credit as business people have attacked any suggestion that would change these profitable times.

9. Cattle producers who speak out are branded blamers and complainers.
 

agman

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cedardell said:
I think the only fair way to criticize packers is to look at year end returns and get a fix on costs. Then you can equate that to cost per head. Could also be tracked on a monthly basis, but info is hard to get from packers be cause every thing is confidential. However, I would think that up in Canada they would look at income records for tax purposes. I think we need a uniform taxing code through out the world or all our US plants will move out. Profits at the plant should be able to be accurately quoted, however, since ownership of the meat is retained through the marketing chain it is possible to hide profits through packer confidientially. Personally feel that most of the hidden profit comes from secondary wholesale market. This is where the "jobbers" really take advantage of the higher quality meat. Don't know whether all the jobbers are mafia or not, but bet some of them are still around, especially around Chicago. Chicagoians can't even get a drink of water without paying off the mafia. So I feel all the price paid by consumers is not reflected back into the live cattle price.

You make a very valid point regarding jobbers. That is where I see alot of consolidation coming. There are too many middle men in the beef and meat distribution chain. What you need to understand is that jobbers sell mostly to the HR&I end of the business, not retail. This impacts restaurant prices more than retail prices.
 
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