Canadian Packer Profits

[Big Muddy rancher]

I sure would use Big C if they were a little closer to Michigan.

Big C went around the country promoting that the government charge a checkoff to biuld a packing plant. Not only on the cattle sold thru that plant but all cattle sold in Canada. I would have been alot more supportive if they had of lobbied for fast tracking of privately invested plants or proposed a producer owned plant that collected a check off on the cattle that it processed but what are other plants starting up doing paying a checkoff to their competitor.

 

[rkaiser]

I like to reply to that one with "putting your eggs in more than one basket" Big Muddy.

If the plant with a small number of big money boys, and a group of "hook space" investors goes down, maybe your other investment in a plant with huge investment spread among all producers will look pretty good. Or maybe it would be wise to simply have your investment spread around period.

Also, if the new plants starting up are afraid of competition, what good will it do the industry in general to have them around. Do these folks expect to profit from a failing industry like the ones in place, or do they want to change the landscape of the beef industry in Canada like BIG C wants to do. We already have a group of packers in this country trying to eliminate competition, ei the Better Beef buyout by Cargil.

We certainly do not expect support from all producers big muddy, and in fact have a second condition written into our plan which includes a levy on Cattle slaughtered in the BIG C plants only. I like the madatory levy myself, as it allows for volume, and size with a quicker paydown of the Government Bridge Financed loan, but hey each to their own.

 

[Bill]

If the CCA had forgotten about depending on the NCBA and the USDA to save the day and had lobbied gov't with BIG-C for a couple of mega-plants to process BSE tested beef there would not have been any talk of a check-off. Instead the CCA chose to believe that all would be well after a few months, then a few more , then after March 7.

While BIG-C was holding producer meetings around the country the CCA who was supposed to be working with the feds to find solutions was doing absolutely sweet tweet to "fast track" any new plants.

Why the heck was it up to BIG-C to lobby gov't when the CCA is supposed to be the voice of the Canadian Beef Producer?

 

[Murgen]

Bill, so what is your solution, some of us are lobbying government, some of us are trying to do more. I want to see more $ get in the hands of the primary producer, that's my goal. But, this is a funny market where it is hard to get everybody to stand together. that's why Big -C is so attractive, they get everyone together as one voice. One marketing group, yes the mandatory checkoff is socialistict, but so is the CCA checkoff. I like the idea, but will it fly, we'll see.

 

[Anonymous]

randy: "Saying that Rcalf is soley respnsible for keeping the border closed to Canadian Cattle for two years, when the packers had the door open to Boxed Beef in less than two months is a hard one to grasp."

USDA was ready to import Canadian cattle. If it was not R-CALF's injunction that kept the Canadian border closed to live cattle imports, what else was it?

randy: "Just can't stop with the blamer label can you SH."

I mention blame but I never used the term "blamer" in my last post.

Feeling guilty?

randy: "What have you chosen SH? To attack Rcalf, and anyone else who challenges the status quo?"

I have chosen to correct R-CULT's lies, point out their contradictions, and provide the facts on many of these issues. I feel producers deserve the truth as opposed to relentless baseless allegations by R-CULT.

As far as supporting the status quo, I was retaining ownership on my calves many years ago and marketing through a branded beef program. Hardly supporting the status quo.

randy: "Who would you suggest should reign in the packers from time to time?"

Before you can "reign in the packers" you have to have proof that they are doing something wrong.

Nowhere did I ever say that the packers can do no wrong. My position has been if they are doing something wrong, you need the proof, not just speculation based on the need to blame.

I believe in truth and the presumption of innocense for everyone. Just because someone has a compelling desire to blame someone does not justify making up baseless allegations.


The argument by the plaintiffs in Pickett vs. ibp was that packers were using captive supplies to manipulate markets. 75% of captive supply cattle are forward contract cattle. The plaintiffs themselves had entered into forward contracts with packers and testified that ibp had a legitimate business reason for using captive supplies. Their whole case was built around Taylor's UNTESTED theories. You can't win a case based on theories and self defeating positions such as entering into forward contracts and then suing because the packers then needed less cattle.

If you want to "reign in the packers", they first have to be doing something wrong that can be proven.



~SH~

 

[rkaiser]

I made a point about packers lining up against all other members of CBEF to oppose BSE testing for export market potential.

Are you saying that every member of CBEF is wrong and the packers are right?

Saying that the packers have no control whatsoever over market by owning cattle is a debatable issue, but not debatable with SH.

Wrong, or illegal; simply put it happens because it is allowed to happen. It may be working the way it is, but what is to say it could not work another way.

Wait until a massive over supply happens one day in the USA (I know , never will), and then talk about how packer owned cattle are not affecting price, and or affecting the right of every individual to sell because the only two buyers are in the position to blackball those who don't agree with their policy. Large producers in this country have been held hostage by this notion for 2 years in Canada. Is it fine for Cargil and Tyso to dictate the way that cattle business is done in Canada, just because of BSE?

I know you will explain this one the way you explain everything else SH, and your truth is the only truth you know, but beleive it or not there are alternatives in this world. Alternatives that may also work. Alternatives to taking a stand against BSE testing for marketing purposes. Alternatives to Massive numbers of packer owned cattle. You are the one saying these things are right, but can you not admit that there may be another way without saying that I am calling these things wrong? You prove the alternative thing yourself by not accepting the conventional market while telling everyone else that they should??????
:roll:

 

[rkaiser]

Oh yeh this border closure thing.

Every cattle producer with an iota of common sense knew that Rcalf would challenge each step that the USDA took along this road. I would think that the USDA would have known as well. Preparation has either been a lot better on Rcalf's part, or they must have a lot brighter people working for them than the USDA OR the USDA, for some reason, has no true interest in solving the matter. The latter Sounds conspiratory I know, but the former seems even more unbeleivable, does it not?

 

[don]

randy: Every cattle producer with an iota of common sense knew that Rcalf would challenge each step that the USDA took along this road. I would think that the USDA would have known as well. Preparation has either been a lot better on Rcalf's part, or they must have a lot brighter people working for them than the USDA OR the USDA, for some reason, has no true interest in solving the matter. The latter Sounds conspiratory I know, but the former seems even more unbeleivable, does it not?

it's been apparent for over a year now that r-calf was a good tool for usda to accomplish politically expedient goals and for tyson and cargill to keep the border closed so they could rape the canadian producer and bring some of the smaller packers in the states to their knees. r-calf has been outsmarted and used every step of the way. usda hasn't made more than a token effor to fight the injunctions until now. if usda and the packers have decided it's finally time to open the border because it needs to change the way the world looks at trade from bse countries or they can't keep the lid on bse in the states much longer or cargill and tyson know it's time to get back to normal business (they've milked this as hard as they can and who knows canada might start thinking for itself) r-calf will get crushed. r-calf has done more longterm damage to it's stated goals than it can fix in the next ten years. they have handed more power over to the four largest packers and have made no headway towards strengthening the hand of the cattleman in the beef industry.

 

[Bill]

Bill, so what is your solution, some of us are lobbying government, some of us are trying to do more. I want to see more $ get in the hands of the primary producer, that's my goal. But, this is a funny market where it is hard to get everybody to stand together. that's why Big -C is so attractive, they get everyone together as one voice. One marketing group, yes the mandatory checkoff is socialistict, but so is the CCA checkoff. I like the idea, but will it fly, we'll see.

Good for you Murgen. Many producers outside the traditional cattle orgs. have been lobbying and have been making progress. It is frustrating though when Gov't and the group claiming to represent 90,000 Canadian producers does not seem to be listening. Some provincial groups such as SSGA, ABP and OCA have started to question CCA's stance on some issues and have finally taken their own position.

-The US is and will continue to be Canada's most important export market but we need to quit hoping that they will do what's best for Canada and focus on the mistakes that have been made in Canada by our gov't and industry leaders.

-Laycraft needs to go, along with the inner circle at CCA. There are some very good people around that table who are not being listened to. Someone needs to answer as to why the CCA was so certain the ruling would go in Canada's favor March 7th that there wasn't even a plan B in place. The high priced advisors and lawyers CCA has in Washington either led someone down the garden path or someone wasn't listening.

- Begin testing of every OTM in Canada. Every one of them, Cargill and Tyson be damned. Set the bar where the US won't jump. Lable every package as certified BSE free along with a Maple Leaf sticker and put it in every meatcase in the world. It will bring a premium over untested American product.

-Fast track and build a mega cow plant somewhere in the Moose Jaw to Swift Current corridor. I don't care how it is funded but quit sending me those piddly gov't cheques and pool the money to build a plant that is big enough to survive the pressure Cargill and Tyson are sure to put on all the smaller plants being built. Considering the billions paid to the auto and airplane manufacterers in this country funding a couple of beef plants is not a big deal
.
-Suspend all off shore imports of cow beef. We do have enough of it around and by testing OTMs in Canada we have a valid reason not to take in untested OTM beef from any country.

-Raise the check-off and invest that money into Canadian beef promotion and expand our markets internationally. Meet the US head-on in their own country and leave them in the dust overseas.

 

[rkaiser]

don -

it's been apparent for over a year now that r-calf was a good tool for usda to accomplish politically expedient goals and for tyson and cargill to keep the border closed so they could rape the canadian producer and bring some of the smaller packers in the states to their knees. r-calf has been outsmarted and used every step of the way. usda hasn't made more than a token effor to fight the injunctions until now. if usda and the packers have decided it's finally time to open the border because it needs to change the way the world looks at trade from bse countries or they can't keep the lid on bse in the states much longer or cargill and tyson know it's time to get back to normal business (they've milked this as hard as they can and who knows canada might start thinking for itself) r-calf will get crushed. r-calf has done more longterm damage to it's stated goals than it can fix in the next ten years. they have handed more power over to the four largest packers and have made no headway towards strengthening the hand of the cattleman in the beef industry.

I could not agree more, don. I was simply trying an alternate approach with Mr. SH. A man with a wealth of knowledge but tunnel vision when it comes to challenging the packers.

Let's not forget how fast the border was opened to boxed beef in Sept. 2003. I guess that was all simply the way it was supposed to be too hey!

 

[agman]

I could not agree more, don. I was simply trying an alternate approach with Mr. SH. A man with a wealth of knowledge but tunnel vision when it comes to challenging the packers.

quote]

The tunnel vision is yours alone. You have won that prize. You are the one who is constantly complaining about the big packers. Did they cause BSE? Did they not run their plants full time to help minimize the backlog of cattle that already existed in Canada? Have they not invested profits through expansion back into the Canadian beef industry? Did small packing plants also not profit from an unfortunate and unexpected situation?

When you are already at capacity any residual supply is essentially worthless. Did your prices go to ZERO? Do you recall the hog market in the U.S. in the fall of 1998 when total supplies outstripped slaughter capacity even though some packers ran their plants on Sundays to help alleviate the backlog? The limitations of the workforce had to be considered then just as they did in Canada during the midst of the BSE crisis. Are cattle on feed totals in Canada not up 18% from last year? Does that change in supply not make a difference in the value of fed cattle?

Has it not been the big packers who have been making every attempt to reopen the border to their benefit and yours?

 

[Bill]

Has it not been the big packers who have been making every attempt to reopen the border to their benefit and yours?

What position has Cargill and Tyson held towards BSE testing in North America and Canada in particular?

 

[rkaiser]

Agman says -

The tunnel vision is yours alone. You have won that prize. You are the one who is constantly complaining about the big packers. Did they cause BSE? Did they not run their plants full time to help minimize the backlog of cattle that already existed in Canada? Have they not invested profits through expansion back into the Canadian beef industry? Did small packing plants also not profit from an unfortunate and unexpected situation?

When you are already at capacity any residual supply is essentially worthless. Did your prices go to ZERO? Do you recall the hog market in the U.S. in the fall of 1998 when total supplies outstripped slaughter capacity even though some packers ran their plants on Sundays to help alleviate the backlog? The limitations of the workforce had to be considered then just as they did in Canada during the midst of the BSE crisis. Are cattle on feed totals in Canada not up 18% from last year? Does that change in supply not make a difference in the value of fed cattle?

Has it not been the big packers who have been making every attempt to reopen the border to their benefit and yours?

Mine alone hey agman. Seems to be a lot more people all the time questioning a system that for two years has seen excesive profits in one sector of the industry and massive equity loss in the other.

When such a dramatic and obvious situation occurs something needs to change.

The packers did not cause BSE but are certainly taking advantage of the situation in Canada. Is that blaming, or simply a fact?

"Did they run their plants to help miimize the backlog?" That is about the lamest statement I have heard from you yet Agman. You are the one who talks of economics yet you cannot figure out that when profit per head is high, and unchallenged, you could simply kill as many animals as posible to grab all the profit you can. Give me a break on the packers heartfelt decision to run their plants wide open.

Of course they had to invest back in. Another simple business move. Are you up a bit early this morning Agman. You told us margins were 65 bucks American last week. Does that not equate to profit that would become taxable should they not spend some of it in Canada, rather than take it home to Uncle Sam.

Yes small plants profitted as well. And so did I in a retail market price set by the boxed beef trade with the USA.

So why do all these things mean that I do nothing but complain about the packers. Have you ever shown why everything you say is in their defense.

I told a friend once who asked me the question about prices going down to zero. I said that I wish they would, because that would be reality. The only reason prices stopped where they are is to satisfy packer lovers like yourself, and give you folks something to argue with. You never have told anyone here how price is established in Canada Agman, why not?

Your beleif that the packers are making every attempt to open the border is your beleif Agman. I put effort into helping my wife do the dishes too, but as little as possible so as to not disturb my enviable postion.

Happy Fathers day and don't think I hold your words against you.

 

[Sandhusker]

Don, "it's been apparent for over a year now that r-calf was a good tool for usda to accomplish politically expedient goals and for tyson and cargill to keep the border closed so they could rape the canadian producer and bring some of the smaller packers in the states to their knees. r-calf has been outsmarted and used every step of the way. usda hasn't made more than a token effor to fight the injunctions until now. if usda and the packers have decided it's finally time to open the border because it needs to change the way the world looks at trade from bse countries or they can't keep the lid on bse in the states much longer or cargill and tyson know it's time to get back to normal business (they've milked this as hard as they can and who knows canada might start thinking for itself) r-calf will get crushed. r-calf has done more longterm damage to it's stated goals than it can fix in the next ten years. they have handed more power over to the four largest packers and have made no headway towards strengthening the hand of the cattleman in the beef industry."

I'm going to disagree, Don. R-CALF has been a huge pain to USDA. They and the AMI have been used to getting their way without any challenges. All of a sudden, not only are producers squaking, they're acting and even winning. The USDA and AMI didn't plan for that - the weakness of their case proved that.

R-CALF has been successful in letting the powers know that from now on, it won't be business as usual. The USDA will be expected to actually do thier job or they will be called on it and may have to defend their actions in court. Before R-CALF, there was no organization who would poke the big boys in the chest. I think they all know there's a new sheriff in town, now.

 

[agman]

Agman says -

The tunnel vision is yours alone. You have won that prize. You are the one who is constantly complaining about the big packers. Did they cause BSE? Did they not run their plants full time to help minimize the backlog of cattle that already existed in Canada? Have they not invested profits through expansion back into the Canadian beef industry? Did small packing plants also not profit from an unfortunate and unexpected situation?

When you are already at capacity any residual supply is essentially worthless. Did your prices go to ZERO? Do you recall the hog market in the U.S. in the fall of 1998 when total supplies outstripped slaughter capacity even though some packers ran their plants on Sundays to help alleviate the backlog? The limitations of the workforce had to be considered then just as they did in Canada during the midst of the BSE crisis. Are cattle on feed totals in Canada not up 18% from last year? Does that change in supply not make a difference in the value of fed cattle?

Has it not been the big packers who have been making every attempt to reopen the border to their benefit and yours?

Mine alone hey agman. Seems to be a lot more people all the time questioning a system that for two years has seen excesive profits in one sector of the industry and massive equity loss in the other.

When such a dramatic and obvious situation occurs something needs to change.

The packers did not cause BSE but are certainly taking advantage of the situation in Canada. Is that blaming, or simply a fact?

"Did they run their plants to help miimize the backlog?" That is about the lamest statement I have heard from you yet Agman. You are the one who talks of economics yet you cannot figure out that when profit per head is high, and unchallenged, you could simply kill as many animals as posible to grab all the profit you can. Give me a break on the packers heartfelt decision to run their plants wide open.

Of course they had to invest back in. Another simple business move. Are you up a bit early this morning Agman. You told us margins were 65 bucks American last week. Does that not equate to profit that would become taxable should they not spend some of it in Canada, rather than take it home to Uncle Sam.

Yes small plants profitted as well. And so did I in a retail market price set by the boxed beef trade with the USA.

So why do all these things mean that I do nothing but complain about the packers. Have you ever shown why everything you say is in their defense.

I told a friend once who asked me the question about prices going down to zero. I said that I wish they would, because that would be reality. The only reason prices stopped where they are is to satisfy packer lovers like yourself, and give you folks something to argue with. You never have told anyone here how price is established in Canada Agman, why not?

Your beleif that the packers are making every attempt to open the border is your beleif Agman. I put effort into helping my wife do the dishes too, but as little as possible so as to not disturb my enviable postion.

Happy Fathers day and don't think I hold your words against you.

What I have stated about packers is factual. If you think my statements are unsubstantiated then have at it. It should be easy for you to prove me wrong.

Your last statement that you do not believe packers are doing everything they can to reopen the border shows how distorted your conclusions are by your inherent bias against packers. Also, they could have chosen not to run those plants at capacity as I stated which is a fact. If they did not run those plants at full capacity they could have extended the backlog and assured themselves of a further over supply of Canadian cattle and extended the period of excessive profits. Why did they not do that if they only had their best interest in mind?

When the glut was taken care of temporarily why did your prices advance if the market was dysfunctional as you claim. I will say again. At the present time your cattle on feed totals are +18% from year ago levels. Have the slaughter and demand base increased enough to absorb the increase in available supply? The answer is NO. So prices have retreated which is the expected result in a functioning supply/demand situation. The reality is there remains a supply imbalance caused by growth in your cattle inventories versus slaughter capacity and total beef demand. The adversity of that oversupply is exacerbated by a restricted demand base, not of your making.

You say you are not bashing packers, just stating facts. Well I am not supporting packers, I am just stating facts. You are the one that has stated economics is simple. I have stated it is much more complex than you realize. Issues are generally very simple to those on the outside looking in.

Have a happy and joyous Father's Day with your family.

 

[don]

sandhusker, r-calf has succeeded only where they have been allowed to succeed. on mcool it's an abject failure; captive supplies has gone nowhere. as long as tyson and cargill wanted the border closed they let r-calf do the dirty work; bush didn't want the border open before the election - look at the map and see how many cattle there are in the red states, ncba was ineffectual in standing up to r-calf. haven't you noticed how suddenly there are a lot more orgs lining up against r-calf. tyson and cargill have knocked out some of the small competitors in the states and now want their plants down there to show a profit again. r-calf has been one of the biggest allies the american owned canadian slaughterhouses could have. the board of tyson must double over in laughter sometimes when bullard and mcdonnell put out their press releases. r-calf has had any measure of success only against canadians; it's had no success when it came to working against the adversaries in its own backyard. r-calf has given a lot of guys who wanted to complain, like haymaker and ot, a home but the people in r-calf really haven't been the type to change things. watch out because sometimes the new sherriff gets run out of town.

 

[rkaiser]

Agman -

You say you are not bashing packers, just stating facts. Well I am not supporting packers, I am just stating facts. You are the one that has stated economics is simple. I have stated it is much more complex than you realize. Issues are generally very simple to those on the outside looking in.

Well thank goodness we both have our own facts straight.

 

[Anonymous]

randy: "Saying that the packers have no control whatsoever over market by owning cattle is a debatable issue, but not debatable with SH."

Everything is open to debate.

Back your position!


Shall we start with the results of the Pickett vs. ibp lawsuit where the plaintiffs admitted that ibp had the right to enter into contractual arrangements with producers (75% of captive supply) and successfully defeated their own argument. Pretty hard to argue against captive supply when you were a willing participant as a couple of the Pickett plaintiffs were.

What agman says is correct. The Canadian packers could have run slaughter at normal capacity and backlogged the cattle further prolonging the surplus.

The fact is, the AMI filed a lawsuit against USDA to allow the importation of cows. How does that fact fit with your theory of AMI supporting the ban on Canadian live cattle imports?

randy: "I know you will explain this one the way you explain everything else SH, and your truth is the only truth you know, but beleive it or not there are alternatives in this world. Alternatives that may also work. Alternatives to taking a stand against BSE testing for marketing purposes. Alternatives to Massive numbers of packer owned cattle."

Three simple questions randy:

1. What percentage of the cattle in Canada are packer owned?

2. Should producer owned packing companies like USPB have to buy their cattle since you are against packers (in this case producers) owning cattle?

3. Do you think allowing the Federal government the right to pick and choose who can and who cannot own cattle is a wise decision?



~SH~

 

[Jason]

I am curious as to Randy's answers as well, here's what I know.

1. Based on the 2003 fed cattle payment packers owned 11% of the cattle on feed.

2. Independant packer models here include some that want a specified number of cattle committed to the plant based on a producers ownership of said plant. (The person who owns the plant owns the cattle)

3. The Gov't has a poor history in picking winners and losers. Can-Mag in High River not far from Cargill was a Gov't pick....that white elephant is still empty. Bombardier has been mentioned a few times, a Canadian company that keeps getting millions in gov't subsidies, seems like they would fail without gov't money. There is no other Canadian aerospace company competeing with them either. Competition is Boeing and McDonald Douglas and others.

 

[rkaiser]

Okay,
1). A very illusive number. I guess Jason has some sort of inside track on the thousands of cattle owned by the numbered companies also listed on the sheet he used. Bottom line is, I don't know, but certainly those that find nothing wrong say a bit over 10%. I would tend to say more, simply by being from THE OTHER SIDE.

2). I would have to say that if something was set in place, every plant would have to play be the same rules. Does that not make sense? If a large number of producers owned a plant, and owned cattle, would they be treated as one, or many?

3). I guess the question about the rules made could best be answered by someone who lives with the system. Which states have laws regarding packer ownership? Have the packers moved out of these states because they cannot exist?