ranch hand
Well-known member
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Canadian Packer Profits
- Thread starter Jason
- Start date
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Under topics at the top go to last post and click on date and time of the last post and it will bring the last post up.
Then you just scroll up to the last one you read. No remembering what page you haven't read.
rkaiser
Well-known member
Agman -
Why keep coming back then Agman? Why did you not stop a few pages ago? Why keep trying to prove your intelligence to a dumb farmer like me? Are you scared you might be wrong?
Your silly notion that the packers were out to help the producers of Canada by killing at full steam is laughable. Basic economics is what you should study rather than complicating the issue until you're blue in the face.
Try to make me sound like a packer blamer all you want Agman, it's a distraction from the fact.
I simply have a different view than you do, and will not sit back and take your haughty attitude.
Talk to yourself all day Agman, and you might convince yourself that I am the only one who thinks I am right.
Your clear control of the written word, and your ability to run people off with subtle derogatory remarks leaves you king of what "Poop Island".
Your position is wrong. Packers took full advantage of the situation for short term and excessive profit. SO WHAT.
I am just wise enough to know not to continue a discussion with someone who lacks a basic understanding of economics and virtually no understanding of packer operational costs. On either issue you would and could not offer a challenge now or most likley ever.
Why keep coming back then Agman? Why did you not stop a few pages ago? Why keep trying to prove your intelligence to a dumb farmer like me? Are you scared you might be wrong?
Your silly notion that the packers were out to help the producers of Canada by killing at full steam is laughable. Basic economics is what you should study rather than complicating the issue until you're blue in the face.
Try to make me sound like a packer blamer all you want Agman, it's a distraction from the fact.
I simply have a different view than you do, and will not sit back and take your haughty attitude.
Talk to yourself all day Agman, and you might convince yourself that I am the only one who thinks I am right.
Your clear control of the written word, and your ability to run people off with subtle derogatory remarks leaves you king of what "Poop Island".
Your position is wrong. Packers took full advantage of the situation for short term and excessive profit. SO WHAT.
Jason
Well-known member
Randy, just refocus for a second.
What benefit would there be for Cargill and Lakeside to bankrupt feedlots and producers in Canada?
Is it better or worse for producers that slaughter capacity is higher because of all the packers in Canada ramping up their operations?
How much profit should slaughter operations make? Gross and net?
Everyone agrees they are making money.
Would you rather they lose money or make what they are making now?
What benefit would there be for Cargill and Lakeside to bankrupt feedlots and producers in Canada?
Is it better or worse for producers that slaughter capacity is higher because of all the packers in Canada ramping up their operations?
How much profit should slaughter operations make? Gross and net?
Everyone agrees they are making money.
Would you rather they lose money or make what they are making now?
blackjack
Well-known member
...I don't know what part of the province you are from Jason...but I know there is at least 40,000 head less being fatten here in central Alberta than there was 2 years ago...to me that means there is less competetion out there bidding on my feeder cattle...so if the packers are not willing to pay the guys that fatten a decent price... I imagine you understand what the bottom of the chain receive... I guess its easier to watch a few farmers go broke than to watch the poor packers get by... good grief...
Whiteface, I just have a couple of two year olds left over. I am in Saskatchewan. One draw back these bulls have is they are horned. They are limo bulls, one is a very good bull which just quite hasn't worked out for my customers while the other one is a second rate bull, so no surprise he is around. I have had interest. One guy wanted 2 bulls from teh same place so gave me an offer but quite low because he was not a fan of the one. But I just got a call from a past customer asking about the bulls, as he is looking at buying some cows. Hopefully, they will still move, there is always bulls that get injured so sometimes a marketing chance throughout the year.
Since they are two I dont' have the option to hold them over. Most likely just sell them to market for 20 cents maybe the market will pick up. Last year I sold some bulls for 35 cents, but not sure if that will come back. Otherwise lots of hamburger to deal with, and not much extra return for all the hastle.
For the topic at hand, I think agman is trying to increase the understanding of the packing business. Why they operate the way they do, and I don't quite agree, but I am trying to learn for myself. I have heard all your comments before, but the way they are presented is not going to help the situation, so I was just thinking maybe we could refocus the discussion, and look at what the opportunities are.
I am here for a bit this morning then gone until next week!
Have a good weekend everyone.
Since they are two I dont' have the option to hold them over. Most likely just sell them to market for 20 cents maybe the market will pick up. Last year I sold some bulls for 35 cents, but not sure if that will come back. Otherwise lots of hamburger to deal with, and not much extra return for all the hastle.
For the topic at hand, I think agman is trying to increase the understanding of the packing business. Why they operate the way they do, and I don't quite agree, but I am trying to learn for myself. I have heard all your comments before, but the way they are presented is not going to help the situation, so I was just thinking maybe we could refocus the discussion, and look at what the opportunities are.
I am here for a bit this morning then gone until next week!
Have a good weekend everyone.
rkaiser
Well-known member
Jason - Randy, just refocus for a second.
Which post did I ever say that Cargill and Tyson were out to break the feedlots and producers of Canada. They COULD be, but you and I will never know that. Or they COULD be simply working on more control over the whole thing. My arguement all along with Agman has been the fact that Cargil and Tyson have been and continue to prey on an unchallenged market with nothing but profit on their minds. His BS about helping the producers by reducing inventory is utter nonesense. Canada has had an oversupply of fat cattle for two years - PERIOD.
Of course it is good for capacity to be as much as possible right now. Does that make it right for record profits to be made by one sector while the other flounders in equity loss. Call it blaming all you want, this is a huge problem and needs to be changed. Any suggestion about change is seen by you and Agman as blaming the packers; it is simply trying to fix a broken situation.
As far as the money issue Jason, you tell me. Your figures will differ quite a bit from the Auditor Generals report, so that arguement could last another week or so. I'd have to say that over $200.00 while the producers are loosing at least that much is extreme, is it not. Now talk short term, like Agman does. How long is short term? 2, 4, or maybe 7 years. Cargill and Tyson are already showing the power these kinds of profits are giving them with new aquisiotions (sp) and expansion etc.
Do you oppose the positon of APB to challenge the takeover of Better Beef which woud give Cargill close to half the Slaughter capacity in Canada?
Of course we need packers Jason, but we need competition more.
Neither you, or Agman, or Sh, or anyone else will tackle the question of how price is established in Canada these days. Basis is gone. How is it accomplished? Obviously Tyson and Cargil bid against each other from time to time. But sometimes that does not even happen. I know fat cattle owners who can only receive one bid for their steers, others cannot get a bid when they choose to sell. Our competiton was lost the day the border closed. Now it is a free for all.
Tell me how price is established Jason?
What benefit would there be for Cargill and Lakeside to bankrupt feedlots and producers in Canada?
Is it better or worse for producers that slaughter capacity is higher because of all the packers in Canada ramping up their operations?
How much profit should slaughter operations make? Gross and net?
Everyone agrees they are making money.
Would you rather they lose money or make what they are making now?
Which post did I ever say that Cargill and Tyson were out to break the feedlots and producers of Canada. They COULD be, but you and I will never know that. Or they COULD be simply working on more control over the whole thing. My arguement all along with Agman has been the fact that Cargil and Tyson have been and continue to prey on an unchallenged market with nothing but profit on their minds. His BS about helping the producers by reducing inventory is utter nonesense. Canada has had an oversupply of fat cattle for two years - PERIOD.
Of course it is good for capacity to be as much as possible right now. Does that make it right for record profits to be made by one sector while the other flounders in equity loss. Call it blaming all you want, this is a huge problem and needs to be changed. Any suggestion about change is seen by you and Agman as blaming the packers; it is simply trying to fix a broken situation.
As far as the money issue Jason, you tell me. Your figures will differ quite a bit from the Auditor Generals report, so that arguement could last another week or so. I'd have to say that over $200.00 while the producers are loosing at least that much is extreme, is it not. Now talk short term, like Agman does. How long is short term? 2, 4, or maybe 7 years. Cargill and Tyson are already showing the power these kinds of profits are giving them with new aquisiotions (sp) and expansion etc.
Do you oppose the positon of APB to challenge the takeover of Better Beef which woud give Cargill close to half the Slaughter capacity in Canada?
Of course we need packers Jason, but we need competition more.
Neither you, or Agman, or Sh, or anyone else will tackle the question of how price is established in Canada these days. Basis is gone. How is it accomplished? Obviously Tyson and Cargil bid against each other from time to time. But sometimes that does not even happen. I know fat cattle owners who can only receive one bid for their steers, others cannot get a bid when they choose to sell. Our competiton was lost the day the border closed. Now it is a free for all.
Tell me how price is established Jason?
rkaiser
Well-known member
On a personal basis Cattleman, you and I are doing all we can. Take advantage of the lucrative retail market by reataining ownership to that retail level.
On an industry level. Build more slaughter capacity outside of the mutinational oligopoly. Preferably producer owned. And gain more offshore exports with whatever means possible including BSE testing for market demand.
This process has been challenged by the fact that Cargill and Tyson have built massive war chests to scare off investors, and take an even larger chunk of the cake.
I don't know how to solve that last issue, without sounding like a BLAMER>
Got any ideas of your own Cattlemen?
On an industry level. Build more slaughter capacity outside of the mutinational oligopoly. Preferably producer owned. And gain more offshore exports with whatever means possible including BSE testing for market demand.
This process has been challenged by the fact that Cargill and Tyson have built massive war chests to scare off investors, and take an even larger chunk of the cake.
I don't know how to solve that last issue, without sounding like a BLAMER>
Got any ideas of your own Cattlemen?
Jason
Well-known member
rkaiser said:Jason - Randy, just refocus for a second.
What benefit would there be for Cargill and Lakeside to bankrupt feedlots and producers in Canada?
Is it better or worse for producers that slaughter capacity is higher because of all the packers in Canada ramping up their operations?
How much profit should slaughter operations make? Gross and net?
Everyone agrees they are making money.
Would you rather they lose money or make what they are making now?
Which post did I ever say that Cargill and Tyson were out to break the feedlots and producers of Canada. They COULD be, but you and I will never know that. Or they COULD be simply working on more control over the whole thing. My arguement all along with Agman has been the fact that Cargil and Tyson have been and continue to prey on an unchallenged market with nothing but profit on their minds. His BS about helping the producers by reducing inventory is utter nonesense. Canada has had an oversupply of fat cattle for two years - PERIOD.
Of course it is good for capacity to be as much as possible right now. Does that make it right for record profits to be made by one sector while the other flounders in equity loss. Call it blaming all you want, this is a huge problem and needs to be changed. Any suggestion about change is seen by you and Agman as blaming the packers; it is simply trying to fix a broken situation.
As far as the money issue Jason, you tell me. Your figures will differ quite a bit from the Auditor Generals report, so that arguement could last another week or so. I'd have to say that over $200.00 while the producers are loosing at least that much is extreme, is it not. Now talk short term, like Agman does. How long is short term? 2, 4, or maybe 7 years. Cargill and Tyson are already showing the power these kinds of profits are giving them with new aquisiotions (sp) and expansion etc.
Do you oppose the positon of APB to challenge the takeover of Better Beef which woud give Cargill close to half the Slaughter capacity in Canada?
Of course we need packers Jason, but we need competition more.
Neither you, or Agman, or Sh, or anyone else will tackle the question of how price is established in Canada these days. Basis is gone. How is it accomplished? Obviously Tyson and Cargil bid against each other from time to time. But sometimes that does not even happen. I know fat cattle owners who can only receive one bid for their steers, others cannot get a bid when they choose to sell. Our competiton was lost the day the border closed. Now it is a free for all.
Tell me how price is established Jason?
Ok Randy thanks for answers on the first couple points.
The option that they COULD be out to break everyone is silly. They need cattle and can't manage the millions of acres needed to supply them. The industry is just too big, and the gov't is investigating them already as to the Better Beef merger so they can't control the whole game. At least concede that.
They have helped the situation by ramping up capacity, creating some competition although we still need more. They are building more and unless all smaller packers fold and Cargill and Lakeside merge, we still have competition.
With more capacity they need more cattle. If they break the industry they will have less cattle.
In Canada this is how I believe they are setting the price. They have a formula in place that they know what expansion is going to cost them, they have an obligation to provide a decent return to shareholders, and they have tax liability to address. They know what they get for boxed product, they know their costs. Price is a function of this formula.
The auditor General's report was from August 03 and was based on gross margins. Things have leveled off since and remained steady price wise even though the dollar has risen 20%.
I believe the $65 margin after costs (possibly before taxes, Agman usually gives numbers before taxes) is a reasonable and safe level for them to reinvest hundreds of millions in expanding their capacity. For them to expand capacity without a safety net is just as risky as for these new ventures.
If they just wanted to maximize profits for now with no regard for the future, they would just reduce expenses, no extra shifts that produce more boxed product to move, no expansion, and just keep lowering their price as cattle back up more. This would indicate they are short term and want to break the industry, as well as themselves.
Thinking they are making $200 an animal free and clear right now isn't reasonable, why would Better Beef even consider selling if that was the level of profit? Why wouldn't investors fast track some plants to cash in on that kind of take? There are some huge investors out there with enough liquidity to build a plant in months, but the economics aren't there.
New expansion by new players would be great. But it is risky, these guys better have their hats on tight and be ready for a rough ride, at some point these margins are going to narrow. At this moment I have sort of lost track of all the "expansion plans" by all of these groups. There is the group in Neudorf, Sask, Sunterra coming on stream. Then not sure about this groups a Stoney Plain, sometimes I hear they are coming along other times, it is very unlikely so I don't know, but I have not stuck my money where my mouth is on packer expansion, cause most of these groups make me nervous, and they will be selling their plants for 10 cents on the dollar. Not sure if there will be enough expansion, but it will be tough for government to move in now, because they will tick off a lot of people who are trying to do it on their own, especially if a plant doesn't really benefit them.
A big thing is patience I think. Short term pain for long term gain. In 20 years we can look back at this event and see where the winners and losers will fall. But that happens in all industries all the time.
I worry about how the face of the cow-calf and feeding industry will change. From my grassroots feelings, I don't really want the beef industry to look like the chicken industry of the US, and I think that there are enough people who want to be part time cowboys, and want a bit of land, that it is going to make that tough to happen, they will probably just continue to operate at a loss just to have cattle. But there will also be some big and highly integrated supply chains as well. I don't think I want to play that game, well depending who is driving it...
Personally I believe as Cargill and others get bigger, and continue to push high throughput on low margins, the quality of product that consumers in this country will find at the supermarkets will decrease in quality (some may disagree here). Once operations get bigger, they will leave "smaller" markets because they won't be bothered with them, because to much work for the margin, and that is where you and I will come in to fill those voids. Offering the quality product with the attributes and information the consumers want at a higher price. So as all this restructuring happens, I want to find the holes and fill them. I think there are going to be more holes to fill than there were in the past, especially given the broad range of consumers out there. My excitement for me, is going to the supermarket....looking at the price of meat cuts on the shelf, and taking that home to build my marketing and pricing strategy. That is the ultimate....I already have customers telling me I could get more for my product. This is my thoughts/system/philosophy. I definately realize this is not for everyone, and it can't be really...well amybe depending on their marketing....anyway lots here for people think about, I know there are holes for industry issues...sorry I rambled
A big thing is patience I think. Short term pain for long term gain. In 20 years we can look back at this event and see where the winners and losers will fall. But that happens in all industries all the time.
I worry about how the face of the cow-calf and feeding industry will change. From my grassroots feelings, I don't really want the beef industry to look like the chicken industry of the US, and I think that there are enough people who want to be part time cowboys, and want a bit of land, that it is going to make that tough to happen, they will probably just continue to operate at a loss just to have cattle. But there will also be some big and highly integrated supply chains as well. I don't think I want to play that game, well depending who is driving it...
Personally I believe as Cargill and others get bigger, and continue to push high throughput on low margins, the quality of product that consumers in this country will find at the supermarkets will decrease in quality (some may disagree here). Once operations get bigger, they will leave "smaller" markets because they won't be bothered with them, because to much work for the margin, and that is where you and I will come in to fill those voids. Offering the quality product with the attributes and information the consumers want at a higher price. So as all this restructuring happens, I want to find the holes and fill them. I think there are going to be more holes to fill than there were in the past, especially given the broad range of consumers out there. My excitement for me, is going to the supermarket....looking at the price of meat cuts on the shelf, and taking that home to build my marketing and pricing strategy. That is the ultimate....I already have customers telling me I could get more for my product. This is my thoughts/system/philosophy. I definately realize this is not for everyone, and it can't be really...well amybe depending on their marketing....anyway lots here for people think about, I know there are holes for industry issues...sorry I rambled
Something our industry may consider is trying to be more of a leader, I am not familiar with this, but why do we have to wait for the US to open Asia? I think things will change now with this positive in the US, but we should go to Japan and work on delivering on the specs tehy want. We may not even have to test anything, but just show our system is superior, and that we want to do business with them. I don't know what is going on at the moment, but to me we should be putting things in place so that we are a step ahead of the US when Japan starts excepting beef from us the US or both.
