Captive Canada?

[greg]

Pure old buddy....DON'T get sucked into this vortex of negativity

 

[Big Muddy rancher]

Pure old buddy....DON'T get sucked into this vortex of negativity

I know better but sometimes I can't help myself. :cowboy:

 

[Econ101]

PureCountry, I think the private beef to the consumer thing is great.

However the don't get too big or the big players will shut you down is far fetched.

How can they if you own the cattle, process them legally and satisfy your customers?

To "shut you down" would take the same or better quality at a lower price. If you are selling commodity beef at premium prices there is concern, however Randy has said what some of those critters are grading at and they are above average.

What you are part of is vertical intragation. The same thing R-calf is afraid of, the same thing Conman says is killing the chicken producers (but at the same time they are gaining market share so more are needed).

The concept you are following is what SH has been a proponet of since he started here on Ranchers. Keep the cattle keep control. He just points out packers aren't making obscene profits at our expense. They are part of the chain necessary to sell all the beef we raise. The more quality we can breed, feed or manage into the beef chain is good for everyone. It makes consumers happier with the end product and a happy customer is a repeat customer.

Jason, vertical integration has done nothing to increase the profitability for the farmer. It has dramatically increased the profitability of packers (PSA defines poultry dealers same as packers). The market abuses in poultry (go read the London case for social justice being crushed) have only led to decreases in the profitability of poultry farmers and increased control by poultry companies. Instead of farming the poultry, poultry dealers farm the farmer. This will happen to the beef industry if current trends are allowed to play out and market power is not checked. All increased profitability will be captured by the packers. Trade the short term gain of contracts and marketing agreements for the loss of long term profitability. It is as simple as that.

Again, gaining market share of chicken over beef has only increased the profitability for packers at the expense of the farmers who have approximately half of the capital invested and more and more of the market risk placed on them.

So your telling us that people like Pure country, R kaiser and Robert mac are part of the problem not the solution?

Absolutely not. They are the solution. When Tyson can swing the beef market and then rely on the poultry market, a substitute for beef, to carry them with losses in the beef sector, they create an uneven playing field for kaiser, robert mac, pure country and the others. Watch beef carry poultry on the opposite end of the cycle. They will run other poultry companies out of the poultry business and gain more market control there.

The only true course is one of fair competition where market power can not be employed to the detriment of the producers and the consumers. Robert Mac, Kaiser and the other "little" guys deserve that protection in the market place by government policy and actions. It will keep the sectors strong to have such competition.

 

[Big Muddy rancher]

Yea but you said Vertical integration was bad but that what PC, RK and Robert as well as USBP and other are trying and if the PSA is held up to light that is wrong.

 

[Econ101]

Yea but you said Vertical integration was bad but that what PC, RK and Robert as well as USBP and other are trying and if the PSA is held up to light that is wrong.

Vertical integration is another form of market power, BMR. If market power is not used, it does not matter if it exists (think of your electric or water utility). When market power is exercised, the producer and consumer surplus loses and there is a deadweight loss to the economy.

 

[Bill]

Bill- We don't expect much out of Haymaker so don't be disappointed! :lol: However Econ has proven that the only thing that exceeds his own lack of knowledge about Canada is his absolute ignorance!!

With few notable exceptions, I have heard little other than how bad R-Calf is or has been from Canadians. R-Calf blamers, you might say. Until the market power issues of this industry are recognized and confronted, Canadian producers, U.S. producers, and the taxation of the respective publics will continue to be handed over to giant agribusiness to all of their detriment. It is unfortunate that there are not more Canadians willing to take on tough issues to solve these problems and instead seek to be "blamers" as SH puts it.

Care to give us tips on what us blamers from Canada should be doing? After survivng a 2 year drought, followed by BSE with an August killer thrown in the mix, many of us could sure use some advice from an expert on how to handle the tough issues.

Still waiting for your ideas Econ.

 

[Econ101]

With few notable exceptions, I have heard little other than how bad R-Calf is or has been from Canadians. R-Calf blamers, you might say. Until the market power issues of this industry are recognized and confronted, Canadian producers, U.S. producers, and the taxation of the respective publics will continue to be handed over to giant agribusiness to all of their detriment. It is unfortunate that there are not more Canadians willing to take on tough issues to solve these problems and instead seek to be "blamers" as SH puts it.

Care to give us tips on what us blamers from Canada should be doing? After survivng a 2 year drought, followed by BSE with an August killer thrown in the mix, many of us could sure use some advice from an expert on how to handle the tough issues.

Still waiting for your ideas Econ.

That is why I sympathize with your postitions. A realizaton that market power is the culprit would be helpful. Holding your politicians accountable for allowing the packers to double dip would be another. These things only exacerbated the problem. Look at the PSA and understand the economic concepts behind it so you could work on getting a similar law passed in Canada. I know that these things are hard, but the U.S. did it 85 years ago. Time to catch up.

If you are going to depend on the U.S. for an export market, these economic protections need to be in the trade bill for both of our benefits. We now have a system where agribusiness can figure out what is in their best interest and get the laws, rules, and regulations skewed their way. Why not have a voice in that process? And who is not better suited than these hard tasks than you, BMR?

 

[Jason]

No one has told me how the big boys will "shut down" a program that owns the cattle, kills them legally and satisfys their consumers.

All I've heard id Conman say vertical integration is bad. So RobertMac and RKaiser and myself are not making money according to conman. I better get right on it and stop selling beef to consumers so I don't lose any more money :roll:

 

[PureCountry]

No one has told me how the big boys will "shut down" a program that owns the cattle, kills them legally and satisfys their consumers.

All I've heard id Conman say vertical integration is bad. So RobertMac and RKaiser and myself are not making money according to conman. I better get right on it and stop selling beef to consumers so I don't lose any more money :roll:

Jason, I'm just going by what Paul has said to Randy and myself, and his salesman in Calgary has said the same thing. All the sales are in Calgary restaurants and hotels, and their theory is that if you get too big on the radar, they will underbid you, or do whatever it takes to get your customers. Hence the phrase, "...shut you down."

According to the salesman, he says he's seen it, and been on the receiving end of it. He's worked in the Calgary meat scene for 25 years, and he says they will do it, and have done it. So, like I said, I'm hearing it secondhand, but I believe they can do it to almost anyone they want.

 

[PureCountry]

Pure old buddy....DON'T get sucked into this vortex of negativity

It does seem to 'suck' ya down, don't it?

 

[rkaiser]

Shut you down.

I guess the words may confuse a fellow like Jason who beleives that integrity would hold Cargill back from doing anything but the Lords word.

We had a break a couple of years back with one Calgary Hotel which was part of a chain arcross Canada. The Chef was sold on our product. The market was not huge, but amounted to full carcass sales for us which definately helped. Cargill made a deal with the Hotel chain if all branches used their product. Somewhat similar product and a better price. The Chef eventually left the Hotel over the deal.

Shut you down Jason, you bet they will shut you down. More examples if you like, but for now I'm off to a Hockey game.

Coming to you live from my new lair in Ponoka Alberta.

Randy

Hidy Ho Pure Country

 

[S.S.A.P.]

I'm stuck between a rock and a hard place.

First - hats off to Pure Country, Randy and the others involved with their endevour.

Second - some of our cattle become Cargill's "beef", so I am also happy to hear they are aggressively marketing that beef.

Third involves all the lines being drawn and how each of us interrupts those lines; when does one cross the line from little to big; "radar lines" - PC and RK are already flying above my radar line (meant as a compliment); if another progressive value added/niche marketer successfully overtakes your contract with a hotel/restaurant (by whatever means as long as their net allows them to stay in business) does that then diminish their integrity because they shut you down? These, by the way are not necessarily questions - just thoughts to ponder.

If there is room in the niche market, more progressive, aggressive persons or groups will form. I think the "little and big" of the niche markets will develop as they jockey for positions. In theory, do they in turn become the big bad guys of the niche markets like the big bad guys of commodity beef.

One final thought - someone posted that the multi-nationals don't "do" niche markets - I may be reading Randy's post wrong but would Cargill's (attempt and possibly success because I don't understand if they actually were awarded the hotel contract) proposal to the hotel, with a somewhat similar product and a better price, classify them as a provider of a niche product? Let's change Cargill's name to 'Mom & Pop's Fine Meats' - same proposal to the same hotel.
..... ....... Fire away !!! You can't confuse me (any)more than I already am.

 

[mwj]

s.s.a.p. you raise some very valid points that I would like to hear the answers explained without a shouting match starting! This is a valid question for many niche producers on both sides of the border.

 

[Jason]

Exactly my point folks. Should Cargill or Tyson be the villian if they can supply a similar product cheaper? Did they need to do anything illegal or immoral?

If the same example was bulls, I would target a ranch if I knew they had enough demand for my type of bulls and they were paying more than I was asking. It happens everyday in the purebred industry. Why do you think mailing lists are so secretive? If they aren't send me yours!

If Cargill didn't do a deal with the whole chain would they still have been able to take away that contract? If it was a 1 on 1 and the chef was happy with the product, the manager was happy with the price, I doubt it. The other thing that could have happened was Randy and Company getting the entire chain signed on. Why didn't that happen? Maybe not able to supply that volume, not ready for that level of negotiation, not able to match or beat the price offered by Cargill.

Although I understand the disappointment involved in losing any sale, it was a fair bid and that is what business is about, supplying the best product for the lowest price. This is what producers need to be aware of when entering a new phase of the industry. There exists competition. The BS of selling bulls isn't going to cut it when selling into a business that lives or dies on the end consumer.

 

[rkaiser]

It's all about the economics of scale Jason. And how far we want this scale to go. North American society has become Walmart "shutting down" Fields who shut down Mom and Pop 15 miles down the road.

If this is the system that you enjoy, Jason, no one will convince you of anything but.

The CATTLE industry is somewhat sheltered, especially in the purebred industry other than a few monster purebred bull suppliers in the US. There is usually always room for a small, but efficient and particular cattle breeder to make a buck selling bulls. (Even Angus Bulls in Southern Alberta hey Jason?)

So why is it that Cargill is worried about one of the only niche marketing groups in Calgary Alberta? It is due to the fact that THEY WANT IT ALL Jason. Cargill and Tyson have a Walmart view.

I will be the first to admit that our product is good, but Jason can produce a product that is just as good if bred right and fed right. Our story is our only advantage. Cargill and Tyson know this and can and will use there MARKET POWER to shut down whoever they want whenever they want.

Let's hear how they DON't do this Jason.

 

[Econ101]

No one has told me how the big boys will "shut down" a program that owns the cattle, kills them legally and satisfys their consumers.

All I've heard id Conman say vertical integration is bad. So RobertMac and RKaiser and myself are not making money according to conman. I better get right on it and stop selling beef to consumers so I don't lose any more money :roll:

Jason, you have not been willing to look at the fine points of my arguements. I never said vertical integration is bad. I said it means there is more market power. Tyosn and other poultry companies have used that market power to cheat farmers out of the value of thier assets. They have broken the law in doing so and the Grain Inspection Packers and Stockyards Administration has been helping them get away with it by their incompetence and corruption.

Please do not quote me or paraphrase me if you can not understand or are unwilling to understand the precepts I am arguing.

 

[Jason]

Conman said:Jason, vertical integration has done nothing to increase the profitability for the farmer. It has dramatically increased the profitability of packers

He then says

I never said vertical integration is bad. I said it means there is more market power. Tyosn and other poultry companies have used that market power to cheat farmers out of the value of thier assets. They have broken the law in doing so and the Grain Inspection Packers and Stockyards Administration has been helping them get away with it by their incompetence and corruption.

Which way is it conman? Is cheating producers out of the value of their assests not bad?

You took a stance dead against vertical intigration(based on your hatred of the packers like Tyson) then took a 180 as soon as you saw your buddies were involved in exactly what you just condemed. Then you revert to condemning it by saying you never said it was bad it's just the way Tyson screws producers.

You can't even stick to your stance in the same paragraph.

I have said any effort to sell more beef is good for all in the industry. I wish Randy well, I just don't see how Cargill, Tyson or any big packer can shut them down if they do their homework. If they think they are going to just slide in on a sob story of how screwed producers are by the big guys, real business get tired of that real fast.

 

[Sandhusker]

s.s.a.p. you raise some very valid points that I would like to hear the answers explained without a shouting match starting! This is a valid question for many niche producers on both sides of the border.

Creekstone Farms tried to serve a niche market - you saw what happened there.

 

[Econ101]

Conman said:Jason, vertical integration has done nothing to increase the profitability for the farmer. It has dramatically increased the profitability of packers

He then says

I never said vertical integration is bad. I said it means there is more market power. Tyosn and other poultry companies have used that market power to cheat farmers out of the value of thier assets. They have broken the law in doing so and the Grain Inspection Packers and Stockyards Administration has been helping them get away with it by their incompetence and corruption.

Which way is it conman? Is cheating producers out of the value of their assests not bad?

You took a stance dead against vertical intigration(based on your hatred of the packers like Tyson) then took a 180 as soon as you saw your buddies were involved in exactly what you just condemed. Then you revert to condemning it by saying you never said it was bad it's just the way Tyson screws producers.

You can't even stick to your stance in the same paragraph.

I have said any effort to sell more beef is good for all in the industry. I wish Randy well, I just don't see how Cargill, Tyson or any big packer can shut them down if they do their homework. If they think they are going to just slide in on a sob story of how screwed producers are by the big guys, real business get tired of that real fast.

Jason, you still don't get it. Tyson is using its market power to cut out all the competition. After the competition is gone, there can be no threat to their increasing their spreads. They have done it in the poultry business with the use of the market power they have in their geographical monopsonies and their addtional tools gained by vertical integration.

Vertical integration, just like marketing agreements, is not the problem. The problem is the market power they exert with these tools. Guns are not the problem, the criminals using the gun are the problem.

Jason, you may not ever understand finer points of a discussion if you keep up your misinformed self, especially if don't try.

I hope you get your operation reversed.

 

[mwj]

s.s.a.p. you raise some very valid points that I would like to hear the answers explained without a shouting match starting! This is a valid question for many niche producers on both sides of the border.

Creekstone Farms tried to serve a niche market - you saw what happened there.

I see as far as I can tell that they are still in buisness and serving a niche market. They adapt and move on if they want to survive.