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Does Coke Compete for Producer's Dollar?

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Econ101

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DiamondSCattleCo said:
:lol: Gee, maybe I should buy a bigger hat.

RKaiser, haven't been around here long, and promised myself that I wouldn't come anywhere near the Bull Session for fear of having an RCalfer send my blood pressure into the red zone. Oh well, Mexican blood pressure pills are cheap I hear.

Econ, as far as me being stuffed into an office, thanks but no thanks. I tried corporate life for a few years and grew weary of everyone laughing at my cowboy boots.

Heck, I even cleaned the manure off of 'em before going to work in the morning.

Rod

Well, give 'em heck from home like you are doing. Sometimes a little time and a corona will work instead of blood pressure pills. By the way, I looked at some of my old medicine bottles and a lot of it was made in Canada. Trade can be good. We have to stop allowing the benefits of it to accrue to the big boys only.
 

DiamondSCattleCo

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Econ101 said:
Trade can be good.

Its too bad more people didn't feel that way on both sides of the border. The US and Canada are not that different that we couldn't possibly align policy in all things trade related, and have a genuine open border. If the EU countries can do it, why can't we manage it?

Rod
 

mrj

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DiamondSCattleCo said:
Econ101 said:
Trade can be good.

Its too bad more people didn't feel that way on both sides of the border. The US and Canada are not that different that we couldn't possibly align policy in all things trade related, and have a genuine open border. If the EU countries can do it, why can't we manage it?

Rod


Isn't there a rather long list of items traded between the countries now?

Just a few guys down here fear your competition in beef, forgetting the good trade in breeding stock and reciprocal cattle feeding and processing of a few years past. They have to generate some great hysteria or fearsome "dragon" to slay.....oooops!, I mean sue out of existence.....or their organization will have no reason to exist.

MRJ
 

DiamondSCattleCo

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MRJ said:
Isn't there a rather long list of items traded between the countries now?

There is indeed, however what ticks off most Western Canucks is that our leading exports get picked on by special interest groups who appear to have the ear of a few senators or judges. Or at the very least can talk a good game. Then we get hurt. Softwood lumber, wheat, and cattle have all been targetted in recent years, and its slowly but surely killing us out here. And I do understand that our government has sheltered some of our eastern industries from the "evil American Empire" by putting up trade barriers. I don't think thats any "more right" and needs to be dealt with.

Rod
 

Econ101

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How much sugar would be in a coke? I just went out and bought a coke. It cost $1.19 before tax and was 20 oz. It has 240 calories in the whole coke (that is 22% of recomended allowance for carbohydrates) and is sweetened by corn syrup.

In a 4 lb. bag of sugar there are 453 teaspoons. Each teaspoon(4 grams) has 15 calories in it. A 20 oz coke would would have 240 calories per coke/15 calories per teaspoon= 16 teaspoons in it (boy that is a lot of sugar). Wholesale sugar has been around 30 cents per lb (15 cents for world price)-- up a little now because of the destruction of the cane plants and cane land due to the twin sisters (Rita and Katrina). By the way, the world price of sugar is a thin market price.

453 teaspoons/4 lbs = 113.25 teaspoons in 1 lb. of sugar. 113.25/16=the equivalent of 7.078 twenty oz. cokes per lb. of sugar. 30 cents /7.078=4.23 cents per 20 oz coke.

This has the assumption that the sweetness is related to calories and that sugar equals corn sweetener in usage per calorie for the two different cokes.

4.23 cents per 20 oz coke for the same number of calories of the sugar as the corn sweetener. How much is the wholesale cost of corn sweetener? Does it even matter? *$#* bean counters and the people who listen to them!
 

DiamondSCattleCo

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Econ101 said:
4.23 cents

What a great idea for a book. The Price Of Democracy - 4.23 Cents.

:lol:

Even worse, there has gotta be at least a pennies worth of corn syrup in the corn Coke. 3.23 cents.

Recognizing that this is getting a little maudlin, but unable to stop myself, it drives me nuts to think that my ancestors braved the elements, helped to build a nation, lived through the dirty thirties, and a couple wars, only to have what they built torn apart by large multinationals and the politicians who sold our country to them. Anything for a buck.

And to think I haven't even opened up a Corona yet :lol:

Rod
 
A

Anonymous

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Heck, you anti-corporates have it all figured out don't you?

Explain this, why isn't generic pop more popular than it is with Coke and Pepsi selling at $1.27 per 16 oz bottle as compared to generic pop selling for half that? Perhaps beverage consumers need you guys to save them from themselves.

WHO IS FORCING CONSUMERS TO BUY NAME BRAND POP WHEN GENERIC POP IS SELLING FOR 1/2 THE PRICE?????

Yup, you guys got it all figured out don't you? Good luck selling your soft drinks. Perhaps you might want to talk to "SureFine" before investing too much money.

As if there was no other costs associated with coke and pepsi other than suger and water. No aluminum costs, no labor costs, no transportation costs, no bottling costs, and no profit?

AMAZING! What marketing wizards we have here. Just dump a few teaspoons of sugar in water an WAHLA you are a millionaire overnight. LOL!

No wonder you guys are telling others how to make a fortune instead of making it yourself.


Diamond S: "Econ posted a valid post about a corporation using market penetration and concentration to not respond to consumer demand."

Diamond S: "It was a genuine example of how a huge corporation can indeed twist the market to their own needs."

Conman has never had a valid point because he never brings anything to the table to support his "theories" other than more theories.

If consumer demands are not being met, that opens the door for competition to enter the market place and meet those demands. If packers are making too much profit per head, that opens the door for another company to come in and do it better and more efficiently.

That is precisely why Armour, Swift, Wilson, Cudahey, and Morris became Excel, ibp, Monfort, National Beef, and Beef America which became Excel, Tyson, Swift & Co., Smithfield and USPB.

The obvious is too obvious isn't it?

If a market was truly controlled, HOW DID THE NAMES CHANGE????


Diamond S: "Pure competition assures that only the most efficient company survives. Or alternatively, assures that all companies will attempt to operate at the most efficient level."

That's what we have. Tyson, Excel, USPB, Smithfield, Greater Omaha, and Swift are all competing for the same cattle. To suggest otherwise is living in fairyland.


Diamond S: "Efficiency and large company size do not always go hand in hand. Certainly, large companies are able to use economies of scale to do as you say: provide goods at the lowest possible cost. However they are also able to restrict competition and ignore consumer demand. How? Because we don't have pure competition anymore. Government policy and lawyers have ensured that the big dawgs remain the big dawgs, and thats it very difficult to get a start."

When efficiency and size do not go hand in hand, that opens the door for competition to step in and do it better. What Tyson lacks, Swift and Excel will pick up on.

No packing company is currently big enough to restrict competition. The largest market share is less than 1/3.

If government policies and lawyers have ensured that the big dawgs remain the big dawgs, how did National get purchased by USPB? How did Future Beef get purchased by Creekstone? How did Swift & Co. buy Monfort?

Once again, the obvious is simply too obvious for the conspiring mind.


Diamond S: "Until the concentration reaches too high a level, then it becomes anti-competitive by the very same economic forces that inspired it. Once the concentration becomes so high, and companies are able to use their profits from one market to buy their way into another market, then I think there is a problem."

We are not even close to that level of concentration in the packing industry. The largest packer has less than 1/3 of the market share.


Diamond S: "IMHO, Not even close to being enough to ensure pure competition given the huge size of the market."

I totally disagree. Using that logic, there should be no competition between Ford, Dodge, and Chevy either.

Or Peterbilt, Kenworth, Volva, and Freightliner.

Or Winchester, Ruger, Remington, and Marlin.

Or........

Open your eyes. It only takes two to compete although there is certainly a better opportunity for "price fixing" with only 2 players. We have 5 major players all competing for the same cattle.

I'd suggest you get out your checkbook and invest in a packing company if you are so convinced that there is money for the taking.

Through the 90's, the average per head profit for the 5 largest packers was $3.88 per head. You want more competition than that. Knock yourself out. I hope you invite me to your foreclosure sale to pick through the bones.

Diamond S, you may be singing the packer blamer's theme song but you'll have to do better than that.


RK: "This poor Randy routine is pathetic SH."

I agree but for whatever reason, you persist with it.


Conman: "The point is that concentration in markets is not good for consumers."

That is flat wrong. Walmart has market share and I'd love to hear you try to explain how saving money at Walmart is not in the consumer's best interest. Gonna give the Walmart consumer the "save you from yourself" speech? You arrogant eletist!



~SH~
 

Jason

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There have been at least 3 contributors to this thread that disregard the fact that laws are being broken by some consumers.

They seem fine with consumers breaking laws but have a fit if a large corp sues to enforce them.

R-Calf sued to change laws they didn't like, and at least one of the contributors here supports that action.

Why is there a different legal standard if you are an individual or a corporation?

Coke has built consumer loyalty. If they find they can save money with corn syrup over cane sugar, it is a business decision. If the consumers don't like it, switch. If consumers say corn syrup coke is still better than their next choice, Coke has done an amazing job of customer loyalty.

To support lawless actions by consumers against a corporation is immoral. If consumers quit buying coke, coke would change or go broke. They cannot control consumers any more than Tyson or Cargill can control consumers.

By the scenario of coke, some contributors to this thread would support consumers buying illegal beef products from the country of their choice and importing them into the US.
 

mrj

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Jason said:
There have been at least 3 contributors to this thread that disregard the fact that laws are being broken by some consumers.

They seem fine with consumers breaking laws but have a fit if a large corp sues to enforce them.

R-Calf sued to change laws they didn't like, and at least one of the contributors here supports that action.

Why is there a different legal standard if you are an individual or a corporation?

Coke has built consumer loyalty. If they find they can save money with corn syrup over cane sugar, it is a business decision. If the consumers don't like it, switch. If consumers say corn syrup coke is still better than their next choice, Coke has done an amazing job of customer loyalty.

To support lawless actions by consumers against a corporation is immoral. If consumers quit buying coke, coke would change or go broke. They cannot control consumers any more than Tyson or Cargill can control consumers.

By the scenario of coke, some contributors to this thread would support consumers buying illegal beef products from the country of their choice and importing them into the US.

Good points, Jason.

ANd some seem to treat this "event" as if Coke is actually a product that is good for people to consumer. Amazing!

How many have read those periodic emails that tout the benefits of Coke as a household solvent and cleanser? Makes one wonder why anyone would drink it. I have tried a few of them, and it does work as claimed. Long live Pepsi! Isn't it strange how we humans will pay good money for things we like that are of no benefit, and maybe even dangerous to our health.......and complain about the changes and costs of the products????? And now the "Nanny types" are going after mushrooms as being dangerous to health. That is just too much!!!!!

MRJ
 

Sandhusker

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Some of you are simply not getting it. Coke is using their power to stifle a consumer demand simply because they profit more from that instead of meeting the demand. The consumer loses.
 

Econ101

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Jason said:
There have been at least 3 contributors to this thread that disregard the fact that laws are being broken by some consumers.

They seem fine with consumers breaking laws but have a fit if a large corp sues to enforce them.

R-Calf sued to change laws they didn't like, and at least one of the contributors here supports that action.

Why is there a different legal standard if you are an individual or a corporation?

Coke has built consumer loyalty. If they find they can save money with corn syrup over cane sugar, it is a business decision. If the consumers don't like it, switch. If consumers say corn syrup coke is still better than their next choice, Coke has done an amazing job of customer loyalty.

To support lawless actions by consumers against a corporation is immoral. If consumers quit buying coke, coke would change or go broke. They cannot control consumers any more than Tyson or Cargill can control consumers.

By the scenario of coke, some contributors to this thread would support consumers buying illegal beef products from the country of their choice and importing them into the US.

Jason, there was no breaking of the law by consumers. Importing the bootleg coke was just a breaking of the bottler's agreement with coke. There were no laws that were being broken at all. The article pointed that fact out. The lawyers for coke were going to possibly sue the Mexican bottlers.

It is interesting how you jump to the conclusions without facts on the side of the large corporation. You have a pattern of doing this. MRJ also said you had good points. Interesting. Very interesting.
 

DiamondSCattleCo

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~SH~ said:
WHO IS FORCING CONSUMERS TO BUY NAME BRAND POP WHEN GENERIC POP IS SELLING FOR 1/2 THE PRICE?????

You completely missed my point, SH. Generic cola doesn't even enter into the arguement as we've already established that the Coke drinkers first choice is Cane Coke and their second choice is Corn Coke. In order to get their choice in drink, consumers have been forced to buy bootleg Cane Coke which breaks a bottlers agreement (not a law). This points to a flaw in the market. Consumers should not have to bootleg product to get what they want. Companies should immediately respond to the demand or attempt to convince the consumer that the demand is inappropriate, not call their lawyers to squelch competition, even innappropriate competition. We've already established that it would be nearly impossible for another company to make a cola that tastes identical to Cane Coke without probably infringing on their patent, so that bars another company from competing. And I've already agreed that another company can attempt to "build a better Cane Coke", but it would take years and in the meantime the consumer has to suffer because Coke's market penetration has allowed them to ignore consumer demand.

~SH~ said:
No wonder you guys are telling others how to make a fortune instead of making it yourself.

I don't know about Econ, but I've learned that the pursuit of happiness is a much more productive way to spend a life than the pursuit of the almighty buck, and as such, am now fighting against that which is preventing me from pursuing my happiness.

I think its rediculous when society has crumbled to the point that both mother and father have to work simply to keep the kids fed and watered, a decent vehicle in the driveway, and clothes on their backs, while multinational corporations post profits in the billions.

~SH~ said:
Conman has never had a valid point because he never brings anything to the table to support his "theories" other than more theories.

Now SH, you're allowing emotion to get in the way in this thread. Econ simply posted a news story, nothing more.

~SH~ said:
That is precisely why Armour, Swift, Wilson, Cudahey, and Morris became Excel, ibp, Monfort, National Beef, and Beef America which became Excel, Tyson, Swift & Co., Smithfield and USPB.

I'm missing your point SH. You're not talking competition, you're talking about ownership changes along with name changes.

~SH~ said:
That's what we have. Tyson, Excel, USPB, Smithfield, Greater Omaha, and Swift are all competing for the same cattle. To suggest otherwise is living in fairyland.

Its already been established that varying packers concentrate on different markets, by the packers own admissions. So now we're down to a couple different packers who are seriously bidding on a particular animal as it walks into the salebarn. Thats not competition.

~SH~ said:
No packing company is currently big enough to restrict competition. The largest market share is less than 1/3.

It only takes 15% of a market to be able to have a steady influence on prices within that market. This isn't theory, but economic reality. If you have a single company with 1/3 the market, they essentially own that market. Again, not economic theory, but reality.

~SH~ said:
I totally disagree. Using that logic, there should be no competition between Ford, Dodge, and Chevy either.
Or Peterbilt, Kenworth, Volva, and Freightliner.
Or Winchester, Ruger, Remington, and Marlin.

Completely different markets. Lets use the Ford, Dodge, Chevy one for a minute. The automotive market has literally dozens of options for the buyer, hundreds if you count tier 2. Production numbers in the automotive industry don't even come close to the packing industry, yet you have more major players. Thats why there is alot of genuine competition in the automotive industry. Edit: Lets also not forget the import market. Before imports hit the US shores, the big 3 were on pretty solid ground (if you forget about Chrysler's mismanagement). Profits were solid, and thankfully, the corporate environment was still service oriented and paid attention to the demands of consumers. If the imports hadn't breached our shores, I shudder to think of where we'd be right now.

~SH~ said:
Through the 90's, the average per head profit for the 5 largest packers was $3.88 per head.

Those numbers come from the packers themselves. I don't buy them. Lets take 5 culls I shipped yesterday as an example. I received $27.25/cwt, which was almost top of the market. Total weight was 5702 lbs and I received $1553.79. After freight, salebarn comissions, check off, etc etc, I got a cheque for $1301. So $260/animal.

A couple of those animals were 2 year old heifers, so they aren't going for hamburger, but just to make it easier, we'll assume thats where they end up. We'll even make it easier and assume that only 50% of the animals are used, even though we both know an Angus is going to give more than 50%. So 2851 lbs of hamburger, or 570.2 lbs of hamburger on each animal. Regular ground beef today at the Co-op was $1.99/lb. So $1135.00 for each animal.

So where in hell did the $875 go? I know the buyer who bought my animals. He gets 3% of the original $1554.00. So $6.92/animal. We're now down to 868.08. The animals went straight to the packing plant on a cattleliner at an absolute max of $15/animal trucking, and probably closer to $8/head. We're down to $853 total profit on the animal thus far.

My local Co-op gets a 20% markup on beef. Which means they paid $945 for that animal or $190 profit. So that leave $663 profit made on that animal.

Only two places could have made that profit: The packer or the middleman who sold to the Co-op, who in this particular case, happens to be the packer.

So since the packers are only making $3.88/animal, does that mean they are really so inefficient that it costs them $659.12 to process the animal, cover their admin costs and keep the lights on? And we haven't even gotten into the parts of the animal that went for fido food and other uses. Come on yourself. The $3.88/head is simply a bookeeper managing to work the numbers so it doesn't appear as though the packer is raping the marketplace.

Rod
 

Econ101

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DiamondSCattleCo said:
~SH~ said:
WHO IS FORCING CONSUMERS TO BUY NAME BRAND POP WHEN GENERIC POP IS SELLING FOR 1/2 THE PRICE?????

You completely missed my point, SH. Generic cola doesn't even enter into the arguement as we've already established that the Coke drinkers first choice is Cane Coke and their second choice is Corn Coke. In order to get their choice in drink, consumers have been forced to buy bootleg Cane Coke which breaks a bottlers agreement (not a law). This points to a flaw in the market. Consumers should not have to bootleg product to get what they want. Companies should immediately respond to the demand or attempt to convince the consumer that the demand is inappropriate, not call their lawyers to squelch competition, even innappropriate competition. We've already established that it would be nearly impossible for another company to make a cola that tastes identical to Cane Coke without probably infringing on their patent, so that bars another company from competing. And I've already agreed that another company can attempt to "build a better Cane Coke", but it would take years and in the meantime the consumer has to suffer because Coke's market penetration has allowed them to ignore consumer demand.

~SH~ said:
No wonder you guys are telling others how to make a fortune instead of making it yourself.

I don't know about Econ, but I've learned that the pursuit of happiness is a much more productive way to spend a life than the pursuit of the almighty buck, and as such, am now fighting against that which is preventing me from pursuing my happiness.

I think its rediculous when society has crumbled to the point that both mother and father have to work simply to keep the kids fed and watered, a decent vehicle in the driveway, and clothes on their backs, while multinational corporations post profits in the billions.

~SH~ said:
Conman has never had a valid point because he never brings anything to the table to support his "theories" other than more theories.

Now SH, you're allowing emotion to get in the way in this thread. Econ simply posted a news story, nothing more.

~SH~ said:
That is precisely why Armour, Swift, Wilson, Cudahey, and Morris became Excel, ibp, Monfort, National Beef, and Beef America which became Excel, Tyson, Swift & Co., Smithfield and USPB.

I'm missing your point SH. You're not talking competition, you're talking about ownership changes along with name changes.

~SH~ said:
That's what we have. Tyson, Excel, USPB, Smithfield, Greater Omaha, and Swift are all competing for the same cattle. To suggest otherwise is living in fairyland.

Its already been established that varying packers concentrate on different markets, by the packers own admissions. So now we're down to a couple different packers who are seriously bidding on a particular animal as it walks into the salebarn. Thats not competition.

~SH~ said:
No packing company is currently big enough to restrict competition. The largest market share is less than 1/3.

It only takes 15% of a market to be able to have a steady influence on prices within that market. This isn't theory, but economic reality. If you have a single company with 1/3 the market, they essentially own that market. Again, not economic theory, but reality.

~SH~ said:
I totally disagree. Using that logic, there should be no competition between Ford, Dodge, and Chevy either.
Or Peterbilt, Kenworth, Volva, and Freightliner.
Or Winchester, Ruger, Remington, and Marlin.

Completely different markets. Lets use the Ford, Dodge, Chevy one for a minute. The automotive market has literally dozens of options for the buyer, hundreds if you count tier 2. Sheer product numbers in the automotive industry don't even come close to the packing industry, yet you have more major players. Thats why there is alot of genuine competition in the automotive industry.

~SH~ said:
Through the 90's, the average per head profit for the 5 largest packers was $3.88 per head.

Those numbers come from the packers themselves. I don't buy them. Lets take 5 culls I shipped yesterday as an example. I received $27.25/cwt, which was almost top of the market. Total weight was 5702 lbs and I received $1553.79. After freight, salebarn comissions, check off, etc etc, I got a cheque for $1301. So $260/animal.

A couple of those animals were 2 year old heifers, so they aren't going for hamburger, but just to make it easier, we'll assume thats where they end up. We'll even make it easier and assume that only 50% of the animals are used, even though we both know an Angus is going to give more than 50%. So 2851 lbs of hamburger, or 570.2 lbs of hamburger on each animal. Regular ground beef today at the Co-op was $1.99/lb. So $1135.00 for each animal.

So where in hell did the $875 go? I know the buyer who bought my animals. He gets 3% of the original $1554.00. So $6.92/animal. We're now down to 868.08. The animals went straight to the packing plant on a cattleliner at an absolute max of $15/animal trucking, and probably closer to $8/head. We're down to $853 total profit on the animal thus far.

My local Co-op gets a 20% markup on beef. Which means they paid $945 for that animal or $190 profit. So that leave $663 profit made on that animal.

Only two places could have made that profit: The packer or the middleman who sold to the Co-op, who in this particular case, happens to be the packer.

So since the packers are only making $3.88/animal, does that mean they are really so inefficient that it costs them $659.12 to process the animal, cover their admin costs and keep the lights on? And we haven't even gotten into the parts of the animal that went for fido food and other uses. Come on yourself. The $3.88/head is simply a bookeeper managing to work the numbers so it doesn't appear as though the packer is raping the marketplace.

Rod

Rod, you are right about the money and happiness thing. For this post you get a 10 gallon Texas hat---and a case of corona.
 

rkaiser

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A Diamond post -
~SH~ wrote:
WHO IS FORCING CONSUMERS TO BUY NAME BRAND POP WHEN GENERIC POP IS SELLING FOR 1/2 THE PRICE?????


You completely missed my point, SH. Generic cola doesn't even enter into the arguement as we've already established that the Coke drinkers first choice is Cane Coke and their second choice is Corn Coke. In order to get their choice in drink, consumers have been forced to buy bootleg Cane Coke which breaks a bottlers agreement (not a law). This points to a flaw in the market. Consumers should not have to bootleg product to get what they want. Companies should immediately respond to the demand or attempt to convince the consumer that the demand is inappropriate, not call their lawyers to squelch competition, even innappropriate competition. We've already established that it would be nearly impossible for another company to make a cola that tastes identical to Cane Coke without probably infringing on their patent, so that bars another company from competing. And I've already agreed that another company can attempt to "build a better Cane Coke", but it would take years and in the meantime the consumer has to suffer because Coke's market penetration has allowed them to ignore consumer demand.

~SH~ wrote:
No wonder you guys are telling others how to make a fortune instead of making it yourself.


I don't know about Econ, but I've learned that the pursuit of happiness is a much more productive way to spend a life than the pursuit of the almighty buck, and as such, am now fighting against that which is preventing me from pursuing my happiness.

I think its rediculous when society has crumbled to the point that both mother and father have to work simply to keep the kids fed and watered, a decent vehicle in the driveway, and clothes on their backs, while multinational corporations post profits in the billions.

~SH~ wrote:
Conman has never had a valid point because he never brings anything to the table to support his "theories" other than more theories.


Now SH, you're allowing emotion to get in the way in this thread. Econ simply posted a news story, nothing more.

~SH~ wrote:
That is precisely why Armour, Swift, Wilson, Cudahey, and Morris became Excel, ibp, Monfort, National Beef, and Beef America which became Excel, Tyson, Swift & Co., Smithfield and USPB.


I'm missing your point SH. You're not talking competition, you're talking about ownership changes along with name changes.

~SH~ wrote:
That's what we have. Tyson, Excel, USPB, Smithfield, Greater Omaha, and Swift are all competing for the same cattle. To suggest otherwise is living in fairyland.


Its already been established that varying packers concentrate on different markets, by the packers own admissions. So now we're down to a couple different packers who are seriously bidding on a particular animal as it walks into the salebarn. Thats not competition.

~SH~ wrote:
No packing company is currently big enough to restrict competition. The largest market share is less than 1/3.


It only takes 15% of a market to be able to have a steady influence on prices within that market. This isn't theory, but economic reality. If you have a single company with 1/3 the market, they essentially own that market. Again, not economic theory, but reality.

~SH~ wrote:
I totally disagree. Using that logic, there should be no competition between Ford, Dodge, and Chevy either.
Or Peterbilt, Kenworth, Volva, and Freightliner.
Or Winchester, Ruger, Remington, and Marlin.


Completely different markets. Lets use the Ford, Dodge, Chevy one for a minute. The automotive market has literally dozens of options for the buyer, hundreds if you count tier 2. Sheer product numbers in the automotive industry don't even come close to the packing industry, yet you have more major players. Thats why there is alot of genuine competition in the automotive industry.

~SH~ wrote:
Through the 90's, the average per head profit for the 5 largest packers was $3.88 per head.


Those numbers come from the packers themselves. I don't buy them. Lets take 5 culls I shipped yesterday as an example. I received $27.25/cwt, which was almost top of the market. Total weight was 5702 lbs and I received $1553.79. After freight, salebarn comissions, check off, etc etc, I got a cheque for $1301. So $260/animal.

A couple of those animals were 2 year old heifers, so they aren't going for hamburger, but just to make it easier, we'll assume thats where they end up. We'll even make it easier and assume that only 50% of the animals are used, even though we both know an Angus is going to give more than 50%. So 2851 lbs of hamburger, or 570.2 lbs of hamburger on each animal. Regular ground beef today at the Co-op was $1.99/lb. So $1135.00 for each animal.

So where in hell did the $875 go? I know the buyer who bought my animals. He gets 3% of the original $1554.00. So $6.92/animal. We're now down to 868.08. The animals went straight to the packing plant on a cattleliner at an absolute max of $15/animal trucking, and probably closer to $8/head. We're down to $853 total profit on the animal thus far.

My local Co-op gets a 20% markup on beef. Which means they paid $945 for that animal or $190 profit. So that leave $663 profit made on that animal.

Only two places could have made that profit: The packer or the middleman who sold to the Co-op, who in this particular case, happens to be the packer.

So since the packers are only making $3.88/animal, does that mean they are really so inefficient that it costs them $659.12 to process the animal, cover their admin costs and keep the lights on? And we haven't even gotten into the parts of the animal that went for fido food and other uses. Come on yourself. The $3.88/head is simply a bookeeper managing to work the numbers so it doesn't appear as though the packer is raping the marketplace.

Rod

Cool as a friggin cucumber. Where do I get some of that DiamondS?
 

Sandhusker

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rkaiser said:
A Diamond post -
~SH~ wrote:
WHO IS FORCING CONSUMERS TO BUY NAME BRAND POP WHEN GENERIC POP IS SELLING FOR 1/2 THE PRICE?????


You completely missed my point, SH. Generic cola doesn't even enter into the arguement as we've already established that the Coke drinkers first choice is Cane Coke and their second choice is Corn Coke. In order to get their choice in drink, consumers have been forced to buy bootleg Cane Coke which breaks a bottlers agreement (not a law). This points to a flaw in the market. Consumers should not have to bootleg product to get what they want. Companies should immediately respond to the demand or attempt to convince the consumer that the demand is inappropriate, not call their lawyers to squelch competition, even innappropriate competition. We've already established that it would be nearly impossible for another company to make a cola that tastes identical to Cane Coke without probably infringing on their patent, so that bars another company from competing. And I've already agreed that another company can attempt to "build a better Cane Coke", but it would take years and in the meantime the consumer has to suffer because Coke's market penetration has allowed them to ignore consumer demand.

~SH~ wrote:
No wonder you guys are telling others how to make a fortune instead of making it yourself.


I don't know about Econ, but I've learned that the pursuit of happiness is a much more productive way to spend a life than the pursuit of the almighty buck, and as such, am now fighting against that which is preventing me from pursuing my happiness.

I think its rediculous when society has crumbled to the point that both mother and father have to work simply to keep the kids fed and watered, a decent vehicle in the driveway, and clothes on their backs, while multinational corporations post profits in the billions.

~SH~ wrote:
Conman has never had a valid point because he never brings anything to the table to support his "theories" other than more theories.


Now SH, you're allowing emotion to get in the way in this thread. Econ simply posted a news story, nothing more.

~SH~ wrote:
That is precisely why Armour, Swift, Wilson, Cudahey, and Morris became Excel, ibp, Monfort, National Beef, and Beef America which became Excel, Tyson, Swift & Co., Smithfield and USPB.


I'm missing your point SH. You're not talking competition, you're talking about ownership changes along with name changes.

~SH~ wrote:
That's what we have. Tyson, Excel, USPB, Smithfield, Greater Omaha, and Swift are all competing for the same cattle. To suggest otherwise is living in fairyland.


Its already been established that varying packers concentrate on different markets, by the packers own admissions. So now we're down to a couple different packers who are seriously bidding on a particular animal as it walks into the salebarn. Thats not competition.

~SH~ wrote:
No packing company is currently big enough to restrict competition. The largest market share is less than 1/3.


It only takes 15% of a market to be able to have a steady influence on prices within that market. This isn't theory, but economic reality. If you have a single company with 1/3 the market, they essentially own that market. Again, not economic theory, but reality.

~SH~ wrote:
I totally disagree. Using that logic, there should be no competition between Ford, Dodge, and Chevy either.
Or Peterbilt, Kenworth, Volva, and Freightliner.
Or Winchester, Ruger, Remington, and Marlin.


Completely different markets. Lets use the Ford, Dodge, Chevy one for a minute. The automotive market has literally dozens of options for the buyer, hundreds if you count tier 2. Sheer product numbers in the automotive industry don't even come close to the packing industry, yet you have more major players. Thats why there is alot of genuine competition in the automotive industry.

~SH~ wrote:
Through the 90's, the average per head profit for the 5 largest packers was $3.88 per head.


Those numbers come from the packers themselves. I don't buy them. Lets take 5 culls I shipped yesterday as an example. I received $27.25/cwt, which was almost top of the market. Total weight was 5702 lbs and I received $1553.79. After freight, salebarn comissions, check off, etc etc, I got a cheque for $1301. So $260/animal.

A couple of those animals were 2 year old heifers, so they aren't going for hamburger, but just to make it easier, we'll assume thats where they end up. We'll even make it easier and assume that only 50% of the animals are used, even though we both know an Angus is going to give more than 50%. So 2851 lbs of hamburger, or 570.2 lbs of hamburger on each animal. Regular ground beef today at the Co-op was $1.99/lb. So $1135.00 for each animal.

So where in hell did the $875 go? I know the buyer who bought my animals. He gets 3% of the original $1554.00. So $6.92/animal. We're now down to 868.08. The animals went straight to the packing plant on a cattleliner at an absolute max of $15/animal trucking, and probably closer to $8/head. We're down to $853 total profit on the animal thus far.

My local Co-op gets a 20% markup on beef. Which means they paid $945 for that animal or $190 profit. So that leave $663 profit made on that animal.

Only two places could have made that profit: The packer or the middleman who sold to the Co-op, who in this particular case, happens to be the packer.

So since the packers are only making $3.88/animal, does that mean they are really so inefficient that it costs them $659.12 to process the animal, cover their admin costs and keep the lights on? And we haven't even gotten into the parts of the animal that went for fido food and other uses. Come on yourself. The $3.88/head is simply a bookeeper managing to work the numbers so it doesn't appear as though the packer is raping the marketplace.

Rod

Cool as a friggin cucumber. Where do I get some of that DiamondS?

Daaaaang, this boy must of paid attention in school!
 

DiamondSCattleCo

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Econ101 said:
Rod, you are right about the money and happiness thing. For this post you get a 10 gallon Texas hat---and a case of corona.

:lol: Much appreciated. After the raping I took on my animals yesterday, Corona wasn't gonna be on the menu for awhile :lol:

Y'know, the older cows I didn't even mind taking the hit on too much. They'd been here awhile, earned their keep with good calves and paid for themselves. But those 2 yr olds ticked me off. I called the barn, thinking they'd gotten pre-sorted into the wrong pens, and ready to chew Ryan out, but they hadn't. They were in the 2nd from top pen of fat 2 yr olds. 27cents on good animals that likely would have graded.

Rod
 

rkaiser

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Graded all right. We had a taste test at the CBEF annual meeting last fall where the chef cooked identical cubes of beef from identical cuts off carcasses with A, AA, AAA, Choice, and a D1 grades.

Guess which one the group rated as number one.

Yeah it was the AAA ----- But number two was the D1 cow.
 
A

Anonymous

Guest
DSCC: "Consumers should not have to bootleg product to get what they want. Companies should immediately respond to the demand or attempt to convince the consumer that the demand is inappropriate, not call their lawyers to squelch competition, even innappropriate competition."

With all due respect, I highly doubt that Coke needs you to tell them how to run their business considering how long they have been in this business. If Coke is not meeting consumer demand, the demand for their product will suffer the consequences. End of story.


DSCC: "We've already established that it would be nearly impossible for another company to make a cola that tastes identical to Cane Coke without probably infringing on their patent, so that bars another company from competing. And I've already agreed that another company can attempt to "build a better Cane Coke", but it would take years and in the meantime the consumer has to suffer because Coke's market penetration has allowed them to ignore consumer demand."

Generic Coke is already available. Most consumers would not be able to tell the difference between it and real Coke. Consumers are buying the name. If they don't like the product, there is other sodas available. Again, Coke doesn't need you to tell them how to run their business.


DSCC: "I think its rediculous when society has crumbled to the point that both mother and father have to work simply to keep the kids fed and watered, a decent vehicle in the driveway, and clothes on their backs, while multinational corporations post profits in the billions."

Yup, there it is! CLASS ENVY! "How dare you be profitable if I'm not."

If I have heard it once I have heard it a hundred times.

If ranching is not profitable enough for you to meet your standard of living without both spouses working, perhaps you need to find another occupation because you're certainly not going to get anymore out of the packing industry.

Large successful packing companies do not owe you a living. If you think the packing industry is so profitable, invest in the packing industry and get your eyes opened.

When the Pickett plaintiffs sued ibp, ibp's profit information was subpoenoed into court. ibp's per head profits for this era of "SUPPOSED" market manipulation was $26 per head. Do you honestly believe that ibp owes you a larger share of that $26 per head when Harlan Hughe's ranch profitability data is showing a $250 per head difference between the high and low cost producers?

Break these "HUGE CORPORATE PACKER PROFITS" down on a per head basis and if another $5 per head is going to be the difference between profit and loss for you, you got bigger problems than packer profits.


DSCC: "I'm missing your point SH. You're not talking competition, you're talking about ownership changes along with name changes."

If the packing industry was not competitive, you'd see the same names expanding their companies but that's not happening because the packing industry is highly competitive.


DSCC: "Its already been established that varying packers concentrate on different markets, by the packers own admissions. So now we're down to a couple different packers who are seriously bidding on a particular animal as it walks into the salebarn. Thats not competition."

First off, every major packer out there is after those cattle that will grade choice. Their second concern is for better yielding cattle. There is not a major packer out there that would not bid on a pen of cattle that THEY BELIEVE will grade over 70% choice with over 70% Yield grade 1s and 2s. There is not a grid out there with any of the major packers that does not reward these same cattle.

I don't know where your salebarn example fits in because very few fat cattle are sold in the sale barns. Most fat cattle are sold in the feedlot by packer buyers who bid on the cattle in the pens.

The packing industry has never been more concentrated and cattle prices have never been higher. How do you explain that obvious fact in light of your belief that concentration hurts competition?

The obvious is too obvious for you isn't it?


DSCC: "It only takes 15% of a market to be able to have a steady influence on prices within that market. This isn't theory, but economic reality. If you have a single company with 1/3 the market, they essentially own that market. Again, not economic theory, but reality."

That is nothing more than conspiracy theory. Look at the obvious. Currently Tyson has about 1/3 of the market share. Cattle prices have never been higher. Tyson's profits have fluctuated very little. These obvious TANGIBLE facts blow your "theory" right out of the water.

HIGHEST CATTLE PRICES EVER RECORDED AND THE PACKING INDUSTRY HAS NEVER BEEN MORE CONCENTRATED.

You want to challenge that fact? Bring it!

The obvious is simply too obvious for you isn't it?


DSCC: "Completely different markets. Lets use the Ford, Dodge, Chevy one for a minute. The automotive market has literally dozens of options for the buyer, hundreds if you count tier 2. Sheer product numbers in the automotive industry don't even come close to the packing industry, yet you have more major players. Thats why there is alot of genuine competition in the automotive industry."

Doesn't matter if there is numerous options, those options still come from one of 3 major automobile manufacuturers just as over 300 individual beef packages come from a single carcass.

Industry concentration is industry concentration. Either it leads to lower prices or it doesn't. In the cattle/beef industry, it hasn't. You will offer no proof to the contrary.


DSCC: " Those numbers come from the packers themselves. I don't buy them."

Hahaha! Of course you don't buy them because it's not what you want to believe. Packer profitability information is available to GIPSA. The large corporate packers consistantly have about a 1.5% - 2% return on their investment. You consider that a "HUGE PROFIT"???

If you are so convinced these numbers are not accurate, open up a packing company and find out. Don't regulate the packer that you believe is too profitable, BE ONE!


DSCC: "Those numbers come from the packers themselves. I don't buy them. Lets take 5 culls I shipped yesterday as an example. I received $27.25/cwt, which was almost top of the market. Total weight was 5702 lbs and I received $1553.79. After freight, salebarn comissions, check off, etc etc, I got a cheque for $1301. So $260/animal.

A couple of those animals were 2 year old heifers, so they aren't going for hamburger, but just to make it easier, we'll assume thats where they end up. We'll even make it easier and assume that only 50% of the animals are used, even though we both know an Angus is going to give more than 50%. So 2851 lbs of hamburger, or 570.2 lbs of hamburger on each animal. Regular ground beef today at the Co-op was $1.99/lb. So $1135.00 for each animal.

So where in hell did the $875 go? I know the buyer who bought my animals. He gets 3% of the original $1554.00. So $6.92/animal. We're now down to 868.08. The animals went straight to the packing plant on a cattleliner at an absolute max of $15/animal trucking, and probably closer to $8/head. We're down to $853 total profit on the animal thus far.

My local Co-op gets a 20% markup on beef. Which means they paid $945 for that animal or $190 profit. So that leave $663 profit made on that animal.

Only two places could have made that profit: The packer or the middleman who sold to the Co-op, who in this particular case, happens to be the packer.

So since the packers are only making $3.88/animal, does that mean they are really so inefficient that it costs them $659.12 to process the animal, cover their admin costs and keep the lights on? And we haven't even gotten into the parts of the animal that went for fido food and other uses. Come on yourself. The $3.88/head is simply a bookeeper managing to work the numbers so it doesn't appear as though the packer is raping the marketplace."


How typical, Conman, Randy, and Sandbag all line up to nod their heads in agreement as you tell them what they want to hear but not one of them has enough common sense to even understand your obvious distortions. What a bunch of lemmings. Sandbag, we have been over this before. Why didn't you correct Rod? Yeh, I know, because he said what you want to believe, not what the facts support.


First off, HOW MUCH CULL COW BEEF SELLS FOR $1.99 PER POUND????

Try $1.00!

Second, an 1140 pound heiferette is going to yield 684 pounds of CARCASS, NOT BEEF. Of that Carcass, approximately 40% is bone and fat worth about $.08 per pound, NOT $1.99.


Your actual amount of ground beef is closer to 410 pounds off an 1140 pound carcass, not 570 pounds. The value of the ground beef from cull animals is about $1.00 per pound, not $1.99 per pound.

You missed this by a mile and Sandbag, Conman, and Randy the packer blamer all line up and nod their heads because you told them what they wanted to hear just like a typical R-Calf convention. Head nodders! Not one of them or you has enough knowledge about the packing industry to even know what percentage of the carcass is red meat and what it would be priced it.

NEXT!



~SH~
 
A

Anonymous

Guest
Great response Sandbag! Wow, you really buried me with your facts to back the $1.99 cull cow beef and 50% red meat yield.

Oh wait, you diverted again didn't you.

Imagine that!


~SH~
 

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