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Does Coke Compete for Producer's Dollar?

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~SH~ said:
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~

I was supposed to back something? I didn't make a statement. Hell, I wasn't even talking to you.
 
Sandbag: "Daaaaang, this boy must of paid attention in school!"

Did Cody highschool teach you that 1140 pound cull animals yielded 50% ground beef valued at $1.99 pound?

Nod your head Sandbag you lemming!



~SH~
 
~SH~ said:
Sandbag: "Daaaaang, this boy must of paid attention in school!"

Did Cody highschool teach you that 1140 pound cull animals yielded 50% ground beef valued at $1.99 pound?

Nod your head Sandbag you lemming!



~SH~

What Cody grad said it did? If you have a problem with Rod's statement, bring something to the table instead of snotty taunts.
 
Sandbag: "If you have a problem with Rod's statement, bring something to the table instead of snotty taunts."

I just did!

Did you have anything to add besides an "atta boy Rod, you're singing my packer blaming song"?


~SH~
 
~SH~ said:
Sandbag: "If you have a problem with Rod's statement, bring something to the table instead of snotty taunts."

I just did!

Did you have anything to add besides an "atta boy Rod, you're singing my packer blaming song"?


~SH~

Nothing that you could understand.
 
Sandbag: "Nothing that you could understand."

Yeh, keep telling yourself that. Beats making a fool of yourself again.

Here, "FETCH" (throws stick).


~SH~
 
~SH~ said:
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.

With all due respect, I'm not attempting to tell Coke how to operate, just pointing out a flaw in the market mechanism that you thus far have not been able to refute.

As far as the demand goes, Coke has enough market penetration that they are the #1 and #2 choices. Doesn't matter if its name recognition or genuine taste, but when a company has this much power they can ignore consumer demand secure in the knowledge that they are still the second choice, and as such, their profits will not be affected.

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

Whoops, wrong assumption SH. I ran with the big dawgs for awhile. Had the nifty sports car, the nice place to live, and plenty of cash. I gave it up because I didn't like the environment.

And I never said I wasn't profitable in the cattle industry. Quite the opposite in fact. I'm one of the lowest cost producers in the area, I simply don't have enough numbers to allow me to ranch fulltime and keep my family fed and watered. And as I posted on a thread a couple weeks back, the number of animals that I now need to run to ensure a decent standard of living (aforementioned decent car, clothes, food) is much higher than it ever was 30 or 40 years ago. I think its a shame that producers have been expected to get more and more efficient and productive, while the fruits of their labor are sucked up into a non-competitive industry.

~SH~ said:
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.

Agreed. And on these animals, the packers make out almost as well as they do on the cull animal market. Its late here tonight, but I'll crack off some numbers tomorrow.

Also, the packers in Saskatchewan no longer accept less than a liner load of fats from single source. Used to be a time when several producers could send a liner load in. So for most cow/calf producers in Saskatchewan, that means their fats will go through the barn. Its completely taken away a marketing avenue that we once had. Just to prevent confusion, the average cow/calf herd in Saskatchewan has 50 adults.

~SH~ said:
cattle prices have never been higher.

Maybe in the US. I'm Canadian. Our calf prices are finally starting to come around, thanks to the open border, but our fats and culls are still being stolen. You seem to forget that a multinational corporation operates in more than the just the US. They can take reduced profits in one country when their margins in another are massive.

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."

~SH~ said:
That is nothing more than conspiracy theory.

Not conspiracy theory. Those numbers are accepted by many economists, and are used by government agencies in competition analyses. Of course, I painted a pretty broad picture there. There have been some extraordinarily well run companies that were able to manipulate market pricing while their market shares were considerably lower. Of course, they did it gracefully, with superior products at lower prices, versus the hamhanded approach that multi-nationals use.

~SH~ said:
HIGHEST CATTLE PRICES EVER RECORDED AND THE PACKING INDUSTRY HAS NEVER BEEN MORE CONCENTRATED.

You want to challenge that fact? Bring it!

Certainly. 4 years ago, I was able to get 80 cents on old cull cows. My 8 weight steers were selling for $1.375. Todays market: 27 cents on the culls, and the top pen of 8 weights sold for $1.1895. Not quite record prices.

~SH~ said:
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.

Ummmm, Honda, Toyota, Isuzu, VW, Hyundai, Audi, Porche, etc etc etc. Consumers also have a valuable ally in the used car market. If new car prices climb too high, we can simply climb into the rich neighbors 2 year old car and be just as happy.

Anyone wanna buy a used streak?

~SH~ said:
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.

Concentration in the beef cattle market has not led to lower prices because there are insufficient suppliers for the supermarkets to choose from. The price is no longer set by consumer demand. Its much the same as my oil/gas company example. Packers 1 - 5 are going to charge X dollars per pound, knowing full well that their neighbor is charging the same amount, and knowing full well that Small Packer 1 - 5 cannot undercut them either, because of economies of scale.

~SH~ said:
Hahaha! Of course you don't buy them because it's not what you want to believe. Packer profitability information is available to GIPSA.

SH, you make friends with an accoutant who works for a large corporation. Your head would spin at the number of ways a good accountant can hide profit from auditors and the taxman, all the while turning those numbers around for the shareholders. Hell, my cattle company is incorporated. My actual reported profits to Canada Revenue are much lower than my actual cash profits, and best of all, its completely legal.

~SH~ said:
First off, HOW MUCH CULL COW BEEF SELLS FOR $1.99 PER POUND????

I'm Canadian. The cheap crap sells for a buck 99. The good lean ground beef is $3.50/lb. You know where that lean ground beef comes from? Gummy culls that are stolen for 10 cents/lb.

~SH~ said:
Your actual amount of ground beef is closer to 410

Ok, we'll use your 410, even though I know its closer to 450 or 460 on the buck 99 junk. I do apologize for my 570. Brain fart.

Thats still $815.90. Co-ops 20% profit margin means that they paid 679.92 for that beef. Minus my 260, the buyers 6.92 and the exorbitant trucking of $15. So we're still at $397.99, and we still haven't counted the pooch food and other value added markets. I remember reading a Cargill newsletter once that said they made use of over 80% of an animal. They've got a profit of $397.99 on the first 40%.

And we still haven't counted the 2 yr olds who likely would have graded and went for roasts (poor roasts - $5.00 lb up here) or poor steaks ($3.99).

Sorry SH. You're a long ways off from the $3.88/animal.

Rod
 
Sandhusker said:
Welcome to the blamer's camp, Rod. :lol: Hmmm, I wonder what your name will be?

:lol: Thanks. I'm not sure what I'll be called, but I pretty much answer to everything. :lol:

Or is there a censor in here?

Rod
 
Rod did I miss where you accounted for processing the cows?

Wages, utilities, transportation, disposal of SRM, waste, spoilage, maintainance, and other costs are incured by those after you.

Cull cows never hit 80 cents in Canada, some bulls did, but not cows. 65 was about tops.

It still wasn't adressed why coke using lawyers is wrong, yet R-half is right?

You talk about your cash operating profit vs your reported income to Canada Revenue. The depreciation and past losses you carry forward are legitimate business expenses and you take advantage of them. Should a packer not be allowed the same courtesy?

Plants need to be renovated and even rebuilt from time to time. If the company is not allowed some room to pay for those expenses they are destined to go bankrupt when the equity of the plant is used up.

Everyone talks about a level playing field. Why should bigger players be penalized just because they are big?

How many cows does a rancher need to own before they shouldn't be allowed to depreciate machinery?

Excess regulation will cause troubles. Rule against one segment and see the rule come back and bite those who made the rule.
 
Jason said:
Rod did I miss where you accounted for processing the cows?

Wages, utilities, transportation, disposal of SRM, waste, spoilage, maintainance, and other costs are incured by those after you.

Cull cows never hit 80 cents in Canada, some bulls did, but not cows. 65 was about tops.

It still wasn't adressed why coke using lawyers is wrong, yet R-half is right?

You talk about your cash operating profit vs your reported income to Canada Revenue. The depreciation and past losses you carry forward are legitimate business expenses and you take advantage of them. Should a packer not be allowed the same courtesy?

Plants need to be renovated and even rebuilt from time to time. If the company is not allowed some room to pay for those expenses they are destined to go bankrupt when the equity of the plant is used up.

Everyone talks about a level playing field. Why should bigger players be penalized just because they are big?

How many cows does a rancher need to own before they shouldn't be allowed to depreciate machinery?

Excess regulation will cause troubles. Rule against one segment and see the rule come back and bite those who made the rule.

Jason, do you ever learn anything? It is about market power that is used to subvert the highest efficiency of supply and demand markets in order to gain more profits for a few.
 
Jason said:
1) Wages, utilities, transportation, disposal of SRM, waste, spoilage, maintainance, and other costs are incured by those after you.

2) Cull cows never hit 80 cents in Canada, some bulls did, but not cows. 65 was about tops.

3) It still wasn't adressed why coke using lawyers is wrong, yet R-half is right?

4) You talk about your cash operating profit vs your reported income to Canada Revenue. The depreciation and past losses you carry forward are legitimate business expenses and you take advantage of them. Should a packer not be allowed the same courtesy?

1) Sorry Jason, I should have stated gross profit for the packer of $397. I did take into account transport before it got to the packer, and all other costs before packer were included in my calculation.

But since packers are reporting $3.88/animal, does that mean they are really that inefficient that it costs them $393 to process, keep the lights on, pay wages, dispose of waste (which isn't all that costly. A friend runs a trucking outfit that hauls waste from Moose Jaw. Cheap rates), and handle other overhead? No way. If so, then they are one of the most ineffecient companies I've ever seen.

2) Culls hit 83 cents in Kelvington. I know, because I shipped a couple old culls and was amazed at the price. Of course, this was before some market consolidation, chicken and pork demand was off, and I happened to hit the market at the right time.

3) I didn't argue the R-Calf using lawyers is wrong, because I think it is. Lawyers have no place in a genuine free market. If government isn't governing properly, then they need to be called to the carpet.

4) What I'm saying is that Revenue Canada's depreciation laws are kind of a joke. Its nice for those who are smart enough to take advantage of them, but still doesn't change their inaccuracy. For example, I'm able to FULLY depreciate a piece of equipment, and if its sold for less than a certain percentage of its original value (I can't remember the number, my accountant looks after that side of it), I don't have to claim it back. A certain percentage of my income is tax free and is allowed to be used for re-investment and capital gains. However I never actually need to show I used it for such. And the percentage is much higher than I need for re-investment. And why are corporations allowed certain write offs that a privately held company doesn't have access to? And why is that corporation taxed at a different rate than a privately held company?

The playing field is not level, but it could be made that way with REDUCED regulation and proper policing of the current regs. Many corporation bury their excess profits in entertainment expenses. I think these write offs should be gone. Make it easier for the tax man to audit, and it eliminates the Banff cabin with the hot tub and ski bunny. We've just eliminated an inefficiency in the market.

Rod
 
Rod, I appreciate a civil debate.

Do you know the costs of labor etc to process a cow? You say it can't be $393. I agree but it isn't $50 either.

SRM removal alone hit $150-200. Every $1 increase in wages at a plant the size of Cargill adds $10 to the cost of a carcass. Wages here are over $11, that's another $110 per animal. We haven't even touched natural gas, electric, or other costs.

Retailers have costs as well. You allow 20% to cover that and maybe that does it, but from numbers we've seen come out I wouldn't be willing to bet on it. Retailers actual profit margin on beef is usually 1% after expenses. This was confirmed by Macon who used to run a chain of stores.

So it becomes a question of do you think packers deserve to make a profit? Is their profit always the same?

You said you don't think coke should be allowed to use lawyers to protect their business interests when contracts are broken, how about at the WTO level?

Depreciation laws are the same for everyone. You still have to buy that equipment if you want to depreciate it. If it is fully depreciated it likely doesn't sell for much. If it recovers costs depreciated your accountant might hide it, but there is a cost (it usually is offset by further depreciation so a person doesn't see it). Regardless, all businesses have the same options available. Do you just buy a new truck to depreciate it even if you are losing money? I sure don't. Even when I make money there are enough expenses that need to be covered I have never had to buy machinery that I didn't need.

What law(s) do you think would benefit the industry? No one has been able to show proof of collusion, just vague accusations of market power based on jealousy of size matters.
 
Jason said:
Rod, I appreciate a civil debate.

Do you know the costs of labor etc to process a cow? You say it can't be $393. I agree but it isn't $50 either.

SRM removal alone hit $150-200. Every $1 increase in wages at a plant the size of Cargill adds $10 to the cost of a carcass. Wages here are over $11, that's another $110 per animal. We haven't even touched natural gas, electric, or other costs.

Retailers have costs as well. You allow 20% to cover that and maybe that does it, but from numbers we've seen come out I wouldn't be willing to bet on it. Retailers actual profit margin on beef is usually 1% after expenses. This was confirmed by Macon who used to run a chain of stores.

So it becomes a question of do you think packers deserve to make a profit? Is their profit always the same?

You said you don't think coke should be allowed to use lawyers to protect their business interests when contracts are broken, how about at the WTO level?

Depreciation laws are the same for everyone. You still have to buy that equipment if you want to depreciate it. If it is fully depreciated it likely doesn't sell for much. If it recovers costs depreciated your accountant might hide it, but there is a cost (it usually is offset by further depreciation so a person doesn't see it). Regardless, all businesses have the same options available. Do you just buy a new truck to depreciate it even if you are losing money? I sure don't. Even when I make money there are enough expenses that need to be covered I have never had to buy machinery that I didn't need.

What law(s) do you think would benefit the industry? No one has been able to show proof of collusion, just vague accusations of market power based on jealousy of size matters.

Nobody has been able to prove to you, Jason. It has been proven to jurors in the U.S. where it is supposed to matter. I am not jealous of anyone. I am concerned about being treated fairly.

The problem with middle men is that when they have enough market power they are able to take from the producers what should be theirs. That is the reason for the PSA. It limits their ability to do that to producers (as has historically been the case). It also limits their abilty to do that to consumers. We have these kind of laws to make sure that market power does not create inefficiencies in the economy and deadweight losses, and permanent members of an industry when "they get it wrong". The coke example was an example of market power being exerted without the influences of competition. When this happens consumers lose. Competition is what keeps the markets operating at top efficiency and market power, when exerted, always thwarts that efficiency.

Jason, what do you say is the cost of processing an animal? Do you have any "real" numbers? How about "real" numbers on the overhead you pointed out? How about "real" numbers on SRM removal. I warn you, unless you are operating the company yourself and have access to the accounting information and competetency in reading those numbers (Sarbanes Oxley requires this of U.S. execs since they feigned incompetence in several fraud cases in the U.S.) you are making arguments only on guesses. As Rod pointed out, the company has an interest in making that number as unrealistically high as they can for propaganda reasons.

I would like to turn a question around that is always brought up by some on this discussion board. SH is fond of saying, and I have heard it from you also, if the packers are making so much money then why don't you open a packing plant (or coke plant). My question is why? Should we allow companies to get away with the illegal abuse of market power just so that they can earn more money? Do we have to always use the argument if you can't beat them, then join them, when they are getting some of their gains through cheating the producers or consumers through the illegal use of market power just because people like you don't understand what is happening? How about this statement: If the packers or those with market power don't want to be in the market they are in, they can sell out. Using market power to build illegal barriers to entry, or to illegally increase profitabilty is still against the law. Whether they are profitable at these endeavors or not is not a defense. To say so would allow someone who robbed a bank to claim that if the money robbed from the bank did not cover his living expenses, his get away car, the guns he used, the entertainment he had, then he could be excused from the act of robbery? That is the "logic" being employed under this argument.

The coke example clearly shows that it is vigorous competition that meets consumer demand, not a market where competition was driven out and then the market power exploited at the expense of the consumer or producer surplus. Market power gets in the way of that competition element in a free market. It always creates deadweight losses in an economy and economic inefficiencies. That is why the U.S. has the Sherman, Clayton, Robinson-Patman, and the PSA acts. I am not saying that coke has broken any laws, but they have made "bad" management decisions that can be forced on the market because of their market power.

The coke example was an example SH first brought up that was clearly missued in his "logic" on market concentration. The conservative Wall Street Journal seems to agree.
 
Econ101 said:
Jason said:
Rod, I appreciate a civil debate.

Do you know the costs of labor etc to process a cow? You say it can't be $393. I agree but it isn't $50 either.

SRM removal alone hit $150-200. Every $1 increase in wages at a plant the size of Cargill adds $10 to the cost of a carcass. Wages here are over $11, that's another $110 per animal. We haven't even touched natural gas, electric, or other costs.

Retailers have costs as well. You allow 20% to cover that and maybe that does it, but from numbers we've seen come out I wouldn't be willing to bet on it. Retailers actual profit margin on beef is usually 1% after expenses. This was confirmed by Macon who used to run a chain of stores.

So it becomes a question of do you think packers deserve to make a profit? Is their profit always the same?

You said you don't think coke should be allowed to use lawyers to protect their business interests when contracts are broken, how about at the WTO level?

Depreciation laws are the same for everyone. You still have to buy that equipment if you want to depreciate it. If it is fully depreciated it likely doesn't sell for much. If it recovers costs depreciated your accountant might hide it, but there is a cost (it usually is offset by further depreciation so a person doesn't see it). Regardless, all businesses have the same options available. Do you just buy a new truck to depreciate it even if you are losing money? I sure don't. Even when I make money there are enough expenses that need to be covered I have never had to buy machinery that I didn't need.

What law(s) do you think would benefit the industry? No one has been able to show proof of collusion, just vague accusations of market power based on jealousy of size matters.

Nobody has been able to prove to you, Jason. It has been proven to jurors in the U.S. where it is supposed to matter. I am not jealous of anyone. I am concerned about being treated fairly.

The problem with middle men is that when they have enough market power they are able to take from the producers what should be theirs. That is the reason for the PSA. It limits their ability to do that to producers (as has historically been the case). It also limits their abilty to do that to consumers. We have these kind of laws to make sure that market power does not create inefficiencies in the economy and deadweight losses, and permanent members of an industry when "they get it wrong". The coke example was an example of market power being exerted without the influences of competition. When this happens consumers lose. Competition is what keeps the markets operating at top efficiency and market power, when exerted, always thwarts that efficiency.

Jason, what do you say is the cost of processing an animal? Do you have any "real" numbers? How about "real" numbers on the overhead you pointed out? How about "real" numbers on SRM removal. I warn you, unless you are operating the company yourself and have access to the accounting information and competetency in reading those numbers (Sarbanes Oxley requires this of U.S. execs since they feigned incompetence in several fraud cases in the U.S.) you are making arguments only on guesses. As Rod pointed out, the company has an interest in making that number as unrealistically high as they can for propaganda reasons.

I would like to turn a question around that is always brought up by some on this discussion board. SH is fond of saying, and I have heard it from you also, if the packers are making so much money then why don't you open a packing plant (or coke plant). My question is why? Should we allow companies to get away with the illegal abuse of market power just so that they can earn more money? Do we have to always use the argument if you can't beat them, then join them, when they are getting some of their gains through cheating the producers or consumers through the illegal use of market power just because people like you don't understand what is happening? How about this statement: If the packers or those with market power don't want to be in the market they are in, they can sell out. Using market power to build illegal barriers to entry, or to illegally increase profitabilty is still against the law. Whether they are profitable at these endeavors or not is not a defense. To say so would allow someone who robbed a bank to claim that if the money robbed from the bank did not cover his living expenses, his get away car, the guns he used, the entertainment he had, then he could be excused from the act of robbery? That is the "logic" being employed under this argument.

The coke example clearly shows that it is vigorous competition that meets consumer demand, not a market where competition was driven out and then the market power exploited at the expense of the consumer or producer surplus. Market power gets in the way of that competition element in a free market. It always creates deadweight losses in an economy and economic inefficiencies. That is why the U.S. has the Sherman, Clayton, Robinson-Patman, and the PSA acts. I am not saying that coke has broken any laws, but they have made "bad" management decisions that can be forced on the market because of their market power.

The coke example was an example SH first brought up that was clearly missued in his "logic" on market concentration. The conservative Wall Street Journal seems to agree.


Econ, this is pertinent to a LOT of your HUGE number of posts: do you believe that EVERY jury decision is correct, and that NO judge is EVER correct in overturning a jury decision for any reason?

What about the apparent fact that there are jurisdictions where juries are very prone to decide against those businesses and individuals assumed to have "deep pockets"? Do you say that is possible, or impossible?

MRJ
 
MRJ said:
Econ101 said:
Jason said:
Rod, I appreciate a civil debate.

Do you know the costs of labor etc to process a cow? You say it can't be $393. I agree but it isn't $50 either.

SRM removal alone hit $150-200. Every $1 increase in wages at a plant the size of Cargill adds $10 to the cost of a carcass. Wages here are over $11, that's another $110 per animal. We haven't even touched natural gas, electric, or other costs.

Retailers have costs as well. You allow 20% to cover that and maybe that does it, but from numbers we've seen come out I wouldn't be willing to bet on it. Retailers actual profit margin on beef is usually 1% after expenses. This was confirmed by Macon who used to run a chain of stores.

So it becomes a question of do you think packers deserve to make a profit? Is their profit always the same?

You said you don't think coke should be allowed to use lawyers to protect their business interests when contracts are broken, how about at the WTO level?

Depreciation laws are the same for everyone. You still have to buy that equipment if you want to depreciate it. If it is fully depreciated it likely doesn't sell for much. If it recovers costs depreciated your accountant might hide it, but there is a cost (it usually is offset by further depreciation so a person doesn't see it). Regardless, all businesses have the same options available. Do you just buy a new truck to depreciate it even if you are losing money? I sure don't. Even when I make money there are enough expenses that need to be covered I have never had to buy machinery that I didn't need.

What law(s) do you think would benefit the industry? No one has been able to show proof of collusion, just vague accusations of market power based on jealousy of size matters.

Nobody has been able to prove to you, Jason. It has been proven to jurors in the U.S. where it is supposed to matter. I am not jealous of anyone. I am concerned about being treated fairly.

The problem with middle men is that when they have enough market power they are able to take from the producers what should be theirs. That is the reason for the PSA. It limits their ability to do that to producers (as has historically been the case). It also limits their abilty to do that to consumers. We have these kind of laws to make sure that market power does not create inefficiencies in the economy and deadweight losses, and permanent members of an industry when "they get it wrong". The coke example was an example of market power being exerted without the influences of competition. When this happens consumers lose. Competition is what keeps the markets operating at top efficiency and market power, when exerted, always thwarts that efficiency.

Jason, what do you say is the cost of processing an animal? Do you have any "real" numbers? How about "real" numbers on the overhead you pointed out? How about "real" numbers on SRM removal. I warn you, unless you are operating the company yourself and have access to the accounting information and competetency in reading those numbers (Sarbanes Oxley requires this of U.S. execs since they feigned incompetence in several fraud cases in the U.S.) you are making arguments only on guesses. As Rod pointed out, the company has an interest in making that number as unrealistically high as they can for propaganda reasons.

I would like to turn a question around that is always brought up by some on this discussion board. SH is fond of saying, and I have heard it from you also, if the packers are making so much money then why don't you open a packing plant (or coke plant). My question is why? Should we allow companies to get away with the illegal abuse of market power just so that they can earn more money? Do we have to always use the argument if you can't beat them, then join them, when they are getting some of their gains through cheating the producers or consumers through the illegal use of market power just because people like you don't understand what is happening? How about this statement: If the packers or those with market power don't want to be in the market they are in, they can sell out. Using market power to build illegal barriers to entry, or to illegally increase profitabilty is still against the law. Whether they are profitable at these endeavors or not is not a defense. To say so would allow someone who robbed a bank to claim that if the money robbed from the bank did not cover his living expenses, his get away car, the guns he used, the entertainment he had, then he could be excused from the act of robbery? That is the "logic" being employed under this argument.

The coke example clearly shows that it is vigorous competition that meets consumer demand, not a market where competition was driven out and then the market power exploited at the expense of the consumer or producer surplus. Market power gets in the way of that competition element in a free market. It always creates deadweight losses in an economy and economic inefficiencies. That is why the U.S. has the Sherman, Clayton, Robinson-Patman, and the PSA acts. I am not saying that coke has broken any laws, but they have made "bad" management decisions that can be forced on the market because of their market power.

The coke example was an example SH first brought up that was clearly missued in his "logic" on market concentration. The conservative Wall Street Journal seems to agree.


Econ, this is pertinent to a LOT of your HUGE number of posts: do you believe that EVERY jury decision is correct, and that NO judge is EVER correct in overturning a jury decision for any reason?

What about the apparent fact that there are jurisdictions where juries are very prone to decide against those businesses and individuals assumed to have "deep pockets"? Do you say that is possible, or impossible?

MRJ

No, MRJ, I do not believe that every jury decision is correct. I did not believe in the O J Simpson verdict. The judge in that case did not have the power to overturn the verdict in a practical sense. I know a lot about the race relations in L A. That was part of the problem in that case---a persistant abuse of judgement and power on the part of the police and law establishment as well as differences in opportunities in the community. I cringed when I saw the detective taking Simpson's blood sample before the lab results on the crime scene were analized and posted. It is surely one of the reasons the government lost their case.

I think the assertion you make here, "What about the apparent fact that there are jurisdictions where juries are very prone to decide against those businesses and individuals assumed to have "deep pockets"? Do you say that is possible, or impossible?", has the same burden of proof as the case itself. Just saying it isn't true. Proving it is required. It is a poor defense without that proof. None of that "proof" was offered in the judge's or the appellate decisions. Why do you have reason to believe it true?
 
Econ101 said:
MRJ said:
Econ101 said:
Nobody has been able to prove to you, Jason. It has been proven to jurors in the U.S. where it is supposed to matter. I am not jealous of anyone. I am concerned about being treated fairly.

The problem with middle men is that when they have enough market power they are able to take from the producers what should be theirs. That is the reason for the PSA. It limits their ability to do that to producers (as has historically been the case). It also limits their abilty to do that to consumers. We have these kind of laws to make sure that market power does not create inefficiencies in the economy and deadweight losses, and permanent members of an industry when "they get it wrong". The coke example was an example of market power being exerted without the influences of competition. When this happens consumers lose. Competition is what keeps the markets operating at top efficiency and market power, when exerted, always thwarts that efficiency.

Jason, what do you say is the cost of processing an animal? Do you have any "real" numbers? How about "real" numbers on the overhead you pointed out? How about "real" numbers on SRM removal. I warn you, unless you are operating the company yourself and have access to the accounting information and competetency in reading those numbers (Sarbanes Oxley requires this of U.S. execs since they feigned incompetence in several fraud cases in the U.S.) you are making arguments only on guesses. As Rod pointed out, the company has an interest in making that number as unrealistically high as they can for propaganda reasons.

I would like to turn a question around that is always brought up by some on this discussion board. SH is fond of saying, and I have heard it from you also, if the packers are making so much money then why don't you open a packing plant (or coke plant). My question is why? Should we allow companies to get away with the illegal abuse of market power just so that they can earn more money? Do we have to always use the argument if you can't beat them, then join them, when they are getting some of their gains through cheating the producers or consumers through the illegal use of market power just because people like you don't understand what is happening? How about this statement: If the packers or those with market power don't want to be in the market they are in, they can sell out. Using market power to build illegal barriers to entry, or to illegally increase profitabilty is still against the law. Whether they are profitable at these endeavors or not is not a defense. To say so would allow someone who robbed a bank to claim that if the money robbed from the bank did not cover his living expenses, his get away car, the guns he used, the entertainment he had, then he could be excused from the act of robbery? That is the "logic" being employed under this argument.

The coke example clearly shows that it is vigorous competition that meets consumer demand, not a market where competition was driven out and then the market power exploited at the expense of the consumer or producer surplus. Market power gets in the way of that competition element in a free market. It always creates deadweight losses in an economy and economic inefficiencies. That is why the U.S. has the Sherman, Clayton, Robinson-Patman, and the PSA acts. I am not saying that coke has broken any laws, but they have made "bad" management decisions that can be forced on the market because of their market power.

The coke example was an example SH first brought up that was clearly missued in his "logic" on market concentration. The conservative Wall Street Journal seems to agree.


Econ, this is pertinent to a LOT of your HUGE number of posts: do you believe that EVERY jury decision is correct, and that NO judge is EVER correct in overturning a jury decision for any reason?

What about the apparent fact that there are jurisdictions where juries are very prone to decide against those businesses and individuals assumed to have "deep pockets"? Do you say that is possible, or impossible?

MRJ

No, MRJ, I do not believe that every jury decision is correct. I did not believe in the O J Simpson verdict. The judge in that case did not have the power to overturn the verdict in a practical sense. I know a lot about the race relations in L A. That was part of the problem in that case---a persistant abuse of judgement and power on the part of the police and law establishment as well as differences in opportunities in the community. I cringed when I saw the detective taking Simpson's blood sample before the lab results on the crime scene were analized and posted. It is surely one of the reasons the government lost their case.

I think the assertion you make here, "What about the apparent fact that there are jurisdictions where juries are very prone to decide against those businesses and individuals assumed to have "deep pockets"? Do you say that is possible, or impossible?", has the same burden of proof as the case itself. Just saying it isn't true. Proving it is required. It is a poor defense without that proof. None of that "proof" was offered in the judge's or the appellate decisions. Why do you have reason to believe it true?


I feel it is believeable because so many people from a number of states have said people known to them have taken cases to jurisdictions in areas known for that "result". I have too many friends and relatives in the southeastern USA who have made the same comment. A few of those comments have been related to the Pickett case, but many have been about other, more successful cases.

MRJ
 
MRJ, what cases are you talking about?

I happen to know a lot of people in the South that have an opposite opinion than you. I happen to live in the south. If we were not on the jury and did not hear the evidence, we just have opinions.

When I read both court's opinions, I had an open and critical mind. It was only after finding out that those opinions had some incorrect reasoning (Robinson-Patman example) and left out some of the facts that I made up my mind about the opinions and the case. SH's arguments (which I have shown to be fallacious) stiffen my opinion even more. To overturn the jury verdict, the judges should have had much more than they had in their opinions.
 
DSCC: "With all due respect, I'm not attempting to tell Coke how to operate, just pointing out a flaw in the market mechanism that you thus far have not been able to refute."

You've presented your opinion of Coke's failure to meet consumer demands. I pointed out the fact that if Coke doesn't meet consumer demands, their product will suffer accordingly. Nobody has a gun to the consumer's heads forcing them to buy Coke that they don't believe tastes like Coke.


DSCC: "Doesn't matter if its name recognition or genuine taste, but when a company has this much power they can ignore consumer demand secure in the knowledge that they are still the second choice, and as such, their profits will not be affected."

That is absolutely untrue. If Coke doesn't taste like Coke to the consumer, they have many other alternative beverages to choose from. If Coke doesn't meet their consumer's demands, their sales will suffer regardless of their market share.


DSCC: "I think its a shame that producers have been expected to get more and more efficient and productive, while the fruits of their labor are sucked up into a non-competitive industry."

The fruits of their labor are not being sucked into a non competitive industry. That is simply untrue. The profits at the packing and retail end of this industry are not what you believe them to be and this industry is competitive.

This industry is competitive and it always has been with the exception of the closing of the Canadian border in Canada. When the Canadian border was closed, Canada found themselves in a situation of having more cattle than slaughter capacity but that is not the situation now.

If you believe it is, where is your proof?


DSCC: "Maybe in the US. I'm Canadian. Our calf prices are finally starting to come around, thanks to the open border, but our fats and culls are still being stolen. You seem to forget that a multinational corporation operates in more than the just the US. They can take reduced profits in one country when their margins in another are massive."

Why are your fats being stolen? If you don't like the price in Canada, who is stopping you from selling fats in the U.S.????

You don't know what the packer profit margins are in Canada. There was actually a quarter, while the border was closed, that Tyson showed a loss in their Lakeside plant. I suppose you are going to tell me that they are lying to their shareholders to hide their profits huh? LOL!

The Canadian government conducted a study on packer profits while the border was closed. Most of this "so called profit taking" was gobbled up by the costs of SRM removal. You don't know what you are talking about. You are speculating. You have no proof of what packer profits are.


DSCC: "Not conspiracy theory. Those numbers are accepted by many economists, and are used by government agencies in competition analyses. Of course, I painted a pretty broad picture there. There have been some extraordinarily well run companies that were able to manipulate market pricing while their market shares were considerably lower. Of course, they did it gracefully, with superior products at lower prices, versus the hamhanded approach that multi-nationals use."

Look at the obvious Diamond S, packer concentration in the United States has never been higher and cattle prices in the United States has never been higher. How do you explain that in light of your beliefs? You can't!

Tyson has about 1/3, and Swift & Co. and Excel have a little less than 1/4 each and we have never had higher cattle prices.

THE OBVIOUS IS TOO OBVIOUS FOR YOU ISN'T IT?????


DSCC: "Certainly. 4 years ago, I was able to get 80 cents on old cull cows. My 8 weight steers were selling for $1.375. Todays market: 27 cents on the culls, and the top pen of 8 weights sold for $1.1895. Not quite record prices."

What does that have to do with packer concentration?

4years ago you had access to the U.S. market with your cull cows. Today you don't. That doesn't have anything to do with packer concentration it has to do with less demand for your cull cows.


DSCC: "The price is no longer set by consumer demand. Its much the same as my oil/gas company example. Packers 1 - 5 are going to charge X dollars per pound, knowing full well that their neighbor is charging the same amount, and knowing full well that Small Packer 1 - 5 cannot undercut them either, because of economies of scale."

You are absolutely wrong about that. Supply and demand has everything to do with live cattle prices. Live cattle prices in the U.S. and Canada under normal trade situation, track with boxed beef prices and the value of beef by products.

The reason there is very little difference between the cattle prices offered by the major packers is due to their similar costs and similar boxed beef markets.

I have sold fat cattle to Excel and Swift and have also taken bids from ibp. What they are willing to pay is based on their needs at the time. If they have most of their needs filled, the price they are willing to pay falls. If they do not have most of their needs filled, they are more aggressive. SUPPLY AND DEMAND!


DSCC: "SH, you make friends with an accoutant who works for a large corporation. Your head would spin at the number of ways a good accountant can hide profit from auditors and the taxman, all the while turning those numbers around for the shareholders. Hell, my cattle company is incorporated. My actual reported profits to Canada Revenue are much lower than my actual cash profits, and best of all, its completely legal."

There is no incentive to hide your profits in a publicly traded company. Who is going to invest in a company that doesn't show a profit if they made a profit? Use your head here Rod. Tyson is not privately owned so they have more incentive to show a profit than hide one.


DSCC: "I'm Canadian. The cheap crap sells for a buck 99. The good lean ground beef is $3.50/lb. You know where that lean ground beef comes from? Gummy culls that are stolen for 10 cents/lb."

I'm U.S. Most U.S. cull cow beef sells for around $1.00 per pound.


DSCC: "Ok, we'll use your 410, even though I know its closer to 450 or 460 on the buck 99 junk. I do apologize for my 570. Brain fart.

Thats still $815.90. Co-ops 20% profit margin means that they paid 679.92 for that beef. Minus my 260, the buyers 6.92 and the exorbitant trucking of $15. So we're still at $397.99, and we still haven't counted the pooch food and other value added markets. I remember reading a Cargill newsletter once that said they made use of over 80% of an animal. They've got a profit of $397.99 on the first 40%.

And we still haven't counted the 2 yr olds who likely would have graded and went for roasts (poor roasts - $5.00 lb up here) or poor steaks ($3.99).

Sorry SH. You're a long ways off from the $3.88/animal."


Your brain is still farting. First off, the $3.88 per head profit was for the packing industry, not the retail industry.

The packer buys the fat cattle at x dollars. It costs them x dollars to process. If I remember right that cost is about $130 per head. They sell the boxed beef and beef by products of ofal and hides. What's left is about a $3.88 per head margin for the 5 major packers through the 90's.

When ibp's records were subpoenoed into court, they made $26 per head during this era of "SUPPOSED" market manipulation. Nowhere close to what you believe they made.

Then they sell the boxed beef, they have transportation costs to the retail outlets, they have wage earners that handle the beef, they have retail counter space, packaging, trimming, and retail stores have featured prices (2 for one sales) to move product because they sell it or they smell it. What doesn't sell by expiration date is discarded. Did you factor any of that in? NO! BECAUSE YOU ARE SPECULATING! You don't know and are using elementary math to try to figure it out.

I already told you that the bone and fat is only worth about $.08 per pound and you still have shipping and handling costs associated with it.

Go to your local locker plant and find out what it costs to process an animal. They are probably paying someone to haul their ofal away while the larger packer is paying you for it's value.

Your numbers are way, way off of reality. You didn't even seperate processing and fabrication from retail. Some packers have seperate fabrication plants that break down the carcass.

Did you factor in the trim? There is a considerable amount of trim that comes off each carcass during fabrication leaving less saleable beef.

You absolutely don't know what you are talking about like so many producers that want to blame packers for profitting at their expense.

Jason knows what it costs because he's actually done it. You are speculating.

You missed seperating the bone and fat from the meat.
You missed the price because you didn't factor "featured prices" to move product.
You missed the trim.
You missed the transportation costs and handling.
You didn't seperate processing and fabrication costs from retail costs.
You didn't consider discarded prodcuct that was not moved by expiration date.

You don't have a clue!

Jason is right. Packer and retail profits run around 1% - 2%.


Mike Callicrate was the packer blamer's spokesperson in the United States. Mike told packer blamers that packers and retailers were making $400 per head profits off the backs of producers. Well guess what, Mike decided to enter into the packing industry. He only paid a top premium of $50 per head for fat cattle above the market. He charged consumers 10% - 20% more for his product than the commodity beef market. Yet, at the time he was featured in R-CULT's publication, he had yet to realize a profit.

HOW CAN HE NOT BE PROFITABLE CHARGING CONSUMERS 10% to 20% MORE FOR THE BEEF IF COMMODITY BEEF PACKERS AND RETAILERS WERE MAKING $400 PER HEAD??????

He was lying about the $400, that's how. He didn't know any better and you are using the same fuzzy math he did. Now he knows but I doubt he'll ever admit it because of all the people he lied to.

Bring me some actual numbers not what you BELIEVE they are.



~SH~
 
Conman: "When I read both court's opinions, I had an open and critical mind. It was only after finding out that those opinions had some incorrect reasoning (Robinson-Patman example) and left out some of the facts that I made up my mind about the opinions and the case. SH's arguments (which I have shown to be fallacious) stiffen my opinion even more. To overturn the jury verdict, the judges should have had much more than they had in their opinions."

YOU LYING #!%^#@!&%$!

You said you had never read the court proceedings and now you're saying you did.

YOU KNOW DAMN WELL YOU DIDN'T READ THE COURT PROCEEDINGS and you never proved anything I stated to be incorrect.

You're a damn liar and a phony.

Until you provide the proof from the Pickett proceedings or otherwise to back your position, you are nothing but a cheap talkin' counterfeit.




~SH~
 
Packer backers screamed because the Pickett suit was filed in Alabama- Canadians screamed because the R-CALF one against USDA is filed in Montana...
Looks to me like both are in the "Heartland of America"- areas where common people live......

MRJ- Would you have been happier if they were filed in L.A., or N.Y.C?...
Maybe in D.C. where the big bucks wouldn't have so far to go to do their influence peddling?
 

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