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How do you packer blamers explain this? Part II

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RobertMac

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Great post, Rod!


DiamondSCattleCo said:
~SH~ said:
Rod: "How much money did it take them to start up their trucking concern?"

Irrelevant! What we are talking about here is what they are making or losing on beef and whether or not they are unfairly profiting at the expense of producers. A conspiracy that you cannot support with any hard proof.

NOT irrelevant. I'm not saying that its not legal, because there is absolutely nothing wrong with internal transfers of money, but it had to come from somewhere. Since its the beef division thats coming under fire from critics, its a perfectly reasonable place to pull money from.

So, short term, the company appears to be suffering to the stock market, NOT POTENTIAL INVESTORS since they are NOT MAKING NEW SHARE OFFERINGS. It is not uncommon for a corporation to take a brief hit to their share prices while expanding into a new market.

~SH~ said:
Rod: "Where did that money come from? Thin air? Of course it came from the profits of another area of the business. So they did an internal transfer to support a start up venture, which makes the beef side look even worse than it is. It isn't rocket science."
Hahaha!

You are honestly so conspiracy oriented that you would actually believe they would lie to potential investors about their profits??? LOL!

You can't be serious!

Ok, so where did the money come from? Since they are so badly bent and busted, how are they coming up with money for new overseas purchases, new trucking divisions, and new plant expansions? All this spending comes out of the profits of their divisions. Its not breaking the law to report poorer earnings due to spending.

~SH~ said:
Rod: "As are you! What you lay out for facts is simple speculation as well. None of your statements is supported by Tyson's press release."

Thank you for admitting that you are speculating. Me? I'm not! What I am saying can be backed up.

Then please do. Show me that the two plants that closed were LOSING money.

~SH~ said:
Give me one reason why Tyson would lie about their profits TO POTENTIAL INVESTORS???

SH, you need to learn how the stock market works. If Tyson hasn't issued NEW shares to the market, the price of their shares is IRRELEVANT! If Tyson operates on secured capital from banks, they only need to worry about large drops in their share value that can downgrade their credit rating. The share price drops from lower than expected earnings are minimal, ESPECIALLY since they can show company expansion. In other words, they take a short-term hit to their share value, but long-term it boosts the share value due to potential added earnings and added assets. This is normal business functioning, not illegal at all, but you certainly can seem to see it. Virtually every company who expands reports lower than average earnings during the expansion phases.

~SH~ said:
This move was necessitated by financial losses, not efficiency reasons OR THEY WOULD HAVE ALREADY DONE IT.

SH, since you seem to have access to their books, please prove this.

My money say you can't, because the losses in the beef division are simply amortized expenditures from company expansion. If there weren't gross profits to begin with, they could have NEVER secured the financing for the expansion, nor would the board of directors authorize them to dip into capital savings, since these funds could not be used for expansion without reporting their use to the IRS and having to be taxed on them, at least in the short-term.

Rod

SH

This packer reported profit figure is the biggest lie that you try to perpetuate on us. Rod did a great job of showing that there are profits over direct cost, profits over direct cost plus fixed(overhead) cost, profits over direct cost plus fixed cost plus reinvestment cost(some legally tax deductible). Those of us that have been in business for any length of time and worked with accountants know this. Tyson has accountants to tract their cash flow to maximize asset utilization and minimize taxable income. That's where the $3.88/head profit figure comes from.

My proof...I take animals from birth to the consumer. I pay my farm enterprise (cattle sector=rancher/stocker/feeder) $1.30/lb carcass weight ($900 to $1100/head avg). I will pay taxes on my meat enterprise (packer/distributor/retailer) having overcome startup loses. By your own argument, my direct and overhead cost in my meat business are far higher than the highly efficient beef sector. I know how much surplus is there to be claimed. The battle is over who this surplus goes to...right now that surplus is going to producers (high cattle prices because of tight supplies). The packers desperately want to reclaim the surplus. Reread what the packer spokesman said...$64M lose in profits...not $64M in the red! (your spin) How do they reclaim the surplus? By reducing their input cost (the price of live cattle)...this is the natural antagonism between the cattle sector and the beef sector. How is this antagonism removed? Vertical integration. The model for the protein industry is the poultry industry. Control and/or ownership from conception to the retailer. The question for producer is...will the beef industry be 'top-down' vertically integrated or 'bottom-up' vertically integrated? Control of your destiny goes with ownership!

More info

http://www.kansascityfed.org/publicat/ECONREV/PDF/2Q01Bark.pdf
 

rkaiser

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This is the educational side of this site that is truely enjoyable.

I am not saying that Scott does not post like this as well from time to time.

Thank you Rod and Robert and I hope that Scott can hold back his emotions and realise that everything the two of you have said on this post is realistic.
 

Jason

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Robert Mac said:
My proof...I take animals from birth to the consumer. I pay my farm enterprise (cattle sector=rancher/stocker/feeder) $1.30/lb carcass weight ($900 to $1100/head avg). I will pay taxes on my meat enterprise (packer/distributor/retailer) having overcome startup loses. By your own argument, my direct and overhead cost in my meat business are far higher than the highly efficient beef sector. I know how much surplus is there to be claimed. The battle is over who this surplus goes to...right now that surplus is going to producers (high cattle prices because of tight supplies). The packers desperately want to reclaim the surplus. Reread what the packer spokesman said...$64M lose in profits...not $64M in the red! (your spin) How do they reclaim the surplus? By reducing their input cost (the price of live cattle)...this is the natural antagonism between the cattle sector and the beef sector. How is this antagonism removed? Vertical integration. The model for the protein industry is the poultry industry. Control and/or ownership from conception to the retailer. The question for producer is...will the beef industry be 'top-down' vertically integrated or 'bottom-up' vertically integrated? Control of your destiny goes with ownership!

I see what you are getting at Robert, but there are a few problems with the scenario.

Tyson is a public company. We all have access to their quarterly statements. They deal in chicken and beef.

Why and how can they take money from only 1 side of their business without it being seen?

Let's use Rod's concern about their trucking line. He says they just take money out of their beef earnings to get the trucks up and running. Again why not out of the higher chicken earnings? Realistically each division is seperate and money to upgrade or start new divisions will come from the entire company. If they continue to lose in one area is it logical they will just keep subsidizing it?

Let's go back to your beef venture. You have a set price of $1.30 on your calves, if the market is higher than that you are subsidizing your beef side, and if the market is lower, you are subsidizing the cattle.

Regardless of which side is making more money, the real number that matters is your bottom line that you live off of. You can show a huge profit in your cattle but if you lose it in the beef side what's the point?

True as you are expanding, the profits will be reinvested. Tyson being a publicly traded company has to show reinvestment dollars. They announced $650 million in reinvestment dollars. But again if they borrow funds and their profits decline by $64 million that affects shareholders and if shareholders get restless Tyson will be in trouble.

You next claim they can just lower their bids for cattle, only if their competition has exactly the same costs. If Cargill has their house in order to make $50 a head but Tyson is in the red, do you think producers are going to sell to Tyson? Cargill sure as hell isn't going to lower their bids to allow Tyson to make a profit. Cargill is going to buy their fill of the quality cattle. If they see no reaction in bids from others they will buy as many as they can process, adding shifts if they can still make the higher profits.

As I recall SH has always agreed that owning your cattle to retail will generate the greatest gross profit.
 

Econ101

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Jason said:
Robert Mac said:
My proof...I take animals from birth to the consumer. I pay my farm enterprise (cattle sector=rancher/stocker/feeder) $1.30/lb carcass weight ($900 to $1100/head avg). I will pay taxes on my meat enterprise (packer/distributor/retailer) having overcome startup loses. By your own argument, my direct and overhead cost in my meat business are far higher than the highly efficient beef sector. I know how much surplus is there to be claimed. The battle is over who this surplus goes to...right now that surplus is going to producers (high cattle prices because of tight supplies). The packers desperately want to reclaim the surplus. Reread what the packer spokesman said...$64M lose in profits...not $64M in the red! (your spin) How do they reclaim the surplus? By reducing their input cost (the price of live cattle)...this is the natural antagonism between the cattle sector and the beef sector. How is this antagonism removed? Vertical integration. The model for the protein industry is the poultry industry. Control and/or ownership from conception to the retailer. The question for producer is...will the beef industry be 'top-down' vertically integrated or 'bottom-up' vertically integrated? Control of your destiny goes with ownership!

I see what you are getting at Robert, but there are a few problems with the scenario.

Tyson is a public company. We all have access to their quarterly statements. They deal in chicken and beef.

Why and how can they take money from only 1 side of their business without it being seen?

Let's use Rod's concern about their trucking line. He says they just take money out of their beef earnings to get the trucks up and running. Again why not out of the higher chicken earnings? Realistically each division is seperate and money to upgrade or start new divisions will come from the entire company. If they continue to lose in one area is it logical they will just keep subsidizing it?

Let's go back to your beef venture. You have a set price of $1.30 on your calves, if the market is higher than that you are subsidizing your beef side, and if the market is lower, you are subsidizing the cattle.

Regardless of which side is making more money, the real number that matters is your bottom line that you live off of. You can show a huge profit in your cattle but if you lose it in the beef side what's the point?

True as you are expanding, the profits will be reinvested. Tyson being a publicly traded company has to show reinvestment dollars. They announced $650 million in reinvestment dollars. But again if they borrow funds and their profits decline by $64 million that affects shareholders and if shareholders get restless Tyson will be in trouble.

You next claim they can just lower their bids for cattle, only if their competition has exactly the same costs. If Cargill has their house in order to make $50 a head but Tyson is in the red, do you think producers are going to sell to Tyson? Cargill sure as hell isn't going to lower their bids to allow Tyson to make a profit. Cargill is going to buy their fill of the quality cattle. If they see no reaction in bids from others they will buy as many as they can process, adding shifts if they can still make the higher profits.

As I recall SH has always agreed that owning your cattle to retail will generate the greatest gross profit.


Jason:"Tyson is a public company. We all have access to their quarterly statements. They deal in chicken and beef.

Why and how can they take money from only 1 side of their business without it being seen?"


Jason, have you ever read a quarterly or annual report from Tyson? Do you know how? They don't just deal in chicken and beef.
 

DiamondSCattleCo

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Jason said:
1) Why and how can they take money from only 1 side of their business without it being seen?

2) Let's use Rod's concern about their trucking line. He says they just take money out of their beef earnings to get the trucks up and running. Again why not out of the higher chicken earnings? Realistically each division is seperate and money to upgrade or start new divisions will come from the entire company. If they continue to lose in one area is it logical they will just keep subsidizing it?

3) True as you are expanding, the profits will be reinvested. Tyson being a publicly traded company has to show reinvestment dollars. They announced $650 million in reinvestment dollars. But again if they borrow funds and their profits decline by $64 million that affects shareholders and if shareholders get restless Tyson will be in trouble.

1) The statement is not going say 'Internal Transfer To Trucking Division - $17 million' Its going to be buried in there somewhere, and likely not intentionally. It may be reported as capital investment funds. Do you have a link to their financial statement? I don't have the time to snoop for it.

2) It just doesn't matter which concern they take from, as you are right, it all comes from the same place. One of the things I wasn't able to find out was whether each division was also incorporated. If so, this may provide the reason. Its possible that the other divisions had captial expenditures max'ed out. They are a number of reasons, all of which are plausible. As far as subsidizing a divisions thats losing money, the trucking concern is pretty new. They won't be expecting any money to be made yet. North American companies are slowly starting to adapt a "Japanese Outlook" on long term. Used to be that a North American company would look 5 years into the future and decide that was long term. Japanese companies have often looked a hundred years into the future.

3) A start up venture such as their trucking line is likely not making a dime yet, so there are no funds for re-investment. Purchasing new plants would net a loss in the first few years due to depreciation of the equipment. Only in the long term will capital expenditures add to the bottom line, and even then, they're not taxable (just the profits made from them are) and would simply be reported as an asset, which is only useful for calculating net worth or share value.
 

mrj

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Believing the Western Livestock Journal is run by people very well versed in cattle/beef industry issues, I'm quoting from editorial by Pete Crow.

Crow details the tyson closure of those two Nebraska plants and adds that this indicates Tyson is responding to the economics of this business and have realized they have to make their own markets work better. He further states this is a response to the long-term profitability of the beef packing industry and AT THIS TIME, all segments of the meat packing industry, pork, poultry, and beef, are losing money. Also adding that this has been the most profitable of times for livestock producers.

Crow states that the past two years have seen the beef slaughter capacity gro in Canada and the rest of the world, whild declining in the USA. He even predicted just what is happening on this site! Saying "I can hear it now, those dirty rotten multinational packers had it coming for what they did to us in the '80's when calf prices were so low". Boy, did he nail that!

Crow points out that efficiency in the industry has grown and spread out well, with beef production increasing so much from each carcass that tonnage has increased each year and the poor producer has already been forced out of the industry.

The first seven weeks of this year, cattle slaughter was just .04 percent above last year at 3,530,000 head which is 15,000 head more than last year. However those cattle, only .04% more than last year, produced 2.4% more beef. That is a whopping 2.7 BILLION pounds more that a year ago. THINK ahout that! That isn't just feedlot cattle, but includes those bigger slaughter cattle. We have gone from slaughtering 650,000 head of cattle per week several years ago, up to 700,000 during summer and now are slaughtering fewer cattle each week and producing more beef.

As John Tyson stated after buying IBP, "our job is to add value to products going out the front door, not JUST to buy cattle cheaper. Now they are aligning their business, as are other packer/processors, to do just that.

Everyone in the cattle beef industry, and really most other industries, is forced to produce more with less. That is life in the business world. We cattle producers have come lately and reluctantly, and some have not yet come, to realize that raising cattle is a BUSINESS, not just a LIFESTYLE. Who can we blame for that????

MRJ
 

DiamondSCattleCo

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MRJ said:
Everyone in the cattle beef industry, and really most other industries, is forced to produce more with less. That is life in the business world. We cattle producers have come lately and reluctantly, and some have not yet come, to realize that raising cattle is a BUSINESS, not just a LIFESTYLE. Who can we blame for that????

Thanks for pointing out that editorial. At least I know which magazine has an incompetent editorial staff.

Anyway, what does this whole business vs lifestyle arguement have to do with anything? It doesn't change that the packers are currently expanding into new markets all the while poor mouthing about not having any money.

When the packers stop with their expansionist policy, and start being honest about what their true margins are BEFORE NEW CAPITAL EXPENDITURES, I'll quit complaining. Until then, I repeat my question: Where is the money coming from for the expansions?

Rod
 

Jason

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Rod, no one has ever said packers are starving to death.

The $3.88 figure for all 5 major packers in the US during the 90's is a testament of their lean business style.

Margins rise and fall. I would be scared to death if all packers were starving as it would signal they are all likely to close their doors, then where would cattle people be?

You are correct in saying the expansion money comes from profits, and that packers take a long range look at things. Agman has indeed confirmed they look far into the future, not just a couple years.

At the same time, they can't only look to the distant future as they have to get there before they can enjoy being there.

The fact that packers look forward proves they must compete. If Tyson builds a trucking division, it will have to be cheaper for Tyson to use than using truckers from another firm. If it isn't, what's the point? Tax laws in both Canada and the US have a similar law that says business ventures have to show a profit, or have the intent of being profitable.

Again all the profits for packers feeders and primary producers come from the consumer. MRJ posted an article that shows how much more beef is on the market. What happens when more product is offered to a static market? For all of it to be consumed, the price has to drop.

Packers cannot change consumer spending by force. They must provide a product that the consumer sees a value in. It is a fact that people want fast and easy food options. The packers know this and see it is the only way to hold consumer dollars. If they were so arrogant as to think they could just keep shoving a 3 hour roast at consumers they would soon be out of business because someone else would give the consumer the 10 minute roast, and take the consumer dollars.
 

Econ101

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Here is Tyson's quarterly report:

http://tinyurl.com/paqt6

You will find that Tyson made most of its money in the poultry business. While higher cattle prices can go to cattle producers, because there is no real "market" for chicken for farmers to sell to and it is almost all grown under contract. The increases in price of chicken goes to Tyson, not the producers. Tyson plays many market games against producers in the poultry business and laughs at any enforcement of the PSA. This will happen in beef when they have the market cornered or have participants that play the same game that they have touted in chicken. The concentration issue is real and in poultry the increases of price go to Tyson due to their unchecked market power.

It will happen to beef if they can make it happen. All of this talk about how little Tyson earns per head is immaterial. They are taking their earnings and at selective times buying up the competition in the beef industry so they will have more market power. When they operate in with negative margins in beef, all their competitors have the same profitability problems. When they can make a lot of money in poultry and the rest of the competition can not, they can further consolidate the beef business or just plain run out competitors.

In poultry the market power was magnified through the vertical integration. They will and are trying the same tactic in beef.

Go look at the above Tyson report and see where they got the money for the expansion and or capital improvements they are making. It came from poultry. Do you want to hear from more poultry growers to see how Tyson and the other poultry companies are using their market power to put the squeeze on them? The less they get the cost of poultry by cheating poultry farmers out of the value of their assets, the less poultry will cost and the more market share it will get from beef. Tyson can take the extra money from chicken and consolidate the beef industry more.
Some people are stuck with rcalf or the bse issues or NCBA alliegences, beef demand strategies and such. These are all shortsighted things that allow Tyson to divide producers and then conquer.


Tyson does look further than their nose in their strategy but some people on this board do not.
 

DiamondSCattleCo

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Jason said:
1) Margins rise and fall.

2) The fact that packers look forward proves they must compete. If Tyson builds a trucking division, it will have to be cheaper for Tyson to use than using truckers from another firm. If it isn't, what's the point? Tax laws in both Canada and the US have a similar law that says business ventures have to show a profit, or have the intent of being profitable.

3) Again all the profits for packers feeders and primary producers come from the consumer. MRJ posted an article that shows how much more beef is on the market. What happens when more product is offered to a static market? For all of it to be consumed, the price has to drop.

Packers cannot change consumer spending by force. They must provide a product that the consumer sees a value in. It is a fact that people want fast and easy food options. The packers know this and see it is the only way to hold consumer dollars. If they were so arrogant as to think they could just keep shoving a 3 hour roast at consumers they would soon be out of business because someone else would give the consumer the 10 minute roast, and take the consumer dollars.

1) Of course, but what I take offense to is gouging, and on the cull market in Canada, the packers were making a fortune on the backs of producers, all the while poor-mouthing about how much money they were losing.

2) If Tyson build a trucking firm, its not because of competition, its because they are an expansionist company who has absolutely no intent on returning anything back to the producer. They'll build a profitable trucking outfit, then turn those profits into yet another business concern.

3) If Tyson were regulated into acting in the BEEF industry only, they may be more willing to attempt to influence consumer demand. It CAN and HAS been done by the Eat Beef commercials from a few years ago. The two largest packing concerns had NOTHING to do with those commercials, as they were secure in the knowledge that their position in other markets would float them past the rough spot. I believe that allowing a company into multiple markets, especially competing markets, breeds inefficiency and removes much of the impetus they have to do well. Some of the world's leading economists agree with that position, so I'm in pretty good company.


Rod
 

Jason

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Rod, companies like Tyson aren't evil empires intent on just building business after business for the hell of it.

They have a board of directors and shareholders. If those people don't make money what's going to happen? Can people just reinvest every penny and not take anything to live on? Of course not! Tyson needs to show a profit to shareholders to keep them. Tyson starts posting 0 or low profits, stocks slide (they already are). If stocks fall too far Tyson can't borrow funds. Without that ability they can't survive a downturn. (They can't stockpile cash as shareholders get profits).

No one disputes Tyson and Cargill made money while the Canadian industry was in disarray. However the facts have been shown that during 1 quarter of 2005 they lost money. Losses need to be averaged in, not just the highest level of profit considered.

You admit they plan on being profitable in the trucking division, that will take competition. H&R, CoolX, Schneider, the list is long, that could handle their needs. To say they just take the cash and start a trucking division so as not to give money to producers is a stretch.

You also bring up their positions in other protiens like chicken floating them past a rough spot in beef. Maybe it does, but does that show a real incentive to lose money on beef? Do you honestly think they would lose money on beef on purpose just because chicken will float them? I don't try to lose money on my hay just because the cows will float me.

Why do companies like Tyson spend millions of dollars developing quick beef products? Yep they sure are trying to break producers by selling more pounds of beef. Our check off dollars advertise beef, not Tyson, not Cargill, not Joe's organic beef, but all in the beef industry benefit whenever demand increases.
 

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Jason said:
1) Rod, companies like Tyson aren't evil empires intent on just building business after business for the hell of it.

2) You admit they plan on being profitable in the trucking division, that will take competition. H&R, CoolX, Schneider, the list is long, that could handle their needs. To say they just take the cash and start a trucking division so as not to give money to producers is a stretch.

3) You also bring up their positions in other protiens like chicken floating them past a rough spot in beef. Maybe it does, but does that show a real incentive to lose money on beef? Do you honestly think they would lose money on beef on purpose just because chicken will float them? I don't try to lose money on my hay just because the cows will float me.

4) Why do companies like Tyson spend millions of dollars developing quick beef products? Yep they sure are trying to break producers by selling more pounds of beef. Our check off dollars advertise beef, not Tyson, not Cargill, not Joe's organic beef, but all in the beef industry benefit whenever demand increases.

1) Jason, an expansionist company is an expansionist company. Tyson is showing us that. In the past, they've taken funds from the beef industry and used it to fund a chicken division and a pork division. Pure expansionist policy.

2) You're twisting my words around. What I said is that Tyson's profits from the beef industry are not being sunk back into the beef industry but rather into other divisions like trucking, chicken, and pork. I guess in a way, its taking away from producers because they're certainly not giving back.

3) Once again, twisting my words around. I never said it created an incentive to lose money in beef. I did say it REMOVES an incentive to help turn around the beef market should it take a downturn. A subtle difference perhaps, but still important.

4) The Eat Beef commericials? Several small independent packing plants spent money on that campaign.

Rod
 

Jason

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Rod, Tyson never had a beef interest until they bought IBP in 2001 I believe it was. They were leaders in Chicken before that and saw IBP had the desire to move into case ready product, a move that Tyson was already familiar with in chicken.

So based on that timing of events, and your claim that they just keep building profitable business, they took money from their chicken profits to invest in beef.

You still can't show how them building a trucking division is taking profits away from producers. What would be the difference if they stayed status quo and paid the profit back to shareholders? It still wouldn't be passed back to producers. There is no law, incentive or whatever to pass all profits back to producers.

From Tysons last year statement ( I forgot to post the link it is avaliable off tysonfoods.com) they didn't make any money in beef. All corporate profits were from chicken and pork.

Is Tyson happy about that? Not according to recent moves they have made to be more competative in beef. They are closing plants that don't pay and consolidating work under 1 roof. If they didn't care about beef profits why not just sit tight and live on chicken? If they sit tight they will get run over.

Do you believe case ready 10 minute roasts or other quick beef items help sell more beef or less? That is key to understanding if Tyson is helping beef demand or not.
Tyson must believe they can operate a trucking division cheaper than they can hire outside firms. If they are right, either the other packers will have to match their transportation costs or fall behind in efficiency.
 

DiamondSCattleCo

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Jason said:
1) Rod, Tyson never had a beef interest until they bought IBP in 2001 I believe it was. They were leaders in Chicken before that and saw IBP had the desire to move into case ready product, a move that Tyson was already familiar with in chicken.

2) You still can't show how them building a trucking division is taking profits away from producers. What would be the difference if they stayed status quo and paid the profit back to shareholders? It still wouldn't be passed back to producers. There is no law, incentive or whatever to pass all profits back to producers.

3) Do you believe case ready 10 minute roasts or other quick beef items help sell more beef or less? That is key to understanding if Tyson is helping beef demand or not.

4) Tyson must believe they can operate a trucking division cheaper than they can hire outside firms. If they are right, either the other packers will have to match their transportation costs or fall behind in efficiency.

1) After MRJ posted that, I verified it this morning. However, other packers used their position in beef to buy into chicken and pork. And do you deny that during rough spots in beef they can use profits from chicken or pork to sustain themselves? Do you also deny that it may take away at least SOME incentive for them to turn the beef market around?

2) If Tyson issues a press release stating they were able to secure 100% of the funding for a trucking company from an investment banker, I'll stop saying they took profits from producers.

3) Certainly it does, however its not just the Tyson's of the world who doing those kinds of things. And there are considerably more value added niches coming from the small independent packers. If Tyson was restricted to beef, perhaps they'd be even more inclined to make more value added steps.

4) Fine and dandy, but they fueled it off the backs of the producers all the while poor-mouthing about how much trouble they're having.

Rod
 
A

Anonymous

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Robert Mac has found someone who told him what he wants to believe so he sinks his teeth into it like a rabid dog thinking he's really got something. HAHAHA! Just like a baited hook, HERE COMES ROBERT MAC with the new "flavor of the month" conspiracy theory. LOL!


Watch closely Robert........


Rod: "So, short term, the company appears to be suffering to the stock market, NOT POTENTIAL INVESTORS since they are NOT MAKING NEW SHARE OFFERINGS. It is not uncommon for a corporation to take a brief hit to their share prices while expanding into a new market."

Absolutely ridiculous!

Your thinking is so backwards on this Rod that I can't believe that anyone would give it a second thought.

For starters, Tyson is not going to INTENTIONALLY show losses. What reason would they possibly have to show losses? Fear of criticisms coming from packer blamers??? LOL! GET REAL! I suppose you also have a conspiracy for why they would show periodic profits too huh? LOL!

THOSE SHARES CAN BE SOLD. When those shares are sold, if the company is not profitable, WHO IS GOING TO BUY THEM????

Second, Tyson's expansions have nothing to do with their profits and losses. Their profits and losses are figured as a return on their investment.

Third, expansion does not take place in periods of losses, EXPANSION TAKES PLACE IN PERIODS OF PROFITABILITY. So what if Tyson is expanding one plant, THEY ARE CLOSING TWO OTHERS.

Fourth, Tyson may invest profits from one area into another BUT THEY WILL NOT SUBSIDIZE LOSSES IN ONE AREA WITH PROFITS FROM ANOTHER. For example, if you raise wheat and cattle and you always make money on cattle but never on wheat, HOW LONG ARE YOU GOING TO KEEP RAISING WHEAT????

Same stupid argument.

Tyson may have invested profits from their poultry and pork sectors into the beef sector but they are not going to continue to carry losses in the beef sector.

You prove to me that their expansion will equal the capacity of the two plants they are closing then you'll have something.

Why would it be beneficial for them to show losses at some times and profits at others????

You can't explain it without some far out conspiracy theory.

Where did the money come from when Tyson initially bought ibp??? Did it come from beef profits?? Of course not because Tyson wasn't in the beef industry at the time were they? Obviously Tyson invested money in the beef industry that came from somewhere else which supports the argument that Tyson invests money into the beef industry that came from other places BUT TOTALLY DEFEATS YOUR ARGUMENT THAT THE MONEY FOR EXPANSION CAME FROM THEIR BEEF SECTOR PROFITS THAT THEY WERE NOT REVEALING.

You can't argue this both ways Rod. You can't say on one hand that Tyson is investing money from their poultry profits into their beef sector and then turn around and suggest that Tyson's beef industry expansion is coming from profits within their beef sector that they are hiding behind investments. YOUR ARGUMENTS ARE CONFLICTING.

I'm sorry Rod, I know you didn't want to be categorized as a packer blamer but when you pull wild conspiracy theories out of the air like this and your arguments are conflicting, it's obvious that you are among conspiracy driven packer blamers who do not base their opinions on facts and that is the same mentality shared by guys like Tommy, OT, and Robert Mac that sink their teeth into anything that supports their bias.


Rod: " Ok, so where did the money come from? Since they are so badly bent and busted, how are they coming up with money for new overseas purchases, new trucking divisions, and new plant expansions? All this spending comes out of the profits of their divisions. Its not breaking the law to report poorer earnings due to spending."

Nobody said Tyson was never profitable but the money could have come from anywhere. Where did the money come from when Tyson originally purchase ibp???? OBVIOUSLY IT DIDN'T COME FROM THEIR BEEF SECTOR BECAUSE THEY DIDN'T HAVE ONE.

USE YOUR HEAD ROD!!!!!!!!!!!!

Tyson is not "intentionally showing losses" just because they don't want to deal with the thumbsucking packer blamers that are blaming them for being profitable.


Rod: "Show me that the two plants that closed were LOSING money."

It's so obvious Rod.

1. Profitable plants do not close, THEY EXPAND.
2. Tyson has showed losses which negated the plant closures.
3. Tyson's representative stated the plants were losing money.

What do you have to prove otherwise???

NOT A DAMN THING BUT THE TYPICAL PACKER BLAMING CONSPIRACY THEORIES.


Rod: "SH, you need to learn how the stock market works. If Tyson hasn't issued NEW shares to the market, the price of their shares is IRRELEVANT! If Tyson operates on secured capital from banks, they only need to worry about large drops in their share value that can downgrade their credit rating. The share price drops from lower than expected earnings are minimal, ESPECIALLY since they can show company expansion. In other words, they take a short-term hit to their share value, but long-term it boosts the share value due to potential added earnings and added assets. This is normal business functioning, not illegal at all, but you certainly can seem to see it. Virtually every company who expands reports lower than average earnings during the expansion phases."

Once again, you are wrong from so many standpoints.

First, OLD SHARES CAN BE SOLD. Tyson does not need to offer NEW SHARES in order to have investors.

Second, the price of the shares is very relevant. What happens when the value of shares starts dropping? PEOPLE START SELLING!

Third, their expansion does not equal the plants that they are closing.

THERE IS NO REASON FOR ANY PUBLICLY TRADED COMPANY TO INTENTIONALLY SHOW LOSSES!


Rod: "My money say you can't, because the losses in the beef division are simply amortized expenditures from company expansion. If there weren't gross profits to begin with, they could have NEVER secured the financing for the expansion, nor would the board of directors authorize them to dip into capital savings, since these funds could not be used for expansion without reporting their use to the IRS and having to be taxed on them, at least in the short-term."

Expansion does not affect the profits and losses that are reported to GIPSA as a return on their investment.

Money that is invested in expansion can come from anywhere. Expansion is not proof of profits in the beef industry. Tyson could own oil stocks or any other source of income and invest it in beef company expansion.

Your argument is absolutely ridiculous Rod.

In this situation, Tyson's expansion was not equal to the two plants that closed down.


RM: "This packer reported profit figure is the biggest lie that you try to perpetuate on us."

You're the liar for calling it a lie. Where is your proof to the contrary? Where is your proof to prove Agman's statistic incorrect? Where is your proof to disprove IBP'S SUBPOENOED PROFIT INFORMATION IN PICKETT???

You just don't want to believe it like most other whiny packer blamers.

Tyson can be closing plants, Future Beef can go broke, USPB can report their patronage divivends, Tyson can report their profits and losses and none of it matters to you BECAUSE IT'S NOT WHAT PACKER BLAMERS LIKE YOU WANT TO BELIEVE.

What do you have to prove otherwise?

NOT A DAMN THING!


Robert Mac: "Rod did a great job of showing that there are profits over direct cost, profits over direct cost plus fixed(overhead) cost, profits over direct cost plus fixed cost plus reinvestment cost(some legally tax deductible). Those of us that have been in business for any length of time and worked with accountants know this. Tyson has accountants to tract their cash flow to maximize asset utilization and minimize taxable income. That's where the $3.88/head profit figure comes from."

BULLCRAP!

You don't have a clue where the $3.88 per head came from. It's not what you want to believe so you sink your teeth into the first explanation that comes along THAT YOU WANT TO BELIEVE.

Packer profitability or losses is reported to GIPSA as a return on their investment.

Only a complete fool would believe that Tyson would have any reason to show losses TO POTENTIAL INVESTORS.

This just proves to me how brainwashed you guys really are. It's almost hard to believe at some times because you can't even reason it out.

Your own examples don't tell you a thing about how profitable packers are or whether they are sustaining losses. You don't know what they are paying for cattle, you don't know what they are getting for beef and beef by products, and you don't know what their processing costs are. In short, you don't know a damn thing about their profits or losses.

You keep using the argument, HOW DO THEY REGAIN THE SURPLUS, BY REDUCING THEIR INPUT COSTS.

How does Tyson reduce their input costs if the supply of available cattle is less than the total slaughter capacity available AND EXCEL, SWIFT, AND USPB ARE PAYING MORE?????

That's what you guys can't get through your thick packer blaming skulls. Tyson is "A MARKET", Tyson is not "THE MARKET". Tyson can lower the price they are willing to pay all they want but if Excel and Swift pay more, WHO'S GOING TO SELL TO TYSON IF THEY SELL AT ALL????

I can't believe I find myself three years later still addressing the same baseless conspiracy theories.


You guys got nothing here, just like usual.


~SH~
 

Tam

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Rod I just want to ask you if Tyson according to you are during rough spots in beef using profits from chicken or pork to sustain themselves then why are comments like this showing up in an article that Econ put on about how Wall Street sees Tyson.
. Disappointing quarterly earnings and a hazy outlook have knocked the stock down about 23% in about three months.
options traders gave every indication that they think things could get worse.
This as the stock slipped 13 cents to $14.21.
The trading followed comments made late Tuesday in which the company's chief executive, John Tyson, told the Consumer Analysts Group of New York that the current quarter is "the toughest one I've seen."
downgraded his rating on the stock to underperform, citing "deteriorating earnings visibility."
they fell 50 cents, to 85 cents, on the Chicago Board Options Exchange.

Can you tell us why Tyson stock is falling and shareholders are selling if Tyson is profiting in their Chicken sector enough to subtain the Beef sector?

1) Of course, but what I take offense to is gouging, and on the cull market in Canada, the packers were making a fortune on the backs of producers,
I want to ask you during the majority of the BSE situation was either one of the Multi National packers here in Canada buying cull cattle. or were their plants the ones that were processing UTM fed cattle only? According to the Texas Experts that the Competition Bureau brought in to help explain things that MIKE quoted
* While there is no appreciable monopsony market power exertion by beef packers in fed cattle markets, there is significant monopsony market power exertion in cull cattle markets.6
Please remember I said Mike quoted them not me

Now I would have to say most in Canada are not happy about the prices we recieved for our cull cattle but It wasn't the Multi Nationals that were pocketing the cull cattle money it was our very own Canadian packer. And since they were the only one, they could pay what ever they wanted to. That is the problem with having more cattle than capacity. That is why one of the recommendation coming from the Standing Committee was that
the Government of Canada pursue business opportunities with a particular emphasis on increasing livestock slaughtering and value-added products processing in Canada.

That said do you also take offense when the Producers are recieving Historically high prices for their Cattle while Packers are having to close doors and lay off workers and take from one food sector to subtain another. Just how many US producers do you think are looking at the cheques they are recieving for their cattle and stop to think about what those prices are doing to others? NONE they are banking the money and hoping their salmon run continues. That is the only reason R-Calf wants this border kept closed and we all know that is true. So to blame the packers for gouging you also have to blame the Producers when the tables turn. But you won't as I'll bet you will be just like the US producers and bank your cheque without a second thought of what that cheque is doing to the Packers bottom line.
 

Sandhusker

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I'll let Rod handle most of this, but saw a couple of laughers that I have to address

SH, "Third, expansion does not take place in periods of losses, EXPANSION TAKES PLACE IN PERIODS OF PROFITABILITY. So what if Tyson is expanding one plant, THEY ARE CLOSING TWO OTHERS.

Did you miss this from a week or so back, SH, "Tyson Foods Inc., the world's largest meat producer, said Friday it plans to spend up to $650 million on capital expenditures and look into overseas acquisitions, despite a slip in earnings"

Care to explain that? Are they losing money or not?

More SH, "THOSE SHARES CAN BE SOLD. When those shares are sold, if the company is not profitable, WHO IS GOING TO BUY THEM????"

Want to bet another $100 that I can't find a million shares of unprofitable companies that were traded TODAY?

.
 

Econ101

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Tam: * While there is no appreciable monopsony market power exertion by beef packers in fed cattle markets, there is significant monopsony market power exertion in cull cattle markets.6
Please remember I said Mike quoted them not me

Now I would have to say most in Canada are not happy about the prices we recieved for our cull cattle but It wasn't the Multi Nationals that were pocketing the cull cattle money it was our very own Canadian packer. And since they were the only one, they could pay what ever they wanted to. That is the problem with having more cattle than capacity. That is why one of the recommendation coming from the Standing Committee was that

Econ: Tam there is a difference between monopsony market power exertion and increased profitabilty due to circumstances in the market. You seem to continually get these two things confused. Do you need a little lesson in that?
 

DiamondSCattleCo

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~SH~ said:
Rod: "So, short term, the company appears to be suffering to the stock market, NOT POTENTIAL INVESTORS since they are NOT MAKING NEW SHARE OFFERINGS. It is not uncommon for a corporation to take a brief hit to their share prices while expanding into a new market."

Absolutely ridiculous!

Apparently SH, you need a lesson in the stock market and bookkeeping before we can continue, otherwise we'll spin our wheels.

First, the stockmarket:

A company will issue X numbers of shares at an initial share offering price. The theory behind this is that X times the initial share offering will be somewhat close to the net worth of the company, including income for the year that the stocks are initially offered. Once the company sells those shares, THEY DO NOT EVER TOUCH THEM AGAIN UNLESS THEY BUY THEM BACK.

I capitalized that SH, because its apparently a HUGE misunderstanding that you and others have.

As company does business, it releases earnings and shareholder reports. It may or may not pay dividends on the shares that they've released. And yes, old shares may be sold. BUT THEY ARE NOT SOLD BY THE COMPANY.

Again I capitalized that for you SH.

If I bought all the shares in a company, and someone wanted to buy shares in that company, they have to BUY FROM ME. In other words, if I do decide to sell the shares, the company receives NOTHING from the transaction.

Now, a company can issue more shares later on in its life. This is fairly common, especially when a company expands a great deal since its initial share offering. Its also a little dangerous, because it generally means that existing shares prices suffer, so shareholders will get a little upset. HOWEVER, it doesn't hurt the company one IOTA.

As a side note, investment bankers, the ones who lend money for expansion, don't hold alot of stock in share prices. Share prices were intended to be a reflection of the worth of a company, however due to their limited availability, supply and demand can affect their prices and sometimes the share price doesn't match the true worth of the company.

Obviously, this is a VERY dumbed down view of the stock market, and we're only touching on non-voting shares, which by the way, are the share prices that have been quoted on this forum.

So now, we move to our bookeeping lesson.

When a company expands, its going to get funds from a few general places:

1) And least common. Issue more shares.
2) Borrow from investment bankers.
3) Dip into savings.

Virtually all expansion is fueled by a combination of 2 and 3. To make this lengthy diatribe a little shorter, getting into savings or borrowing, gives the company a write off and a LOSS AGAINST INCOME WHICH MUST BE REPORTED. That includes to GIPSA, shareholders, IRS and the public.

When these expenditures are reported, it often means that earnings are going to suffer over the time of the expansion and the next few years, until the expansion begins to show profit. This is isn't conspiracy theories, and this isn't something that the company has any control over WHATSOEVER! People who are buying and selling the shares control the share prices through supply and demand.

There, I think thats got it.

Tyson has EXPANDED in the last few years, as such, their earnings are going to be showing a loss against them in the form of amortized costs. This is REQUIRED BY LAW! THEY HAVE TO SHOW LOSSES! What business unit they decide to show the losses against is completely up to them.

I think that effectively addresses most of your post SH. No conspiracy theories AT ALL, just REAL accounting and REAL stock market analysis. For anyone to say that expansion costs aren't written off the bottom line shows a monumental ignorance of accounting and the LAW.

~SH~ said:
You can't argue this both ways Rod. You can't say on one hand that Tyson is investing money from their poultry profits into their beef sector and then turn around and suggest that Tyson's beef industry expansion is coming from profits within their beef sector that they are hiding behind investments. YOUR ARGUMENTS ARE CONFLICTING.

Of course I can argue it both ways. Thats why Tyson is into beef, chicken AND pork. When one goes low, they subsidize it with profits from the others. And this removes SOME of that companies competitiveness. Starving companies are innovators.

~SH~ said:
Rod: " Ok, so where did the money come from? Since they are so badly bent and busted, how are they coming up with money for new overseas purchases, new trucking divisions, and new plant expansions? All this spending comes out of the profits of their divisions. Its not breaking the law to report poorer earnings due to spending."

Nobody said Tyson was never profitable but the money could have come from anywhere. Where did the money come from when Tyson originally purchase ibp???? OBVIOUSLY IT DIDN'T COME FROM THEIR BEEF SECTOR BECAUSE THEY DIDN'T HAVE ONE.

Look at their prospectus SH. They're not showing any kind of investments. Now you're grasping for straws.

~SH~ said:
Rod: "Show me that the two plants that closed were LOSING money."

It's so obvious Rod.

1. Profitable plants do not close, THEY EXPAND.
2. Tyson has showed losses which negated the plant closures.
3. Tyson's representative stated the plants were losing money.

Profitable plants do not expand if the capacity isn't necessary, which you yourself said it wasn't. Tyson's press release also echoed this. Profitable plants WILL close if their production can be easily relocated to another MORE profitable plant. Tyson hasn't even showed losses. They've shown losses to profits. Totally different animal. And Tyson's reps only said the industry was getting tighter, not that those TWO PLANTS WERE LOSING MONEY.

~SH~ said:
Only a complete fool would believe that Tyson would have any reason to show losses TO POTENTIAL INVESTORS.

If the charges to income come from expenditures, TYSON HAS NO CHOICE BUT TO REPORT IT! Its the law, SH. What business unit they choose to deduct it from is completely up to them and POLITICS!

Rod
 

DiamondSCattleCo

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Tam said:
.1) Disappointing quarterly earnings and a hazy outlook have knocked the stock down about 23% in about three months.

2) Can you tell us why Tyson stock is falling and shareholders are selling if Tyson is profiting in their Chicken sector enough to subtain the Beef sector?

3) It wasn't the Multi Nationals that were pocketing the cull cattle money it was our very own Canadian packer.

4) That said do you also take offense when the Producers are recieving Historically high prices for their Cattle while Packers are having to close doors and lay off workers and take from one food sector to subtain another.

1) I hope you read that closely. Disappointing EARNINGS. Notice they haven't started posting losses.

2) I never once said that profits in one sector would necessarily COMPLETELY overcome losses in another sector, however it certainly takes some of the desperation away from Tyson to innovate in beef. What if Tyson was ONLY involved in beef? You can bet your butt they'd be moving MUCH quicker and INNOVATING, not COPYING.

3) So you're saying that not one single multi-national packing plant slaughtered a cull and sold it on the Canadian at excess profit? Tam, you'd better redo your research. The multi-national corporations maybe didn't sell culls meats internationally, but they sure as heck sold them in Canada.

4) You guys keep pointing at historically high producer GROSS earnings, all the while their NET EARNINGS are slipping. Which makes it even more of joke for you to refer to it.

Rod
 

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