How many Canuck producers would support this?

[Anonymous]

Rod,

I was very involved with the Northern Plains Premium Beef cooperative effort.

There was a lot of questions and a lot of concerns that many producers had that were never answered adequately over this producer owned venture.

Ironically, one of the biggest challenges we faced was the LMA packer blamers who convinced many producers that the large packers would squish the effort like a bug because it meant a loss of their salebarn commission dollars on those cattle. You know, the ones who say that there is no competition in the packing industry but then contradict themselves by suggesting that smaller packing companies can't compete???? Yeh, those hypocrites!

The fact is, ibp (prior to Tyson), excel, and monfort (prior to Swift) would not be able to squish the effort due to the number of northern cattle that would be removed from their system. NPPB would have a captive supply of producer owned cattle committed to the system. It was a typical LMA "fear mongering" lie to save their own industry.

About the same time the NPPB venture was starting up, a group of Kansas producers attended a NPPB meeting and started down the USPB road which eventually became successful.

The difference between NPPB and USPB was the known and the unknown.

USPB bought about 38% of National Beef. A company that already had established markets for their beef and namebrand recognition.

NPPB, on the other hand, wanted to build their own plants and market their own beef.

There was so many questions that needed to be answered with NPPB:

1. Where to build the plant?

Labor force, water, transportation costs, housing, climate, proximity to feedlots, etc. etc.

2. Where to market the beef?

Transportation costs to the beef market from the plant.

3. What was it going to cost to run the plant?

4. What would the true costs of concrete and mortar be?

5. Would the producers stay committed through the hard times?

6. Markets for ofal and hides?


It didn't take long to figure out that those who were claiming "HUGE PACKER PROFITS" were lying out of their butts once you started crunching the numbers.

If any new money was going to come to the consumer, it was going to come from the sale of value added beef and beef by-products above commodity beef. Not by any profits in processing your own cattle. Those margins were as tight as they were going to get and still are despite the packer blaming fear mongerors.

NPPB kept coming up short in their equity drives. Many producers were looking for an excuse not to donate. Each time NPPB downsized their plan and went back to the process of gathering committment, they come up with 1/3 of their needs.

Eventually, the concept faded to oblivion.

Those who cussed the packers the most were the least likely to do anything about it when provided the opportunity.


I think a much better approach is to have the large efficient packers custom kill cattle for a cooperative of producers and invest in the retail side of the industry. The producer would own the cattle going in and the beef going out.

During the era of NPPB, there was simply too much change for many producers. Most had never fed their own cattle let alone jump into a processing venture.

The concept is great, the devil is in the details.


Another venture to study would be Future Beef which could not stand the fall in retail beef prices.

The key is to have the best retail beef sales staff that money can buy because that is where the "rubber meets the road".


~SH~

 

[Econ101]

Rod,

I was very involved with the Northern Plains Premium Beef cooperative effort.

There was a lot of questions and a lot of concerns that many producers had that were never answered adequately over this producer owned venture.

Ironically, one of the biggest challenges we faced was the LMA packer blamers who convinced many producers that the large packers would squish the effort like a bug because it meant a loss of their salebarn commission dollars on those cattle. You know, the ones who say that there is no competition in the packing industry but then contradict themselves by suggesting that smaller packing companies can't compete???? Yeh, those hypocrites!

The fact is, ibp (prior to Tyson), excel, and monfort (prior to Swift) would not be able to squish the effort due to the number of northern cattle that would be removed from their system. NPPB would have a captive supply of producer owned cattle committed to the system. It was a typical LMA "fear mongering" lie to save their own industry.

About the same time the NPPB venture was starting up, a group of Kansas producers attended a NPPB meeting and started down the USPB road which eventually became successful.

The difference between NPPB and USPB was the known and the unknown.

USPB bought about 38% of National Beef. A company that already had established markets for their beef and namebrand recognition.

NPPB, on the other hand, wanted to build their own plants and market their own beef.

There was so many questions that needed to be answered with NPPB:

1. Where to build the plant?

Labor force, water, transportation costs, housing, climate, proximity to feedlots, etc. etc.

2. Where to market the beef?

Transportation costs to the beef market from the plant.

3. What was it going to cost to run the plant?

4. What would the true costs of concrete and mortar be?

5. Would the producers stay committed through the hard times?

6. Markets for ofal and hides?


It didn't take long to figure out that those who were claiming "HUGE PACKER PROFITS" were lying out of their butts once you started crunching the numbers.

If any new money was going to come to the consumer, it was going to come from the sale of value added beef and beef by-products above commodity beef. Not by any profits in processing your own cattle. Those margins were as tight as they were going to get and still are despite the packer blaming fear mongerors.

NPPB kept coming up short in their equity drives. Many producers were looking for an excuse not to donate. Each time NPPB downsized their plan and went back to the process of gathering committment, they come up with 1/3 of their needs.

Eventually, the concept faded to oblivion.

Those who cussed the packers the most were the least likely to do anything about it when provided the opportunity.


I think a much better approach is to have the large efficient packers custom kill cattle for a cooperative of producers and invest in the retail side of the industry. The producer would own the cattle going in and the beef going out.

During the era of NPPB, there was simply too much change for many producers. Most had never fed their own cattle let alone jump into a processing venture.

The concept is great, the devil is in the details.


Another venture to study would be Future Beef which could not stand the fall in retail beef prices.

The key is to have the best retail beef sales staff that money can buy because that is where the "rubber meets the road".


~SH~

I'll change my quote at the bottom of my posts based on this post, SH. You do have a few good things to add sometimes. The concentration in the industry and market power games that are used to the benefit of those exercising them at the exclusion of other market participants is what is creating the market inefficiencies, barriers to entry, and less opportunities for cattlemen.

 

[Jason]

Where did Sh say the big boys stopped NPPB?

It was the details of getting a plant running. Finding markets for beef BEFORE it was in the coolers. Lack of funding.

Tight margins and lack of funds stopped NPPB, not the big players.

 

[blackjack]

...sh brought up some great points...

...nr...just reading an article in the alberta express this morning...producer owned retail outlet starts up on west side of edmonton...this group initially looked at setting up a slaughter house...but because of increased processing capacity...the co-op decided to build a retail outlet instead...started up last sept...good luck to them...

 

[Northern Rancher]

Our little local meat shop has survived for 70 plus years-put alot of kids through schooland financed alot of retirements.. This in a town of 5,000 with two other huge grovery stores and one other smaller privately owned grocer. I wonder hopw many 5-10 employeee stores could be built for what one megapacking plant would cost-that would benefit our rural economies alot more than one more huge plant.

 

[rkaiser]

Goodness gracious, we are on to something here.

Thank you SH for a usable post.

Our group has come to the realisation that building a packing plant is a also a dream. Like SH says, a huge step for producers to take.

But we ain't going away. We are having a meeting tonight following a new agenda that I will announce shortly.

Marketing is the key. Always has been. Good on those folks in west Edmonton blackjack.

 

[Mrs.Greg]

About five years ago we had a small meat plant built in our area ,he had a portable kill station,would come out and custom kill.He got soo busy that he remodeled last year and all meat is inspected,now you bring your cattle in one certain kill days....line-ups of stock trailers. .He now has a small meat shop in front.We have people calling all the time to privatly buy our steers to take into the meat shop.Word of mouth is crazy,he can't hardly keep up!!

 

[Northern Rancher]

I don't see why that wouldn't work in almost every small town-it's the same here really hard to get an animal killed for resale.

 

[Mrs.Greg]

It should work in every small town,the thing is hes getting so busy you have to book weeks ahead and because of word of mouth and hes very good and clean,people are bringing from at least an hour away.Another thing his shop is almost right in town and there have been NO complaints from town .Nothing but support from town and Area...thats a huge thing support!!!

 

[cowsense]

This thread is great, some excellent dialogue among EVERYONE without namecalling.....might just start something. I feel the best avenue for the smaller producer is niche marketing BUT I do have to qualify that by stating the process will only work for those that are willing to fully service their customer's needs. There can be premiums built into these enterprises and they will be necessary to cover the extra costs of smaller scale enterprise. There's lots of these programs that have started and were shut down or even failed because of a lack of understanding of the committment recquired to run a successful business!

 

[rkaiser]

Okay gang, and especially Mr. Scott Huber. What do you think of a producer owned brokerage company.

BIG C has started conversation on how to move toward marketing beef in a substantial way. Most of the conversation at previous meeting, even during the time we were considering the plant proposal, involved marketing and our membership with the Canadian Beef Export Federation and communication with government and private industry around the world was constant. (beleive it or not)

Let's have it folks. Do you think we can disrupt the sytem by working within the system? We would like to let producers hold on to the ownership of their electronic I.D. tags as long as possible and let us have a chance at marketing their beef after it is killed in one of the many plants coming on line - or the current plants that would allow a custom kill.

And and and aquire RFQ's from contacts that we have and are making and fill those orders with product from the plant in Canada that has the best price.

I will explain how I got my head around this last statement at a later time, but for now -

What do you all think?

 

[fedup2]

Randy, just wondering if you've ever read anything on this site:

http://www.cooperativegrocer.coop/articles/index.php?id=520

The topic index also has lots of reading.

 

[Anonymous]

Conman: "The concentration in the industry and market power games that are used to the benefit of those exercising them at the exclusion of other market participants is what is creating the market inefficiencies, barriers to entry, and less opportunities for cattlemen."

I have no idea where you derived at that conclusion from anything I have written Conman. No surprise though. To the contrary, nothing could be further from the truth in the cattle industry than what you just stated regarding producer owned cooperatives.

Let me break it down for you. If you take the equity that cattle producers have tied up in land, livestock and machinery, the equity of the large packers wouldn't make a pimple on the producer's butt. The market power is on the producer side of this equation, not on the packing side.

Another blatant example of how wrong you are is that every producer can raise their own cattle, feed their own cattle, slaughter their own cattle, and market that beef without ever dealing with a large packer. There is no law to stop them short of interstate shipment laws. The question is, how do you do it on a large scale?

If you take just a measely 10% of the "PROGRESSIVE" producers out of the equation to run their own packing plant and market their own beef, YOU HAVE JUST REMOVED 10% OF THE LARGE PACKERS SUPPLY OF CATTLE. Where's their market power with a 10% reduction in supply???

Packers only have power when producers willingly give them that supply.

The producer controls this industry until the point that they sell the cattle. Without cattle, the packing industry does not exist.

With this "PRODUCER LEVERAGE" in mind, WHY DOES ANYONE NEED THEIR OWN PLANT???

Why not approach Tyson and Cargill and say, "here's the deal, we want to control this product from pasture to plate. You (Tyson and Cargill) need our cattle to run your plants. Instead of fighting, why don't you give us a per head bid to process our cattle? That way we both stay in business. We own the cattle going in and the beef coming out and you have a consistant supply of cattle to run your plant more efficiently. A win-win situation".

If you think you can do a better job, buy their plants and run them yourselves. Without producers selling them cattle, they don't have a need for those plants anymore.

They've got the cattle processing experience and labor force already in place. WHY NOT WORK WITH THE SYSTEM INSTEAD OF AGAINST IT???

NPPB died! Future Beef died! USPB is going "great guns".

What's the difference? USPB utilized the existing system.

Those plants would have a guaranteed supply of cattle without having to fight over price and put up with bullsh*t conspiracy theorists like Conman. Producers would control their destiny from beginning to end.

There is no need to re-invent the wheel when efficiecy is what allowed the existing plants to survive as long as they have.

Oh, I can hear it now, "waaaaaah, we would be serfs to Tyson and Cargill, waaaaaaah". Like I said, the ones who bitch the loudest about the packing industry are the least likely to do anything about it.

Randy Kaiser, have you reviewed any of the Northern Plains Premium Beef information? If not, I can send it to you along with their equity drive video. Perhaps it can help you avoid some of the problems that NPPB encountered.

Want to look at some other success stories besides USPB? Check out Harris Ranches and Oregon Country Beef (which may have changed their name, not sure).

How anyone can make a stupid comment about "barriers to entry" (like Conman just did) when some progressive producers went from owning 38% to full ownership of the 4th or 5th largest packing company in the nation (National Beef) is beyond me. Defeatests like Conman only serve to drag this industry down.

At the same time Randy, it would be worth your time to research why Future Beef and Beef America failed. Future Beef fell on hard times with their retail beef prices. THEY PAID TOO MUCH FOR YEARLINGS WITH NO GUARANTEE OF THEIR RETAIL BEEF MARKET. Beef America went under due to an ecoli. outbreak that they could not recover from.

The more you research about the packing industry, the less blame you will lay on them.

The ignorant producers that would have the concentration in the cattle industry broke up resulting in having more less efficient packing companies that payed less for fat cattle would only serve to break this industry financially as competing meats became more efficient.

Giving up profitability to the less efficient packing companies due to their inefficiencies driven by market manipulation conspiracy theories would only serve to set this industry back 30 years.

As I think about the NPPB venture, more issues come to mind. Another huge hurdle is to have a consistant supply of cattle that are available for year round slaughter. That requires traditional spring calvers, backgrounders, grass yearling operations, fall calvers, and summer calvers. You have to have a year round supply of cattle to keep those plants running at peak efficiency. That creates organization. Once you delve into this aspect, you will quickly understand why some packers feed their own cattle to fill those seasonal voids.

You have to have a CEO with his/her feet firmly planted on the ground as opposed to "pie in the sky" ideas without supporting facts.

Randy,

You will need to elaborate on the details of a "producer owned brokerage company".



~SH~

 

[Econ101]

Conman: "The concentration in the industry and market power games that are used to the benefit of those exercising them at the exclusion of other market participants is what is creating the market inefficiencies, barriers to entry, and less opportunities for cattlemen."


SH:

I have no idea where you derived at that conclusion from anything I have written Conman. No surprise though. To the contrary, nothing could be further from the truth in the cattle industry than what you just stated regarding producer owned cooperatives.

Are you so conceited that you think I get all (or any valulable) my information from you?

 

[Mike]

For RandyK and some others interested in going into the beef packing business.

Why Future Beef Went Under

By Wes Ishmael Contributing Editor

Nov 1, 2002 12:00 PM

About 11 unforeseen squalls, a few navigational blunders, $250 million and you're sunk.
Primedia Business - Beef Magazine, Click Here!

At least that's how it went for Future Beef Operations (FBO), which opened its state-of-the-art harvest facility in Arkansas City, KS, in August 2001. By the following March, FBO was ordered into Chapter 11 bankruptcy reorganization. And by its first anniversary in August 2002, the courts ordered it into Chapter 7 bankruptcy liquidation.

FBO's intent was to construct a vertically coordinated, closed-loop beef production system that could return producers more dollars. During its production zenith, FBO harvested 1,625 head/day, marketing most of the boxed beef to its exclusive retail partner, Safeway, which also had an investment stake in the company.

Ultimately, FBO planned to not only sort and control the cattle it was putting on feed, but to also have a hand in the genetic selection behind them.

Ronnie Green joined FBO in June 2000 as head of its genetic operations. He was named vice president of FBO's cattle operations in February 2002, just before the Chapter 11 order. By that time, it wasn't so much a matter of plugging holes on a sinking ship, as it was trying to limit the casualties. Green had the dubious honor of being the last one off the boat.

In the end, FBO was the victim of historically bad timing, technical failures, idealism and, arguably, the fact it was out-traded on the front end.

For perspective, FBO sourced all cattle (most of them FBO-owned) that would be fed at its partner feedlots, harvested by FBO and then marketed to Safeway in what was the industry's first exclusive production-retailer relationship attempted in volume. For its money, Safeway was securing a long-term beef supply of known quantity and quality. Meanwhile, FBO and its production partners felt a locked-in customer and long-haul pricing mechanism would guarantee them a profit.

FBO sold boxed beef to Safeway below market prices, thanks in part — at least conceptually — to the cost efficiencies gained through a coordinated system. And Safeway received retail product differentiated for food safety that was second to none.

More specifically, Green explains FBO consisted of five value-added units in addition to its packing and fabrication facility in Arkansas City:

* case-ready ground beef,
* case-ready variety meats, primarily for export,
* cooked and marinated products,
* pet treats and
* blue-chrome hides

The five units were to be the profit centers for FBO, while boxed beef from the harvest and fabrication facility was to be the baseline, explains Green. Boxed beef would pay the overhead; value-added products would supply the profit.

Green says the concept of FBO was to "try to build a vertically coordinated supply chain that would allow the capture of value-added dollars from the system that had not been caught in closed-loop systems before. And to try to take out some of the inefficiencies in the system due to a lack of coordination. The idea in this case was to do it through a single retailer."

Then reality set in.
What Went Wrong

Squall #1 — FBO designed its processing plant and business model around hot-fat trimming. They'd source the right kind of cattle and be paid only for the red meat yield delivered.

"In retrospect, that's one of the things that killed us," Green says. "Our relationship with Safeway wasn't set up to take advantage of hot-fat trimming."

So not only was FBO selling product below market price, but hot-fat trimming meant they had fewer pounds to sell at any price.

"Safeway was buying Select carcasses (the contract specification) at slightly under the market because we'd been banking so much on the value-added products," says Green. "In reality, Safeway paid us the very bottom and then never bought the value-added products like they said they would."

For instance, rather than buying enough case-ready ground beef to place in three divisions, as the plan dictated, Safeway put it in only one. So, at its peak, the value-added, case-ready ground beef unit FBO was banking on for profit was running at only 22% of capacity.

Squall #2 — Because of FBO's exclusive contract with Safeway, no other customers would jump in to buy product and close the gap. Potential customers figured they'd just be helping Safeway build a system that ultimately would be used against them.

Squall #3 — As for the case-ready variety meats, no one had a chance to buy them, at least not with the promised food safety interventions. Green says the interventions relied on a process called Supa-Chill, but FBO never got the equipment working right, nor would the manufacturer stand behind it.

Squall #4 — In building its business model, FBO felt an industry shortage of blue-chrome hides represented a huge potential for them. The blue-chrome process entails splitting the hair side of the hide from the flesh side — the most labor- and chemical-intensive part of finished leather production. Already planning to de-hair the hides as part of its pathogen prevention program, FBO concluded that extending the process to the blue-chrome stage was a logical step.

But FBO had problems getting the de-hairing process to work right. By the time FBO shut its doors, Green estimates only 5,000-6,000 head had been de-haired. As a result, they had more labor involved in the blue-chrome process than anticipated.

Even worse, just before FBO opened its doors, a competing packer decided to enter the blue-chrome hide market.

"Hides were a total disaster," says Green. "There was a huge margin built into the hide facility in the business plan. When others got into the blue-chrome hide business right before we opened, the market went down the drain because there was plenty of supply.

"Needless to say, the problems with the de-hairing process, combined with additional competition in the market, meant we were getting under the anticipated market for blue-chrome hides. They were stacking up by the pallet, and we couldn't move them at an affordable (profitable) price," Green says.

Toward the end, FBO fire-sold a boatload of hides to China. "It was another example of the design for value-added components being right, but the market not being built for them first," he says.

Squall #5 — By the time FBO closed its doors, Green says the company was making money in its pet treat business, but pet treats are a seasonal market. With the contracts they had for the Christmas season they would just now be running that value-added unit at higher capacity.

Squall #6 — If timing is everything, then FBO had it all — bad timing that is. FBO chose to open its doors in August. Green explains August-October is historically the toughest time of the year for any packer to source supply.

Then came last fall's terrorism horrors of Sept. 11, the Russian ban on U.S. poultry and the foot-and-mouth disease rumor that crashed the futures market.

Squall #7 — FBO cattle buyers, contracting cattle for delivery all through the next summer, were overly bullish, often setting the markets when they were buying. When Green took over cattle operations, he quickly discovered FBO was badly positioned economically on way too many cattle at too high a level.

Squall #8 — Whether driven by pride or idealism, FBO had told people they were opening the doors to full production in August. And they did, despite the fact that none of the value-added units were ready at that time.

"If we could have operated four or five months (harvesting commodity cattle while getting the other units up and running) without investing in captive supply, it could have been a whole different story," says Green. "One of my biggest personal concerns from the beginning was that the company was never willing to crawl, then walk. It just ran."

Squall #9 — FBO thought it had addressed risk adequately in its contract with Safeway. The contract employed a "risk collar," which means Safeway guaranteed that FBO wouldn't lose more than X dollars per head. But when losses began mounting, Safeway stopped paying, Green says. By the time FBO closed its doors, Safeway owed more than $10 million in this stop-loss money.

Squall #10 — What about the contract?

"One of the problems with FBO from the beginning was that the contract with the buyer was poorly constructed and too hard to defend," says Green.

There were problems with other contracts, too. A disagreement with the owner of the system FBO planned to use for sorting cattle led to a multi-million dollar litigation that's still unsettled. So FBO had to develop its own sorting system, adding cost and delays to the endless money drain of litigation.

But Green points out FBO did honor its contracts with producers.

Squall #11 — FBO's most lethal mistake may have been that no retailer asked them to create the system.

"I think the concept can work, but there has to be a pre-determined outlet for the product in place. It has to be demand-driven. It can't be supply-driven, then see if it will work," says Green. "There have to be the end users saying 'we want a closed-loop system that can do these things.'"
Lessons Learned

All told, there was about $50 million in equity investment — no single investor held more than a 20% stake in Future Beef Operations (FBO), says Ronnie Green, the company's former vice president of cattle operations.

Three banks put up secured notes accounting for another $180 million (the largest was $160 million). Add about $18.5 million for Chapter 11 financing and Green says the total bill is about $250 million.

In return, Green shares some valuable lessons for the industry:

Lesson 1 — "We learned producers want to see something like this work and want to participate in it. I thought that would be a hurdle, and it wasn't. The willingness, desire and commitment to make it work on the producer side were there. Producers absolutely aren't the hurdle."

Lesson 2 — "We learned the industry isn't yet willing to pay for food safety. They talk about it but won't do it. Even with this summer's E. coli attention, retailers were unwilling to pay for a safer product and system."

Lesson 3 — "I have no doubt a coordinated system, done correctly, allows you to produce a more consistent product. But the implementation of doing that is very difficult. The industry talks systems coordination, but still operates in silos — cow-calf, stocker, feedlot, packer, retailer, etc."

Lesson 4 — "If your business model calls for a single outlet for your product, the odds are stacked against you. You have to have a phenomenal partner who does everything they say they'll do and more, or it's tough to make it work," Green says.

In other words, talk is cheap. All the partners involved must be passionate about making the system work.

"We learned that if you're going to set up a vertically coordinated supply chain, you'd better make sure you have good partners, passionate about the concept at all levels. Your contract with them had better be mutually beneficial and equally shared proportionate to the risk. And the contract had better be well-constructed," he says.

Lesson 5 — "One of the hurdles I didn't foresee was people inside the company getting in the way of the good idea," Green explains. "The idea was sound, but a lot of human faults got in the way, and the biggest one was greed. Rather than start slow, it was more a feeling of, 'We'll put it all into this one system and capitalize on it right away.' Walk before you run."

Lesson 6 — "We learned there's a great desire among people for more information, but they don't want the hassle of figuring out what to do with it," he says. "People will make changes, but there's a huge difference between getting data and using information to manage."

Lesson 7 — "We found there are ways to sort cattle into uniform outcome groups and there is value in that, but there are simpler ways of doing it than some might think," Green says. "Why have we known the value of sorting cattle for so long but been unable to implement it?"

Lesson 8 — "High cost isn't sustainable. You can't support high overhead unless you're a specialty item," he says.

Finally, perhaps most telling, Green says, "We talk a lot about value-adding, branding and returning more dollars to the producer. But in reality, retailers and others up the food chain expect us to provide those things — that those things shouldn't be added value but standard value. If true, the ramifications for the industry's future are obvious; the industry will have to operate at higher volume and lower cost."

 

[DiamondSCattleCo]

Okay gang, and especially Mr. Scott Huber. What do you think of a producer owned brokerage company.

BIG C has started conversation on how to move toward marketing beef in a substantial way. Most of the conversation at previous meeting, even during the time we were considering the plant proposal, involved marketing and our membership with the Canadian Beef Export Federation and communication with government and private industry around the world was constant. (beleive it or not)

Let's have it folks. Do you think we can disrupt the sytem by working within the system? We would like to let producers hold on to the ownership of their electronic I.D. tags as long as possible and let us have a chance at marketing their beef after it is killed in one of the many plants coming on line - or the current plants that would allow a custom kill.

And and and aquire RFQ's from contacts that we have and are making and fill those orders with product from the plant in Canada that has the best price.

I will explain how I got my head around this last statement at a later time, but for now -

What do you all think?

This may work, especially with an outfit that already has a proven sales force. So what would the charge back to the producer be for brokering his beef?

This is a good thread, but I believe that we as producers have to be careful with the niche and small markets. Don't get me wrong, we need to fill those markets, but long term, they won't generate the demand we need to ensure our feeder and fed cattle prices remain high. As producers, we need market share, if only to keep the other players honest.

I recognize the barriers to entry that exist for any new venture, especially one on a large scale. As someone who has started a couple business ventures, the task of securing financing can be daunting, but definitely not impossible. Especially now that we have a new minority government in place. They are going to want to satisfy everyone, and the time is ripe for securing long term government guaranteed loans. I don't have the numbers, however most startup ventures in North America fail because of lack of operating capital.

I haven't had the opportunity to read many proposals, however I think JD6320 made one important point: look at what has worked elsewhere and adapt it to our own circumstances. There are some very successful livestock co-ops operating in the world right now, and I think we'd be doing ourselves a dis-service to not take a HARD look at them.

Maintain ownership of the animal from the time it drops to the time it hits a consumer plate. Perhaps that means we need to hire an existing packing plant to cut and wrap for a beef venture, but that would only be a short-term solution.

Rod

 

[Jason]

I think some very good ideas are starting to be presented.

One of the main things I have said all along is develop the market first, then kill the cattle.

Will they make it? As one Midwestern U.S. participant on the tour remarked, "There are several very smart things being done out there." Reg Clause of Iowa State University Value-Added Agricultural Center wrote in his review of the tour to CooperationWorks! director Audrey Malon: "First, the brand development is well advanced. Rather than building a packing plant and then developing brand and retail relationships, this project has put the priorities in the proper order. This lesson transfers to many projects other than beef. It's the linkage of producer to retail that is vital to transferring value back up the chain."

I have been in both positions in selling freezer beef, having orders before killing and having freezers full of beef.

Consumers are very reluctant to buy something they perceive as being passed over or whatever. I had the kill dates and they were current, but it was far easier to tell a customer they had to wait 3 weeks to get a half rather than them buying one in the freezer.

Steaks were easy to move from the freezer, but with only 11% of an animal being middle meats they disappear way too fast, leaving end meats just sitting there. To make a profit on freezer beef, the chuck and round have to be marketed at a profit as there is no hide or offal value in small operations.

Having a big plant bid to custom kill makes sence as they can still sell the offal and put the hides in their plant. If they can be garanteed 1 or 2 full days a week at a profit, they potentially would be in a better position to compete harder for other cattle.

However, not only is there a kill schedule to deal with, but a fabrication schedule. Either a joint plant with the kill or another one would have to be used to break the carcass down to the retail packages.

 

[fedup2]

That cooperativegrocer site has tons of information under the topic index.
I am amazed with all the things that one has to consider when doing something like this. Sure reminds you that one needs more than a good idea and a few dollars to throw at a project like this.

 

[flounder]

deleted...tss

 

[Econ101]

How many fines did Cargill and Tyson amass in Canada? In the U.S., the Secretary of Agriculture does not fine agribusiness as the recent report on the AMS and other regulatory agencies under the USDA has pointed out.

I guess fines are left to the little guys only.