Jason said:
Rod, maybe you haven't seen the number of plants looking for investor money with no business plan, no idea of enviromental regulations, no idea how or where they would sell the beef, or with no idea of what the actual costs of building a plant are.
Oh certainly, I didn't mean it like that. The reason I said I took it as a given is because I wouldn't expect anyone to support a poorly-run outfit.
Jason said:
And if there is a town like that what are the chances those 16.6% are interested in working anyway?
Field of dreams comes to mind: If you build it, they will come. When the Francois/Finlay dam was being build, the town of Nipawin went from 4900 people to around 6000 workers. But, I never suggested the plant be built close to a small town anyway. Location is getting into a little more detail than needs to be discussed.
Jason said:
It would lead to problems with who gets which cattle, will producers be able to sell to other plants if they own one? Would you buy bulls from another breeder if you have your own?
My edit didn't make it in time. No captive supplies. Producers/Feeders could sell anywhere they wanted. However, it would be hoped that producers would support the co-operative venture, since the profits would be channeled back to the producer, not to a suit and tie sitting at the stock market.
Jason said:
industry in terms of management and expertise. The co-op idea isn't a plus or minus because if there were more profits than expenses the profits are still going somewhere, co-op members are shareholders.
The co-op idea is a plus for producers. Currently, any profits go back to shareholders who do not have a stake in the livestock. They simply own chunks of paper that entitle them to X% of the profits.
Jason said:
The only benefit of a co-op type investment is that the most likely investors (cattle people) would own shares in the plant and possibly make their money back.
No shares based on investments into the co-op. That completely defeats the purpose of the co-op and no longer makes it a co-op. If the plant is built, it would be funded with bank money and hopefully government could be convinced to guarantee the loans. After that, "shares in profit" are only dispersed to those who ship their cattle to the co-op. If you ship 40,000 lbs of beef to the co-op in 2005, and after the books are done, its discovered that 1 penny of profit was made per pound of beef, you get your $400. If the co-op makes a buck a pound, you get $40,000. You get the idea. Part of the gross profits would end up having to go into capital accounts, just in case there was a loss on the year.
Rod