It is the Industry Concentration Game--Producers lose

[Econ101]

1) The packing industry has never been more concentrated and cattle prices have never been higher?

2) Want to lower cattle prices? Break up the large packers and create more smaller less efficient packing companies.

1) SH, you're attributing today's higher prices with packer concentration, and I truly believe you are in error. If you take a look at long term demand, you'll see its been steadily increasing over the years, as such, prices have went up.

2) Thats speculation. My own beliefs, backed by sound economic theory, but also speculation, says that if we had another 10 or 12 equal sized players in the market, we'd be much further ahead. We'd have the increased demand of today's market, combined with the increased competition from multiple packers bidding on our animals.

The biggest benefits of economies of scale come from making individual plants larger and more efficient, not from one company owning several plants. You may see some benefit on the administration side, but thats insigificant, and not able to offset the reduced competition on the bidding side.

Rod

We would probably see a more stable market with less highs and less lows. It would be a more efficient market.

 

[DiamondSCattleCo]

We would probably see a more stable market with less highs and less lows. It would be a more efficient market.

I'm not sure I understand the more efficient market (could you give me the benefit of your thinking?), however I do agree with the more stable market to a degree. There are historically times when beef demand is higher during the year, so multiple packers wouldn't affect that. However short term spikes or crashes caused by certain packers slowing down would be minimized. I think this would be beneficial to producers, as it would allow them to govern risk a little better.

Rod

 

[Anonymous]

Conman: "I bet people like robert mac and rkaiser are getting more money FROM CONSUMERS than Tyson is per lb. Tyson is just paying the cheapest game in town. I bet the quality in the little deals are a lot better than from the big packers. If it were not so, why would they have to play the little market games against people like rkaiser and why would they have to control the producer's advertising checkoff money through the USDA?"

You bet on a lot of things you can't prove. This is just one more example because you don't have a clue what Tyson is getting for their beef or what the quality is.

Packers have no control on how checkoff dollars are being spent. That's another damn lie.

PROVE ME WRONG YOU PHONY!

Sandbag: "Hate to tell you this, SH, but there are many factors that figure into cattle prices. To lock onto one is very foolish."

Sandbag, I am well aware of what factors affect cattle prices.

Where was this argument of yours when your heros were blaming imports and "HUGE PACKER PROFITS" on lower cattle prices?

Did you tell them then that there are many factors that figure into cattle prices and that locking onto one factor was foolish????

WHERE'S THE CONSISTENCY IN YOUR ARGUMENTS?????

Nah, when they blamed packer concentration and captive supplies on lower cattle prices, you nodded your head like the follower you are while independent thinkers were pointing out the factors that were actually contributing to lower cattle prices.

I didn't say current cattle prices were a result of packer concentration. That was your "ILLUSION".

I simply pointed out the fact that packers have never been more concentrated and we have never experienced higher cattle prices. That proves that concentration is not keeping prices lower as your packer blaming heros were claiming before.

Rod: "1) SH, you're attributing today's higher prices with packer concentration, and I truly believe you are in error."

I did not contribute higher cattle prices with packer concentration. I simply pointed out the fact that packers have never been more concentrated and cattle prices have never been higher. That is a fact. That is not saying that concentration was the reason.

You and Sandbag both spun my words into what you wanted them to say, NOT WHAT THEY SAID.

2) Thats speculation. My own beliefs, backed by sound economic theory, but also speculation, says that if we had another 10 or 12 equal sized players in the market, we'd be much further ahead. We'd have the increased demand of today's market, combined with the increased competition from multiple packers bidding on our animals.

It's not speculation, it's fact. If it wasn't fact, the smaller less efficient packers would still exist. They couldn't compete BECAUSE THE MARKET WAS COMPETITIVE.




~SH~

 

[Econ101]

We would probably see a more stable market with less highs and less lows. It would be a more efficient market.

I'm not sure I understand the more efficient market (could you give me the benefit of your thinking?), however I do agree with the more stable market to a degree. There are historically times when beef demand is higher during the year, so multiple packers wouldn't affect that. However short term spikes or crashes caused by certain packers slowing down would be minimized. I think this would be beneficial to producers, as it would allow them to govern risk a little better.

Rod

Stable markets are more efficient for just the reason you stated. Less risk rent (money needed to compensate for additional market risk).

 

[DiamondSCattleCo]

Rod: "1) SH, you're attributing today's higher prices with packer concentration, and I truly believe you are in error."

I did not contribute higher cattle prices with packer concentration. I simply pointed out the fact that packers have never been more concentrated and cattle prices have never been higher. That is a fact. That is not saying that concentration was the reason.

When you mention them together in a sentence like that, it makes it sound like you are. At the very least you are saying that concentration doesn't hurt cattle prices, and I'm saying I disagree with that viewpoint.

2) Thats speculation. My own beliefs, backed by sound economic theory, but also speculation, says that if we had another 10 or 12 equal sized players in the market, we'd be much further ahead. We'd have the increased demand of today's market, combined with the increased competition from multiple packers bidding on our animals.

It's not speculation, it's fact. If it wasn't fact, the smaller less efficient packers would still exist. They couldn't compete BECAUSE THE MARKET WAS COMPETITIVE.

In a way SH, you just made my point for me. Since retail prices are largely unaffected by the number of packers in the industry, its reasonably safe to say that the smaller plants went under because they had costs that were too high. Since economies of scale are pretty much unaffected by multiple plant ownership, the only other thing that could cause increased costs were the plants having to pay more money for the animals. You combine that with today's increased demand, and we'd have higher prices. Its sound logic and the only way you can refute it is to prove that multiple plant ownership will lead to lower per lb packing costs.

Rod

 

[DiamondSCattleCo]

Stable markets are more efficient for just the reason you stated. Less risk rent (money needed to compensate for additional market risk).

Thanks, I didn't think of it that way.

Rod

 

[Anonymous]

Rod: "At the very least you are saying that concentration doesn't hurt cattle prices, and I'm saying I disagree with that viewpoint."

I am saying the CURRENT level of concentration has not hurt cattle prices, absolutely. I hate to point out the obvious but if it had, we would not have this level of cattle prices in the U.S.

You can disagree all you like but you'll never be able to back your position with supporting facts because it's just an opinion.

There is three factors that determine packer profitability:

1. What it costs them to process cattle.
2. What they get for their beef and beef by products.
3. What they pay for the cattle.

When you have 3 major players all competing for the same cattle, they are going to have to have to pay up against their competition, they are going to have to process their cattle competitively, and they are going to have to get as much as they can from the retailers.

Due to economies of scale, smaller packers will not be able to process cattle cheaper than these larger more efficient companies. They only way they can compete is to sell their beef and beef byproducts for a higher price.

Rod: "In a way SH, you just made my point for me. Since retail prices are largely unaffected by the number of packers in the industry, its reasonably safe to say that the smaller plants went under because they had costs that were too high. Since economies of scale are pretty much unaffected by multiple plant ownership, the only other thing that could cause increased costs were the plants having to pay more money for the animals. You combine that with today's increased demand, and we'd have higher prices. Its sound logic and the only way you can refute it is to prove that multiple plant ownership will lead to lower per lb packing costs."

You don't know why they went under. They may have had costs that were too high or they didn't get enough money for their beef and beef by products. Some, like Beef America, did not have enough equity to survive an ecoli outbreak which resulted in further concentration.


~SH~

 

[ranch hand]

Rod: "At the very least you are saying that concentration doesn't hurt cattle prices, and I'm saying I disagree with that viewpoint."

I am saying the CURRENT level of concentration has not hurt cattle prices, absolutely. I hate to point out the obvious but if it had, we would not have this level of cattle prices in the U.S.

You can disagree all you like but you'll never be able to back your position with supporting facts because it's just an opinion.

There is three factors that determine packer profitability:

1. What it costs them to process cattle.
2. What they get for their beef and beef by products.
3. What they pay for the cattle.

When you have 3 major players all competing for the same cattle, they are going to have to have to pay up against their competition, they are going to have to process their cattle competitively, and they are going to have to get as much as they can from the retailers.

Due to economies of scale, smaller packers will not be able to process cattle cheaper than these larger more efficient companies. They only way they can compete is to sell their beef and beef byproducts for a higher price.

Rod: "In a way SH, you just made my point for me. Since retail prices are largely unaffected by the number of packers in the industry, its reasonably safe to say that the smaller plants went under because they had costs that were too high. Since economies of scale are pretty much unaffected by multiple plant ownership, the only other thing that could cause increased costs were the plants having to pay more money for the animals. You combine that with today's increased demand, and we'd have higher prices. Its sound logic and the only way you can refute it is to prove that multiple plant ownership will lead to lower per lb packing costs."

You don't know why they went under. They may have had costs that were too high or they didn't get enough money for their beef and beef by products. Some, like Beef America, did not have enough equity to survive an ecoli outbreak which resulted in further concentration.


~SH~

There is four factors that determine packer profitability:

1. What it costs them to process cattle.
2. What they get for their beef and beef by products.
3. What they pay for the cattle.

4. What the CEO's wages and benefits are!! (retirement, entertainment, stocks gave as bonus and etc.)

 

[Sandhusker]

I'd say debt load is one that shouldn't be ignored. A real businessman certainly takes that into consideration. Someone might have to explain it to SH. :lol:

 

[Anonymous]

Conman: 4. What the CEO's wages and benefits are!! (retirement, entertainment, stocks gave as bonus and etc.)

That's figured into the plant costs.

Sandbag: " I'd say debt load is one that shouldn't be ignored. A real businessman certainly takes that into consideration."

Debt load is also figured into the plant costs.


NOTHING AGAIN!


~SH~

 

[Econ101]

Conman: 4. What the CEO's wages and benefits are!! (retirement, entertainment, stocks gave as bonus and etc.)

That's figured into the plant costs.

Sandbag: " I'd say debt load is one that shouldn't be ignored. A real businessman certainly takes that into consideration."

Debt load is also figured into the plant costs.


NOTHING AGAIN!


~SH~

SH, so now you are giving my handle to others!!!!! Now I'm upset!!!

 

[ranch hand]

Conman: 4. What the CEO's wages and benefits are!! (retirement, entertainment, stocks gave as bonus and etc.)

That's figured into the plant costs.

Sandbag: " I'd say debt load is one that shouldn't be ignored. A real businessman certainly takes that into consideration."

Debt load is also figured into the plant costs.


NOTHING AGAIN!


~SH~

Well maybe sir they need to get their plant costs under control if they want to make a bigger profit. Producers are suppose to be lean and mean. I could pay my top hand big bucks and run in the red to get away from paying so much taxes too.

 

[DiamondSCattleCo]

I am saying the CURRENT level of concentration has not hurt cattle prices, absolutely. I hate to point out the obvious but if it had, we would not have this level of cattle prices in the U.S.

I'm saying thats speculation, same as you accuse me of. You cannot offer any proof that prices wouldn't be even higher if we had more packers today.

Due to economies of scale, smaller packers will not be able to process cattle cheaper than these larger more efficient companies. They only way they can compete is to sell their beef and beef byproducts for a higher price.

SH, I think you're misunderstanding how economies of scale can work in industry. Take 6 efficient packing plants with modern equipment. How can these 6 plants operate more efficiently with one owner versus 6? There may be minor savings on hard inputs as they can buy volumes to distribute among six plants, but you'd be hard pressed to put a meaningful price per pound on it. Where else are there economies of scale? And I ask this as a genuine question, not sarcasm.

Rod

 

[Sandhusker]

Conman: 4. What the CEO's wages and benefits are!! (retirement, entertainment, stocks gave as bonus and etc.)

That's figured into the plant costs.

Sandbag: " I'd say debt load is one that shouldn't be ignored. A real businessman certainly takes that into consideration."

Debt load is also figured into the plant costs.


NOTHING AGAIN!



~SH~

Debt load is not figured into plant costs. Your knowledge of accounting matches your business knowlege.

 

[Anonymous]

Sorry Conman,

Didn't mean to credit an original thought to you.

Ranch Hand: "Well maybe sir they need to get their plant costs under control if they want to make a bigger profit. Producers are suppose to be lean and mean. I could pay my top hand big bucks and run in the red to get away from paying so much taxes too."

Who said their plant costs are not under control?

Ranch hand: "I could pay my top hand big bucks and run in the red to get away from paying so much taxes too."

Why does a "ranch hand" have a "top hand"???

If you think the packing industry is so profitable, maybe you should invest in it and get your rude awakening much like Future Beef did.

Rod: "You cannot offer any proof that prices wouldn't be even higher if we had more packers today."

Rod, the very reason we only have 5 major packers in the U.S. today is because the less efficient companies could not compete. THEY COULD NOT PAY UP FOR CATTLE LIKE THE BIG BOYS AND STILL MAKE A PROFIT.

Yes, some companies can compete by adding value to beef and beef by products but you are not going to compete with Tyson, Excel, and Swift on a kill cost per head basis.

Sandbag: "Debt load is not figured into plant costs."

Debt load and interest would both be considered costs of operating a packing plant.


Your spin matches your intelligence.



~SH~

 

[Econ101]

SH: "Rod, the very reason we only have 5 major packers in the U.S. today is because the less efficient companies could not compete. THEY COULD NOT PAY UP FOR CATTLE LIKE THE BIG BOYS AND STILL MAKE A PROFIT."


And as Pickett proved, market manipulation. I would add to that USDA manipulation.

 

[Anonymous]

Conman: "And as Pickett proved, market manipulation."

Pickett never proved nothing! That's why they lost.


~SH~

 

[Sandhusker]

Conman: "And as Pickett proved, market manipulation."

Pickett never proved nothing! That's why they lost.


~SH~

Pickett lost because they couldn't meet the extra criteria Strom placed on them, you know, armed robbery is not a crime if you use a hunting gun.

 

[Mike]

Conman: "And as Pickett proved, market manipulation."

Pickett never proved nothing! That's why they lost.


~SH~

Pickett lost because they couldn't meet the extra criteria Strom placed on them, you know, armed robbery is not a crime if you use a hunting gun.

Amendment VII, US Constitution

"In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law."

 

[Anonymous]

Sandbag: "Pickett lost because they couldn't meet the extra criteria Strom placed on them, you know, armed robbery is not a crime if you use a hunting gun."

That's a damn lie.

Strom cited numerous reasons why the plaintiffs failed to prove their burden of market manipulation. Judge Strom's reasoning has been posted. Yet you paint another deceptive illusion like the pathetic individual you are.



~SH~