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R-CALF Testifies

A

Anonymous

Guest
July 24, 2006



Director Testifies at Iowa Farm Bill Hearing



(Billings, Mont.) – R-CALF USA Region VII Director Eric Nelson gave testimony earlier today on behalf of the organization at a regional Farm Bill hearing in Ankeny, Iowa, conducted by the U.S. Senate Agriculture Committee.



The U.S. cattle industry is the largest single sector of U.S. agriculture, and the continued health of this sector is essential to creating strong, thriving rural communities all across the United States. Yet during the past decade, U.S. cattle producers have faced significant obstacles in both the domestic and international markets, and since 1994, more than 122,000 cattle ranches and farms have exited the beef cattle business. During that same period, the inventory of cattle and calves in the U.S. dropped from 101 million to just under 95 million.



Nelson testified that the Farm Bill should make progress in five key areas: 1) honest competition in the domestic livestock market; 2) animal health and safety; 3) consumer information; 4) international trade; and, 5) the development of initiatives to sustain a more prosperous and competitive cattle and beef sector.



“As our sector faces many challenges, the Farm Bill should contain a separate cattle and beef chapter encompassing each of these issues,” Nelson told the panel.



Nelson’s entire written testimony is available at www.r-calfusa.com under the “Competition Issues” link, but during the hearing, he primarily focused on competition in the marketplace.



Consolidation in the meatpacking industry has grown at an alarming rate over the past few decades, as have abusive contracting practices,” Nelson noted. “Concentration among meatpackers has more than tripled since the late 1970s, and today, just four beef-packing companies control more than 83 percent of the industry.



“While the meatpacking industry has seen dramatic consolidation, packers have also increasingly used non-traditional contracting and marketing methods that further erode the selling power of cattle producers,” Nelson explained. “Such methods include purchasing cattle more than 14 days before slaughter (packer-fed cattle), forward contracts, and exclusive marketing and purchase agreements.



“Together, the four largest packing companies employed such forms of ‘captive supply’ contracting methods for a full 44.4 percent of all cattle they slaughtered in 2002,” he continued. “That figure is for the whole year, but if packers acquire large numbers of supply in advance for one time frame, damage to the market can be done. As recently as this past February, there were nearly four full weeks without a cash market in my part of the world, as the packers had acquired enough inventory in advance through forward and formula contracts, with many cattle coming from Canada. When trade did resume, the market had lost nearly $10 per hundredweight.



“The impact of packer concentration and abusive contracting practices is also evident in the declining share of each beef retail dollar that actually reaches cattle producers, with the producer’s share of each retail dollar earned on beef being 47 cents in 2005, down from 56 cents in 1993,” Nelson pointed out. “Slaughter cattle I’m selling now are bringing about $1,000 per head and take about 16 months of feed and care to get them to that point. After a packer buys that animal for that $1,000, roughly in the next week, the packer and the retailers resell that same animal for around $2,100.



“The Farm Bill should ensure that antitrust and competition laws are effectively and vigorously enforced,” Nelson emphasized.



Nelson also discussed other issues in dire need of attention before the expected completion of the 2007 Farm Bill, especially if there are any delays in writing this specific legislation.



“First, there was a precipitous drop in U.S. fed-cattle prices that began in late January 2006 and continues today, despite widespread reports of tight cattle supplies and strong beef demand, demonstrating the need to immediately reauthorize Livestock Mandatory Price Reporting in accordance with recommendations recently made by the GAO (Government Accountability Office,” Nelson commented. “We support the recommendations proposed by Senators Grassley and Harkin and trust that transparency in the market can be improved by extending and strengthening Livestock Mandatory Price Reporting as quickly as possible.



“Second, the current import and volatile market situation highlights the need to implement the 2002 Mandatory Country-of-Origin Labeling (M-COOL) law as soon as possible,” he outlined. “It breaks my heart that as a producer, we can produce the best product in the world, and then have U.S. consumers buying Canadian, Japanese or Argentine beef, all the while paying top dollar thinking it’s U.S. beef, with importers pocketing huge profits.



“Next, we can immediately increase packer competition and limit concentration by passing Senate Bill 3519 (the Agriculture Small Business Opportunity and Enhancement Act), which would allow interstate sales of state-inspected meat and poultry.



“Finally, as we push to reopen our export markets to U .S. beef, we must remember that the customer is king, and allow individual packers to voluntarily test beef for BSE (bovine spongiform encephalopathy),” Nelson concluded. “The future for the cattle industry will be bright as long as needs of independent producers are looked out for.”



# # #



R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA’s membership consists primarily of cow/calf operators, cattle backgrounders, and feedlot owners. Its members – over 18,000 strong – are located in 47 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.
 
A

Anonymous

Guest
“Consolidation in the meatpacking industry has grown at an alarming rate over the past few decades, as have abusive contracting practices,” Nelson noted. “Concentration among meatpackers has more than tripled since the late 1970s, and today, just four beef-packing companies control more than 83 percent of the industry.

Meanwhile, we have just seen the highest feeder cattle prices ever recorded.


“Together, the four largest packing companies employed such forms of ‘captive supply’ contracting methods for a full 44.4 percent of all cattle they slaughtered in 2002,” he continued. “That figure is for the whole year, but if packers acquire large numbers of supply in advance for one time frame, damage to the market can be done. As recently as this past February, there were nearly four full weeks without a cash market in my part of the world, as the packers had acquired enough inventory in advance through forward and formula contracts, with many cattle coming from Canada. When trade did resume, the market had lost nearly $10 per hundredweight.

As if that was the only factor playing on the markets. Typical R-CALF logic.


“Second, the current import and volatile market situation highlights the need to implement the 2002 Mandatory Country-of-Origin Labeling (M-COOL) law as soon as possible,” he outlined. “It breaks my heart that as a producer, we can produce the best product in the world, and then have U.S. consumers buying Canadian, Japanese or Argentine beef, all the while paying top dollar thinking it’s U.S. beef, with importers pocketing huge profits.

Then why did you make "M"COOL unenforceable by prohibiting "M"ID from "M"COOL. You shot yourself in the foot.

Btw, most consumers don't care where their beef originated from as long as it offers value and is safe. If they wanted source verification, they could buy source verified beef.


“Next, we can immediately increase packer competition and limit concentration by passing Senate Bill 3519 (the Agriculture Small Business Opportunity and Enhancement Act), which would allow interstate sales of state-inspected meat and poultry.

I support the concept of interstate shipment of meat based on state inspection but I fully expect R-CALF to screw this up with their conspiracy theories as well. Hope I'm wrong!



~SH~
 

TimH

Well-known member
Quote from the article-

“Consolidation in the meatpacking industry has grown at an alarming rate over the past few decades, as have abusive contracting practices,” Nelson noted. “

:D :D :D :D :D :D :D

"...AT AN ALARMING RATE...." :D :D :D :D

Now there is a popular "Liberal Activist Group" catch phrase. They all use it. Dead giveaway!!! :D :D :D :D :D :D

Long live R-calf!!!!! :D :D :D :D :D :D
 
A

Anonymous

Guest
Driven by emotion, what do you expect?

"ALARMING"

"CONTAMINATED"

"HIGH RISK"


What they lack in facts, they try to compensate for with emotion.


~SH~
 

feeder

Well-known member
SH, have you sold fat cattle this year to any packers? If you did and are happy with your profits would you please clue me in on your secrets to your success. Feeder cattle prices are good but fat cattle prices are horrible in comparison.
 

the chief

Well-known member
Meanwhile, we have just seen the highest feeder cattle prices ever recorded.

After years and years and years of breakeven or below prices that forced many producers to get out of the business. But then, you don't really give a squat, do you scott? As long as the packer is happy, right?
 
A

Anonymous

Guest
Feeder: "SH, have you sold fat cattle this year to any packers?"

Nope!

What's your point? Who do you think owes you more money? The packers? How much are they making feeder? The retailer? How much are they making that you think they should share with you?

If you find either of these entities too profitable than why haven't you invested in the packing or retail business?

If you haven't found any excessive profit centers in either of these two entities, what's left? WAHLAH, THE CONSUMER!

Gonna sue the consumer because they aren't paying enough more for beef for you to be profitable?

WHO DO YOU THINK OWES YOU MORE MONEY AND WHAT SHOULD THEIR PROITABILITY LEVEL BE???

You won't answer that question, nobody ever does.

Tell me feeder, what exactly do you feel would be a fair return on investment for packers and retailers?

I don't care how badly "WE" feel that we are not getting paid what we are worth, "WE" cant' change the cards on the table. If you find a profit center that you believe is excessive, you need to invest in it.

If you think Tyson is making too much money at $26 per head from selling everything from the tongue to the tail, you need to invest in the packing industry and capture that value yourself. NOBODY OWES YOU A LIVING.


Feeder: "Feeder cattle prices are good but fat cattle prices are horrible in comparison."

I've went through excessive losses in the feedyard. The only thing I could do to change that would have been to not buy cattle at a price that was higher than I could lock in a profit at on the board. That means less money for the producers who I bought cattle from. Would you fault me for that?

You guys are always looking for someone or something to blame but can't ever put your finger on anything.

The most legitimate blame lays at the foot of the consumer. Blame them because cattle prices start and end at the foot of the consumer.


Chief: "After years and years and years of breakeven or below prices that forced many producers to get out of the business."

So what's your point?

The packers made too much money during those years?

If you believe that, you better have the goods to back it up. Tyson was blamed for excessive profits during the Pickett era that were revealed to be $26 per head. THAT WAS THEIR GOOD YEARS.

Would half of those profits ($13 per head) made a difference to those producers?

Is your point that retailers made too much money during those years?

Can you back that with actual profit figures from retailers or are you just looking for someone to blame?

Is your point that consumers didn't pay enough more for beef to make you profitable?

You know it's a funny thing but I don't see any pasture land sitting idle around here. Someone must be making a profit or are the banks just shoring up all these guys?

Interestingly, Harlan Hughes data shows a difference of around $250 per head between the high cost and low cost producers. Should the government shore up the high cost producers to keep them in business or should they have to compete since you are such an advocate of competition in the livestock industry?

WHO OWES YOU A LIVING????


You know one of the biggest problems this industry faces chief? It's the ignorance of what factors truly affect cattle markets. You guys don't have a clue.

When do I ever hear R-CALF mention competitive meat supplies? If the consumer walks up to the retail beef counter and only has so much to spend and decides to save money on $.99 chicken as opposed to $2.45 beef, DO YOU BLAME HER???

Don't you think that purchase affects your bottom line?

R-CALF always talks about LOWER CATTLE NUMBERS but what does that tell you when carcass rates have grown at a rate to surpass any reduction in cattle numbers?

R-CALF blames imports but we had higher feeder cattle prices in the fall of 2005 with an opened Canadian border than in the fall of 2004 with a closed Canadian border. Do you see R-CALF telling anyone about that? Of course not, that would defeat their entire argument.

Has there been any reduction in packer concentration? Well, if packer concentration leads to lower cattle prices, how did we just come off the highest feeder calf prices ever recorded when packers have never been more concentrated?

Has the number of captive supply cattle been reduced? Well, if the captive supply numbers have not been reduced, how did we just come off the highest feeder calf prices ever recorded when the number of captive supply cattle has not been reduced?

HOW DO YOU EXPLAIN THAT CHIEF???

To anyone with any degree of common sense, obviously there is more factors playing on the market than the typical "scapegoats" of imports, packer concentration, and captive supplies.


You wont see me suggest that cattle prices are "TOO HIGH" or "HIGH ENOUGH" but if you are going to look for something or someone to blame for lower prices, you better know what the hell you are talking about rather than just making it up or agreeing with "populist" blaming opinions just so you have something to justify lower cattle prices.

Not what you wanted to hear huh?

Ok, packer concentration, captive supplies, and imports are the reasons for all those years of lower cattle prices. Feel better now?



~SH~
 

Jason

Well-known member
feeder, I have some serious questions for you, this isn't to fight, or rattle your cage, but for everyone to think about.

When you buy calves in the fall, what factors do you look at?

I'll list what I think most feedlots look at, please feel free to add to or dispute what I list. (in no particular order)

Fat prices, both current cash sales and futures boards.

Estimated feed costs, including estimated gain per day, and losses.

Interest costs.

Income tax situation.

Cost of prefered weight of calves compared to cost of heavier calves (or lighter).

What do you do if you think calves are too high? For instance, if you estimate your break even on 6 wts. and it calculates to $1.20 at 600 pounds as a top price, what do you do if 6 wts are selling for $1.28?

Some of the reasons feedlots lose money are bad weather, less gain on feed, higher than anticipated losses, and betting the cash market will be better than the futures boards.

If you gamble that the cash price of fats will be higher than the futures boards when those calves are ready, who is at fault if that gamble doesn't pay?

Think away.
 

feeder

Well-known member
Jason, I answer yes to most of your points. The income tax situation doesn't factor into our operation, only in the aspect that we would like to see income growth. Yes, we have changed our weight preferences if they are a better buy as long as the month they sell can pencil out. When we buy feeders we try to get below the futures price of fats a couple of bucks. But we can't survive only making 15-20$$ per head due to we are a smaller feedlot. We need a few better turns to average out. We can only have 1000 head at one time in the yards due to DNR regs. We can't achieve the larger numbers with a narrower margin as some. And no, we haven't increased our breakeven target just so we could buy cattle. That is why we are still looking for a few loads. Have been burnt a few times and don't want another train wreck. What I do know is that a person has to really watch the markets and try to capitalize on them when you have a chance. So, I hope I addressed your points. Like I have said before, everyone in this business from cow-calf to feeder to packers have to make enough to survive so we can all keep doing what we do.
 

the chief

Well-known member
~SH~ said:
Feeder: "SH, have you sold fat cattle this year to any packers?"

Nope!

What's your point? Who do you think owes you more money? The packers? How much are they making feeder? The retailer? How much are they making that you think they should share with you?

If you find either of these entities too profitable than why haven't you invested in the packing or retail business?

If you haven't found any excessive profit centers in either of these two entities, what's left? WAHLAH, THE CONSUMER!

Gonna sue the consumer because they aren't paying enough more for beef for you to be profitable?

WHO DO YOU THINK OWES YOU MORE MONEY AND WHAT SHOULD THEIR PROITABILITY LEVEL BE???

You won't answer that question, nobody ever does.

Tell me feeder, what exactly do you feel would be a fair return on investment for packers and retailers?

I don't care how badly "WE" feel that we are not getting paid what we are worth, "WE" cant' change the cards on the table. If you find a profit center that you believe is excessive, you need to invest in it.

If you think Tyson is making too much money at $26 per head from selling everything from the tongue to the tail, you need to invest in the packing industry and capture that value yourself. NOBODY OWES YOU A LIVING.


Feeder: "Feeder cattle prices are good but fat cattle prices are horrible in comparison."

I've went through excessive losses in the feedyard. The only thing I could do to change that would have been to not buy cattle at a price that was higher than I could lock in a profit at on the board. That means less money for the producers who I bought cattle from. Would you fault me for that?

You guys are always looking for someone or something to blame but can't ever put your finger on anything.

The most legitimate blame lays at the foot of the consumer. Blame them because cattle prices start and end at the foot of the consumer.


Chief: "After years and years and years of breakeven or below prices that forced many producers to get out of the business."

So what's your point?

The packers made too much money during those years?

If you believe that, you better have the goods to back it up. Tyson was blamed for excessive profits during the Pickett era that were revealed to be $26 per head. THAT WAS THEIR GOOD YEARS.

Would half of those profits ($13 per head) made a difference to those producers?

Is your point that retailers made too much money during those years?

Can you back that with actual profit figures from retailers or are you just looking for someone to blame?

Is your point that consumers didn't pay enough more for beef to make you profitable?

You know it's a funny thing but I don't see any pasture land sitting idle around here. Someone must be making a profit or are the banks just shoring up all these guys?

Interestingly, Harlan Hughes data shows a difference of around $250 per head between the high cost and low cost producers. Should the government shore up the high cost producers to keep them in business or should they have to compete since you are such an advocate of competition in the livestock industry?

WHO OWES YOU A LIVING????


You know one of the biggest problems this industry faces chief? It's the ignorance of what factors truly affect cattle markets. You guys don't have a clue.

When do I ever hear R-CALF mention competitive meat supplies? If the consumer walks up to the retail beef counter and only has so much to spend and decides to save money on $.99 chicken as opposed to $2.45 beef, DO YOU BLAME HER???

Don't you think that purchase affects your bottom line?

R-CALF always talks about LOWER CATTLE NUMBERS but what does that tell you when carcass rates have grown at a rate to surpass any reduction in cattle numbers?

R-CALF blames imports but we had higher feeder cattle prices in the fall of 2005 with an opened Canadian border than in the fall of 2004 with a closed Canadian border. Do you see R-CALF telling anyone about that? Of course not, that would defeat their entire argument.

Has there been any reduction in packer concentration? Well, if packer concentration leads to lower cattle prices, how did we just come off the highest feeder calf prices ever recorded when packers have never been more concentrated?

Has the number of captive supply cattle been reduced? Well, if the captive supply numbers have not been reduced, how did we just come off the highest feeder calf prices ever recorded when the number of captive supply cattle has not been reduced?

HOW DO YOU EXPLAIN THAT CHIEF???

To anyone with any degree of common sense, obviously there is more factors playing on the market than the typical "scapegoats" of imports, packer concentration, and captive supplies.


You wont see me suggest that cattle prices are "TOO HIGH" or "HIGH ENOUGH" but if you are going to look for something or someone to blame for lower prices, you better know what the hell you are talking about rather than just making it up or agreeing with "populist" blaming opinions just so you have something to justify lower cattle prices.

Not what you wanted to hear huh?

Ok, packer concentration, captive supplies, and imports are the reasons for all those years of lower cattle prices. Feel better now?



~SH~


What is the name of the secretary at AMI that types all this for you? :lol: :lol: :lol: :lol: :lol:
 

Jason

Well-known member
feeder said:
Jason, I answer yes to most of your points. The income tax situation doesn't factor into our operation, only in the aspect that we would like to see income growth. Yes, we have changed our weight preferences if they are a better buy as long as the month they sell can pencil out. When we buy feeders we try to get below the futures price of fats a couple of bucks. But we can't survive only making 15-20$$ per head due to we are a smaller feedlot. We need a few better turns to average out. We can only have 1000 head at one time in the yards due to DNR regs. We can't achieve the larger numbers with a narrower margin as some. And no, we haven't increased our breakeven target just so we could buy cattle. That is why we are still looking for a few loads. Have been burnt a few times and don't want another train wreck. What I do know is that a person has to really watch the markets and try to capitalize on them when you have a chance. So, I hope I addressed your points. Like I have said before, everyone in this business from cow-calf to feeder to packers have to make enough to survive so we can all keep doing what we do.

Ok feeder, I appreciate your reply, it is exactly what I hear up here. Margins are slim because someone down the road will compete for the calves harder. I 100% agree that a $20 margin on 1000 head isn't much. You can't live on it for sure.

How about the guy that has 20,000 head capacity. Sure he has a few rules to comply with, but he still makes close to $20 a head. His gross is $400K though, a very good living.

So here is where it gets tricky. What if there was a way to make sure you made say $100 a head? That gives you a decent income of $100K. Sounds good right? The trouble is where does it come from? All other things being the same the extra $80 per head has to come from the person you buy from. How do you convince the rancher that he should sell to you at a 13 cent discount on his 6 wt calves when the bigger feedlot is paying the $1.20?

The other side it could come from is the consumer. What if the price of beef was artificially inflated to give you that extra $80? How many pounds less would we as an industry sell?

We're stuck with this system that the most efficient grow and sometimes put some very good decent hardworking but less efficient people out of business.

Notice how packers haven't even entered the picture? But But But they take all the profit.... do they? Facts don't show that. The same thing that happens to you feeding calves happens to packers. Someone comes along and says if I do more cattle for $1 less profit I can get market share. Competition has forced the packers to get big or get out. If they are truly making all the money, invest in them and share it.

It isn't always pretty, but it is pretty simple.
 
A

Anonymous

Guest
Chief: "What is the name of the secretary at AMI that types all this for you?"

Typical blamer response!

A typical diversion from someone who cannot accept the truth about these issues. Some things never change!


Feeder: "But we can't survive only making 15-20$$ per head due to we are a smaller feedlot."

What does that tell you about concentration?

Feeder I can give you sympathy but that won't change anything. I can give myself sympathy for the losses I occurred while feeding but it was my own fault. I can't blame anyone else. The biggest mistake I made was not practicing better risk management and paying too much for the calves going in.

You see, at one time I was just like the rest of these packer blamers on this site. Guys like chief who could only make statements and never back his views with factual information. I did the research and the profits in the feeding, processing, and retail industries are not there to blame. We have to compete with the cheaper production costs of poultry and pork and that's just a fact of life. Consumers will only spend so much on beef and that is what drives the price of cattle. Some of these guys can't even grasp that basic concept.

Now lets look strictly at the feeding side of this industry. Producers used to blame the feeders just like they do the packers and the retailers. Know why they don't blame the feeders anymore? Because numerous producers started retaining ownership on their cattle and found out that the profits weren't what they thought. Some sustained heavy losses. As you know, there's a lot of risk involved in cattle feeding. I did it because I wanted to thoroughly understand it.

There is a function on the DTN called "Livestock margins". There is a breakeven price for 550 lb. feeder cattle on that page. All the markets and expenses are updated daily. The local markets track dead on with those break-even levels. That's what you compete against.

I'll bet if you took a 10 year average of profits and losses in the feedlots in the US you would find somewhere close to a $5 per head average loss. Do you know why that is? Because many investors throw money into the fed cattle business so they can say they are in the cattle business. They use it for a tax shelter. That's exactly why so many feedlots are moving towards custom feeding. There's too much risk.

I could never understand what good it does for these guys to have someone or something to blame. It doesn't change anything. All they do is spend their days bitching about things they don't understand and end up losing it in the end anyway.

Nobody owes someone else a living. Not the packer, not the feeder, not the retailer and not the consumer. I have to do it more efficiently than someone else or I'm out. That's just the way it is.

This is all too matter of fact for guys like chief. They don't want the facts to confuse their "scapegoats". That's why they make their little statements then run. They can't debate these issues from a factual merit because they let others do their thinking for them.

Here's what I learned about feeding cattle:

1. Buy above average genetics at average prices.

2. Match those cattle to a specific market that pays premiums for the type of cattle you are feeding.

3. Make damn sure the cattle you buy were on a good vaccination AND MINERAL program.

4. Manage your financial risk with futures and options

5. Feed with a reputable feedyard that will pay you for better feed conversins rather than capitalizing on those genetics themselves and charging you for average feed conversions.

6. Feed with a feeder that will help you understand your feed costs so you can realize a profit when the opportunity arrives.

7. Pick a feedyard that won't turn into a mudhole with wet weather.

8. Best situation is to feed them yourself since most times if you want something done right you have to do it yourself.

9. Kill those cattle when they are ripe, not according to the market. Managing your financial risk with futures and options makes this easier.

10. Weigh out all of your marketing options and know what those cattle are capable of from a grade and yield standpoint.

11. Be willing to accept a $50 per head profit when it's offered to you on the board.


Those are the things that I have learned feeder. I can remember a day when I was at the Valentine, NE salebarn and I could buy 500 lb. feeders, run them on grass, and realize a $50 profit on the futures market that day with an average gain and death loss. The profit was right there for the taking on the board. Shortly after that I talked to my banker and asked them, without naming names, if they had any guys taking advantage of that opportunity. He said, "yeh, a few guys" and mentioned the fact that it was quite an opportunity. Turned out to be a good grass year and the guys that bought those calves and run them on grass and locked them up on the board did real good. Those opportunities are rare but they do happen.

How ironic that those profits allowed those guys to turn around and pay more for cattle the next time but there are those blamers again who claim futures forward contracts are used to manipulate markets. They don't understand them, they don't use them, so they blame them.

Cattle feeding is a risky game and the margins are tight. That's what competition does. We can look for scapegoats forever or we can look at ourselves and see how we could do things better. That's what seperates the blamers from those who are being blamed.


~SH~
 

Econ101

Well-known member
Jason said:
feeder said:
Jason, I answer yes to most of your points. The income tax situation doesn't factor into our operation, only in the aspect that we would like to see income growth. Yes, we have changed our weight preferences if they are a better buy as long as the month they sell can pencil out. When we buy feeders we try to get below the futures price of fats a couple of bucks. But we can't survive only making 15-20$$ per head due to we are a smaller feedlot. We need a few better turns to average out. We can only have 1000 head at one time in the yards due to DNR regs. We can't achieve the larger numbers with a narrower margin as some. And no, we haven't increased our breakeven target just so we could buy cattle. That is why we are still looking for a few loads. Have been burnt a few times and don't want another train wreck. What I do know is that a person has to really watch the markets and try to capitalize on them when you have a chance. So, I hope I addressed your points. Like I have said before, everyone in this business from cow-calf to feeder to packers have to make enough to survive so we can all keep doing what we do.

Ok feeder, I appreciate your reply, it is exactly what I hear up here. Margins are slim because someone down the road will compete for the calves harder. I 100% agree that a $20 margin on 1000 head isn't much. You can't live on it for sure.

How about the guy that has 20,000 head capacity. Sure he has a few rules to comply with, but he still makes close to $20 a head. His gross is $400K though, a very good living.

So here is where it gets tricky. What if there was a way to make sure you made say $100 a head? That gives you a decent income of $100K. Sounds good right? The trouble is where does it come from? All other things being the same the extra $80 per head has to come from the person you buy from. How do you convince the rancher that he should sell to you at a 13 cent discount on his 6 wt calves when the bigger feedlot is paying the $1.20?

The other side it could come from is the consumer. What if the price of beef was artificially inflated to give you that extra $80? How many pounds less would we as an industry sell?

We're stuck with this system that the most efficient grow and sometimes put some very good decent hardworking but less efficient people out of business.

Notice how packers haven't even entered the picture? But But But they take all the profit.... do they? Facts don't show that. The same thing that happens to you feeding calves happens to packers. Someone comes along and says if I do more cattle for $1 less profit I can get market share. Competition has forced the packers to get big or get out. If they are truly making all the money, invest in them and share it.

It isn't always pretty, but it is pretty simple.

Jason, with bigness comes the ability to use market power. If you believe in the laws of the land, and the laws of the land are not being upheld, why would you invest in those that thwart the law? Go with the biggest, you say. Why? Why are you such a sellout? Is it just being practicle in your mind? This kind of reasoning will not fix your roof, let alone allow you to invest in someone else's business.
 

feeder

Well-known member
All valid points Jason. Now another scenerio is what happens in the long term when the packers now own many large feedlots and then can supply certain percent of their slaughter needs. They soon won't have to bid a fair price for their calves or for fats. So now the cow-calf and the feeder are really in a bind. And they have control over it all like the hog industry. Just hope we can all deal with it. Have a good day.
 

Econ101

Well-known member
feeder said:
All valid points Jason. Now another scenerio is what happens in the long term when the packers now own many large feedlots and then can supply certain percent of their slaughter needs. They soon won't have to bid a fair price for their calves or for fats. So now the cow-calf and the feeder are really in a bind. And they have control over it all like the hog industry. Just hope we can all deal with it. Have a good day.

Thats okay, Jason has the good will of the Canadain govt. to pay for his mistakes. :lol: :lol:
 

Jason

Well-known member
feeder said:
All valid points Jason. Now another scenerio is what happens in the long term when the packers now own many large feedlots and then can supply certain percent of their slaughter needs. They soon won't have to bid a fair price for their calves or for fats. So now the cow-calf and the feeder are really in a bind. And they have control over it all like the hog industry. Just hope we can all deal with it. Have a good day.

Now your just running scared.

How many feedlots do the packers own? A couple per plant at most.

Let's just follow this a ways. Let's say there is no producers suddenly retaining ownership and all the calves are bought by the packers. A stretch but let's play the game.

What happens when the futures, feed costs etc. tell producers that their 6 wt calves should bring $1.20, but those damn packers are only offering $1.10? The same thing that happens now when those damn feedlots don't offer enough. Guys like me keep our calves and feed them ourselves.

Next step I can hear it already... but then you can't sell your calves because the packers won't give you hook space. Number 1 use the forward contracts to provide yourself security. Or number 2 retail the beef yourself. It is already happening, so don't bother to say it can't be done.

Facts that are in place right now, the biggest feedlots are privately owned not packer owned.

Packers cannot afford the overhead costs to own all the calves they can process. If packers were the only feedlots, they would be very vulnerable to producers just holding back their calves 1 fall.

It would be easier to build a processor for fats owned by producers then the packers to buy up all the producers.

But but but.. we can't retail against the power of the packers. Why not? If they control so much and jack the prices up, we just undercut their retail prices and get it done.

There are too many progressive producers, feeders and packers for total control ever to be gained in this industry. That and the anti trust laws would kick in if packers started manipulating prices. No proof exists that they even can manipulate prices. The market reacts to each move and will correct any exaggerated moves designed to infulence things artificially. The market is really controlled by the ones who own the cattle. Retain ownership, retain control.
 

Econ101

Well-known member
Jason said:
feeder said:
All valid points Jason. Now another scenerio is what happens in the long term when the packers now own many large feedlots and then can supply certain percent of their slaughter needs. They soon won't have to bid a fair price for their calves or for fats. So now the cow-calf and the feeder are really in a bind. And they have control over it all like the hog industry. Just hope we can all deal with it. Have a good day.

Now your just running scared.

How many feedlots do the packers own? A couple per plant at most.

Let's just follow this a ways. Let's say there is no producers suddenly retaining ownership and all the calves are bought by the packers. A stretch but let's play the game.

What happens when the futures, feed costs etc. tell producers that their 6 wt calves should bring $1.20, but those damn packers are only offering $1.10? The same thing that happens now when those damn feedlots don't offer enough. Guys like me keep our calves and feed them ourselves.

Next step I can hear it already... but then you can't sell your calves because the packers won't give you hook space. Number 1 use the forward contracts to provide yourself security. Or number 2 retail the beef yourself. It is already happening, so don't bother to say it can't be done.

Facts that are in place right now, the biggest feedlots are privately owned not packer owned.

Packers cannot afford the overhead costs to own all the calves they can process. If packers were the only feedlots, they would be very vulnerable to producers just holding back their calves 1 fall.

It would be easier to build a processor for fats owned by producers then the packers to buy up all the producers.

But but but.. we can't retail against the power of the packers. Why not? If they control so much and jack the prices up, we just undercut their retail prices and get it done.

There are too many progressive producers, feeders and packers for total control ever to be gained in this industry. That and the anti trust laws would kick in if packers started manipulating prices. No proof exists that they even can manipulate prices. The market reacts to each move and will correct any exaggerated moves designed to infulence things artificially. The market is really controlled by the ones who own the cattle. Retain ownership, retain control.

Jason, there was proof provided and accepted by a jury as to Tyson manipulating prices. It did happen and a jury (not a Canadian jury) accepted the arguments and even came back with an award.

I might add on another note that Tyson also has already plead to felony convictions in the past:

Department of Justice
FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 25, 2003
WWW.USDOJ.GOV
ENRD
(202) 514-2007
TDD (202) 514-1888

TYSON PLEADS GUILTY TO 20 FELONIES
AND AGREES TO PAY $7.5 MILLION FOR CLEAN WATER ACT VIOLATIONS

WASHINGTON, D.C. - Tyson Foods Inc., the world’s largest meat producer, today pleaded guilty in federal court in Kansas City to 20 felony violations of the federal Clean Water Act at its Sedalia, Missouri poultry plant and agreed to pay $7.5 million to the United States and the State of Missouri. The guilty pleas were announced by Thomas L. Sansonetti, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, Todd Graves, United States Attorney for the Western District of Missouri, and the State of Missouri.

Under an agreement with the Environmental Crimes Section of the U.S. Department of Justice and the U.S. Attorney’s Office, Tyson admitted to having illegally discharged untreated wastewater from its poultry processing plant near Sedalia into a tributary of the Lamine River. A consent judgment between Tyson and the Missouri Attorney General’s Office that resolves allegations of state environmental violations over the same discharges also was entered today in Pettis County Circuit Court.

Under the two pleadings, Tyson agreed to pay $5.5 million in penalty to the federal government, $1 million in penalty to the state, and $1 million to the Missouri Natural Resources Protection Fund to help remedy the harm caused by the illegal discharges. In addition, Tyson has agreed to hire an outside consultant to perform an environmental audit and then to implement an enhanced environmental management program based upon the audit’s findings to assure that the Sedalia facility will remain in compliance with all applicable environmental laws and regulations.

“Violators should know that their failure to comply with the law and their failure to heed state warnings and orders, may result in serious federal criminal charges. Companies that violate environmental laws endanger public health, harm natural resources, and gain an unfair economic advatage over their law-abiding competitors,” said Assistant Attorney General Thomas L. Sansonetti.

Tyson’s Sedalia plant processes approximately one million chickens per week and generates hundreds of thousands of gallons of wastewater per day. Tyson’s state permit issued under the federal Clean Water Act requires the company to treat the wastewater before discharging it into a nearby stream. The permit also establishes limits on the concentration of pollutants that the wastewater may contain.

Between 1996 and 2001, Tyson repeatedly discharged untreated or inadequately treated wastewater from its Sedalia plant in violation of its permit. The Missouri Department of Natural Resources cited the plant several times and the State of Missouri filed two lawsuits against Tyson in an effort to stop its illegal discharges. Tyson continued to discharge untreated wastewater through its storm drains, in spite of the company’s assurances that the discharges would stop and even after numerous warnings, administrative orders, two state court injunctions, and the execution of a federal search warrant at the Sedalia facility.

“Our people and communities are very concerned about the effects of pollutant discharges on the nation's waters,” said Jim Gulliford, Administrator for the U.S. Environmental Protection Agency, Region 7. “It is in the best interests of agriculture and the public that processing plants operate properly. The teamwork between federal and state agencies in this case sends a clear message to polluters that they must prevent illegal discharges to ensure that human and ecological health are protected.”

The violations were initially discovered by Department of Natural Resources investigator Billy Rogers, who then investigated the matter with investigator Terry Ball of the Missouri Attorney General’s Office. Rogers is now an investigator for the Environmental Protection Agency. The federal case was investigated by Special Agent David Clark of the Environmental Protection Agency’s Criminal Enforcement Division and by Special Agent Julia Jensen of the Federal Bureau of Investigation.

Senior Trial Attorney Jeremy Korzenik of the Department of Justice’s Environmental Crimes Section and Assistant United States Attorneys Dan Stewart prosecuted the case on behalf of the federal government.

###

They always claim they are not guilty to see if they can get out of any responsibility they might have.
 

Econ101

Well-known member
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In Re Espy: An Overview of the Smaltz Investigation



Rick Young was a producer of and Jim Mokhiber provided reporting and research for "Secrets of an Independent Counsel."



In September, 1994, about one month after Ken Starr was appointed to the Whitewater investigation, Donald Smaltz arrived from California to oversee an independent counsel inquiry into then-Secretary of Agriculture, Mike Espy. The mandate from the court, as requested by Attorney General Janet Reno, was to examine whether Espy had unlawfully accepted gifts or gratuities from organizations or individuals with business before his Department.

Allegations of wrongdoing first surfaced in a March, 1994 Wall Street Journal article, which questioned whether the Arkansas-based agribusiness giant Tyson Foods was receiving preferential treatment from Espy's Agriculture Department. The article noted that Espy had been "feted" by Don Tyson at a football game, and outlined several regulatory decisions that seemed to benefit Tyson Foods. Subsequent press reports raised further questions about Espy's relationship with companies regulated by the Department, including his acceptance of private air travel and tickets to other sporting events.

The news reports prompted an investigation by the Agriculture Department's Inspector General, who, in the spring of 1994, filed a report with the Department of Justice. At Justice, lawyers spent several months reviewing the matter to determine whether an independent counsel investigation was warranted. Attorneys at the DOJ were divided on the question. Career lawyers with the Public Integrity section argued against an independent counsel, while the FBI pushed for the appointment of one. In the end, Reno, who had vigorously pushed for reauthorization of the independent counsel law, requested that the Special Division appoint an independent counsel.

Within a month of Smaltz's arrival in Washington, D.C., Mike Espy announced his intention to resign at the end of the year. Smaltz let it be known, however, that neither Espy's decision to resign, nor his efforts to reimburse Tyson subsequent to the news reports, would erase the seriousness of the initial violations, if proven true.

Early on, Smaltz focused his investigation on Tyson Foods, seeking to determine whether the company had a practice of providing gratuities to government officials. In searching for inside information about the company's activities, Smaltz discovered a former Tyson airplane pilot named Joe Henrickson, who had unsuccessfully sued the company for wrongful termination. Henrickson told Smaltz an explosive story about having transported envelopes of cash from Tyson corporate officers to then-Governor Bill Clinton. Henrickson also told the story to Time Magazine, which reported in December 1994, that Smaltz had granted Henrickson immunity in exchange for his cooperation.

Publication of Henrickson's allegations, as well as unguarded comments by Smaltz that the pilot's charges had "the ring of truth" to them, sparked an immediate and blistering response from both Tyson Foods and the White House. Tyson blasted Smaltz for engaging in a "witchhunt" and White House Counsel Abner Mikva sent a letter admonishing Smaltz for his public comments, as did the President's personal attorney, David Kendall. The war against this particular independent counsel, Donald Smaltz, had begun.

Smaltz sought cover at the Department of Justice, where he asked Janet Reno to bless an expansion of his investigation into broader questions about the political dealings of Tyson Foods, including Henrickson's allegations about "cash-to-Clinton." The Justice Department, however, believed Smaltz's probe was moving beyond its original mandate and, therefore, into investigative matters that would more properly be handled by the Department. Smaltz's request for expansion was denied. But the independent counsel was not deterred.

Despite Reno's denial of expansion, Smaltz continued to investigate a broad range of Tyson related matters, and eventually, even called Joe Henrickson before a grand jury. Smaltz's relentlessness persuaded Tyson Foods lobbyist, Tom Green, to send Reno a strongly-worded denunciation of Smaltz. Green asked Reno to "remove" Smaltz. The show-down culminated in a July 18, 1995 meeting at the Department of Justice where Smaltz was told by the Attorney General to confine his investigation of Tyson to the allegations about Espy. It would not be Smaltz's last run-in with Reno.

In pursuing the initial allegations, Smaltz also homed in on questions about the Department of Agriculture's decision in early 1993 to shelve regulations that would tighten the inspection standards at poultry operations. In particular, Smaltz wanted to know more about a sequence of meetings in early 1993 that involved Espy, Tyson Foods lobbyist, Jack Williams, and Espy's chief of staff, Ron Blackley. To get answers about Espy, Smaltz went after Blackley. But in going after Blackley, Smaltz again found himself face-to-face with the Department of Justice.

This time, instead of seeking Reno's approval to investigate Blackley, Smaltz took his request straight to the Special Division. In an unusual and precedent setting judicial clash, the DOJ objected to Smaltz's reach for Blackley. In particular, the DOJ opposed Smaltz's plan to investigate whether Blackley, as chief of staff, had improperly intervened in decisions about farm subsidy payments to his former clients. The DOJ argued that Smaltz had again wandered beyond his jurisdictional charter and, moreover, that he needed approval from the Attorney General to proceed. The court, however, rebuffed the Justice Department's opposition and ruled in Smaltz's favor.

In addition to pursuing Tyson Foods and Ron Blackley, Smaltz zeroed in on Espy's relationship with several other organizations and individuals with business before the Department. He also investigated campaign contributions provided to Espy's brother, Henry, who ran unsuccessfully to fill the Secretary's former Congressional seat. To date, Smaltz's investigation has resulted in a more than a dozen criminal convictions or pleas including a plea from Tyson Foods on one felony count of illegally giving $12,000 in gratuities to Espy. In connection with the plea agreement, Tyson has agreed to pay a $6 million fine. Former Chief of Staff Ron Blackley was convicted for making false statements and sentenced to 27 months in prison, which he is appealing.

In a significant setback to Smaltz's investigation, an appellate court reversed a key gratuities conviction against Sun-Diamond Growers of California. The Appeals Court for the District of Columbia rejected Smaltz's argument that the receipt of gratuities alone, absent any demonstrated quid pro quo, is illegal. As of December 1998, the case is on appeal to the US Supreme Court.

As for Mike Espy, the original target of the independent counsel probe, he was indicted on 39 counts of corruption in August 1997. He pled guilty to one count, and the District Court judge threw out eight others. On December 2, 1998, a federal jury acquitted him of the remaining 30 charges, ending Smaltz's four-year, $17 million investigation. The charges were based on Smaltz's allegations that Espy illegally received approximately $34,000 worth of gifts and gratuities, including tickets to sporting events, lodging, airfare and a scholarship provided to his girlfriend. Smaltz tried much of the two month case himself, presenting 70 witnesses over the course of two months. Espy himself did not take the stand, and his lawyers presented no witnesses to testify in his defense. In closing, they argued to the jury that the gifts he had received were not illegal in that they stemmed from longstanding friendships with members of the industries he regulated, and that there was no proof that the gifts influenced him in any official decision making. In a statement issued by the White House after Espy's acquittal, President Clinton said: "I am heartened that he has, as he said, emerged from this ordeal stronger. I hope that as he moves forward he will continue his notable record of service to the country." Smaltz stated that, although he was disappointed in the verdict, he believed the investigation served an important purpose: "If the investigation and prosecutions by our office dissuade corporations from giving gifts to their regulators -- or the regulators from accepting gifts from those who are regulated -- I believe that the costs we have incurred, and the efforts we have expended, are worth the price."
 

Mike

Well-known member
Jason:How many feedlots do the packers own? A couple per plant at most.

Smithfield is part of the Conti group that has a one time capacity of over 800,000 head.

And they are not one of the largest beef packers.
 
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