Random Musings From A Random Mind

[Econ101]

Not to destroy my own arguement, but in Saskatchewan, we saw a period of sale barn consolidations. We're left with 2 (or is that 3 now?) privately owned barns and the rest are owned by Neilson brothers (or were, unless they've been sold again). Thankfully, the remaining private operations refuse to sell, and are also among the biggest in Saskatchewan, giving producers a genuine choice.

Should sale barns prove out to be a better free market mechanism, and from some of the good arguements in this debate they likely aren't ideal, we'd need to ensure that government paid attention to the monopoly laws to ensure we didn't end up with 1000 sale barns all owned by 2 corporations.

Oh wait. Isn't that awful similar to what we have now?

Heck, a better idea would be to nip the whole deal in the bud before it ever gets off the ground. There is no reason to give the sale barns exclusive rights to sell all the cattle. The system of free enterprise works very well, if we just let it.

Build a better mousetrap, and the whole world beats a path to your door. Instead of trying to put the successful entrepeneurs out of business by restricting them with more rules and regulations, go about it from a more positive angle. Just devise a better system and then you can be the one riding high.

If we pass any new law, it should be a law that there can't be any more laws. We've got enough already.

A rope and a big tree used to suffice. My grandfather said it was cheaper than lawyers.

 

[TimH]

This whole thread(now 9 pages worth) started with this sentence......

"Had a random thought cross my mind today while I was working, so I thought I'd pop it onto the forum."

I thoroughly enjoy this site and the wealth of information and literally thousands of years of combined experience and wisdom that I can access for free..... Having said that, I'm very sorry Rod(Diamond S) but I just have to ask....... does your "work" involve the use of glue or solvents in an unventilated area??? :wink:

 

[Mike]

Soapweed wrote:

If we pass any new law, it should be a law that there can't be any more laws. We've got enough already.

I'm not a big advocate of politicians myself but as technology advances there are big changes in ways business is done.

Take for instance the Superior Livestock auctions. When you are sitting at an auction barn you can mostly "see" the finagling going on around you. But with people bidding on the phone and internet, you could be bid out the roof. When broadcast auctions become more prevalent, somebody's bound to break the rules.

I can see rules for transparency that need to be addressed before it happens in just this scenario.

Make the playing field level.

 

[Soapweed]

Take for instance the Superior Livestock auctions. When you are sitting at an auction barn you can mostly "see" the finagling going on around you. But with people bidding on the phone and internet, you could be bid out the roof. When broadcast auctions become more prevalent, somebody's bound to break the rules.

Even under the circumstances you refer to, with people bidding on the phone and over the internet, there still comes a point where one bidder stops and the other bidder becomes the buyer. If the supposed "buyer" reneges and the second place bidder is expected to be the "buyer" after all, that bidder should not accept the deal. That is where the hanky-panky comes into being, but the second place bidder does not need to bail out the auctioneer.

It is always fun to see the auctioneer caught in such escapades, with their trousers figuratively down around their ankles. There is no reason for such malarky, but it happens all the time. The mob spirit, mass hysteria hoopla always puts on a good show, but a good honest auctioneer should be above such dishonesty.

Auctions are fun to go to for the entertainment value alone. It is one big game of chance, and a "poker face" at such a time is a definite asset. It is interesting watching the different bidding techniques. Some old order buyers sit with their hand on their leg, and just barely raise a finger. Other more exhuberant types wave their catalogs furiously, time after time, and quit just as abruptly as they start.

Sometimes it is best to bid on merchandise your really don't care about getting, and show the aucioneer that you can say "no". Then when a bull or horse comes through that you really do want, they won't run you because they know that you know how to say "no".

If something goes through and looks like it has sold, it never hurts to check for sure. Sometimes it was just a "no sale" in disguise, and you can still negotiate a deal for the price you want to pay.

As in any other trade or transaction, at an auction the rule "let the buyer beware" always applies. It is like a night on the town--sometimes you think you bought a number ten but wake up with a number two on your hands. :wink:

 

[DiamondSCattleCo]

I'm very sorry Rod(Diamond S) but I just have to ask....... does your "work" involve the use of glue or solvents in an unventilated area??? :wink:

:lol: Naw, but I had been snowmobiling the day before, so perhaps a little too much 2 stroke smoke. :lol:

The sale barn idea may not have been all that great, but I posted it to get other people's ideas. I guess I don't have as much negative to say about barns because I deal at a barn whose reputation for honesty is impeccable. If Ryan catches buyers doing something crooked, he boots them out the door. If a producer does something crooked, he too is no longer welcome. Having said that, I've all too often seen what happens at barns whose owners aren't as reputable as Ryan's.

I still firmly believe that these cash basis contracts will kill the family producer, the same as they killed the family farm, and that we need some form of open bidding system, whether it be internet based, or contract bidding at a "contract auction barn" or.......

Rod

 

[DiamondSCattleCo]

It is like a night on the town--sometimes you think you bought a number ten but wake up with a number two on your hands. :wink:

Hmmm, I don't know how that feels. I am a cowboy. We do not pay for women, nor do we accept postcoital gratuities. A simple thank you and a bow as they back out of the room is all that is required.

Rod
:lol:

 

[Anonymous]

I'm very sorry Rod(Diamond S) but I just have to ask....... does your "work" involve the use of glue or solvents in an unventilated area??? :wink:

:lol: Naw, but I had been snowmobiling the day before, so perhaps a little too much 2 stroke smoke. :lol:

The sale barn idea may not have been all that great, but I posted it to get other people's ideas. I still firmly believe that these cash basis contracts will kill the family producer, the same as they killed the family farm, and that we need some form of open bidding system, whether it be internet based, or contract bidding at a "contract auction barn" or.......

Rod

Rod- Nothing wrong with tossing out hypotheticals- or thinking outside the box...Some of these guys are so stuck with the status quo that they can't see past the end of their nose....

And if Haymaker was here he'd make an exception for Big Muddy since he has so far too look :wink: :lol:

 

[TimH]

I'm very sorry Rod(Diamond S) but I just have to ask....... does your "work" involve the use of glue or solvents in an unventilated area??? :wink:

:lol: Naw, but I had been snowmobiling the day before, so perhaps a little too much 2 stroke smoke. :lol:

The sale barn idea may not have been all that great, but I posted it to get other people's ideas. I still firmly believe that these cash basis contracts will kill the family producer, the same as they killed the family farm, and that we need some form of open bidding system, whether it be internet based, or contract bidding at a "contract auction barn" or.......

Rod

Glad to see you are a good sport! I was just joking around!!

Seriously , I just do not see a law being passed that would not apply equally to everyone even if I thought that such a law was warranted which BTW, I don't.
As far as not being large enough to put a liner load of fats together to be able to ship directly to the packers goes, there are ways around that. I have done all of the following....
-get together with neighbors to assemble a load.
- buy some similar feeders or short keeps to assemble a load.
- sell fats to a local plant.
- don't listen to Nillson Bros/Heartland Livestock/XL Beef.
-have a local plant custom slaughter for you and retail the beef yourself.

My philosophy is you are never screwed unless you give up.

PS. I gather that you are from that Nipawin/Tisdale area....I worked with some people from there "back in the day" and they were good folks!!

 

[DiamondSCattleCo]

Rod- Nothing wrong with tossing out hypotheticals- or thinking outside the box...

I have every intention of tossing out more "dumb ideas" over the next few months. Other than 2 or 3 producers who are well entrenched in contract selling, I haven't seen any real opposition. A couple 'don't tie me downs', and also some very valid criticism of the idea.

Rod

 

[mrj]

And you wouldn't buy that Mexican horse without checking it out- you would want to know as much as possible about it, including where it came from-- You know where the shirt comes from because it is required to be labeled- everything else you buy is required to be labeled-except meat...The only reason that meat is not labeled is so the Packers/Retailers can continue the fraud of passing off cheap imported meat as a US product to make bigger profits off it....

And as far as I am concerned those that oppose an M-COOL requirement are the same as co-conspirators to that fraud...

OT, consumers in virtually all locations can have access to privately labeled beef. And it is more honest than beef simply labeled as "imported" or "domestic", which implies, but actually lies about, the actual safety and quality of that beef under the current M-COOL law which identifes source ONLY back to the packer when it is possible that health problems originate on the ranch of origin which is EXEMPT from identification under COOL.

I guess I live in a virtually "no location"--No affordable access to privately labeled beef here...
But I forget- your silver spoon makes you think the lower class should not be allowed to know if their beef was slaughtered in a Mexican or Uruguain plant- or was raised in Mexico and may have drank out of chemically polluted streams...You follow the NCBA theory -you poor folk just eat what we put in front of you

******
OT, your typically vicious, silly accusations carry your usual amount of facts. Don't you have Schwans' in your area? They have good beef at relatively reasonable prices. There is Omaha Steaks for a splurge, and probably other less costly ones by mail, too. Even Rapid City has a local small packer where one can get beef, as well as Safeway and their Ranchers Reserve brand which comes from the Ranchers Renaissance alliance, I believe.

As usual, you leave out the fact that imported beef must have been inspected by US trained inspectors to the same level of quality and safety of US inspections. MRJ
*******

Those labels you claim the packer uses to fraudulently pass off imported as domestic beef are not the responsibility of the packer.

The GOVERNMENT is responsible for those labels which indicate beef SAFETY and level of QUALITY, not origin! The packer is selling the particular level of quality of beef that he is known for to the retailers.

Government and Packers are about one and the same anymore when it comes to the rules--since the USDA and NCBA leadership have to ask the Tyson/Cargils etal permission before they pass gas, let alone make a decision.....

**************

More typical gibberish and lies from you, surprise, surprise! You have nothing factual, so you make up vicious lies. MRJ
****************

Producers can and do put their own "label" of identification on their beef if they so choose.........horse breeders use "identification" papers, aka registration of blood lines........however, there are some people in the horse business who mess around with those papers aren't there?

Not very possible under the AQHA since all breeding stock must be DNA'ed..........

*******
Good idea, DNA testing. Maybe that is what it will come to for real food safety and honesty in origin requiring trace-back by DNA, after too many small-time horse breeders and traders found ways to "doctor" their papers for how many years???? MRJ

*********

MRJ

 

[DiamondSCattleCo]

1) My philosophy is you are never screwed unless you give up.

2) PS. I gather that you are from that Nipawin/Tisdale area....I worked with some people from there "back in the day" and they were good folks!!

1) Oh certainly, and while some folks who have posted appear to have me pegged as 'just another whiner who won't adapt', I'm certainly not. I told Jason once that I will adapt to today's reality while fighting for what I believe should be the reality tomorrow.

I have been frustrated by XL in Moose Jaw blocking all attempts at dealing direct (I dunno how much of this thread you read, but 1 producer must have 1 liner load now. No consolidated loads from neighbors). I don't have time this year, but next year I'll be buying some short keeps to bring me up to a liner load. I'll still be attempting to gain access for the small time guy. I think its only fair.

Many people seem to feel that small towns, family farms, and small livestock operations are simply not viable entities for the future. Maybe those guys are right, but I also think that they're worth protecting, if only to protect the small town way of life. I worked in the city for years, and was shocked by the conditions. I do not want to see my children raised where they need to worry about what gun their locker partner might have, or whether they'll be mugged on their way home from the movies.

2) Yup, Nipawin/Carrot Creek area. I dunno about good folks up here, but most of us work hard enough.
Rod

 

[Northern Rancher]

Hey do you know Warren Pridham from Carrot River I went to college with him lol.

 

[DiamondSCattleCo]

Hey do you know Warren Pridham from Carrot River I went to college with him lol.

I don't NR, sorry. I've likely seen him kicking around and didn't know who it was. I deal mostly in Nipawin, so I only know a few Carrot River guys, mostly from the community pasture. Our local commies (Co-op) are lousy, so I've been dealing with Carrot Creek more and more. I'll probably end up meeting him eventually.

Rod

 

[Northern Rancher]

He was a chubby red haired guy that was really good in school lol.

 

[Tam]

Tam, first of all, if R-CALF lied about your product, sue them for libel. What's stopping you?

Secondly, why do you support this packer spawned notion of a North American market? What has this North American market gotten you? You have virtually no Canadian packing industry, only a US packing industry - North Division. You're dependant on the US to take your production - without us you crumble. Your government will not do a thing in your favor if the USDA (packers) won't approve it. Millions of your tax dollars just went to the pockets of those same US packers who are worth billions - and you staunchly defend the system? Where is the benefit of a North American herd for you? Have you ever stopped to consider what being part of this North American herd has/will do for you?

You say R-CALF members need to think for themselves?

I paid my twenty dollars to support sueing R-CALF Sandhusker.
As for the rest of this R-CALF crap

You're dependant on the US to take your production - without us you crumble.

then why did so many in the US fear that if this border was to stay closed Canada would become a very strong competitor for markets instead of the friends we were pre BSE. Seems to me our slaughter capacity has been on the increase since the border was closed and that is why the US system wanted the border open as if we keep building, more of your plants will be mothballed.

And sorry Sandhusher I see this as a North American herd for many reasons and the main one is the fact we have freely traded cattle, beef and feed for over a hundred years. BSE proved just how intrigrated our two systems are. We warned you that if we had BSE it was only a matter of time before you would find it. But in all of your leaders wisdom they insisted it was a Canadian problem and that you were BSE free and had the safest beef in the World. They were so cocky about it that they bad mouthed all beef coming from a country affected by BSE was tainted even if it was as little as one case. To bad but our warning was proven in Dec 2003 when BSE was found within your borders and backed up by the fact you found your own native case in 2005. Did your leadership stop then? No they attacked every aspect of our industry only to find out that it wasn't our system at all that you feared it was your non superior system that they had been bragging up for the last two plus years. This is a North American herd and I feel it has given me a life that I love. The only bad side affects is R-CALF :roll:

 

[Anonymous]

Tam, first of all, if R-CALF lied about your product, sue them for libel. What's stopping you?

Secondly, why do you support this packer spawned notion of a North American market? What has this North American market gotten you? You have virtually no Canadian packing industry, only a US packing industry - North Division. You're dependant on the US to take your production - without us you crumble. Your government will not do a thing in your favor if the USDA (packers) won't approve it. Millions of your tax dollars just went to the pockets of those same US packers who are worth billions - and you staunchly defend the system? Where is the benefit of a North American herd for you? Have you ever stopped to consider what being part of this North American herd has/will do for you?

You say R-CALF members need to think for themselves?

I paid my twenty dollars to support sueing R-CALF Sandhusker.
As for the rest of this R-CALF crap

You're dependant on the US to take your production - without us you crumble.

then why did so many in the US fear that if this border was to stay closed Canada would become a very strong competitor for markets instead of the friends we were pre BSE. Seems to me our slaughter capacity has been on the increase since the border was closed and that is why the US system wanted the border open as if we keep building, more of your plants will be mothballed.

And sorry Sandhusher I see this as a North American herd for many reasons and the main one is the fact we have freely traded cattle, beef and feed for over a hundred years. BSE proved just how intrigrated our two systems are. We warned you that if we had BSE it was only a matter of time before you would find it. But in all of your leaders wisdom they insisted it was a Canadian problem and that you were BSE free and had the safest beef in the World. They were so cocky about it that they bad mouthed all beef coming from a country affected by BSE was tainted even if it was as little as one case. To bad but our warning was proven in Dec 2003 when BSE was found within your borders and backed up by the fact you found your own native case in 2005. Did your leadership stop then? No they attacked every aspect of our industry only to find out that it wasn't our system at all that you feared it was your non superior system that they had been bragging up for the last two plus years. This is a North American herd and I feel it has given me a life that I love. The only bad side affects is R-CALF :roll:

Tam- Do you forget the rules that allowed cattle to go south unrestricted, but put restrictions on all cattle going north......Doesn't sound like one herd to me...Remember you were the ones that called it a Canadian herd and a US herd- and you didn't want the diseased US herd infecting your Canadian herd- (didn't matter where in the US they came from- Canada just lumped them all together US CATTLE)..... It didn't become a North American herd until Canada needed the US slaughter houses and the US Packers wanted acess back to their Canadian supply....

And I haven't heard of too many fearing that the border would stay closed- except some of the packers wanting access to their market manipulators.....

 

[Sandhusker]

Tam, first of all, if R-CALF lied about your product, sue them for libel. What's stopping you?

Secondly, why do you support this packer spawned notion of a North American market? What has this North American market gotten you? You have virtually no Canadian packing industry, only a US packing industry - North Division. You're dependant on the US to take your production - without us you crumble. Your government will not do a thing in your favor if the USDA (packers) won't approve it. Millions of your tax dollars just went to the pockets of those same US packers who are worth billions - and you staunchly defend the system? Where is the benefit of a North American herd for you? Have you ever stopped to consider what being part of this North American herd has/will do for you?

You say R-CALF members need to think for themselves?

I paid my twenty dollars to support sueing R-CALF Sandhusker.
As for the rest of this R-CALF crap

You're dependant on the US to take your production - without us you crumble.

then why did so many in the US fear that if this border was to stay closed Canada would become a very strong competitor for markets instead of the friends we were pre BSE. Seems to me our slaughter capacity has been on the increase since the border was closed and that is why the US system wanted the border open as if we keep building, more of your plants will be mothballed.

And sorry Sandhusher I see this as a North American herd for many reasons and the main one is the fact we have freely traded cattle, beef and feed for over a hundred years. BSE proved just how intrigrated our two systems are. We warned you that if we had BSE it was only a matter of time before you would find it. But in all of your leaders wisdom they insisted it was a Canadian problem and that you were BSE free and had the safest beef in the World. They were so cocky about it that they bad mouthed all beef coming from a country affected by BSE was tainted even if it was as little as one case. To bad but our warning was proven in Dec 2003 when BSE was found within your borders and backed up by the fact you found your own native case in 2005. Did your leadership stop then? No they attacked every aspect of our industry only to find out that it wasn't our system at all that you feared it was your non superior system that they had been bragging up for the last two plus years. This is a North American herd and I feel it has given me a life that I love. The only bad side affects is R-CALF :roll:

I don't hear much about that libel suit you donated to.

We've freely traded cattle with Europe for longer than Canada. Does that make us a Northern Hemisphere Market?

I was hoping you would address the foreign ownership of your packing industry, your government's unwillingness to buck the USDA, and the Canadian tax-payer welfare directed at US companies. Instead, you would rather rant on R-CALF. I guess it's easier to blame others than the one in the mirror. It's sad, Tam, because you'll never fix your problems if you don't know what they are. R-CALF didn't sell out your packing industry. R-CALF didn't make you dependant on one country to make a living. R-CALF didn't spend millions of your tax dollars on welfare for rich US companies. R-CALF didn't stop your government from testing for foreign markets. R-CALF isn't in contempt of parliament.

 

[Big Muddy rancher]

Sandhusker you talk about the Canadian Welfare for the US companies. Geez haven't you heard of the Chrysler corporation? Many other US companies have gotten handouts from your government.

 

[Econ101]

Sandhusker you talk about the Canadian Welfare for the US companies. Geez haven't you heard of the Chrysler corporation? Many other US companies have gotten handouts from your government.

Proof we do not have a "free" market. All of the U.S. automakers are having trouble dealing with the oil shocks because they do not have the lines that work in that market and the foreign auto makers do. Short sighted decisions that pay off in the short run do not always work long term.

 

[Anonymous]

Sandbag: "We've freely traded cattle with Europe for longer than Canada."

We are not freely trading cattle with Europe Sandbag!

Don't you know anything?

DSCC: "SH, I've always understood what gross and net profits were. That $600 I quoted was a GROSS profit. I didn't even attempt to calculate a NET packer profit. As far as red meat yield, I made an error in calculations, not learned anything. So just drop the $600 arguement. I corrected my error down to $400. But even at the final $93 NET profit I ended up with, its a far cry from the $3.88 that you're quoting."

Rod, you never mentioned anything about "GROSS" or "NET" profit. You said "PROFIT" and now you are trying to cover your tracks.

If it's any consolation, you aren't the first producer to not understand packer profitability.

DSCC: "I did learn that people are using a 36% (come on man, 36%?) red meat yield on HAMBURGER cows to try and justify packer profit margins."

Let's not misinterpret what I stated. If 36% of LIVE ANIMAL WEIGHT is not representative of RED MEAT YIELD, tell me what the number is Rod?

Hot Carcass yield is generally 50% to 55% on a cull cow.

Now you tell me what percentage of that hot carcass yield results in red meat yield and what percentage that is OF THE ORIGINAL LIVE WEIGHT?

If you don't like my numbers, you tell me what they are.

DSCC: "And like I said, I know what they're paying to have the ofal hauled away. Its peanuts. I'm not even sure why my brother in law bothers to haul when there are more profitable loads waiting for him."

The point that you are missing is that this ofal (both edible and inedible) has more value to the larger packer and they pay for cattle accordingly. The smaller less efficient packer that does not utilize the value of ofal pays accordingly.

DSCC: "Then you're back to a SINGLE BID system that won't result in true price discovery. These are not lies and misinformation, but economic realities."

Rod, I have personally sold load lots of calves in the sale barn, I have sold them off the place, I have bought feeder calves in the sale barn, I have bought feeder calves off the place, and I have retained ownership on calves through the feedlot.

I can tell you from personal experience, if I have a load lot of calves for sale, I don't need any market reports to know exactly what is a fair market price for those calves off the place. All I need to know is three numbers:

1. Current corn market
2. Fat cattle futures market for when those calves will finish
3. Current fat cattle prices

I can set the price within $2 of the sale barn price, save the trucking, save the commission, save the shrink, save the stress, and split those costs.

Ironically, there is a huge difference in the economic value of feeder cattle that will gain 3.4 pounds per day and convert 5.5 pounds of dry matter to a pound of gain and grade 70% choice with 70% Yield grade 1's and 2's. That value will never be reflected in a market where everything is "FANCY", "OUTSTANDING" and from "REPUTATION OUTFITS".

You can't afford to sell those cattle in an "averaged based" price TAKING system of marketing.

I don't need multiple bidders setting a price because those bidders are subjected to the same corn price and the same futures price.

DSCC: "I've already illustrated several times how contract pricing based on weighted cash market average can drive down market prices."

In return I have illustrated where the fat cattle cash market can be higher than the formula market. I have also illustrated how no feeder is locked into one pricing mechanism and certainly not locked into one packer.

DSCC: "If contract markets drive down cash markets, then we're really only left with one TRUE option: contract."

Contract markets do not DRIVE DOWN cash markets. If that was the case, the cash market would always be lower than the formula and forward contract markets.

How do you explain when forward contract prices are lower than the cash market?

Just so we are on the same page, we are discussing 3 markets here.

1. Formula and grid pricing with both negotiated and non-negotiated base prices.
2. Cash market
3. Futures forward contract

Every feeder has each option available to them.

DSCC: "And like I said, if uneducated producers attempt to destroy the industry through cash market basis contracts, its up to other producers to either educate them or get rules in place to prevent uneducated producers from destroying the market."

Every producer should have the right to market his cattle however he sees fit as opposed to having those methods dictated to him by packer blaming conspiracy theorists.

DSCC: "I never once said that in the short term cash basis markets couldn't be higher than the formula, however I am saying that over the next few decades you will see a reduction in dollars paid to the producer for his animals due to these cash basis contracts and captive supplies."

History has already proven you wrong Rod. Currently, there is more cattle sold on formula and grid pricing in the U.S. than ever before and guess what? That's right, highest feeder cattle prices ever recorded.

Facts are facts!

DSCC: "Do yourself a favor SH and read some historical books on the grain trade. Go back as far as about 1850, and make sure you get some reading in there on the Wheat Board. Stick to factual books that report earnings and market pricing, versus some of the books that utilize alot of editorial and emotion. You'll see why I'm as nervous as I am. The cow/calf industry is heading down the EXACT same path, and in our arrogance, we think we can win."

Let's look at what has actually transpired in recent years as opposed to what we believe MIGHT HAPPEN based on what happened in 1850 and other agricultural commodities under other circumstances. In the United States producers invested in National Beef under the producer owned cooperative called U.S. Premium Beef. First, they bought about 1/3 of the company and when National sold, USPB bought them out to where they now own the entire company. A wise investment.

Producers owning and controlling their financial destiny, what a concept. Pretty hard to blame the packer for price fixing and market manipulation when you, as a producer, own that packing company.

What was also interesting is that the patronage dividends were only about $25 per head. What does that tell you about packer profits? Considering the obvious fact that USPB is competing for the same cattle as the other major packers, do you think they would hide their profits from their investors since it's producers that own the company?

Facts are facts!

DSCC: "Whose going to pay up SH? You've said it yourself. The small packer can't compete and are slowly but surely closing up shop. So once they're gone, whose going to be able to buy the 10's of thousands of animals? Small niche markets?"

Who's going to pay up? The same 4 large packing companies that control over 80% of the fat cattle market now. They are competing with eachother for the same cattle.

There is a number of level two packers that have hung in there due to the niche markets they have developed. What they lack in processing efficiency they make up for in value added products.

The sky is not falling Rod.

DSCC: "The small packer can't compete due to economies of scale. So why start a business that will almost certainly fail?"

Tell that to USPB! They did it and they are succeeding.

Your arguments are conflicting Rod. You can't on one hand say that packers are profitting excessively due to market manipulation and then turn around and say that smaller companies cannot compete. If the profits are as large as you believe, the smaller companies would still be able to compete even with a reduction in efficiencies.

The facts are that the profit margins are tight and that makes it difficult, BUT NOT IMPOSSIBLE, for smaller companies to compete unless they add value to the end products because they cannot compete on per head processing costs.

DSCC: "The packer doesn't owe me a living, however I am captive to one packing plant, and he is exercising his market power to block my entry to that market."

That's not true!

You have two large packing companies in Canada both wanting your cattle and you also have the option of combining loads with another producer to ship to packing plants in the United States.

Don't be such a defeatist.

DSCC: "But if a producer says they can get more money on a single bid or closed bid system, versus an open bid system, then that producer really doesn't understand markets."

Not many feeders I know are just selling to one packer. Most get bids from the most efficient 2 or 3 packers that have historically paid more than other packers.

DSCC: "Thats closed bidding negatively impacting the cash markets."

No it's not. The cash market for feeder cattle is driven by the price of corn and the futures market. Those are the factors that play on the market, not how many cattle were sold previously.

There is a lot more feeders than packers and those feeders enter and leave the market based on profitability.

DSCC: "As a backgrounder, I certainly can make some educated decisions about when feedlots are going to be looking for my animals. I can also make some good decisions about what corn and feed prices are going to do. I may not be accurate to the day, or to the cent, but thats only because I don't spend hours of my day doing an accurate analysis. Rough estimates get me close enough."

There is no need to estimate. On any given day you can see what corn and futures prices are which drive cattle prices.

DSCC: "And so you theorize that they will not pay more in an open bidding situation? The buyers head to a sale barn with an order, and a maximum price based on the feeders costs. When they get to the sale and see that cattle are selling higher than their maximums, why do you think they place the phone calls? To get authorization to pay more, IRREGARDLESS of their costs."

Order buyers can relay "QUALITY" information but the futures market is the same for every feeder and the corn prices vary based on basis only.

I could beat the sale barn price every time simply by finding a handful of feeders who know the value of calf feds that will gain 3.4, who know the value of calves that will convert 5.5 pounds of feed, who know the value of cattle that will grade70% choice and 70% Yield grade 1s and 2s, and who understand the value of a good preconditioning program.

You do what works for you Rod but don't try to tell others how to market their cattle. That is precisely what the Livestock Marketing Police and the OCM are trying to do in the United States. Arrogant %@!&*!@%&s!

DSCC: "This is a step in the right direction, but to get a complete picture requires all producers to report their prices. You'll never get that with a voluntary system."

You're wrong! You don't need every feeder reporting bids to know what the bids are at any given moment. When the major packers are placing bids, they are placing the same bids for many feedlots. When those bids change, there has been a time change with different supply and demand factors playing on those bids.


~SH~