Random Musings From A Random Mind

[Anonymous]

Soapweed
"I also see it as costly to the producer, and a cost that is pretty much unrecoverable. It is also the chief reason that we will soon be stuck with M-ID, which I look at as just another hassle to contend with. "
-------------------------------------

Soap-With the current border regs in place, I don't think M-COOL would be that costly...I believe the importer/Packer /retailer are already being required to have documentation tracking the imported products to origin....

As far as the M-COOL being the reason for M-ID, I don't know...I'm not sure what the reason for M-ID is...Especially in the areas that already have an operating tracking system... I agree that it is going to be a major hassle for many- and I don't think they've looked hard enough at the cost and/or procedure for it working.....

M-COOL may or may not have brought in M-ID, BUT M-ID will bring in M-COOL...The opponents won't have the traceback verification argument to hide behind anymore....

 

[DiamondSCattleCo]

Rod, What is stopping you from getting together with a few neighbors and selling a package deal?

We used to do this up here. 4 or 5 or 10 of us would get together and send a load in. It was tough, but we usually managed it. XL in Moose Jaw no longer wants small lots in the liners. 1 producer, 1 liner load. No exceptions. I'm trying to find other packers who aren't so far away that we lose money.

Why must we limit everyone's way to do business because some producers are limited?

So lets not limit. As I said, perhaps maybe we need to go the other way and force the packers to accept small lots of cattle. Either way works, as long as the market is open access to all.

In every other facet of live the bigger you get the more options you have and that is what drives everyone to better themselves.

So how do I get bigger when I'm blocked from a lucrative marketing option due to my size? I raise all my own feed, and since I can background out calves cheaper than most, I'd be willing to hazard that I can finish them cheaper than most as well.

I'll continue to raise the best backgrounded cattle that I can and expand until I'm big enough to open up all my marketing options. In the meantime, I'll be calling my MLA and MP and informing them of an illegally restricted market.

Regulating the way we can buy and sell our cattle only punishes those that think out side the box and look to better themselves.

How is contract selling 'thinking outside the box'? Its a risk management tool that been around for decades. Grain farmers risk managed themselves out of business, and if some cow/calf producers want to do the same, thats fine by me.

Actually, its not fine by me. If some cow/calf producers want to sign poorly thought-out contracts that hurt the market, then I think they should be the ones to go out of business. Unfortunately, it doesn't work that way in the real world.

In the menatime, I'll have adjusted my ranch to whatever the current market reality is, all the while fighting for what I believe the reality should be.

I find your constant mentioning of 'look to better themselves' a little insulting. Thats why I and other small producers are fighting for equal market opportunities. Quite frankly, I'll put my feeders up against anyones, big or small, because all I've done is better myself year after year. So you're bigger, doesn't mean you're better.

Why better our herds if we know they will be sold as generic feeders at sale barn auction with everyone elses generic cattle?

Now whose not thinking outside the box? My feeders go to the market clearly marked as Diamond S Cattle Co feeders on their tags. I have talked to the buyers, told them what my performance has been, and what my calves are. I've invited buyers to my ranch so they can see the animals before sales. I've had buyers attempt to buy off the ranch, and have refused sale. I call them when my calves are going to market, and should they want them, they know where they are.

And I always sell at pre-sort sales. If your calves are a cut above the rest, they get put in lots with other superior calves and they command a premium. I consider it a source of pride to have the top selling calves at the barn on sale day. So I'd say there is plenty of reason to improve.

Econ you say that the regulations should be made up to regulate the big market power guys Who is to judge the cut off point of when a packer becomes a market power?

I don't think this is what Econ is saying. We need well-thought out regulations so that big power guys don't have the power to restrict competition. No cut-offs necessary.

So tell me something. For you guys that support a restricted market of only a few large operators, what are your views on the oil/gas companies and the way they do business?

Rod

 

[Sandhusker]

What a "Product of USA" label means to me is "The products under this label are benefitting US producers, who pay US taxes - and US taxes fund a whole bunch of things that help us all out. Feel free to buy the beef from Canada, Brazil, or Australia, but also kindly let us know what service currently being funded by taxes you no longer want funded as we will be running short"

That is all well and good, but you are not seeing the whole picture. Just because the foreign beef originated across our national boundary doesn't mean that it hasn't been in our own country long enough to generate quite a bit in taxes. Foreign-born cattle can be grazed on American pastures, fed in American feedlots, processed in American packing plants, roped in American arenas, etc. All of this activity can also generate more taxable American money, which still funds our wonderful American system.

Good thing the original Native Americans weren't armed enough to keep out your and my foreign-born ancestors. :wink:

Yes, those foreign born critters could contribute to our economy in some way, then again you don't know. One thing you DO know is that US born, raised, and slaughtered cattle HAVE contributed. Us bankers like to deal in the knowns and not the maybes. :wink:

I saw a bumper sticker on a van with SD res. plates in Valentine once - not sure exactly how it was worded, but it went something like, "The worst part about our forefathers was their immigration policy". I laughed out loud when I saw it.

 

[Northern Rancher]

I'm just saying I've left the auction mart a few times feeling a little raw around the butt-if you think the auction mart owner is working for the seller give your head a shake. He's working for 'HIMSELF' he'll say or do whatever it takes to handle your cattle as many times as he can. Diamond S why not get your steers fed at a custom lot so you can get some of their marketing working for you.I've fed as little as 20 head in a pen at Highland-there's lots of ways to skin a cat if you explore your options-besides there's even less competition in the auction mart industry than there is in the packing one right now.

 

[Tam]

And something else to toss into the fray, and one of the reasons I began thinking about this topic:

You have to bear in mind that not all of us are big producers. As a small producer, I am economically blocked from the fat cattle market. I can't get enough animals together for a liner load, so the packer doesn't even want to talk to me. If I ship to the barn, we've already established that I'll get less money for my product, to the point where I've lost money versus selling to a feedlot as a backgrounded animal.

So I don't think we have a level playing field. Perhaps this is as simple as regs stating that packers CANNOT refuse to buy small lots of animals?

Rod

Econ says I should have the right to sell my cattle as a producer any way I want, but insists that packers shouldn't beable to contract cattle. So if I CHOOSE to contract my cattle as I feel that is my best option who do I contract them to? By limiting the packers rights on how they buy cattle, you are at the same time limiting me as a producer to sell my cattle as I SEE FIT.
Rod, What is stopping you from getting together with a few neighbors and selling a package deal? Why must we limit everyone's way to do business because some producers are limited? In every other facet of live the bigger you get the more options you have and that is what drives everyone to better themselves. Regulating the way we can buy and sell our cattle only punishes those that think out side the box and look to better themselves. Why better our herds if we know they will be sold as generic feeders at sale barn auction with everyone elses generic cattle? Do you ever sit down with the order buyer while your cattle are in the ring being auctioned off and say to him just hold the phone here, look at the data I have that proves my cattle are top notch cattle, I think they deserve a bit better price than the average. No you are forced to take what they think they are worth on that giving day with no way to convince them they are worth more. I'm not saying sale barns don't have their place but limiting everyone to using them is just plain wrong.

Econ you say that the regulations should be made up to regulate the big market power guys Who is to judge the cut off point of when a packer becomes a market power? Rod you want a level playing field why is the playing field to be regulated to level it for you but at the same time limits the rights of others that even Econ says should have the right to sell their cattle as they see fit ?

Tam:" By limiting the packers rights on how they buy cattle, you are at the same time limiting me as a producer to sell my cattle as I SEE FIT. "

If they are using your contract to manipulate the market, then the answer is yes, Tam. You would have not liability under this scenario, however, just the packer.

The PSA is a market power law. It attempts to disallow the use of market power in price determination. Judges who don't understand economics may have issue with it, but who made them god? They are not supposed to make law. The judges presiding over the Pickett case, both at the lower level and the appellate level were either corrupt or incompetent. I lean on incompetent because they showed their knowledge with their Robinson-Patman example. Incompetent is better than corrupt, and it is not eliminated as a possibility.

International supplies should not ever have the effect of going around domestic laws. The trade agreements made between our countries is not being enforced. It does not include PSA provisions for across the border trade. The trade negotiators have failed in their agreements by not having these provisions. It is funny that the U.S. is trying to get the trade laws passed in the CAFTA countries so the deal will go through. If I were running those countries, I wouldn't sell out my citizens as our trade negotiators have.

The people who judge these things in the U.S. are called jurors. They are not judges, or packers. They are jurors. Do you have them in your neck of the woods?

As I said before, the Capper-Volstead Act allows farmers to own cooperatives and not have this law enforced against its members. You could get into contracts with a cooperative and still have the things you are saying you want. May be rkaiser's Big C is not such a bad idea anyway.

I find it very interesting that you would want to allow those with market power to exert it at the expense of the market, Tam, if they are giving you a good deal. Just a little self serving isn't it?

You said that if I enter a contract that benefited me and my bottom line that is a little self serving but look at the reason Rod wants this to happen

I am economically blocked from the fat cattle market. I can't get enough animals together for a liner load, so the packer doesn't even want to talk to me. If I ship to the barn, we've already established that I'll get less money for my product, to the point where I've lost money versus selling to a feedlot as a backgrounded animal.

There are alot of I's in this statement, could it be thought of as a bit self serving. I'm not saying I have entered into a contract but I don't think I have the right to limit the producers rights to market their cattle however they see fit to best beneifit their bottom line. If I see them doing better than me I guess it is in my best interest to see what they are doing and see if I can make some changes in the marketing of MY CATTLE to better MY BOTTOM LINE.

The judges presiding over the Pickett case, both at the lower level and the appellate level were either corrupt or incompetent.

another opinion from the peaNUT session as my dad use to say. Just because you didn't agree with their reading of the law you think they are all corrupt. :roll:

The people who judge these things in the U.S. are called jurors. They are not judges, or packers. They are jurors. Do you have them in your neck of the woods?

You seem to think that US JURORS know more about the law than Judges. Just how many years of law school do you have to go through to become a juror? Just maybe these juror were a little like you and just thought they knew more about the actual law than they did. Just maybe when the JUDGES that went to school to study law and are paid to preside over the jurors to make sure the law is upheld, looked at it they saw the jurors were wrong. If you were on trial for something and the judge saw that the jurors were wrong would you call him corrupt if he took things into his own hands and reversed the ruling and if on appeal the second panel of judges found that the first judge was right would you go to jail because the jurors found you guilty OR would you Thank God that the judge knew what was what.

As I said before, the Capper-Volstead Act allows farmers to own cooperatives and not have this law enforced against its members. You could get into contracts with a cooperative and still have the things you are saying you want.

First you say I can sell MY CATTLE any way I SEE FIT but I can't sell them to a packer as if the packer buys my cattle he may not have to sit in a sale barn and compete for Rod's cattle. Wouldn't my selling to the COOP manipulate the price at the local sale barn because the COOP Member was not in the sale barn competeing for Rod's cattle? Isn't that why Rod wants to restrict buyer from buying cattle anywhere other than in a sale barn? So all buyers are at the sale bidding up his cattle. I doubt he cares that I may not get the same money as I would if I contracted to a buyer that knows the data on my cattle and is willing to reward me for all my hard work of improving the genetics of my herd. As you said ECON that is just a little self serving .

 

[DiamondSCattleCo]

Diamond S why not get your steers fed at a custom lot so you can get some of their marketing working for you.

This is indeed something I need to look into. We have nothing close to us, so I need to see if it pencils out to ship 3 or 400 miles, pay someone to feed my animals out, all to chase after a narrow margin. On the other hand, if I could send 10 or 20 animals into Moose Jaw, it would pencil out very well for me.

Rod

 

[DiamondSCattleCo]

Isn't that why Rod wants to restrict buyer from buying cattle anywhere other than in a sale barn? So all buyers are at the sale bidding up his cattle.

Actually Tam, you may want to re-read some of my posts before calling me self serving. What I theorized, and what no-one has thus far been able to refute, is if price discovery through an open bidding system was allowed, cattle prices would rise. In other words, it would help EVERYONE, not just me.

And, as has been mentioned, the sale barn idea may not be the best idea. It was only a random thought that I posted to get other peoples thoughts. SH had some valid points, as did Jason. So if people are bound and determined to contract price or direct sell, then at the very least, force it to be an open bidding system and allow one of the simplest free market mechanisms there is to be effective and help you.

And don't allow the corporations to bar access to the market based on size. Does it hurt you if I ship my 10 fats to the packer versus to the barn? No, it certainly doesn't. They eventually end up there anyway.

Rod

 

[Soapweed]

Yes, those foreign born critters could contribute to our economy in some way, then again you don't know. One thing you DO know is that US born, raised, and slaughtered cattle HAVE contributed. Us bankers like to deal in the knowns and not the maybes. :wink:

I saw a bumper sticker on a van with SD res. plates in Valentine once - not sure exactly how it was worded, but it went something like, "The worst part about our forefathers was their immigration policy". I laughed out loud when I saw it.

It's a good thing that the original Spaniards visiting America were allowed to bring in a few of their foreign-born bovines, or we would never have had any cattle to label "Beef born, raised, and processed in the USA." :wink:

 

[Northern Rancher]

There's custom lots that are closer to you than Moose Jaw is-basically the Saskatchewan feeder price is the southern Alberta price less freight-when you sell finished cattle you don't pay sales commission so that helps the freight bill also.

 

[Mike]

You seem to think that US JURORS know more about the law than Judges. Just how many years of law school do you have to go through to become a juror? Just maybe these juror were a little like you and just thought they knew more about the actual law than they did. Just maybe when the JUDGES that went to school to study law and are paid to preside over the jurors to make sure the law is upheld, looked at it they saw the jurors were wrong. If you were on trial for something and the judge saw that the jurors were wrong would you call him corrupt if he took things into his own hands and reversed the ruling and if on appeal the second panel of judges found that the first judge was right would you go to jail because the jurors found you guilty OR would you Thank God that the judge knew what was what.

Tam, the jurors were instructed to make a decision, based on the facts of the case, following the judges explicit guidelines. They did that.

They actually sent questions to the judge while in deliberations about econometric equations that the judge could not answer! That was pretty much what the case was about!

The jury was told;

"While you should consider only the evidence in the case, you are permitted to draw such reasonable inferences from the testimony and exhibits as you feel are justified in the light of common experience."

"You, as jurors, are the solejudges of the credibility of the witnesses and the weight their testimony deserves."

"It is your duty to receive and accept as correct the law as given you in this charge, and you are not privileged to entertain an opinion as to the law or what the law should be which conflicts in any respect with the law as stated in this charge."

 

[Mike]

You seem to think that US JURORS know more about the law than Judges. Just how many years of law school do you have to go through to become a juror? Just maybe these juror were a little like you and just thought they knew more about the actual law than they did. Just maybe when the JUDGES that went to school to study law and are paid to preside over the jurors to make sure the law is upheld, looked at it they saw the jurors were wrong. If you were on trial for something and the judge saw that the jurors were wrong would you call him corrupt if he took things into his own hands and reversed the ruling and if on appeal the second panel of judges found that the first judge was right would you go to jail because the jurors found you guilty OR would you Thank God that the judge knew what was what.

Tam, the jurors were instructed to make a decision, based on the facts of the case, following the judges explicit guidelines. They did that.

They actually sent questions to the judge while in deliberations about econometric equations that the judge could not answer! That was pretty much what the case was about!

The jury was told;

"While you should consider only the evidence in the case, you are permitted to draw such reasonable inferences from the testimony and exhibits as you feel are justified in the light of common experience."

"You, as jurors, are the solejudges of the credibility of the witnesses and the weight their testimony deserves."

"It is your duty to receive and accept as correct the law as given you in this charge, and you are not privileged to entertain an opinion as to the law or what the law should be which conflicts in any respect with the law as stated in this charge."

JURORS DO NOT NEED TO KNOW THE LAW!

 

[Tam]

So how do I get bigger when I'm blocked from a lucrative marketing option due to my size? I raise all my own feed, and since I can background out calves cheaper than most, I'd be willing to hazard that I can finish them cheaper than most as well.

I'll continue to raise the best backgrounded cattle that I can and expand until I'm big enough to open up all my marketing options.

once you get those marketing options do you think you will want some smaller producer telling you that your have to go back to selling your cattle at the local barn like you are telling the bigger producers have to do so you can get larger?

In the meantime, I'll be calling my MLA and MP and informing them of an illegally restricted market.

What these buyers are doing is not illegal is it?

Regulating the way we can buy and sell our cattle only punishes those that think out side the box and look to better themselves.

How is contract selling 'thinking outside the box'? Its a risk management tool that been around for decades.

So what you want is to restrict a risk management tool that has been around for decades.

In the menatime, I'll have adjusted my ranch to whatever the current market reality is, .

Good for you that is what ranching is all about if you don't adjust to the market reality you will never last in todays world.

I find your constant mentioning of 'look to better themselves' a little insulting. Thats why I and other small producers are fighting for equal market opportunities.

You said above "I'll continue to raise the best backgrounded cattle that I can and expand until I'm big enough to open up all my marketing options". I have to ask if you enlarge to the size where you can open all your marketing option do you think you will want a small producer like yourself now telling you that you have to limit your selling to a sale barn?

Quite frankly, I'll put my feeders up against anyones, big or small, because all I've done is better myself year after year.

Good for you but again why would you want to set limits on the industry now that in the future could hold you back from accessing a market that will better serve your needs?

Why better our herds if we know they will be sold as generic feeders at sale barn auction with everyone elses generic cattle?

Now whose not thinking outside the box? My feeders go to the market clearly marked as Diamond S Cattle Co feeders on their tags. I have talked to the buyers, told them what my performance has been, and what my calves are. I've invited buyers to my ranch so they can see the animals before sales. I've had buyers attempt to buy off the ranch, and have refused sale.

can I ask why you refused them as you already said "If I ship to the barn, we've already established that I'll get less money for my product," If they offered you a price you would make money at why not take it instead of taking them somewhere you already estblished you were going to get less for them?

And I always sell at pre-sort sales. If your calves are a cut above the rest, they get put in lots with other superior calves and they command a premium.

Wouldn't they command a premium from the buyer that offered to buy them off your place that you chose to refused ?

I consider it a source of pride to have the top selling calves at the barn on sale day. So I'd say there is plenty of reason to improve.

I have to ask is this the reason you refused the bid at home and paid the commission so you could sell to the same buyers that were at your ranch?

Econ you say that the regulations should be made up to regulate the big market power guys Who is to judge the cut off point of when a packer becomes a market power?

I don't think this is what Econ is saying. We need well-thought out regulations so that big power guys don't have the power to restrict competition. No cut-offs necessary.

Have you read much of what ECON posts? all he wants is to regulate the Tysons and Cargils as he calls them the market power guys why do you think the regulations he would like to see would allow me to contract with a COOP but not a packer? who is to judge who the big power guys are?

Actually Tam, you may want to re-read some of my posts before calling me self serving. What I theorized, and what no-one has thus far been able to refute, is if price discovery through an open bidding system was allowed, cattle prices would rise. In other words, it would help EVERYONE, not just me.

Well your theory is as self serving to me as my wanting producers to have options available to market their cattle is to Econ. You feel that your theory is the way to level the playing field so you and other small ranchers can become large enough to access other markets option. But if we follow your theory there won't be any other options to access once you get large enough to access them. As I said I have never entered a contract but I don't feel I have the right to limit the options others have just because i'm not as big as them. What you are theorizing limits others options to the way you choose to carry on your business. If you want to sell by sale barn and take pride in the fact you had the top selling cattle so be it but why regulate others out of an option that has been a risk management tool for decades just to beneifit you?

 

[Econ101]

Tam, if you want to allow the big boys to manipulate the markets with their little games just so you can keep your privledged place over other cattlemen in your country, then go ahead. You have to do what is in your heart.

Cheating someone else for personal advantage is not something I want to be involved in. Produce a good product and get paid for its fair share of the value. Little games that do anything other than that are just that, little games. If you want to continue to defend them, then go ahead. I think most cattle ranchers and farm families do not have the same view. They want to put in an honest day's work and earn an honest dollar. Things may be different in your neck of the woods.

If you just don't understand what is being said and done, that is another thing. If you don't want to understand what is being said and done is also another thing entirely. I learned a long time ago that if someone wants to be evil, there is not a lot stopping them. They must live with what they have become. It is sad that in today's world, many times those are the people who gain the world but lose something far more important in the process.

You only live a certain amount of time in life. Some of us are already over the half way mark and we still haven't learned that fact.

Sure, for markets to work well, we have to have honesty. Short of that we have to have laws that can be enforced. These laws may take away from your or packer "efficiency" or profitabilty but they add to the efficiency of the market and the betterment of society.

It would seem that self called leaders in this industry would understand these issues. I think a lot of cattlemen in the U.S. are upset because the leaders of the NCBA are taking the same position that you espouse. It is self interest that is not in the interest of market efficiency, economic efficiency, or the interests of your neighbors. It is only your self interest and it has implications for everyone around you.

Keep defending your "rights" at the expense of everyone else. It is a short sighted policy.

 

[DiamondSCattleCo]

Excellent post Econ.

once you get those marketing options do you think you will want some smaller producer telling you that your have to go back to selling your cattle at the local barn like you are telling the bigger producers have to do so you can get larger?

Tam, you've got your mind all wrapped around the sale barn thing. It was only an idea that occured to me while driving into town, and I posted it here to get people's thoughts. I've dropped the sale barn idea (for now) and mentioned opening access for smaller producers.

Once I get bigger, I hope that I am not so arrogant that I won't listen to ALL producers. Big or small, they're simply trying to do the same thing I am: raise good animals, feed their families, and live their lives out as happy as they can be.

So again I ask you, why would rules that force packers to open their doors to small producers hurt the big producer? As a small producer, my animals are FORCED through the sale barn (or a finishing lot) and into the packer. I am forced to go through a middleman to get to the packer. But I still get to the packer, so I'm not driving down prices. Why shouldn't I be allowed direct access, same as a larger producer?

In the meantime, I'll be calling my MLA and MP and informing them of an illegally restricted market.

What these buyers are doing is not illegal is it?

Yes it is. There are rules in place to prevent restricting marketplace entry. This is whats happening. If the packer has enough market control that he can feel secure enough to block someone's entry into the market, then the law has been broken.

So what you want is to restrict a risk management tool that has been around for decades.

Because cash market basis contracting is bad for the industry. Whether it be a small time producer or a big producer signing that kind of contract, it HURTS the entire industry. Free markets assume educated buyers and sellers. If a seller is signing a contract that is ill-conceived and will lead to industry damage, then that producer either needs to be 1) educated or 2) prevented from signing the contract.

One of the things that I find staggering is producers unwillingness to learn from the mistakes of the past. 3 times the Wheat Board was shut down, and 3 times wheat prices crashed into the ground. Yet we still have a few self serving individuals screaming for its closure. The grain industry has used these cash market basis contracts for years and years, and its been one of the tools used to cause the demise of the small family farm. So cow/calf producers think these are a good thing?

Good for you but again why would you want to set limits on the industry now that in the future could hold you back from accessing a market that will better serve your needs?

I'd never access a tool like cash basis contracting because I can comprehend just how bad it is for the industry. While it may help me risk manage or even get ahead today, it'll bite me later.

can I ask why you refused them as you already said "If I ship to the barn, we've already established that I'll get less money for my product," If they offered you a price you would make money at why not take it instead of taking them somewhere you already estblished you were going to get less for them?

Tam, you need to re-read the thread a little closer. I said FATS going to the barn gather less money. Feeders are a different story as the majority of feeders are still sold through barns on an open bid. But skip the barns since it seems to be a topic that everyone cringes at. The key here is OPEN BID.

Why did I refuse the buyers each time they've been here for the last 8 years? Because the premium they offered in the yard, while attractive, wasn't enough. I probably should have risk managed and jumped at the 6 and 8 cents above market average that I was offered. My wife certainly thought I should have and almost beat me.

Of course, if I'd went for the 8 cents above average, I would have missed the 10 - 15 cent premium that I ended up getting at the barn.

Now lets just assume that I had taken the 6 cent premium, or even the 8 cent premium. That buyer would have left my ranch with part of his order filled. So when he went to the barn that week, he would have been bidding just a little less aggressively and maybe pushed down the cash price by a penny or two. One person wouldn't be able to move the market, but what if 20 producers in my area had done it? And he just bought my way above average animals for a slightly above average price.

So lets assume I'd been offered a 17 cent premium and taken it. Same effect on the cash price. It would be drove down, although less so because the buyer would realize he could the animals cheaper at the barn. But that week, the cash price would be off by just a hair.

As producers, we need that open bid whether it be an open bid on deliveries or an open bid on forward contracts, it doesn't matter, but we NEED that open bid. Contract prices do have an effect on the cash price, and its often a negative effect.

Have you read much of what ECON posts? all he wants is to regulate the Tysons and Cargils as he calls them the market power guys why do you think the regulations he would like to see would allow me to contract with a COOP but not a packer? who is to judge who the big power guys are?

No what Econ wants is well thought out regulations that would limit market power of corportations in general. He uses Tyson and Cargill as an example of what happens when large corporations are allowed to run amok in a marketplace.

As far as contracting with a CO-OP, the excess profits from a well-run CO-OP go back to the primary producer. So the net negative effect on the cash market of the contract is offset by the producer equity cheque at the end of the year. So it may have a net zero effect, or if the Co-op has enough market power, it may have net positive effect on the cash market. This is a good thing for producers.

The world isn't here for large corporations, but individuals. Why should we adjust to their reality?

Rod

 

[rkaiser]

Team Auction is one of the only live bidding sales for Fat cattle that I know of in Canada. There may be some fat cattle sold through other satellite or live internet services that I don't know about. Team auction offers a professional eye, photographs, and detailed description of the cattle and yet struggles to produce the average price paid by packers on any week.

I realise that the packer backers will see this as a prime example of how competition works, however I see it as a fearful place for the packers to go, and a collaborative effort to make sure something like this does not takeover a larger share of fat cattle marketings.

Good gracious, the packers actually may have to BID more than once. Currently in Alberta, packers offer ONE bid for your cattle.

 

[feeder]

We tried to market fats that way twice. I think at that time it was fashioned after the TEAM in Canada. Packers weren't aggressive bidders, and after so many no sales, I believe the site was discontinued, at least in our area.

 

[DiamondSCattleCo]

I realise that the packer backers will see this as a prime example of how competition works, however I see it as a fearful place for the packers to go, and a collaborative effort to make sure something like this does not takeover a larger share of fat cattle marketings.

Exactly, why would they go somewhere that offers true price competition and force themselves to actually pony up to the table and bid with everyone else?

Rod

 

[rkaiser]

Intersting how this may turn into an auction barn debate. I use them very little by the way.

However, how is it that northernrancher can simply backmouth the privately owned Live Cattle Auction Industry without a response from anyone. I personally do not like certain companies, but hey, ther are thousands in Canada, and if you don't like one, you can choose another.

Unlike another industry here in Canada that can simply sit back and wait, unless you try to market cattle on your own.

Two companies in this industry which can sit back and wait for 85% of the cattle in Canada. If they can't get them by owning them, they convince farmers like northern rancher that they are treating them with as much respect as their Grandma would and create these contracts. The rest of the cattle they need can be bought or rejected through this one bid system packer backers like to call a free market. And no Northern Rancher, I am not saying that what you are doing is wrong for You, just for the industry in North America.

I cannot see how most Auction barn folks, who are mostly trying to scratch out a living like an average farmer, can be seen as bad guys for working on having as many buyers as possible attend the sale of your cattle.

I applaud the efforts of Team auction for attempting (at least) to bring free marketing back to our industry. Cold you imagine if Cargill and Tyson were forced (by a large number of ranchers) to bid for cattle again in a free and open marketplace. I honestly and with as many manners as possible (northern rancher), I hope that live cattle sales of Fat cattle once again become a reality.

Laws or no laws, integrity or no integrity, I could only imagine owning a large number of the widgets that I need to change into widjots, having a large group of suppliers quaranteeing my profit with contracted supply, and then buying the few extra widgets I needed through a free market that I admittedly have a lot of options in.

 

[Northern Rancher]

R. Kaiser do you honestly believe there are 1,000's of privately owned auction marts in Canada-I know of two maybe three in Saskatchewan-then there are DLM,Team and Superior. I've checked out alot of breeder driven branded beef programs most of them when you strip away the hyperbole are bull marketing schemes nothing more nothing less-they all take care of the promoter first finance wise. As for these new packing plants while promoted with some good intentions and at times religios fervour to realistically compete they are going to have to become alot like they were set up to compete against-we would probably be better off if the government would let our small slaughter houses operate-one of the most successful local businesses we ever had here was totally integrated-ranch-feedlot-slaughter house-meat market. The ranch and meat market are still going but government regulations made the feedlot and slaughter house unviable.

 

[Anonymous]

DSCC: "I also have no need to blame, however I do feel the the market is slowly breaking down based on my own observations. I have children and want to ensure that the lifestyle that I love is still here for them when they grow up. For me, that transcends market efficiency and a corporation's right to profits. I feel that the current corporate enviroment, both in the cattle industry, and in other areas of our lives is restricting our ability to 'live a good clean life'."

The best thing you can do for yourself is get an intimate understanding of packer and retailer profitability to bury those concerns. Don't listen to these thumbsucking packer blamers, go do your own research. Look at what you've learned here about red meat yield, costs of processing, and SRM removal. Heck your $600+ profit dwindled to $93 just by what you had not considered. Wouldn't you be doing yourself a favor to further that education?

Now take the next step and learn about the value of edible and inedible ofal, hides, tongues, livers, tripe, etc. etc. Learn about the amount of trim from a carcass and the value of different categories of lean ground beef. Learn about the prices of middle meats and the percentage of select beef and no roll and how it's priced. Learn about the costs associated with the retail beef industry, how "featured prices" (sell it or smell it) affect average prices. How product that is not sold by expiration date has to be discarded despite the costs of processing.

Keep in mind that a lot of the prices that are reported are for "choice" beef when Select and No Roll are also part of the mix and priced cheaper.

Then and only then will your speculation end and you fully start to understand that the profit margins in processing and at the retail level are as tight as they are going to get. Don't listen to these blaming organizations. They don't have a clue. They spend most of their time trying to defend their own ignorance.

When you start to realize just how much of that carcass is utilized AND PAID FOR by these larger more efficient packers, you will begin to appreciate economies of scale. Like I told you, my local locker plant has to pay to have his ofal hauled off. Do you think he can pay you what your cattle would be worth if that ofal had value?

I can't remember whether I told you this or not but Mike Callicrate is one of the most outspoken packer blamers in the U.S. He was the one telling everyone that packers and retailers were making $400 per head. In R-CULT's publication, he actually stated that he was paying a top premium of $50 for the cattle he bought for his "born, raised, and processed in the U.S." branded beef program. The article then goes on to say that he charged consumers 10% - 20% more for his product than the commodity beef industry that he has been claiming IS RAPING CONSUMERS. The article goes on to say that he had yet to realize a profit and claimed "consumer apathy" as one of the reasons.

WHERE'S THE CONSISTANCY IN HIS ARGUMENTS????

If the commodity retail and packing industry is making $400 per head, wouldn't it be logical to assume that Mike could at least break even charging consumers 10% - 20% more for "born, raised, and processed in the U.S." beef products? He was on the ground floor on promoting "U.S. beef" and he can't even break even????

It's this type of misinformation and these types of blatant lies that have creating so much hype and histeria in this industry. The LMA gave Mike a voice and sent him on the road to "BWAME DA PACKAH".

DSCC: "If everyone had to purchase their cattle in the barn, then the order buyers wouldn't have smaller orders then. The packer needs the same number of cattle each week, whether they get them from the barn or private treaty."

This is the same argument about selling feeder calves off the place vs. selling feeder calves in the sale barn. I can tell you within $2 per cwt. what 550 lb. feeder calves will average in most barns in SD at any given time. How? Just by looking at the breakeven feeder calf index on the DTN. Most calves are bought at breakeven levels or slightly higher with $1 - $3 cwt. difference for quality. I have watched this thing for 10 years and it nails it. WHY? Because corn prices are fairly constant across the feeding belt, the futures price for fat cattle is the same for everyone, and the other costs associated with feeding are fairly constant. Everyone pretty much factors in the same costs and end price when figuring what they can pay for feeder calves. They gamble on weather.

I can price calves off the place within $2 of what they will bring in the barns minus the shrink, stress, commission, and extra trucking without even looking at the salebarn reports.

My point? Fat cattle and feeder cattle can be priced fairly off the place or out of the feedlot without the added stress, extra shrink, and additional trucking associated with the barns.

Does this mean I do not advocate selling in the sale barn? Hardly. We sell our calves in the sale barn currently because we simply do not have enough to make sufficient load lots but I would have no trouble pricing them off the place or buying calves off the place if we had sufficient load lots.


DSCC: "I disagree with your idea that larger means more efficient ALWAYS. Its simply not so. Larger plants are able to able to operate on economies of scale and reduce costs/animal. This is a form of efficiency, I grant you that, however I would argue that the local butcher who buys their stock direct from the producer is even more efficient. No middle men, straight from producer to consumer with only 1 middleman. And butcher meat is often much cheaper than grocery store meat, at least in my area."

I didn't say ALWAYS but with the current packing industry structure, there is no doubt that they are as efficient, from a cost side, as they can get.

With that said, I do believe there is more opporunity out there with new product development and enhancement that can add to large packer profitability and allow these larger plants to pay even more for our cattle and still compete with the other packing companies.

You need to ask yourself one simple question and consider the answer. Why have so many smaller packing plants been replaced by larger more efficient plants if they were profitable? When you ask them they will tell you that they couldn't compete. Well if they couldn't compete, there is obviously competition out there isn't there? They couldn't pay up like the larger plants and still keep their doors open. The larger plants sell everything from the nose to the rectum and add as much value to that carcass as they can so they can still make a profit and buy cattle competitively against THEIR competition.

As a side note, I always find it humourous when those who are bitching about packer profits start complaining about the wages that these packers are paying their employees. WHERE'S THE LOGIC??? If these packers pay their employees more, they will have less to pay for cattle.

NO COMPRENDE'!

DSCC: "Perhaps, but having more people bidding still gives us a check and balance to prevent the 2 or 3 volume buyers from colluding and driving prices down."

To suggest that Excel, Tyson, Swift & Co., Greater Omaha, and USPB are not in competition for the same cattle is ridiculous.

DSCC: "1) Its not how the packers arrive at their final decision on what to pay that I have a problem with. What I find problematic is that they are allowed to generate contracts using last weeks market average as a basis. This isn't good. It provides them with too much impetus to mess with the auction price. Or if the conspiracy doesn't do it for you, then as more and more people deliver straight to the packer on a contract basis, the barn becomes less competitive and the basis for the market is killed."

So what if formula cattle are based on last week's weekly weighted average of the cash market. SO WHAT? You know that before you agree to sell that way.

The arrogance of these packer blamers that think they need to save feeders from their own marketing decisions is nothing short of amazing. Every feeder has the cash market option if they so choose.

Don't you see the irony in these conflicting arguments? On one hand, the packer blamers are arguing that grid pricing should not be based on a weekly weighted average the week prior because it could result in "MARKET MANIPULATION". On the other hand, they are arguing that the market was manipulated because the cash price on the following week was lower. HELLO? I guess "market manipulation" depends on who got the lower price huh?

Do you realize that there is just as many times when the cash market the following week is higher than the previous formula price so how can that price be manipulated.

Also consider this, if one packer drops his price in the cash market because he has most of his needs filled in the formula market, HE'S NOT THE ONLY PACKER BUYING CATTLE. It's going to be quite a coincidence if every packer has his needs filled in the formula market at exactly the same time. THINK ABOUT IT!

Not only that but every single feeder has multiple packers to sell to with multiple pricing systems each. He is certainly not locked into one marketing scheme or one packer.

Is it not in the best interests of a packing company to procure cattle in any way they can???

Also consider the fact that forward contracts were initiated BY PRODUCERS who wanted to minimize their basis risk.

Also consider that most of these packer pricing scheme arguments are coming from those WHO DON'T EVEN SELL TO THE PACKER. They sell to the feeder.

It's insane! All driven by an ignorance of the packing industry.

DSCC: " a contract based on last weeks market price still gives them the impetus to mess with the cash price to try and garner more contracts. Or, a less conspiracy oriented approach: If they're guaranteed X number of contract animals, why bother with the cash market at all? Cash price falls, and so does the contract price."

Then how can you explain the fact that there is times when the cash market following the formula market is higher than the previous week's formula price???

What you guys fail to understand is that these major packers are competing with other major packers for the same cattle. IF THEY DON'T PAY UP, SOMEONE ELSE WILL!!! It's that damn simple.

DSCC: "As I said, perhaps maybe we need to go the other way and force the packers to accept small lots of cattle."

FORCE, why is it always FORCE. Why not start your own packing company that accepts small load lots and see how you fair.

THE PACKER DOES NOT OWE YOU A LIVING!

DSCC: "If some cow/calf producers want to sign poorly thought-out contracts that hurt the market, then I think they should be the ones to go out of business."

So what right do you have to save them from themselves? If they know their expenses and lock in a profit, A PROFIT IS A PROFIT!

DSCC: "Because cash market basis contracting is bad for the industry. Whether it be a small time producer or a big producer signing that kind of contract, it HURTS the entire industry. Free markets assume educated buyers and sellers. If a seller is signing a contract that is ill-conceived and will lead to industry damage, then that producer either needs to be 1) educated or 2) prevented from signing the contract."

You obviously do not even understand forward contracts. Do you buy insurance? If you buy insurance, then you are contributing to the same type of arrangement. It' no different. If I know what my expenses are and I can lock in a profit by singing a forward contract, WHY SHOULD I NOT BE ALLOWED TO???

Does that affect the market? IT COULD, YES! If a packer procures his needs by contract, he needs less cattle in the cash market. So what is the alternative??? Everyone sells in the "socialized" sale barn market where everyone receives the same price for their cattle regardless of quality. Grid pricing was initiated by producers who wanted to get paid for the quality of their cattle. Forward contracts were also initiated by producers who wanted to manage their financial risk. YOU IN TURN WANT TO TELL THESE PRODUCERS THAT THEY DIDN'T KNOW WHAT THEY WERE DOING.

You want to lecture on arrogance? I think the attitude that you need to save feeders from their pricing mechanisms is the epitomy of arrogance.

DSCC: "Of course, if I'd went for the 8 cents above average, I would have missed the 10 - 15 cent premium that I ended up getting at the barn."

Only because the market moved in your favor during the time period between the two bids. Had you been tracking the price of corn and boxed beef, you would probably understand why the price moved.

DSCC: "Now lets just assume that I had taken the 6 cent premium, or even the 8 cent premium. That buyer would have left my ranch with part of his order filled. So when he went to the barn that week, he would have been bidding just a little less aggressively and maybe pushed down the cash price by a penny or two."

That's supply and demand! Or the price of corn could have risen and the futures market risen allowing him to pay more the next week despite having your cattle already bought. Who is going to feel bad then?

DSCC: "So lets assume I'd been offered a 17 cent premium and taken it. Same effect on the cash price. It would be drove down, although less so because the buyer would realize he could the animals cheaper at the barn. But that week, the cash price would be off by just a hair."

You can't predict how many buyers are going to need cattle at any given time nor can you predict how corn prices and futures prices will move.

Using your logic, you shouldn't sell your calves at the sale barn either because an order buyer that buys your calves is going to pay less for the next calves because you already filled part of his order. SAME LOGIC!

DSCC: "As producers, we need that open bid whether it be an open bid on deliveries or an open bid on forward contracts, it doesn't matter, but we NEED that open bid. Contract prices do have an effect on the cash price, and its often a negative effect."

What we need is a free market system that allows producers to decide for themselves what is the best way to market their cattle. NOT SOMEONE ELSE TELLING THEM HOW TO MARKET THEIR CATTLE, like the LMA does and their merry band of packer blaming followers.

DSCC: "No what Econ wants is well thought out regulations that would limit market power of corportations in general."

Conman doesn't know what he wants because he doesn't know anything. He has market manipulation conspiracy theories that he cannot prove. That's all he has.

DSCC: "Exactly, why would they go somewhere that offers true price competition and force themselves to actually pony up to the table and bid with everyone else?"

Do you honestly thing that the packers do not know what their processing expenses are? Do you think they don't know what boxed beef prices are at? That is what determines what they are going to pay regardless where they are bidding on cattle.

Another thing I failed to mention about sale barns. What if you don't like the price? You've already trucked the cattle, you've already paid the commission, you've already stressed the cattle, you've taken the cattle off feed, and you've shrunk them. So what do most guys do? They take the price rather than risking the losses of getting those cattle back on feed. When you are bid on a pen of cattle at the feedlot, if you don't like the price, you just keep feeding the cattle until you find a price you can live with.

The Nebraska Cattlemen's Association recently contracted with an outfit that trades market information for price reporting. If you report your prices, then you have access to what other feeders are being bid. HOW CAN A MARKET BE ANY MORE TRANSPARENT THAN THAT??? This is a voluntary system and it didn't require another phony government mandate to accompish either.

Soap: "Good thing the original Native Americans weren't armed enough to keep out your and my foreign-born ancestors."

HAHAHAHA! TOUCHE' SOAPWEED!!!!!

You guys think long and hard about that!!!!!

I would love to hear what a Native American had to say about you import blamers.

Conman: "SH, I have not read the proposed bill."

Then why would you make a stupid statement suggesting that nobody is trying to legislate how feeders can sell their product???

You shot your ignorant mouth off again before you knew what you were talking about.

Conman: "What I know and don't know is way beyond you almost all of the time."

Keep telling yourself that Conman. You prove your ignorance with every post you make.

Conman: "Limitations on packers being defended under the guise of taking something away from the producer will not work for me."

This is not limiting packers, it's limiting feeders and there is no justification. Every producer can sell his cattle on Angus Gene Net and "bid the grid" base price if he does not like the non negotiated base price or he can sell in the cash market. He/she does not need an ignorant packer blamer like you telling them how to sell their cattle.


This cuts at the heart of the free enterprise system.

Conman: "The judges presiding over the Pickett case, both at the lower level and the appellate level were either corrupt or incompetent."

That's what all the packer blamers say when there is no "smoking gun" to blame packers with. There was no proof of market manipulation as defined by the courts. Dropping your price to reflect your needs is not market manipulation but rather a normal supply and demand market reaction. Take it to another court Conman! Take it to feeding country in Kansas, Nebraska, or Iowa instead of Corporate blaming Alabama and see what happens. I doubt you would even find a judge willing to hear the case let alone waste everyone's time with it. It's bullsh*t and Judge Strom was smart enough to sort it out as was the 11th circuit.

If they had a powerful argument to back their case, WHY CAN'T ANY OF YOU PACKER BLAMERS BRING IT TO THE TABLE??? I'll tell you why, because it doesn't exist.

Sandbag: "Why would the prices paid for our product rise when demand for our product is lowered via cheaper replacements?"

Demand for our product is not lowered via a cheaper replacement. Cheap imported "LEAN" trimmings add value to a virtually worthless 50% "FAT" product. You cannot supply that market economically by devaluing the chuck and round. There is a market for all beef the question is AT WHAT PRICE. It's makes more business sense to import lean trimmings to blend with 50/50 trim than to devalue a product that is worth more than 70/30 lean ground beef.

How many times do I have to mention this before it sinks into your economically challenged skull?

Mike: "JURORS DO NOT NEED TO KNOW THE LAW!"

Exactly, that's why they can interpret certain actions such as dropping your price in the cash market to reflect your needs in the formula market as market manipulation. It requires a judge to know whether laws were broken or not. Judge Strom clearly stated no violation of the PSA.


~SH~