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Standing Up For The Packers

Tam

Well-known member
Standing Up For The Packers
Nothing makes most cattlemen more fidgety than someone defending the packing industry, but I must interject when an industry leader recently made the public case that the recent downturn in prices was a result of packer manipulation of the marketplace. I doubt there will ever be a time when blaming the packers isn't a well-received refrain in cattle country, but the latest financials from Tyson tell the real story.

Tyson's profits shriveled in the first quarter of 2006 when the firm posted a $12-million loss. Poultry margins went to almost zero and, though pork didn't do too bad, the beef side of Tyson's business lost $188 million. In the past six months, Tyson has lost more than $250 million in its beef sector.
That is real money, and Swift's recent sale of its cow-processing business to XL Foods Inc., of Alberta, Canada, (April 21 BEEF Cow-Calf Weekly) was also done to shore up what is an increasingly weak bottom line. It may sell organizational memberships to argue that packers are profiting at the expense of producers, but the numbers -- historically and in the short run -- absolutely defy such claims.

I still find it comforting to occasionally blame the packing industry, but even more comforting to know today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand. -- Troy Marshall

What do you have to say about this article Econ?
 

Sandhusker

Well-known member
The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable.
 

Econ101

Well-known member
Tam said:
Standing Up For The Packers
Nothing makes most cattlemen more fidgety than someone defending the packing industry, but I must interject when an industry leader recently made the public case that the recent downturn in prices was a result of packer manipulation of the marketplace. I doubt there will ever be a time when blaming the packers isn't a well-received refrain in cattle country, but the latest financials from Tyson tell the real story.

Tyson's profits shriveled in the first quarter of 2006 when the firm posted a $12-million loss. Poultry margins went to almost zero and, though pork didn't do too bad, the beef side of Tyson's business lost $188 million. In the past six months, Tyson has lost more than $250 million in its beef sector.
That is real money, and Swift's recent sale of its cow-processing business to XL Foods Inc., of Alberta, Canada, (April 21 BEEF Cow-Calf Weekly) was also done to shore up what is an increasingly weak bottom line. It may sell organizational memberships to argue that packers are profiting at the expense of producers, but the numbers -- historically and in the short run -- absolutely defy such claims.

I still find it comforting to occasionally blame the packing industry, but even more comforting to know today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand. -- Troy Marshall

What do you have to say about this article Econ?

I think the guy hit it right on. Some of the folks on this board think the game being played right now is the highest profit game. It is not. It is the concentration game. Comparable economic advantage over competitors. Did Mike C. not tell you of the poultry plant being put out of business in his part of the country.

When I said that low profitabilty (or margins) is the loss leader for market concentration, did you understand what I was talking about?

Everything is about supply and demand. Food is an inelastic good. You are going to eat on average the same amount per day regardless what the cost is on average. If there is a little less food than you need, the change in price of it will go up more than the change of decrease in consumption. If there is a little more than you need, the change in price down will be greater than the change in consumption.

Troy hit the nail on the head when he said, "today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand." Tyson controls the largest share of the poultry market and could bring prices up with decreased production if they wanted to. Tyson could manage that.

This is a game of concentration right now. The high profits will come after the consolidation phase ends and the oligarchical Nash Equilibriums are employed (this just means that when there a few big players left, there will not be any real competition, there will be collusive activity--though not necessarily in the formal way SH defines it---and higher profits will be handed over to those controlling the markets at every one else's expense.)

Tam, the comparable advantages I am pointing out that I happen to see (there are others that are not as easily seen) are the economic tools of concentrating the markets.

Already we are seeing innovative companies like Creekstone being denied the innovation of their markets so the big packers can continue the concentration game unchallenged. It will happen quicker that way. This is a longer term economic strategy---the game of comparable advantage and concentration. Go read the book, The Robber Barons. You might see the whole picture then. Many of the industry concentrators ran the businesses (oil, sugar, meat, etc...) in the ground to gain control and exert real market power to increase profits.
 

agman

Well-known member
Sandhusker said:
The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable.

For a banker you seem to be very short on knowledge about business and the beef industry. There are some real success stories in the packing industry just as there are for innovative producers. Small to intermediate size companies that grow and prosper do exit despite your lack of knowledge of those situations.

Not very period is a period of profit for packers nor is it for the cattlemen. That does not prevent expansion even in bad times. That is when great management surfaces in business just as it does for some cattle producers. Are those producers who have the foresight to expand during rough times guilty of manipulation or can we agree that management skills differ by a vast degree at every level of business independent of size.
 

agman

Well-known member
Econ101 said:
Tam said:
Standing Up For The Packers
Nothing makes most cattlemen more fidgety than someone defending the packing industry, but I must interject when an industry leader recently made the public case that the recent downturn in prices was a result of packer manipulation of the marketplace. I doubt there will ever be a time when blaming the packers isn't a well-received refrain in cattle country, but the latest financials from Tyson tell the real story.

Tyson's profits shriveled in the first quarter of 2006 when the firm posted a $12-million loss. Poultry margins went to almost zero and, though pork didn't do too bad, the beef side of Tyson's business lost $188 million. In the past six months, Tyson has lost more than $250 million in its beef sector.
That is real money, and Swift's recent sale of its cow-processing business to XL Foods Inc., of Alberta, Canada, (April 21 BEEF Cow-Calf Weekly) was also done to shore up what is an increasingly weak bottom line. It may sell organizational memberships to argue that packers are profiting at the expense of producers, but the numbers -- historically and in the short run -- absolutely defy such claims.

I still find it comforting to occasionally blame the packing industry, but even more comforting to know today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand. -- Troy Marshall

What do you have to say about this article Econ?

I think the guy hit it right on. Some of the folks on this board think the game being played right now is the highest profit game. It is not. It is the concentration game. Comparable economic advantage over competitors. Did Mike C. not tell you of the poultry plant being put out of business in his part of the country.

When I said that low profitabilty (or margins) is the loss leader for market concentration, did you understand what I was talking about?

Everything is about supply and demand. Food is an inelastic good. You are going to eat on average the same amount per day regardless what the cost is on average. If there is a little less food than you need, the change in price of it will go up more than the change of decrease in consumption. If there is a little more than you need, the change in price down will be greater than the change in consumption.

Troy hit the nail on the head when he said, "today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand." Tyson controls the largest share of the poultry market and could bring prices up with decreased production if they wanted to. Tyson could manage that.

This is a game of concentration right now. The high profits will come after the consolidation phase ends and the oligarchical Nash Equilibriums are employed (this just means that when there a few big players left, there will not be any real competition, there will be collusive activity--though not necessarily in the formal way SH defines it---and higher profits will be handed over to those controlling the markets at every one else's expense.)

Tam, the comparable advantages I am pointing out that I happen to see (there are others that are not as easily seen) are the economic tools of concentrating the markets.

Already we are seeing innovative companies like Creekstone being denied the innovation of their markets so the big packers can continue the concentration game unchallenged. It will happen quicker that way. This is a longer term economic strategy---the game of comparable advantage and concentration. Go read the book, The Robber Barons. You might see the whole picture then. Many of the industry concentrators ran the businesses (oil, sugar, meat, etc...) in the ground to gain control and exert real market power to increase profits.

You don't know enough about the beef industry to voice a legitimate opinion about any segment. Your accusations of manipulation and concentration are getting old. You have worn that factless record out.
 

DiamondSCattleCo

Well-known member
agman said:
Not very period is a period of profit for packers nor is it for the cattlemen. That does not prevent expansion even in bad times.

The problem is that we keep hearing about massive losses and hard times, and have for years, but somehow, somewhere, the money always magically surfaces. They're showing a 250 million loss, but how much of that is capital writeoffs, loan payments from previous expansion, and downpayment on new expansion? What I'd really like to see is their loss before debt reduction from expansion. I'm betting its not such a bleak outlook, otherwise their credit rating would have already been downgraded.

Rod
 

Bill

Well-known member
Econ101 said:
Tam said:
Standing Up For The Packers
Nothing makes most cattlemen more fidgety than someone defending the packing industry, but I must interject when an industry leader recently made the public case that the recent downturn in prices was a result of packer manipulation of the marketplace. I doubt there will ever be a time when blaming the packers isn't a well-received refrain in cattle country, but the latest financials from Tyson tell the real story.

Tyson's profits shriveled in the first quarter of 2006 when the firm posted a $12-million loss. Poultry margins went to almost zero and, though pork didn't do too bad, the beef side of Tyson's business lost $188 million. In the past six months, Tyson has lost more than $250 million in its beef sector.
That is real money, and Swift's recent sale of its cow-processing business to XL Foods Inc., of Alberta, Canada, (April 21 BEEF Cow-Calf Weekly) was also done to shore up what is an increasingly weak bottom line. It may sell organizational memberships to argue that packers are profiting at the expense of producers, but the numbers -- historically and in the short run -- absolutely defy such claims.
I still find it comforting to occasionally blame the packing industry, but even more comforting to know today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand. -- Troy Marshall

What do you have to say about this article Econ?

I think the guy hit it right on....................

Including this part?
It may sell organizational memberships to argue that packers are profiting at the expense of producers, but the numbers -- historically and in the short run -- absolutely defy such claims.

Hasn't "packers are profiting at the expense of producers" been yours and R-Calf's common belief?
 

PORKER

Well-known member
projections of future results and other forward-looking statements. One can identify these forward-looking statements by use of words such as "strategy," "expects," "plans," "anticipates," "believes," "will," "continues," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are based on the company's assumptions and estimates and are subject to risks and uncertainties. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the company is hereby identifying important factors that could cause actual results and outcomes to differ materially from those contained in any forward-looking statement made by or on behalf of the company; any such statement is qualified by reference to the following cautionary statements

**Like Rod says ;The problem is that we keep hearing about massive losses and hard times, and have for years, but somehow, somewhere, the money always magically surfaces. They're showing a 250 million loss, but how much of that is capital writeoffs, loan payments from previous expansion, and downpayment on new expansion? What I'd really like to see is their loss before debt reduction from expansion.
 

Econ101

Well-known member
agman said:
Econ101 said:
Tam said:
What do you have to say about this article Econ?

I think the guy hit it right on. Some of the folks on this board think the game being played right now is the highest profit game. It is not. It is the concentration game. Comparable economic advantage over competitors. Did Mike C. not tell you of the poultry plant being put out of business in his part of the country.

When I said that low profitabilty (or margins) is the loss leader for market concentration, did you understand what I was talking about?

Everything is about supply and demand. Food is an inelastic good. You are going to eat on average the same amount per day regardless what the cost is on average. If there is a little less food than you need, the change in price of it will go up more than the change of decrease in consumption. If there is a little more than you need, the change in price down will be greater than the change in consumption.

Troy hit the nail on the head when he said, "today's prices, like prices in the past, can be explained by the far more mundane but manageable concept of supply and demand." Tyson controls the largest share of the poultry market and could bring prices up with decreased production if they wanted to. Tyson could manage that.

This is a game of concentration right now. The high profits will come after the consolidation phase ends and the oligarchical Nash Equilibriums are employed (this just means that when there a few big players left, there will not be any real competition, there will be collusive activity--though not necessarily in the formal way SH defines it---and higher profits will be handed over to those controlling the markets at every one else's expense.)

Tam, the comparable advantages I am pointing out that I happen to see (there are others that are not as easily seen) are the economic tools of concentrating the markets.

Already we are seeing innovative companies like Creekstone being denied the innovation of their markets so the big packers can continue the concentration game unchallenged. It will happen quicker that way. This is a longer term economic strategy---the game of comparable advantage and concentration. Go read the book, The Robber Barons. You might see the whole picture then. Many of the industry concentrators ran the businesses (oil, sugar, meat, etc...) in the ground to gain control and exert real market power to increase profits.

You don't know enough about the beef industry to voice a legitimate opinion about any segment. Your accusations of manipulation and concentration are getting old. You have worn that factless record out.

Spoken by a true industry spokesman.

Just look at the results. The rest is BS.

It seems even your packer buddies beefman or SH don't know enough about this industry to voice an opinion about this industry.

Get a clue, Agman. The facts are right there in plain sight.
 

Sandhusker

Well-known member
agman said:
Sandhusker said:
The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable.

For a banker you seem to be very short on knowledge about business and the beef industry. There are some real success stories in the packing industry just as there are for innovative producers. Small to intermediate size companies that grow and prosper do exit despite your lack of knowledge of those situations.

Not very period is a period of profit for packers nor is it for the cattlemen. That does not prevent expansion even in bad times. That is when great management surfaces in business just as it does for some cattle producers. Are those producers who have the foresight to expand during rough times guilty of manipulation or can we agree that management skills differ by a vast degree at every level of business independent of size.

You insult me with your opening line, but then don't refute anything I said. :roll: Why did you bother to post?
 

ocm

Well-known member
Sandhusker said:
agman said:
Sandhusker said:
The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable.

For a banker you seem to be very short on knowledge about business and the beef industry. There are some real success stories in the packing industry just as there are for innovative producers. Small to intermediate size companies that grow and prosper do exit despite your lack of knowledge of those situations.

Not very period is a period of profit for packers nor is it for the cattlemen. That does not prevent expansion even in bad times. That is when great management surfaces in business just as it does for some cattle producers. Are those producers who have the foresight to expand during rough times guilty of manipulation or can we agree that management skills differ by a vast degree at every level of business independent of size.

You insult me with your opening line, but then don't refute anything I said. :roll: Why did you bother to post?

There is another alternative. They could be printing money themselves. Other than that there are two and ONLY two sources of capital---profit and loans (including investors). At least that's what the experts have told me.

Do you suppose these financial reports included their foreign operations? I would be surprised if it did.
 

the chief

Well-known member
Hey Tam, this packer is doing better:

MINNEAPOLIS – Cargill today reported net earnings of $370 million for the 2006 third quarter ended Feb. 28, up from $366 million in the same period a year ago. Similar to the fiscal year’s first half, the company’s third quarter reflected solid operating results.

In the first nine months, Cargill’s net earnings were $1.37 billion, all of which came from continuing operations. Those results were up 7 percent from $1.27 billion a year ago, excluding the one-time, noncash net gain realized last year related to the formation of The Mosaic Company.

“Cargill delivered a solid third quarter, which kept the company’s nine-month results ahead of last year’s record earnings pace,” said Warren Staley, Cargill chairman and chief executive officer.

Three of Cargill’s five segments – risk management and financial, origination and processing, and food ingredients and applications, the latter led by the North American-based food ingredients businesses and the poultry businesses globally – delivered third-quarter earnings that exceeded the prior year’s results.

Now in its fourth quarter, Staley said Cargill was especially pleased to complete the purchase of Degussa’s food ingredients operations and welcome its people to the Cargill team. “Acquiring Degussa’s food ingredients operations was a cornerstone investment in our strategy to become a leading provider of specialty ingredients that help our food customers respond to consumers’ preferences for flavorful, nutritious and convenient food products.” The acquisition, Cargill’s second largest, was completed April 5.
 
A

Anonymous

Guest
Sandbag: "The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable."

Austin, could you site some examples of recent expansions in the packing industry to back this statement?

Of course you can't! You never back any of your statements, you just make them like the blamer you are.

Are you suggesting that Tyson is lying to their investors to make their company appear less profitable than it really is? Do you suppose that would attract investors?

I understand why you have so much time to play on the computer at your banking job when you should be selling loans. I wouldn't bank with someone with your degree of ignorance either.


Chief: "Cargill today reported net earnings of $370 million for the 2006 third quarter ended Feb."

What has Cargill (Excel) made off their beef plant profits in recent quarters? What Cargill makes as a company doesn't tell you a damn thing about what they made in their beef plants. Another "ILLUSION"!


OCM: "There is another alternative. They could be printing money themselves. Other than that there are two and ONLY two sources of capital---profit and loans (including investors). At least that's what the experts have told me."

Oh, so now they're into "counterfeit" money making too huh?

Hahaha!

The conspiracies never end.


Rod: "They're showing a 250 million loss, but how much of that is capital writeoffs, loan payments from previous expansion, and downpayment on new expansion? What I'd really like to see is their loss before debt reduction from expansion."

Another "ILLUSION".

Rod, prove that Tyson's reorted losses are from capital writeoffs, loan payments from previous expansion, and downpayment on new expansions???

In light of that, do you suppose they hide their capital writeoffs, loan payments from previous expansion, and downpayment on new expansions WHEN THEY SHOW PROFITS????

I'll bet there was even some "head nodders" (Porker) that agreed with such ridiculous logic.


The problem with a packer blamer is that they can never accept the truth or facts. They have to come up with some wild conspiracy theory to discredit the facts that do not support their bias.

The only reality these packer blamers will ever believe is if the packers closed their doors and there was no more market for cattle.

As I have been helping a friend sort pairs for the last week, I thought about what the biggest difference was between the philosophies of the blaming segment of our industry and the progressive side of this industry. I know for a fact that the difference in philosophies between the two sides is based on what factors each side believes affects cattle prices.

Just look at this post. Sandbag says packers are expanding despite showing losses but he can't back that statement. Chief creates the "illusion" that Excel is still profitable by presenting the financials on Cargill AS A FOOD COMPANY. OCM presents the possibility of Tyson producing their own money. Rod thinks they are hiding their profits behind capital writeoffs and expansion payments.

NOT ONE STITCH OF PROOF TO PROVE ANY OF IT!!!!

This post is so revealing.

Perhaps you packer blamers shoud take a vote and decide which "ILLUSION" you are going to support to explain off how Tyson is showing losses in their beef divisions.

What a bunch of fools!


~SH~
 

ocm

Well-known member
~SH~ said:
Sandbag: "The big packers continue to get bigger. They buy out competition and build new plants. They wouldn't/couldn't do that if beef packing wasn't profitable."

OCM: "There is another alternative. They could be printing money themselves. Other than that there are two and ONLY two sources of capital---profit and loans (including investors). At least that's what the experts have told me."

Oh, so now they're into "counterfeit" money making too huh?

Hahaha!

The conspiracies never end.

~SH~

By "refuting" my facetious comment on printing money you haved proved Sandhuskers point. Duh! That was my point!!!!
 

DiamondSCattleCo

Well-known member
~SH~ said:
Austin, could you site some examples of recent expansions in the packing industry to back this statement?

You don't pay much attention to the other posts here do you? They expanded, just last year, and the year before that, and the year before that. You're telling us that Tyson hasn't bought ANYTHING in the last 5 years? And from their own press releases, they had 600 million allocated to expansion this year.

~SH~ said:
Are you suggesting that Tyson is lying to their investors to make their company appear less profitable than it really is? Do you suppose that would attract investors?

You still haven't learned that they don't need to attract new investors, have you? They haven't issued ANY new share offerings, so no need to attract investors. The ONLY thing they have to worry about right now is their credit rating, and it hasn't been downgraded.

And I never once said they were lying to investors to make themselves appear less profitable, only that smart investors understand that during periods of expansion, the books will often show losses due to write-offs from those expansions. Thats why Tyson's credit rating hasn't been downgraded yet. When their credit rating gets downgraded, then they'll have to worry.

~SH~ said:
Rod, prove that Tyson's reorted losses are from capital writeoffs, loan payments from previous expansion, and downpayment on new expansions???

You already lost this arguement once SH, about a month ago, when I showed you Tyson's books they'd posted on their own website and pointed out the capital writeoffs and debt expenditures that came off their bottom line. It didn't equal the 250 million they show today as a loss, but then again, the books weren't reporting the time period we're discussing in this thread (nor have they posted them online yet, at least not since last month). You said they weren't reporting those things, even though, by law, they have to.

~SH~ said:
The problem with a packer blamer is that they can never accept the truth or facts. They have to come up with some wild conspiracy theory to discredit the facts that do not support their bias.

The problem with the packer backers on this website is that they have no business experience, no marketing experience, don't know how to read books, and have no idea how share prices affect a company, yet they comment on those very things.

~SH~ said:
Rod thinks they are hiding their profits behind capital writeoffs and expansion payments.

NOT ONE STITCH OF PROOF TO PROVE ANY OF IT!!!!

I never once said that their losses were entirely due to capital writeoffs and debt reduction. Not once. What I was wondering is how much of the loss was capital writeoffs and debt reduction, as I already proved, from Tyson's own books, that at least a portion of their 2004 losses were due to capital writeoffs and debt reduction.

Rod
 

ocm

Well-known member
Sandhusker said:
SH is back after a short haitus. That means there is an empty bed at the substance abuse clinic.

More likely there is now room at the anger management seminar. (but "caveat emptor" this one has a high rate of recidivism).

Testing....
 
A

Anonymous

Guest
Well surprise, surprise, surprise!

Sandbag offers no proof of recent BEEF PACKING expansions to back his statement that "big packers continue to get bigger".

Chief diverts having to seperate Cargill's beef packing profits from profits in their other entities.

OCM now claims sarcasm about his assertion that Tyson is "printing their own money".

Rod offers no proof that Tyson's reported losses in their beef division was due to capital writeoffs, loan payments from previous expansion, and down payments on new expansions WHICH must only be present when Tyson is showing losses???? LOL!

Then the blamers join hands in their little packer blaming support group with another "steers attempt" to discredit me. IMAGINE THAT????

Same-O, Same-O from the "factually defenseless" amongst us.

Perhaps it's time for another of "fedup the referee's" forum post evaluations to gather more support for the blamers.


Rod: "They expanded, just last year, and the year before that, and the year before that. You're telling us that Tyson hasn't bought ANYTHING in the last 5 years? And from their own press releases, they had 600 million allocated to expansion this year."

Tyson's expansions as a company doesn't have a damn thing to do with expansions in their beef packing sector. ANOTHER ILLUSION!


Rod: "You already lost this arguement once SH, about a month ago, when I showed you Tyson's books they'd posted on their own website and pointed out the capital writeoffs and debt expenditures that came off their bottom line. It didn't equal the 250 million they show today as a loss, but then again, the books weren't reporting the time period we're discussing in this thread (nor have they posted them online yet, at least not since last month). You said they weren't reporting those things, even though, by law, they have to."

Diversion!

AGAIN, BRING THE PROOF THAT TYSON'S RECENT LOSSES FROM THEIR BEEF PROCESSING PLANTS WERE FROM CAPITAL WRITE OFFS, LOAN PAYMENTS FROM PREVIOUS EXPANSION, AND DOWN PAYMENTS ON NEW EXPANSIONS.

Either you have the proof to back your assertion or you are joining Sandbag in creating "ILLUSIONS".



~SH~
 
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