Traceability/ROI

[wd40]

We've been told it's to be more competitive. So....
1) Into whose market will that traceability get us into? The American commodity market when we already send, what 80% of our beef?
2) Against whose (competition) better traceability systems are we going to edge out of their already successful marketing because our system is superior?
3) How big, how many dollars worth in exports might we realize if our system was to work?
Seems to me that the ROI is pretty miniscule! The cost spent so far (for no ROI) and the future cost/benefit is a very, very small return. Kinda like the gun registry. It’s all just a red herring because the tag companies have the ear and probably the pocket book of govt.

[grassfarmer]

The obvious one would be Europe. You likely won't get in there with any quantity of beef, and remain there , unless you have credible traceability and tracking. They have shut out a lot of South American beef imports on this basis.
How big a market is it? how much would we benefit? who knows. As long as we have the current packer monopoly the benefit to producers would likely be nil. That applies to everything else too though.

[per]

I have cattle going to Europe that would not be possible without being able to trace them back to my ranch. Europe is a huge market that demands traceability and is there for the taking. Every pound of beef we get off this continent helps the market here as well. Win win.

[Happytrails]

BINGO! Traceability can be used as a marketing tool! What a good idea! But to answer WD's and my question who in the hell decided to expand it into a mandatory industry regulation? The factors which make traceability a useful marketing tool are all compromised when it is made mandatory. Why not let the market set its value? HT

[perfecho]

Well, it was Cargill George that mandated our verification. And I am sure the "market" system lobbied to have it that way.....why wouldn't they....more market accessibility. But with only two major purchasers of our product, they don’t have to pay for the true value of it.
Although I am in favor of age/tracking verification....it could open the world to our beef.....it doesn’t really matter until we have true competition on our product. That may happen eventually, but many of us will not be around to benefit from it.

[wd40]

Now we are starting to take some sense. Our 2 "TWO" packers are only, I said only interested in their commodity markets. That's south of the 49th. ONLY. So does all of Canada need a tracability system to get into the EU market. If so then all Canada should pay for it. For the limited tonnage going to the
EN, OK maybe wwe'll provide, but it won't happen through the 2 players.
Agian the "return on investment", or "Cost/benefit" falls far, far short of paying for a traseability system as it points today.

[wd40]

IN short simple words - It's time someone started showing/demonstrating some real Return on the huge investment that's been made for 10 tears I mean years now.

[Happytrails]

Good points WD. Cost/benefit analysis seems to be a dying concept and especially regarding movement tracking. Even tho the sacred principles of traceability call for the benefits to exceed the costs there is no mention in them of a true cost/benefit study. HT

[grassfarmer]

Round and round in circles getting nowhere...Traceability is now said to be a waste of time as with only two packers there is no way any potential increase in returns from foreign markets accessed will trickle down. Where have you been since 03? remember back when Cam Ostercamp was promoting his BIG plan for producer owned slaughter capacity as the way to break the packer stranglehold - get control of our product back, trace it, BSE test it and export it off this continent.
Unfortunately as usual when push came to shove not enough producers could be bothered turning out to support the plan. So it has been an uphill struggle for groups like Canada Gold who are still following the same basic concept although they have not as yet been able to own the slaughter capacity.
Although traceability can be portrayed by some as a big expense and waste of time it could also have been the key to open the door to export markets off this continent bypassing the status quo packers. Unfortunately we did not unite as producers when the time was right.... so we keep on going around and around on the same old treadmill getting nowhere - will we ever learn?

[Happytrails]

Concerning bad ideas: going round and round getting no where is the best there is. Some of us feel that the cattle business has been pretty good to us and is a great way of life. As a young man I was told that if you were in cattle only for the money you would never be satisfied. However if you kept cattle for fun and satisfaction you would never have a bad day. Sounds kind of stupid but 35 years later I have to say it was good advice. If we allow the bureaucrats and regulators to take away the fun and leave only the drudge what kind of world is that? The market returns for the last few years leave lots to be desired but the market always corrects. There have been longer flat spots in the past. In those times we got more competitive, didn't try to reinvent the wheel, and were there when prices improved. Those who are'nt satisfied with the status quo in the cattle business should limit their reforms to themselves and leave the rest of us alone. HT

[grassfarmer]

When were the longer flat spots in the past HT? When you say "we got more competitive" do you mean on an individual basis ie competing harder with your neighbors or do you mean as an "industry" we got more competitive? If it was as an industry how did "it" become more competitive?

[Happytrails]

I hesitate to reply to 3 rhetorical questions but, hoping that God has a soft spot for fools, here goes.
I don't have any data on prolonged bad cattle markets in the past but have heard that the 20's were'nt good and the thirties were worse.
In regard to being competitive I don't understand the difference between industry and individual. Isn't the industry simply the sum of us individuals? I believe that competition makes the breed stronger. To suggest otherwise puts one in the company of Marx, Lenin, etc IMHO.
How did the industry become more competitive? In a word: better management. In case you haven't noticed, North America has been blessed with enough good farm land to grow a lot more food than we need. So production has to be limited; either by market manipulation or the hard rules of economics (ie. low cost producers outlast higher cost ones). Studies have shown that different producers have widely differing costs of production. That tells me there is still room for improvement in industry competitiveness. It isn't easy but matching your cash outflow to your cash inflow is worth it. HT

[smcgrath76]

HT - I don't think cost competitiveness
or larger operations, etc. have limited
production. I do agree that there is
lots of room for improvement in any
operation (my own included). The issue
of pure capitalism vs. market
manipulation (for lack of a better term)
is a non starter, since we are already
operating with a significant amount of
market manipulation. I see this as a
risk factor, but I can appreciate how
others see it as an opportunity,
godsend, PITA, and everything else along
the spectrum.
I don't think our industry is healthy
and I don't think that the primary
producer is having much say in the "beef
business". I also tend to believe that
is our own fault, but that it is a big
hurdle to change since we have been
going down the low cost road for so
long, rather than the value added one.

[burnt]

smcgrath76 - It is precisely as you said. My youngest son and I had this discussion at the lunch table today. He works for a large dairy farm where efficiency is king.

I gave my opinion that efficiency is ultimately the consumer's benefit, not the producer's.

After initially disagreeing, he is now smoking his brain over that one and I know that his boss, being very much a thinking type, will probably develop a few new synapses trying to puzzle that one out.

We cannot reach profitability by focusing strictly on efficiency. And that is what most of agriculture has done, as you said, for so long . . .

We have forgotten how to derive profit from greater value, if we ever knew how.

Do you have any thoughts on how to derive greater value? Is it something that can be done as an industry or must it be an individual achievement?

[grassfarmer]

Don't worry HT I wasn't trying to trip you up with my questions. I was wondering if you had experienced the extended periods of poor cattle markets you spoke of firsthand but I see it was before your time.

I think we need to ponder more on the difference between the individual and "the industry". The common speak used in the media calls us the "cattle industry" CCA talks about increasing market access being "good for the industry" which would seem to imply that it helps us as individuals within that industry.
I think there are two industries(or business sectors) - the cattle industry and the beef industry. They are very different sectors with the cattle industry comprising cow/calf, backgrounders, feedlots and purebred cattle owners. There are thousands of us all competing against each other for cattle, land, feed, the highest market prices. This is a very competitive business but there are still undoubtedly efficiency gains and management improvements to be had.

The beef sector on the other hand comprises the packers, 2 with close to 90% of national slaughter capacity between them. With that kind of monopoly there is very little competition, they don't need to compete. They don't even need to be all that efficient - what's the risk when there is no-one likely to take them over? A similar set of rules applies to the further processing and retailing sectors - few players, very limited competition.

I think this indicates how we do not in fact have one "industry" we have two very different industries with totally different aims. You are right competition is good - it's healthy, that is why it is intolerable to have monopolies like Nilsson/XL. Extreme capitalism in this form is very close in result to the communist system.

Here is a question for you - why should we, the producer, be the only one that has to be constantly more competitive to survive? By extension shouldn't the packer or retailer become more competitive? if they were they should be able to pay more for their product(to the cattle producer) and sell the beef on for less money to the retailer or consumer and still be better off due to efficiency gains. That is what we are constantly expected to do.
Obviously this is not the case - when you have monopolies they always pay less for their raw product, charge more for their finished product and pocket the difference.
With the above in mind I firmly believe there can be no solution for the "industry" that will be beneficial to cattle producers. Hence the importance of producers seeking to control their product right through to consumer. Every time I hear a cattle organization official stand up and say this or that will be good for "the industry" I know they are working against producer interests. They cannot represent two fundamentally opposite interests. The sooner we realize this the better.