TRADE

[cakadu]

There have been some really good points made on both sides of the argument in terms of whether to fly below the radar or go all out.

I would have to agree with grassfarmer that flying below the radar is more promising because the bigger plants are geared to deal with commodity beef only and are not able to switch gears fast enough to allow for changing consumer demands or niche markets.

I wonder if the demise of the domestic plants was in part due to the fact that the leadership that existed at that time was more interested in bringing in the multi-nationals and did what they could to give them preferential treatment here.
I wonder what would have happened had the leadership done what they could to protect the domestic plants? Problem is that you can't go back and change anything and coulda, woulda, shoulda gets you no where.

There are a couple of examples in the US in the pork industry of smaller plants that are very successful because they are flying under the radar of the big companies and are able to deliver products that the Smithfield Foods of the world are unable to deliver.

As an aside, what is absolutely mind-boggling is that in southern Alberta, something like 60 to 80% of what is manufactured down there is owned by US companies i.e. Lamb Weston, Frito Lay/Hostess and of course the meat packing plants.

[cowman]

Cargill/IBP are always getting ripped on here because of how they have used the border for their benifit. Would anyone feel better if it was Canada Packers, Or Burns or Intercon doing the screwing? In other words if they weren't an American company but a good old true blue Canadian one?
The above mentioned Canadian companys were no angels! They used all the dirty tricks that Cargill/IBP do! I believe if you check out the head of the American Meat Institute(Bill Buckner) you will find out he is a Canadian? Manager of Red Deer Canada Packers, before he took over at Cargill! A pretty good guy and a real good hockey player!
Why do we get so upset that Americans own most of our agricultural processing? They own just about everything up here anyway, from our oil companies, to our retail stores, even our restaurant chains!
It really is time to start to realize we are one country and start to work at getting rid of that border?

[farmers_son]

Kgb: If I may reply...You said "the consumer will buy the cheapest beef of the best quality he can afford regardless of how it is branded or presented". Obviously that is a misrepresentation. If branding offered no advantages in terms of market demand, whether retail price or volume, then no one would do it. Cargill and Tyson are investing in brands because that is where the profit is. If we wish to capture some of that profit we need to do the same because it is folly to believe the packers are going to pass on any of that extra profit to producers.

I certainly agree with you when you say the people in the packing industry were not naive or dumb. Canada Packers did not disappear. See history of Canada Packers at http://www.mapleleaf.com/aboutus/OurHistory.aspx
Canada Packers amalgamated with Maple Leaf and now focuses on branded food products under the divisions Maple Leaf Consumer Foods, Maple Leaf Pork, Maple Leaf Poultry, Maple Leaf Foods International. As well the Maple Leaf Group has integrated down through its divisions Shurgain, Landmark Feeds, Elite Swine and Rothsay Rendering.

One has only to look at the Alberta Beef promotions with the RancHers to see the power of a brand that producers could develop. Cargill and Tyson cannot even touch that kind of image.

Your comments on cheaper have no basis in fact. There is no relation between the retail price of beef and the producer price. Just look at the price of beef in the stores and stop by the auction. No relation.

You mention government support. I think it goes without saying that government support is needed. And I am not talking handouts or government dollars. I am talking about incentives for producers to invest in value added possibly through write-offs or tax deductions on value added investment. Something along the lines of a LSVCC that are available in some provinces only in Alberta tailored for agriculture. See lines 413 and 414 of your tax return. A producers investment in a value added cooperative or corporation should qualify for contribution to their RRSP if it doesn’t already. What about supplementary permits? There is room for the federal government to insist that importers really do have to go to local sources of cow beef, for instance a producer owned packing plant, before importing non-NAFTA beef into this country. There are countless other ways that government could create an environment that was supportive of a producer value added venture. Bottom line the government needs to establish policies that genuinely encourage opportunities for producers to integrate further up the value chain.

Of course there is freedom of choice. If you see your future is selling live cattle to Cargill and Tyson then more power to you. I for one know believe that is a certain path to an end that will see these corporations totally dominating the producer who will be little more than a employee for the mulitnationals. Or you can invest in your future and take a chance. Maybe it won’t work but it is for darn certain that none of us would loose any more than the packers have stolen from us since May 20. But I say there is a reasonable opportunity for success, it is worth a go. The choice is up to each of us.

[cakadu]

Cowman, isn't XL doing just that right now? Yet, it seems to be okay because they are just following the lead of the other 2. I have yet to figure that one out.

[nerves]

When I read these threads it is always the same idea build a plant the bigger the better. What if some ranchers got together and set up a meat shop in an urban center. Take your cattle to your local slaughter plant for slaughter then take the carcass to your meat shop for ageing and processing. The big expence is in the processing right now it can cost up to 500 bucks for a basic cut and wrap, and your kill fee is a small percentage of that. When people invest in large plants you are putting your trust in the hands of people that are investers. If thease plants go broke how much will you get back. I believe there is more value if you own a piece of the actual business not just shares. We still have alot of offshore beef coming into this country this would be the best solution to shrink the tonnage down. What do the rest of you think?

[kpb]

farmers_son, I'm sorry I was not clearer in my thread--I did not wish to indicate that there is any relation between the retail price of beef and the price the producer receives--this is obviously not true. What I was trying to say is that people-both consumers and producers-will do what is in their perceived best interests. The customer will buy the cheapest, best beef he can get regardless of who packages it or where it comes from. And the producer will also act solely in his best interest--he will sell his animal to the highest bidder, regardless of whether that bidder is Cargill or a producer-owned plant. There is no link between these two processes but they both reflect the nature of human beings and I've seen nothing that disputes this.
I think it is typical of us to be discussing how each of our new plants can find a niche market--sure hope there's a lot of niches out there!! Wouldn't it make more sense for us to get our governments on side and build big plants that would be able to compete head-to-head against the multi's instead of scrambling after the crumbs that they leave behind? Do we really want to own just a little bit of our packing industry and leave the big part to the multi's? Does that not leave us vulnerable, for the most part, forever?
I'm not interested in having a domestic industry that is simply a bit player in our own country. I want producers to own most of the slaughter capacity in Canada--that is the only way we can assure ourselves of a good future.

[greybeard]

Great thread. I didn’t open it with Stout’s name on it. I think everybody but stout make good points. Farmer’s son, I am always amazed at the depth of your posts.
Nerves makes some good points. We often look at to big of a problem. We have to save ourselves, not the whole industry. The main point here is we have to get closer to the consumer in order to survive. We need a bigger share of the final dollar than the multi-nationals will give us. I agree with STOUT on that one. If they think South America is a safe place to invest and they can land it in cheaper from there, it will happen.
On another topic, Natural Valley out of Wosley has product on the market. A friend of mine brought some in and said it sold out very quickly. He was seemed pleased with himself, as he recognized it as a chance to support local producers. I believe they are having it custom-killed and can’t keep up with demand. They have a niche market plan that makes sense to me, but are sold out on the under 2 year old part of it

[grassfarmer]

Unfortunately, due largely to producer apathy, we have failed to raise enough of an issue that Government has been forced to take action either to control the two existing packers or to create alternatives to them. So we are trying for small plants - not by choice.

farmers_son, "One has only to look at the Alberta Beef promotions with the RancHers to see the power of a brand that producers could develop. Cargill and Tyson cannot even touch that kind of image." I don't quite understand that statement. It is a great image no doubt and one that should bring returns for Alberta producers - unfortunately Cargill and Tyson are currently the sole beneficiaries of this advertising with us producers paying the bill. How do primary producers reclaim the right to use this kind of image to our benefit not theirs?

[nerves]

So Kpb I see what you are saying but right now we have an oversupply of cattle and no were put them what happens ten years down the road. How hard is it going to be to keep a big plant running at capacity. Our ranching community is elderly at best 70 percent will retire in 15 years. Were are the calves going to come from to keep the feedlots full? My feeling is that a quick fix would be great but were do you go from there?

[cowman]

nerves: You have actually hit the nail on the head! The various governments are not doing much...and probably with good reason? The fact is with the new expansion plans of Cargill/IBP we really will have enough capacity to get all the fats killed...and they do seem to be able to market it?
It is true we need some cow capacity, at least in the short term, and somehow we need to get investment for that? Let's face it: Klein could have easily put up the money to build a cow plant but has chosen not to. Instead we have all these various schemes that are very "high risk" of ever making it. If there was any money to be made some enterprizing little soul would have built one already? Do you ever wonder how come we have abbatoires disappearing rather than being built?