ABP Magazine

[cowman]

I often wonder though if the problem is the Cargills of the world making massive profits...or is it the fact that beef(or all food for that matter) has not kept up with inflation?
Before you roast me consider this: What did you get for a calf 15 years ago? What do you get today? What did a steak cost..then and today?
Heres my own guess. In 1992(use that year because I remember it clearly) I sold calves in that $1.25 range, in 2005...about the same! Now I think a steak was around $5 at Safeway...maybe up to $7 now? My numbers might not be real accurate here as I don't do much shopping!
How much has inflation gone up in those ensuing 13 years? If we average it at 2.5% thats 32.5%? That means that calf should be worth $1.66...just to keep up to inflation? I guess the steak has mostly kept up?
The fact is everything you put into raising that calf has kept up with inflation(or maybe better) so defacto you are really not getting enough for that calf? We all know what a new pickup costs, how much to fill the fuel tank, heat the house, put the lights on! I would suggest most of these costs have excceeded inflation? In some cases by a great deal!
I would assume Cargills/Safeways costs to process and market that beef have probably kept up with inflation?
Bottom line is the North American consumer is paying less for food today(adjusted for inflation) that they were thirteen years ago. I believe the portion of income spent on food is below the 10% mark? It used to be close to 25%? I think in Europe the portion is over 30%?
It has always been in a governments interest to keep food prices low. Keeps the majority happy, lets the manufacturers pay low wages, puts money in peoples pockets to buy industries goods...you know the essentials like an RV, luxury car, speed boat, motorcycle, exotic vacation, etc.!
Whether acknowledged or not there is a "cheap food policy"? If hamburger climbed to $4/lb. just watch the cheap beef flood in! Happens every time. And this is not necessarily anything to do with free market competition...often it is subsidized dumping of a foreign product...like the Irish beef scandal of the seventies or the subsidized corn of the last few years?
The government is out to protect their interests...the urban voter, not the tiny minority of food producers.

[whiteface]

"Before anyone roasts you" cowman. It's exactly your economic thinking that gets me to put a post on here once in a while (although I'm sure it brings out some others too but for different reasons). I don't need to regurgetate everything you just said, suffice it to say I agree one thousand percent that the people of this country are spending more of thier money on toys, houses, and the energy to run their toys and heat and light their houses than on their food. I stay in touch with my tenants all the time on this issue and beyond any doubt, the ones that do better, pay a little more for their food ( and alot better toys), the ones that don't are eating maccaroni and paying as much as they can afford on their trucks and SUV's. I didn't make the rules, I just listen to what they tell me. Food is a loooong way down the list of people other than cow-calf and grain guys. Mind you, I don't have millions of tenants so maybe my census is not accurate, however my guess is that with the mix of people and the different cities they're in, and the comments being quite similar, I would say I have a fairly good reading on this type of need. The government is doing simply what the majority asks for. Sorry about our luck. Maybe y'all should have oil and gas jobs, then will no longer be this "over supply" of cattle. I do still give credit to the drive that has some of you literally banging your heads against the wall, but at some point if you stop banging, your head will stop hurting. I bang my head too alot of days, just for things that I feel I can actually change. Have a good day all, enjoy the rain and sunshine together, great calf and crop growing weather!

[grassfarmer]

Well I would disagree with that thread 1000% although I don't think there is such a percentage, Whiteface.
It's a one dimensional look at costs, inflation and food prices with a view to backing the packers once again. The price consumers are paying in the store for beef is high enough to justify a very good return to beef producers if there were a more equitable distribution of the profits. This is the problem. Equally Cowman could post the figures that show the producers return for the grain in a loaf of bread or the ranchers return for the steak now compared to 1992. These most clearly show that the big change has been in the take the middleman gets due to processor concentration over the years. Blaming the consumer or the Government for insisting on cheap food is a smoke screen.

[whiteface]

Fair enough grassfarmer, you're entitled to your opinion and while I may disagree with anyone wholeheartedly from time to time, I do appreciate the opinions of everyone... it is part of my job to know where my buyers are comeing from. Hope you're all enjoying this perfect weather, have a good one all!

[cswilson]

Heck my kids like macoroni lol. By the way Meadow Lake will be crowned Hockeyville-(my fearless prediction) probably due to my boys KD addiction lol.

[whiteface]

GOOOOOOOOO OILERS!!!!!!!

[coppertop]

GOOD POST WHITEFACE !!!!! Won't it be great to see them in the Stanley Cup playoffs !!!

Love em' or hate em' they have been the cinderella team so far, and the excitement in Edmonton is unreal. Oilers jerseys and flags everywhere. It takes a brave soul to venture anywhere near Northlands when there is a playoff game, the traffic is unreal. Sure generating a lot into the economy of the city thats for sure.

[PureCountry]

CSWilson, isn't Cold Lake still in the running for the Hockeyville Crown? I didn't know Meadow Lake was....either one would be better than a town from down East getting it!

[cowman]

Yea grassfarmer, I only wrote it because I love the packers and big corporations and want to do everything in my power to support them! LOL
The fact is I'm getting the same price for that calf today as I was in 1992? And if you believe kpb and sean, I'll be getting a hell of a lot less for him in the next couple of years! Hmmm...that must make me a total whiner to point that out? It must be Cargills fault, right? Maybe I can do some voodoo economics to convince myself this is the direction we should be going?

[rkaiser]

The point is cowman - your 1992 prices are the same, but Cargill continues to expand and control more every day. The rules let it be that way cowman, and if we sit back and don't challenge the rules, we can watch this happen further.

No it is not Cargill's fault - it is the rules and no one is going to tell me that Cargill has nothing to do with setting those rules.

Le tthem show us the true captilalist that they claim to be and leave the producer funded ABPCCA COMPLETELY ALONE. When that day comes, I will run and within years you would see a hell of a lot more wise minds take that thing over. That is the only reason that I (and even you cowman) respect Rcalf. They may have some things screwed up, but they certainly understand that this industry is not about one entitiy. It's about Cattle, and it's about beef. Unless you consider the movement toward packers owning and controlling the cattle as well.

[grassfarmer]

Cowman,
The changes that have happened in the hog sector are often highlighted as the way we are heading in the beef sector. Here are some figures that highlight what has happened in the hog sector between 1988 and 2002 and prove to me why we need to fight any move to go down a similar path.

1988 - 33,760 hog farmers
2002 - 11,565 hog farmers

1988 - pork chops grocery price $6.88/ kg
2002 - pork chops grocery price $9.54/ kg

1988 - farmgate hog price $1.44/kg
2002 - farmgate hog price $1.46/kg

1988 - hog plant starting wage $9.38/hour
2002 - hog plant starting wage $9.65/hour

So who has prospered most in the hog production chain in this time period? the hog farmer? the hog plant worker? the consumer buying pork? - It's quite clear that the processor/retailer sectors are the ones that have done exceptionally well in this time period. This is the reality of the concentration of the agri businesses that handle farmers production once it leaves the farm. Clear proof that this "free trade" does not work in the interests of primary producers.

[PureCountry]

Great post GF.

[kpb]

grassfarmer, I quite often cite what happened in the hog industry not because I want us to go that route but because I see it looming on the horizon.

The hog industry used to be set up quite a bit like our industry--lots of independent operations. Almost overnight, it seems to me, it pretty much changed to a few huge operations and lots of contract feeders. You can see that in your numbers. With a huge operation--like a huge feedlot--you don't have to make big margin on every animal, you just need to have a lot of animals.

If things don't change I see this as inevitable in our business. What I'm trying to get my head around--and what I think about a lot--is how to stop this from happening. Consider that the interests in favor of this taking place are entrenched and powerful--the packing industry has most of the slaughter capacity and won't give it up easily--they have connections with the biggest feedlots which have connections with the biggest cow-calf guys. All of them produce what is dictated by the big retailers. All of them control the producer groups that are listened to by the government when the politicians make decisions. And all of them have lots of money.

rkaiser, I agree with your sentiments but I'm afraid there is no hope that the Cargills and Tysons of this world will go back to a pure system of capitalism. They thrive in an environment of monopolies--they don't want competition and will stamp out any hint of it.

Lastly I have read that Wal-Mart is going to start stocking organic food. Does anyone really think that organic meat, stocked by Wal-Mart, is far behind? And I can tell you that that meat will not come from the small producer--it will come from the big feedlots-contracted-to-the-packer and from ranches-contracted-to-the-feedlot with specific breeding and feeding contracts. And the worst part is that the general public will buy their organic beef from Wal-Mart and not from my neighbour just like they buy their hammer there instead of in town.


kpb

[grassfarmer]

kpb, I agree with you on the magnitude of the threat family farms are facing. That is why I believe we have to be involved politically (and that includes the ABP) rather than join the "well it's going to happen anyway" camp or "cost cutting will allow me to survive" camp. Ultimately I don't think either of these will succeed.
On the other hand look at who is hurt by the corporate agri-businesses monopolies - primary producers,
truckers and workers in the industry (including packing plant staff as shown above)and most of all consumers. The few nameless people that get rich of all our backs are very, very few relatively. I think educating all the people who are hurt by these actions is the way ahead. To do so we must fight, must protest and must educate consumers. CSwilson was saying that he never made sales by running down competitors, well I gain quite a lot of customers by pointing out to the consumers of our grassfed beef what is really going on in our industry. The fallacy that there is a cheap food policy always interests them when they are informed that although something might look cheap on the store shelf by the time they have paid their taxes to support the corporate processors expansion plans and paid their taxes again to fund bail out packages for hard up farmers/ranchers their food isn't so cheap. The "fair trade coffee" model is one most consumers understand - we just need them to understand it is also applicable to beef among other things.

[rkaiser]

Great post with the hog numbers grassfarmer.

I'll add a few words penned by the president of BIG C in his newest article which will hit store shelves soon (Probably be a pullout in the next ABP magazine LOL)

Cam writes -"In Behind the Veil of Science I asked a thinly veiled question as to whether CCA directors strings were being pulled and ellicited a very indignant response from one of them. That same one is now on record as having said, in a discussion pertaining to BSE testing to create export markets, I quote "we live beside the most lucrative market in the world, why would we do anything to annoy that market?" Again I ask, lucrative to whom? We have extensive data and statistics, most of it in CCA's own canfax archives, proving that while we ramped up beef production by 60% in about ten years, family farm income decreased at often identical rates."