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May 27, 2006 | 14:36
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Do you ever wonder what am I doing here? Why do I have to go through all this garbage, called life?
This forum is literally dead. ....although it shouldn't be! This should be the most active forum on the board!
Why are we here? Good question? Don't know if I have the answers or not!
For myself: I believe I am here for one reason: to educate myself! To find out what I screwed up, in my "other life", that I need to change, modify, completely trash all the things I bought into?
There has to be more than this, I'm born, I live my life as I see fit, I die? What is the purpose? Or is there no purpose?
Personally I have a purpose! I believe I am probably here because I didn't get it right somewhere else? Christianity works for me, although it might not be the Christianity of conventional thinking? In the big picture...it only has to work for work for me?
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May 27, 2006 | 17:59
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That is an interesting concept kpb and it is great to see someone actually coming up with possible solutions. Your plan is based on sound principles in that it would effectively be a "supply management" type scenario for the domestic market with the excess sold to packers to hit the world market at the "world" price. I would certainly back the concept - as you say,there will be details that you haven't thought of but rather than point out what won't work as usually happens lets focus on the positive.
A few thoughts occur to me:
1. would the new "marketing venture" be aiming to make money or just be run to facilitate producers getting the base price? ie would there be an expectation of a shareholder return as well as a guaranteed beef price?
2. How much of an overlap is there between cattle slaughtered here for the domestic market and parts exported? ie would it be workable for Canadians to eat all the ground that comes off the number of cattle that they would need slaughtered for steaks etc?
3. Would this involve individual ranchers retaining ownership on the cattle through to slaughter or would feedlots be allowed to participate in the scheme by buying feeder cattle from a ranchers allocation, fattening them and then selling them for the guaranteed market price?
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May 27, 2006 | 18:52
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grassfarmer, thanks for your comments. Man, those are good questions--two that hadn't crossed my mind and I sure would like to hear what you think.
Firstly, I envisioned a sort of Co-Op approach where ranchers would be guaranteed a return per animal that would be profitable to them and then would get a patronage-type dividend at year's end. But maybe it would be better to structure the company so it pays regular dividends? Or maybe so that the set price accounted for all returns from the calf to slaughter approach.
Secondly, I don't know the answer to this one. And now you've got me thinking about what to do with excess ground, for example. What happens now on the North American market? Does it get exported? Or does it all sort of balance out...I wish farmers_son was nearby--he always had the answers to these types of questions,.
thirdly, I assumed that the rancher would own everything right to the end and the company would own feedlots and slaughterhouses. But how about a privately-owned feedlot--maybe they could contract with the company to finish the company's calves?
grassfarmer, other than putting the idea on here I don't feel like I have ownership of it. You've got great ideas on this subject--I would like to hear what you think about those three questions and others that might have crossed your mind.
If we get lots of input on this, I'll write it all up and send it to the politicians and various interest groups.
kpb
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May 27, 2006 | 20:54
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Good to see somebody thinking about solutions. I think that one big problem with this plan would be NAFTA. I can't see Canada excluding the Americans from our domestic market and then peddling our excess into their market. The plan would be hard to make NAFTA friendly in my opinion.
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May 28, 2006 | 06:50
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There is probably something to your idea! It could work...if there was a strong political will to get it done?
It would take a lot of arm twisting at the international level? Some countries want us to get rid of our domestic supply managed dairy and poultry already? I doubt they would be all that keen if we were basically proposing to limit our own domestic markets?
I would think Australia and New Zealand wouldn't be very happy with a set up like this in Canada?
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May 28, 2006 | 11:37
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kpb, The three questions I threw out to you were for consideration - I don't really have answers to them. Perhaps some of the people behind the BIG-C plan would have a better grasp of how to structure it with regard to the first question.
The second is one that I don't know enough about, again there are those that know in the industry already. A further consideration to this would be non-fed animals - would the existing packers be allowed to kill them and feed them into the domestic kill or would the rancher owned set up also allocate cull cow quota to producers?
The third question is probably not a biggie either way but many ranchers would likely feel excluded if they had to retain ownership to qualify. Again if the finished price was guaranteed maybe that would lesson their risk and they would consider retaining ownership.
Of course the posts by topper and Cowman throw in some realism too - to make this happen would be no easy task. It would require producers to agree to it and then the Cdn government to agree to it enough to break just about every trading agreement they have. I'm guessing it would set a precedent among countries that export a lot of their production. Ultimately though Canada should have the right to protect and advance the interests of it's ag producers and consumers. Whether they would ever have enough backbone to stand up to the corporations that would inevitably object to this is another matter.
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May 28, 2006 | 11:39
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Cowman,
What do you mean that "Some countries want us to get rid of our domestic supply managed dairy and poultry already?" - hell, we as beef producers want to get rid of supply management in the dairy sector.... it says so in the ABP manifesto and they are speaking for us unless we tell them otherwise. Why Alberta beef producers would wish to bring this misfortune on their dairy farmer neighbours is beyond me as it's clear that any "freeing up" of world trade restrictions on our beef exports if we gave up supply management would not help beef producers.
As Wayne Easter said on the last round of the WTO negotiations "At the end of the day, even if we get the best solution currently on the table, economic returns to producers will hardly change an iota because what the WTO is doing is establishing fences around countries, but not establishing any rules around the traders that trade those products between countries"
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May 28, 2006 | 22:37
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...if this would help to get away from the capitive supplies...i am all for it...i also like the voluntary aspect of your plan but those that did not join the program and stayed in the free market would be ineligible for the government support...there has to be a way to give producers an incentive to join without the pressure of the market setting up an artifical price to deter application of the plant ...also what would be the role of the auction marts ...order buyers ...the backgrounding and finishing... glad you made a post like this kpb...grassfarmer has brought up alot of reasons for the cowcalf man to want to change the direction our industry is going by the stats he released...
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May 28, 2006 | 23:22
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cowman, it is a sad day when anyone thinks that life is garbage. Life is what we make it, and we will be tested time and time again, our faith will be tested and we will endure pain and suffering but each time we will become stronger, and if we are here for the right purpose we will make the world better for others .
All I need to do is look around my world and realize that I am blessed. Blessed with health, a family that has things together, and I have my own little piece of paradise, not fancy but its mine.
I don't need a man made building so I can worship the creator I believe in. I can give thanks every day when I walk around the pastures, look at the critters, have the trust and companionship of a faithful dog, all these things are precious to me...and they are my heaven on earth.
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May 29, 2006 | 09:37
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I think this may be a reasonable starting point. I have had similar thoughts in the past about the Wheat Board. I believe the optional aspect is important, but also, I think you need to build in restrictions that say if you are in, you are in and if you are out you are out for at least X number of years.
Producers will always tend to go to the highest market. I just read an interesting article the other day about how we have built excess capacity into the Canadian slaughter through BSE expansions (admittedly mostly Cargill and IBP). A couple of thoughts...
1. It would be tough to control supply/marketings without somehow securing a higher price.
2. Retailers/consumers would fight back over higher prices (would require a major "Got Beef" campaign)
3. NAFTA/WTO - enough said
4. Any effort would have to make a jump to a scale large enough to supply major retailers/wholesalers right out of the gate.
I like the concept. I still think farmers need to enter the food business and that current ag policy does not enable this. The biggest success has been with the complete lack of involvement by government with small farmgate operations.
I thought/think that the potential for regional plants exists, with a larger national market coordination shell that could target larger markets, and coordinate product delivery. One challenge to this is that provincially inspected plants cannot sell meat out of the province, thus the need for CFIA certification and thus the need for EXTREME PATIENCE.
The organizations designed to protect us and our industry often do so by complete imobilization of initiative. If we can't move it must be safe, until we realize we are in the middle of the train track.
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May 29, 2006 | 10:34
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smcgrath76, I don't follow you #2 point "Retailers/consumers would fight back over higher prices (would require a major "Got Beef" campaign"
I do not envisage consumers paying higher prices than they do now - the middleman's share of profits would be cut by this plan giving more to the primary producer while maintaining the consumer beef price. I think it would be essential in fact to have consumers "on side" with us on this plan if it were to succeed.
Retailers are in a different boat - they might find their margins cut although as I understand it from the post BSE price slump on live cattle they have very little negotiating power with the current packers and hence probably didn't have the outrageous profit margins the packers had at that time.
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May 29, 2006 | 11:55
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I honestly do not believe that retailers would cut their take. I think that the potential may be for producers to act as their own middlemen.
If you believe the retailer, beef is often used as a loss leader/feature to pull costomers into the grocery store.
I think this is one area that requires extreme caution as consumers are ready, willing and able to make rapid protein substitution decisions. Chicken vs. pork vs. soybeans.
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May 30, 2006 | 10:31
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good point on protein substituation....if such an operation was not operating on an extremely efficient basis domestic demand from consumers for beef may drop as protein can be substituted by consumers with alternative domestic or imported protein sources...with a captive market and distrbution system and no competitive forces driving efficency to supply the domestic demand beef consumption would likley decline unless all other protein sources were also covered under such a planned system.....frankly i cannot see that happening, nor do I beleive it should in a country with an ag industry that is ultimately dependent on export of food for survival and growth.
also....while global trading practices are not always fair and equitable hypocrisy on trade policy does not give Canada or other developed countries (EU/US) much credibility....closing our borders to imported beef products and then expecting to ship over half of our production to foreign markets???
the role of goverment in such industries should be to regulate effective and fair competition to ensure that efficency and productivity are rewarded to the indivuduals and investors ..ie. ranchers and farmers, not just the packers and other people in the value chain of the beef business or the food business in total for that matter .....
that being said, thinking outside of the box, as this thread is, is a healthy exercise and and the debate is good for our industry...IMHO
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May 30, 2006 | 12:27
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Northfarmer, I agree with the point that Canadian consumers must not be forced into alternate protein sources as a result of higher priced beef.
However the quote you make that "with a captive market and distriution system and no competitive forces driving efficency to supply the domestic demand beef consumption would likley decline" is rather missing the point about "competitive forces and efficiency" The packer /retailer part of the production chain is concentrated in so few hands that they do not have to be very efficient at the moment - they can use their market power to force ever lower prices on primary producers rather than make their own operations more efficient. If you look at primary agricultural producers over the last 50 years they are by far the most efficient sector of the whole north American economy, who else could produce goods for the same price they did 20 years ago given the huge price increases on the input side?
I believe an example of competition not driving efficiency and leading to lower prices for consumers is seen in the North American milk market. Canada with it's supply managed dairy sector and perceived lack of competition generally has lower retail milk prices than they find in the US where the open market economy is making it very tough for dairy producers to survive.
I very much agree with your latter comment that the role of Government should be to regulate effective and fair competition - this would be my first choice solution rather than producer owned packing plants etc - unfortunately the Government shows no inclination to do so.
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May 30, 2006 | 12:45
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The day I trust government to regulate things fairly for the good of the grassroots producer, will be one day after the government gives any indication that they give a flying @#&$^#!!!! ABOUT the producer.
I agree with alot of the points you've made here gentlemen, but the thought of government regulating it makes me want to go right back to selling beef off the farm, or out of the back of the truck, and selling milk and butter for cash under the table. Less government involvement in a producer-owned packing plant would mean more producer benefits, in my opinion.
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May 31, 2006 | 07:19
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Government involvement scares the crap out of me to be honest. As for dairies wouldn't alot of them be able to survive in a free market without having to pay out the nose for quota. Quota debt in feathers and milk is extra debt to service most producers could sure live without. I still think a loosening of the regs for provincial abbatoirs and small producer owned meat shops from town to town would be more viable. We have two family run shops in our town of 5,000 and they seem to compete with the two huge grocery stores we have also. Maybe something like a Tim Horton's concept-where the consumer would know that if he walked through the doors of 'Rancher's Pride' or whatever they were dealing more directly with the producer. Something like that I could see investing in. On a cow carcass-Cargill is the bear and the producer is the coyote-if we try and take the whole deal we'll probably get ate-but if we nibble away at the edges we can probably get full and the bear won't notice-in other words don't try and outbig them with government money-instead fly under their radar and chip away.
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May 31, 2006 | 09:46
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Not to pick a fight but, we wouldn't be in any control then would we? Just slinking around for scraps and crumbs - as coyotes do.
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May 31, 2006 | 09:47
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I should clarify my points further....when I suggested govt's role should be top regulate I am speaking to the issues around concentration of ownership and competition specifically......ie. they stopped bank mergers but not packer mergers, and there is more concentrtion in the packer industry than banking ...I am not supporting supply management and direct government control of supply and distribution.....I beleive a lack of effective competition and direct producer involvemnt in the value chains beyond the typical farmgate is why farmers returns are declining....getting farmers involved in the vlaue chains beyond the farm gate is key to returns improving....producer owned packing and retail sales could and will be viable but we then enter the realm where producers themselves may lack both capital and expertise.....coopetaive ownership structures have not proven to be the most efficient though can work....direct producer ownership is likley better if it can be done...IMHO
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May 31, 2006 | 10:06
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I appreciate the input on this post. I know the idea isn't perfect but it might be a starting point for more discussion?
A couple of things--I think PureCountry has it right when he says we don't want to be the coyote--the whole point of this exercise is not to get the scraps of our labour but the whole darn thing. We can have the scraps now--let's try to get as much profit as we can.
NorthCountry and others--I agree that government regulations are not ideal and some will not accept government involvement in our industry. But note that producers are not willing to invest in packing plants on their own--that has been proven by the lack of money put into plants during BSE and afterwards. These plants were crying for money and the producer did not step forward.
Now the plan I have proposed is voluntary--those who cannot stomach the government getting involved do not have to participate. They will be no worse off than they are now--still dealing with the big packers and the big feedlots for the export market.
I am not a fan of government involvement. But the plain fact is that the only way we are going to gain control of our product to the grocery shelf, over both the short and long terms, is through the help of government. This way we can set our price in order to make a profit on our product. Yes there will be a buy-in from producers and some debt there, just like the dairy guys. But the dairy farmers are the most successful in this country and I don't hear the consumer doing any crying about milk prices. If the consumer knows that by paying a price for beef that gives the producer a little profit, than the taxpayer will not have to pay farm welfare to that producer ever again I think the Canadian consumer will be on side.
Just my thoughts.
kpb
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May 31, 2006 | 16:12
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The anology I was getting at was instead of trying to build a megaplant and get government involved to compete-franchise out meatshops and smaller abbatoirs to investors and hit a niche that the bigs aren't servicing. Like A Tim Horton's-every one the same size and you know what you are getting when you go in-use the same concept-a number of easily recognized purveyors of beef-spread the investment and benefits throughout the country.
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Jun 1, 2006 | 11:49
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I like that idea CS. It is along the lines of what I think needed to be done with the regional plant concept.
It could potentially be started small (one or two locals) and grow from there.
The biggest challenge to our industry domestically is probably the regulation and interprovincial pissing match in terms of trade, certfication, foodsafety, brand inspection, animal disease, etc.
I think it matches up some of KPBs vision with less gov't involvement.
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Jun 1, 2006 | 12:48
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It's easier to think a bit smaller and grow than to think tooo big and shrink. You have to crawl before you can walk-I think this franchise concept would be easier to attract outside investment too also. It's always nicer to float a new venture with somebody elses capital. Most of use are better at raising calves than we are at managing butcher shops and arranging venture capital.
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Jun 1, 2006 | 15:38
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I'm not sure I understand this concept of yours cswilson. What you are talking about are essentially what I would call butcher shops - locally owned or franchised stores selling beef or meat only? These are what we grew up with in the UK, every town had one or two. How widespread are these type of butcher shops in Canada? do they exist in urban areas or only in some rural towns? In the UK they have largely gone the way of the dodo as most younger, and all urban consumers shop at supermarkets. Isn't this the case in Canada also? From what I read it seems that even the straight cuts of beef on the supermarket shelf are an endangered species to be replaced with prepacked "meal solutions" ie a tiny quantity of beef bulked up with some vegetables and sauce and charged at the same price per pound as a decent steak!
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Jun 1, 2006 | 23:56
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Well the two we have here sell other stuff also-they seem to be competeing fine against the two big box grocery stores in town. If the concept was marketed right it would fly I'm sure.To build a megaplant to compete with Cargill you have to become just like them-then it's same s..t different pile for the producer.
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Jun 2, 2006 | 17:32
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No offense meant but I don't like the idea. You say that any young guy could just buy an older guys allocation.
I would like to milk cows again but there is no way that I could afford to pay the $30,000 per cow for quota. I small herd of milk cows these days is 40 which means 1.2 MM before I even put a cent into facilities, animals, land, machinery, etc.
This would go the same way and would ensure that only rich europeans and inherited farms could afford to be in the industry.
Too many of these policies (supply management) are meant to keep the status quo and protect old peoples retirement funds while keeping new entrants out.
Why make the beef business the same way?
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Jun 2, 2006 | 18:00
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The biggest problem with the supply management system is that only the rich can enter the industry since dairys were allowed to include the quota as an asset..and activley buy/sell a 'worthless' piece of paper. The trend for the supply managed system in canada is towards fewer but bigger farms, as the big guys buy up the quota. Isn't this the same thing that is happening in the USA dairy industry without the quota? Not to mention the grain/beef farms in Canada? I think we have to focus on getting more money out of the existing system. THat is the only way to save the farm in the long run.....how to do that is the problem. I figure the government would love to get rid of supply management,a major trade irritant, but then they may be on the hook for billions for compensation for the now worthles quota.
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Jun 2, 2006 | 18:04
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Quota cost needn't be a deterrant to new entrants - this post started of quoting $100 per share to buy in to the project that could be fixed as the cost of "quota" for eternity.
Seems to me the "free market economy" we have already is ensuring "only rich europeans and inherited farms could afford to be in the industry" - and oil money people.
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Jun 2, 2006 | 19:28
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Do you seriously think it would stay at $100 per head if there is a guaranteed margin? When the quota exchange system first started in my home province quota was about $1500/kg. It is now 30K .
If there was no quota system then I would at least have a chance in the business. With the quota system, it guarantees that I will never have a chance unless I have a million dollars burning a hole in my back pocket.
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Jun 2, 2006 | 22:43
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Some of the latter quotas that were introduced in Europe had a fixed value at time of creation set by the regulaterly bodies and they worked fine. They only increase in value in an uncontrolled marketplace where high margins can be earned. I don't think that that would really apply to the project we are discussing here. If, like the dairy world, you could keep 40 cows on a quarter and make $50,000 a year then the "quota" would be worth bidding up.
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Jun 3, 2006 | 04:11
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How would quota affect guys who run stocker cattle-develop breeding heifers-etc. I can see it just another means for the government trying to whittle everybody's peg to fit in their preordained hole-when you try and legislate it so nobody fails very few succeed. If the dairy industry is so rosy why are their dairies going under in their supply managed utopia. A quota system would be good for me because I'd get it grandfathered but for my kids-can't see that happening. There'd be more ways to inflate the price of it and hide it than you can shake a stick at.
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