Slaughterhouse set to expand

[grassfarmer]

A thought occurred to me today Sawbones - why should the cow/calf man have to sign up the 100,000 head and own the plant? Wouldn't it be a lot simpler if a big feedlot did? They have the numbers of cattle, and the incentive to do it if a contract were available from retailers on the 100k headage. That way there wouldn't be 101 different producers to try and get singing off the same sheet and investing. The feedlot would be well set up to supply identical product week in and week out. I think that would give a feedlot a bit of security as well knowing they didn't have to depend on the no-competition "open market" when selling. They would be free to source and buy calves where ever they liked and to whatever protocols they set.
If this isn't an attractive deal to a large feedlot why should it be to cow/calf guys?

[Sawbones]

You're on the right track gf. We've approached two major feedlots that could finish our cattle and that's all we need but for this to really work we need the source and that's the cow/calf guy and the only way he gets to play is to commit his calves and be prepared to stick it out. We aren't going to save the industry but hopefully we can do something for ourselves

[grassfarmer]

Why do you need the source though - the cow calf operator? If the feedlots have the supply contract and the packing plant the country is full of calves - they can go out and buy them on the open market or establish contracts with producers to rear calves to a certain standard. This would be a free market solution and it would be up to the feedlot to pay enough money to get the cattle - if they didn't they wouldn't have enough to supply their contract. I don't see why the cow/calf operator necessarily needs to own the plant.

[smcgrath76]

I see the need for C/C to contract
supply in, otherwise you will in the
long run need to kill x number of extra
cattle to fill your market specs. By
working with the C/C guy we can breed
cattle that fit the market, and then
manage them right through to the desired
endpoint. Without a big plant and lots
of markets it is tough to pull off the
strategy of buying all calves (even if
the price is right).

[grassfarmer]

I think we could have all the contracts, agreements, type of genetics, rearing management established by the feedlot and delivered by the c/c guy without the c/c guy owning the plant. I just don't see the need for plant ownership by the c/c level. A little financial incentive on the calves from the feedlot and producers will line up to deliver. This would happen because c/c guys would be working within their realm of comfort. C/C guys balked at a lot of the proposed plant projects because they had no clue how much beef their calves would yield when fattened or what it would be worth (which wasn't helped by some of the consultants who didn't know either)

[Sawbones]

That's entirely the point gf...a little financial incentive and the c/c guy will also run to the majors so for short term gain, the entire chain collapses and we're back to square one. If you're serious, get involved and by making the payment to the plant based on a $25-$30 fee per animal delivered, it's no different than you're already paying..the only difference is at the end of the day, you actually have something to show for your efforts.

[rkaiser]

So - how many cattle have you got committed so far Sawbones? A few more details would be nice but the basics sound pretty damn good to me. It has always astounded me that this industry can be controlled by so very few with a relatively small amount of capital. Could you imagine what a few hundred million would do in the oil industry.... Pretty much squat. But it could buy our industry back and at least give us the opportunity to be responsible and see if we --- the steakholders --- could do a better job than the status quo who are only interested in profit and could care less whether our industry even has enough left to supply our domestic needs.

We have all had ideas on how to raise the cash and none have succeeded. The big boys could not even muster enough in the Balzac project but they were still but a few. The masses are definitely needed. The Beef Initiative Group plan was all about masses, but the masses were divided at the time and our plan to use a government backed loan to build the plant was seen as left wing radical by some tunnel visioned foes. Maybe it's time for one last kick at the proverbial cat. Especially if the investor is waiting, the retailer is interested and government involvement is minimal. I personally trust that if one group has the where with all to get that kind of homework done it will be the group that I believe our Sawbones friend takes part in.

What can we ---- I --- do to help Sawbones?

It's been fun growing our company - but the boys are doin a fine job without the rancher buttin in on store management and sales. We are resigned to the fact that growth will be slow until the recession turns and the other retail boys slow down on the "lost leader" sales of crappy beef. We are in a good position for the turn around when it inevitably comes but our industry as a whole is not.

So should we sit and watch the patients and deep pockets of Cargill and our Canadian/Global Brothers Nillsen pay off. Or do we revive all the good old dreamers from the recent past and support this very intriguing plan that Sawbones has suggested?

[burnt]

rkaiser, you are missed over in the other place you old rascal.