What will save this turn of cattle feeding?

[grassfarmer]

"if the Canadian meat packing business
is so lucrative why did Tyson sell Lakeside?"
a. because they were running under capacity both here and in the US.
b. because they could use their US capacity to kill Canadian cattle if they want to.
c. they are less likely to want to due to COOL.
d. they had a buyer.
I would put all these reasons ahead of lack of profitability.


If we had 10 packers now and were able to increase the producer sale of the retail dollar from 16% back to the 24% it was in 1999 it would raise fed cattle prices $550 per animal - money that could and should be spread between cow/calf and feedlot operators. Only by having competition could producers access this money. Reaching new export markets or marketing more beef using the existing processing channels will not help producers because there is no trickle down effect. That is the cost of having no competition.

[grassfarmer]

Perfecho - I don't remember Shirley's quote re the packers but I believe Minister Ritz told the NFU this summer that they were "exaggerating the problems of the beef sector - he had spoken to Brian Nilsson and things were OK"
You are mistaken on the Federal inquiry looking at the packers books though - they never did get to see those books. It's time we had that enquiry again though to find where the money goes.

I repeat our own experience - paying over $550 to get 600lb carcases cut, wrapped and delivered leaves us over $400 a head better off than selling commodity fed cattle. And we sell our beef for less than the Canadian average retail price of beef.

Where does the money go Shaney?

[perfecho]

GF: I remember the radio interview with Shirley…..it bugged me then, it bugs me now. Have included some links and quotes following……you reinforced my msg to Shaney about the margins on local….FOOL…..(Luv my Farm Of Origin Label)

http://cmte.parl.gc.ca/Content/HOC/committee/381/agri/reports/rp2146861/AGRI_Rpt10/AGRI_Rpt10-e.pdf

FINAL REPORT: FINANCIAL ANALYSIS RELATIVE TO MEAT PACKING COMPANIES IN THE CONTEXT OF THE BSE CRISIS OF 2003
Report of the Standing Committee on
Agriculture and Agri-Food

“On a year-over-year basis, the net profit in 2003 was 95% higher than 2002, and for the six months ended June 30, 2004, was 620% higher than the same period in 2002”
http://www.albertaviews.ab.ca/issues/2005/janfeb05/janfeb05slaughterhousedrive.pdf
It took months for the truth to emerge, but it turned out they were right. In April 2004, an all-party parliamentary committee in Ottawa investigating allegations of price gouging found Lakeside Packers, Cargill Foods and XL Foods—which together process more than 90 per cent of Alberta’s beef—in contempt of Parliament for refusing to open their books. The companies eventually showed the Alberta government their financial statements, and last July the province’s auditor general, Fred Dunn, released a report confirming that profit (before interest and taxes) at the three big packers jumped 281 per cent after May 2003. The big three made $79 a head before the mad cow crisis began and $216 a head afterward.
Packers also received much of the $402-million in BSE aid distributed in Alberta as of June 2004. Why? Because they had taken advantage of the buyer’s market created by BSE and now own most of the province’s cattle. Alberta’s agriculture minister at the time, Shirley McClellan, defended the results, saying “It’s ‘Gee you paid the big guys,’ and ‘Gee the little guy didn’t get much.’ But you know what? The little guy didn’t lose much, either.

http://lists.iatp.org/listarchive/archive.cfm?id=95298
(another link for perusal)

Forget which link, but you get the jist….....
March 3: Klein, pressed by reporters on why his government blocked Alberta's auditor general from investigating allegations of meat packer price gouging, storms out of his news conference, saying: "I've had enough of this crap."

[grassfarmer]

I think that article you posted rather blurs what really happened perfecho. The federal investigation that found the packers in contempt for not opening their books never did extract one cent from the said packers as an election came along and they were let off the hook. They never did open their books.

The Alberta inquiry was a different one based on different information and as far as I know the packers did not open their books to the AB inquiry either. The AB inquiry was a joke anyway - the Government basically handed the findings they wanted to hear to the inquirer and asked them to formulate appropriate questions and parameters to justify the favored conclusions.

I well remember the announcement of the AB inquiry though - Shirley sitting next to a smug Arno Doerksen. I see his quote from the article you posted - "Alberta Beef Producers chairman Arno Doerksen, whose organization represents the province’s ranchers, is reluctant to criticize the large packing companies."
And some people still want (now MLA) Doerksen to be the next AG minister?

[perfecho]

The bottom line to all of this, and I guess my previous posts, is we have to be involved.......not at the end of a shoe string that everyone else is slinging. Producers need to speak, educate consumers, (they all think we get subsidy cheques monthly) and seal our own fate....some of us are with "FOOL"...;-)....but it does not take in the majority of production.

[kato]

"if the Canadian meat packing business
is so lucrative why did Tyson sell Lakeside?"

Good question. But another good question would be "if the Canadian meat packing business is not making money, how did Nilsson's afford to buy it?"

Don't worry, there's money out there.

[Sawbones]

Another question for you shaney...When it was found out that the packers were making in excess of $1million per day, they were not required to pay back their grants...When the feedlots were making $17/bu on Canola they planted on silage acres, they were not asked to pay back their grants but when cow/calf producers had cow prices increase, they were asked to pay back their advances. An equity payment was for the loss at a given point in time and cannot be extrapolated or manipulated at a later date. If it was not an equity loss paymnent as stated, we wouldn't be arguing about it.

[shaney]

Okay lets back up here.

My background: a family seed operation with a
feedyard. We have fed cattle for decades in
Southern Alberta. I am apart of the club of people
that has lost tonnes of money in the beef business
since 2003.

I greatly sympathize with the rancher in North
America and the lack of ability to make a profit. I
am not a packer lover like you seem to be inferring.
I just believe that this industry has significant
systemic issues that are deeper than packer
competition.

i think by saying if we had 10 packers in canada
you are trying to provide simple answers to a very
complex problem

Beef demand: due to things like the economy
hamburger is selling well in the US and Canada.
The problem is that the majority of value extracted
from the carcass is from middle meats which are
high value. Unfortunately demand for middle
meats has slowed and is resulting in the issues I
discussed earlier. This industry cannot survive on
grinding the calf or cow into hamburger.

[Sawbones]

Now we're getting somewhere..The industry can't survive on hamburger but the packers can and as long as they maintain their margins, they are happy and exporting hamburger to the US is easy and familiar but doesn't help the industry as a whole. Market access is not the major issue, but profitability for all sectors is the issue. Canadian beef needs to gain full dollars for their premium middle cuts and if they can't get it in the US, the industry has to look for alternative markets. The complaint against the packers is that they are not pulling their weight in developing those premium markets or passing the profits down the chain to producers. COOL in its present format has the same benefit for the packers as a closed border due to BSE.

[kato]

So what we need to do is make the way as easy as possible for someone who does want to develop those markets to do so. That's the way business is supposed to work. If one business does not want to go after a particular market, another one will see an opportunity and do it themselves. The trouble in this country is that on top of all other usual obstacles, we have a government that has heaped regulation upon regulation in the way, some of which seem designed toward keeping the status quo.

We need a total overhaul of our system, with a goal of encouraging new business, not just propping up the existing ones.