Perfecho,
I disagree - the monopoly is working very well - for the Cargills and Nilssons of the world!!
On the cow value we had to go with a rather simplistic demonstration to catch the attention of the largely urban based media.
For sure the packers do not spend $5-600 boning out and grinding a cow and the trucking doesn't come to $100 a head.
The advantages the large packers have over the local custom kill guys are as follows;
1 Initial Government funding to attract them and build the plants.
2 Continued Government funding to update and modernise the plants.
3 Input in establishing regulations that favor their operations but make it difficult for small plants to operate.
4 Lower wages paid to less skilled employees.
5 Benefits and economies of scale.
6 Benefits of corporate concentration (the piracy effect)
Yes, my cow value was low - as someone else said there were the tenderloins - I forgot to calculate that in until I picked up the beef. There is another $120 right there.
More than that we didn't calculate any of the value added ways our beef is retailed we just priced it as simple ground and stew. As a value added example look at the little individual micro-wave beef and vegetable pies they sell. You get about 4 small squares of stew meat in one if you're lucky plus a few cheap vegetables, some pastry and some MSG. The beef will be by far the dearest ingredient but even so the mark up is huge. Also how much extra beef is recovered mechanically in the big plants, then water can be injected into some of the cuts, steaks sold off the cull cows into the "steak sandwich" market. I didn't value organs, hide, bones etc etc.
Bottom line I'm not feeling sorry for the processor or retailer - their margins must be considerable. But you answered that yourself by quoting prices pre-BSE. Just remember the statistic that in 1999 24% of the retail beef dollar found it's way back to the producer - in 2008 it was 16%. No-one argues this statistic - it is proven from Canfax etc data and it proves absolutely how processor /retailer share has soared in the last decade. If producers were to restore their share of retail dollar to 1999 levels with the processor/retailers keeping their margins where they are now the fed cattle price would have to rise 50%!! There is absolutely no way these guys are not making a pile of money - it's time to find out who makes what and then we would be in a position to start formulating beef policy in a sensible manner.
I disagree - the monopoly is working very well - for the Cargills and Nilssons of the world!!
On the cow value we had to go with a rather simplistic demonstration to catch the attention of the largely urban based media.
For sure the packers do not spend $5-600 boning out and grinding a cow and the trucking doesn't come to $100 a head.
The advantages the large packers have over the local custom kill guys are as follows;
1 Initial Government funding to attract them and build the plants.
2 Continued Government funding to update and modernise the plants.
3 Input in establishing regulations that favor their operations but make it difficult for small plants to operate.
4 Lower wages paid to less skilled employees.
5 Benefits and economies of scale.
6 Benefits of corporate concentration (the piracy effect)
Yes, my cow value was low - as someone else said there were the tenderloins - I forgot to calculate that in until I picked up the beef. There is another $120 right there.
More than that we didn't calculate any of the value added ways our beef is retailed we just priced it as simple ground and stew. As a value added example look at the little individual micro-wave beef and vegetable pies they sell. You get about 4 small squares of stew meat in one if you're lucky plus a few cheap vegetables, some pastry and some MSG. The beef will be by far the dearest ingredient but even so the mark up is huge. Also how much extra beef is recovered mechanically in the big plants, then water can be injected into some of the cuts, steaks sold off the cull cows into the "steak sandwich" market. I didn't value organs, hide, bones etc etc.
Bottom line I'm not feeling sorry for the processor or retailer - their margins must be considerable. But you answered that yourself by quoting prices pre-BSE. Just remember the statistic that in 1999 24% of the retail beef dollar found it's way back to the producer - in 2008 it was 16%. No-one argues this statistic - it is proven from Canfax etc data and it proves absolutely how processor /retailer share has soared in the last decade. If producers were to restore their share of retail dollar to 1999 levels with the processor/retailers keeping their margins where they are now the fed cattle price would have to rise 50%!! There is absolutely no way these guys are not making a pile of money - it's time to find out who makes what and then we would be in a position to start formulating beef policy in a sensible manner.
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