Give ABP a chance

[per]

"Per. I think that is a fair question. Economic texts tell us that government dollars are justified in times of market failure. BSE and the resulting loss of markets did cause a market failure."

When Cargill came to town the incentive was to bring a new competitive bidder to town. I

Randy we all should be able to agree that a third bidder moving into a different market space can be nothing but good for the industry as a whole.

[ASRG]

Come on....what's 20 million or whatever? The Alberta government subsidizes the oil and gas industry in the neighborhood of 6 BILLION every year....what's a measely 20 million....to keep the farmers from getting screwed by the packers!
How about our wonderful clowns in Ottawa give us $20 million? About 2% of what they owe us for screwing up the cattle business through the BSE gong show!

[wd40]

Thanks ASRG - you took the words out of my mouth. For some reason the beef industry seems to think it should stand alone set apart from the rest of the corporate world and do everything including dying on it's one.
The list of corporate aid from the Alberta Govt. coffers since Lougheed would fill an 8x11 page. ATCO, the magnesium plant at High River, Precision Drilling, and on, and on and on.
But the beef do-gooders (who are married to the packers) see it as the "un-pardonable sin", to get anything back from our own Govt. for such ventures.
Hypocrite
I can’t believe that when one sees how the vibrant beef industry has gone and will never come back (in our lifetimes), since 2003 we’re still debating this point.
The packers used to sit back and laugh at us, now we’re not even on their radar. Fools we are.

[rkaiser]

Google bridge financing? I am sorry if I used the term wrong MGMT. To me bridge financing is a tool to finance a project until another loan is applicable. CLP was asking for a loan to purchase the plant from the government. If they called it bridge financing as well, we are all extremenly sorry for the error. LOL

Of course this project is risky for crying out loud. What startup is not? Especailly if you compare it to other ventures that had horrible business plans and over shot their infrustructure costs in the millions of dollars. You really need to dig a little to see how many reasons there were for the failure of Ranchers beef the first time round.

How many people like yourself along with most of the gang at our duly elected ABP (LOL) are warning everyone about the risk and using bullshit numbers like the ones you keep posting to prove themselves.

I could put you in touch with the right guy to speak with at Algers to get your Sunterra purchase price right if you wish. Not to mention the Algers sale listing that says that the replacement cost of the plant is 75 million. Even if your 20 million bs number was right --- still a deal to me.

Have you taken a look at the real estate values in the area or the buyers in the vicinity?

Then you start spewing some bs about bridge financing or else a $40.00 levy. What the hell are you talking about. The $40.00 levy is meant to pay back the loan.

Sorry bud, trying my best to be respectful...

[MGMT]

Get the purchase price of the Balzac facility right, get the business plan right, get the management team right and the need for government involvement disappears.

The point has been raised about the packing plant industry getting government money in the past as if somehow two wrongs make a right. Reagonomics never worked, in my opinion. The theory that government dollars at the packing plant level will somehow trickle down to benefit the producers is a myth. It is socialism for the rich, free enterprise for the poor. Does it make any difference if the money flows to Cargill/XL or to this proposed startup?

The point has been raised that it is only $20 million so what is the problem. And that there is a long history of government handing money to private ventures such as the magnesium plant at High River. Lets overlook the fact that the magnesium plant never got off the ground. The truth is that with enough government money (bridge financing if you will) behind the project this plant, or any plant, could operate indefinitely. It would take ongoing injections of the $20 million dollar government fix. The Ranchers Beef operation ran up a debt of $56 million and was only in operation a short while. The government backing/money would be required for at least ten years or longer as it would take that long for a naïve management team to go through the required learning curve, develop the required marketing channels and accrue the financial depth to operate without the government umbilical cord. There is a possibility that plant would never be viable without the support of the Province's treasury.

Actually it would be more cost effective in the long term to simply nationalize the Lakeside plant as a going concern and get on with it. Or why stop there? Why not nationalize the Cargill High River plant as well and take over the world beef market? After all, our province has the financial resources to do that. Think of all the money that would trickle down to the producer level.

[rkaiser]

One thing that you have nailed is that there is no trickle down effect from the two private players in the province.

There will be from a producer owned plant that is taking product off the continent and working outside the conventional markets. Especially for participants and subsequently for Cargill and NB customers as well. The only ones who will suffer or at least have to pick up their game and pay more for cattle are the Cargill and NB.

I do agree with your first statement and am focused on those points. If you have been in business long enough however, you would know that exploring all options is crucial.

All your fear about asking for more money after a loan is in place is due to historic events and your own personal desire to be right about something...

Cheers and Happy New Year MGMT

[burnt]

"The only ones who will suffer or at least have to pick up their game and pay more for cattle are the Cargill and NB."

Not trying to mock you Randy, but, Hahaha, such a minor point!

They'll not likely object at all, will they?

Because that's the biggest reason that new beef processing ventures fail - the old boys club won't let them in.

Cattle prices can be plodding along at 80 cents a pound and when a new guy starts bidding on a few then all of a sudden by golly those same darn buyers somehow discover in their heart of hearts that they can actually pay 90 cents - golly why didn't I think of that sooner!

That's exactly what happened a year or so ago when a small packer took over the defunct Gencor Foods plant in Kitchener. Jeepers all of a sudden Cargill needed a whole whack of cows too and while Cargill could absorb the higher price on a relatively small portion of their production, the new boy couldn't because it was on his whole supply.

Your advantage is that you are not competing in the same market.

[grassfarmer]

"Your advantage is that you are not competing in
the same market."
So what does that mean? You are selling into a
different market? You still have to buy in the same
market as far as I can see. Or are you implying that
producer shareholders would have to surrender
their cattle, at a lower than market price to "their"
plant to make it profitable?

[smcgrath76]

We certainly saw that over-competitive bidding with our involvement in SK. Cull cows
rose several cents in proximity to the plant when a couple of others buyers got really
competitive.
If a higher value market(s) is/are secured then it is possible to pay a premium, however
I believe a more sustainable model probably requires the contributors to participate in
the final market, rather than having the "plant" take all the market risk. Shifting a
mindset from dumping live calves to participating in a value initiative is a big one, so
it will take some time to build, but I expect that is half the fun.
Based on the cattle cycle and how things roll out in the global economy (timing and
order of price changes) it may put a squeeze on things at the wrong time. That will be
a management challenge to ensure the participants keep their eye on the big picture and
to manage cash flows well.
GF - I agree with your sentiments, but I know that commodity prices (even when high) are
average prices and a lot of poor cattle are overpaid for, while still leaving value in
the good cattle. Sorting that out will take cooperation between parties. Perhaps a CWB
payment/final payment or a grid like Natural Valley tried to implement could assist.

[burnt]

I meant the market into which they are selling.