Don't want to squash anyones dreams or ambitions
but 2012 is different to 2003/4/5. The commodity
sector has changed dramatically in that time and we
can't ignore that reality. In our own retailing
business the margin we make over commodity price
has shrunk from over $400 an animal to more like
$200 an animal. We can't up the end price too much
or demand suffers. This is a reality that will have to
be faced by any start up plant, its a price squeeze
that will make success this time around many times
more difficult than it was the last time.
I'm sticking with my beef retailing business for now
because I know it works and I have a fair degree of
control over all the elements. To invest in a
"producer plant" at this stage holds no appeal for
me personally.
By the time it's all said and done, the plant is paid
for, bank interest is paid, staff and management are
hired and paid, marketers are paid, product is
shipped half way around the world to wholesalers
and retailers who still want their cut the cow/calf
guy whose place the calf was born on will still be
just a commodity player with very little control over
their destiny. The premium that a participant could
expect from such a marketing venture would be
pretty small per animal in my opinion. It looks to me
like recreating the commodity system over again.
but 2012 is different to 2003/4/5. The commodity
sector has changed dramatically in that time and we
can't ignore that reality. In our own retailing
business the margin we make over commodity price
has shrunk from over $400 an animal to more like
$200 an animal. We can't up the end price too much
or demand suffers. This is a reality that will have to
be faced by any start up plant, its a price squeeze
that will make success this time around many times
more difficult than it was the last time.
I'm sticking with my beef retailing business for now
because I know it works and I have a fair degree of
control over all the elements. To invest in a
"producer plant" at this stage holds no appeal for
me personally.
By the time it's all said and done, the plant is paid
for, bank interest is paid, staff and management are
hired and paid, marketers are paid, product is
shipped half way around the world to wholesalers
and retailers who still want their cut the cow/calf
guy whose place the calf was born on will still be
just a commodity player with very little control over
their destiny. The premium that a participant could
expect from such a marketing venture would be
pretty small per animal in my opinion. It looks to me
like recreating the commodity system over again.
Comment