UFCW Union Wants to Cripple Beef Industry

[ivbinconned]

UFCW Union Wants to Cripple Beef Industry Like Auto Workers Did to U.S. Car Makers

Big Labor has thrown its support behind the U.S. Senate's attempts to take away rights and limit free market innovation. The United Food & Commercial Workers union (UFCW) has joined the attack on innovative, adaptive cattlemen and their allies, who have been evolving new tools to provide what modern consumers demand.

It took Big Labor decades, many closed auto plants and lost jobs, and huge carmaker market share declines to "get it." Forcing automakers to remain stuck in old production methods, in old plants under old labor cost structures stifled innovation and adaptation and made the industry unprofitable. Rather than change, unions forced confrontation until plants closed and jobs disappeared. Only recently have unions realized that they shared the blame for creating the Rust Belt. Foreign car makers happily provided what consumers wanted. Could American beef follow that path?

Now, the UFCW has resurrected the old union playbook, calling for "stability" and "job protection" at the expense of focusing on consumer wants. In a news release and an advertisement, they've called for passage of marketing and cattle ownership restrictions in the Senate's version of the Farm Bill.

R-CALF and the union share an outlook. They focus on the next participant in a long production chain (packers) as the enemy, rather than realizing the source of money and jobs for everyone is the consumer. Detroit's unions made the same mistake. The result was a product that fell short of consumer demands and a cost structure that failed, yielding lost jobs, lost market share and a shrinking U.S. auto industry.

Over 80 percent of UFCW members don't work in the meat packing industry, but in health care, garment, chemical, distillery and retail industries. It's not surprising they understand little about the beef industry. R-CALF should know better. If they had been paying attention years ago, they would know it was cattlemen who approached packers about contracting and marketing agreements. Had the old cash direct or auction market system just benefited packers, they could have refused and kept the old system. Nothing forced them to offer long-term contracts or marketing agreements.

However, they saw benefits in having some supply management tools, just as cattlemen saw benefits in having a market lined up for their cattle. Crucially, the benefits for consumers were clear - a more stable flow of cattle through a system that passed back their demands for higher quality, lower fat trim and more consistent eating. Packers and cattlemen got comfortable with longer-term contracting. Then national check-off consumer research showed consumers rated one in four steaks as unacceptable. Cattlemen, packers and retailers began working out the partnerships and alliances that share information and profits, and spread the risk of more accurately fulfilling consumer needs.

That intelligent, consumer-responsive system of marketing agreements is what the UCFW, R-CALF, National Farmer's Union (NFU) and their LAG* allies are trying to destroy. They want the simplistic past, when cow/calf operators had only one option -- take weaner calves to the auction market - and cattle feeders could haul fed cattle to auction or sell them live to the packer direct.

R-CALF and NFU are desperate to outlaw selling cattle through a system that transparently pays premiums for what consumers want and penalizes for what consumers don't want. They want cattle sold under the mystery package system -- no one knows for sure how nice the present is until too late. That satisfies their wishes. However, no customer wants to play roulette at the meat counter or in a restaurant. The overwhelming success of chain restaurants and the popularity of brand name meat products at the grocery store testify that customers want consistent, predictable quality.

Most unions prize stability and the preservation of yesterday's job descriptions over tomorrow's job descriptions meeting changing consumer lifestyles and demands. Today's consumer demands a higher quality product, more consistency, more convenience and advance preparation. Alliances between cattlemen, packers and retailers have been designed to pass information on consumer preferences back through the chain, spread out risk and share rewards. Such alliances speed up adaptation along the production chain and reduce inefficiency.

UFCW and R-CALF are fighting that adaptation to change. They do not want any system that focuses on the customer instead of them. They're concerned with their own lifestyles and jobs. They figure someone else can be concerned with what the customer is getting.

Detroit's unions once thought that, too.





Dr. Joyce Van Donkersgoed Veterinary Services Inc.

[nine420]

Amen. Why do we always insist that more regulation will mean more profits. Don't blame the packers for the state beef (or for the matter pork) is in. If owning packers was so profitable there would be one in every town. When the markets are allowed to operate freely with no interventions ie. (border closures to satisfy special interest groups, high tarriffs to protect so called proffitable quota systems) then the signals will be more apparent. If there is an oversupply problem like the one we have now, the only solution is to drop supply. Some Cowboy's seem to think that just because calf prices were high in the fall of 2000, that they can budget for them every year. Reality is that commoditys go up and down. Suck it up princesses, learn how to cut costs or get out now and let the not so fainhearted reap the reward when supply drops and prices rise. All I ask for is a market devoid of Govt Intervention. A free trade world wide would be the ultimate pancea for me. Then if western Canada was the place to raise critters it would be.

[grassfarmer]

wow, what a fundamental lack of understanding of how the "free market" system operates. I guess I must have been wrong all along, the fact that there are only 3 packers left must be due to low profitability and too much competition. If only we can get the beef supply down - prices would rise, err well not really...

[nine420]

Why is there only Three Packers left?

[jensend]

yeah you might want to think about that one. lol.

[ivbinconned]

http://www.maplecreeknews.com/index.php?option=com_content&task=view&id=2398&Ite mid=1



November 15, 2007



Border set to open, testing increases





By Sheri Monk


The cattle industry is in crisis. High feed costs, E. coli, increased border inspections, Canada’s strong dollar and rising basis costs leave producers wondering if the open border will have any positive effect at all.
As of Nov. 19, age-verified cattle over the age of 30 months born on or after March 1, 1999 will be permitted to cross the border for the first time since the BSE crisis in 2003.
“It will go through. The only issue is whether the producer group R-calf will decide to attempt to seek an injunction,” said Steve Kay, editor of Cattle Buyer’s Weekly.
Though Kay didn’t anticipate any further action from the group at the time of his interview, they have since filed a lawsuit and have asked for an injunction delaying the border opening until their case can be heard in a South Dakota court.
Kay also said BSE, closed and reduced foreign markets and dry conditions in North America have all played a role in the cattle crunch.
Government regulation and interference in the market is often cited as a massive detriment to the cattle business. The heavily subsidized bio-fuels sector is buying up grains and driving feed prices to near unaffordable levels. The Canadian Food Inspection Agency (CFIA) recently rolled out new regulations pertaining to Specified Risk Materials (SRM). SRM are the bits and pieces of cattle that can transmit BSE and the goal was to eliminate those tissues from the food chain. Disposal brings added costs–to the producer and to the packinghouse. The U.S. currently has no legislation pertaining to SRM.
“We’re waiting for the USDA to bring forth a proposal regarding SRM–they’ve been studying the issue for the last 18 months. We certainly don’t have the same restrictions. It seems somewhat after the fact–I don’t know how based on science it is–it has obviously added cost to packing industry,” commented Kay.
The government takes ‘check-off’ fees, is responsible for opening foreign markets, determines when a ranch is under quarantine and has the power to drastically add or reduce operating costs at any time under the mandate of food safety. Producers need the government as a partner in preserving Canada’s agricultural economy but are also inherently resentful of the policing power government has over the industry.
Canada will now be subjected to modest increases in meat testing at the U.S. border.
Trim will now be tested upon import for the first time in history. Though this was slated for all imports in 2008, Canada will be subjected to the additional hurdle one full year before any other country–because one day of production at now defunct Rancher’s Beef in Alta. that caused E. coli contamination at a massive American processor.
Live prices have dropped substantially from two years ago–even from one month ago–while the cost to rear those animals is pacing steadily upward.
Packinghouses claim just a one per cent margin–but some believe that a financial cushion is provided by market diversification into transportation and the ever-increasing retail demand for boxed meat. Whereas the price of live cattle is easy to determine, there is no single database that reveals the slaughterhouse margin. Meanwhile, industry experts are fearful that slaughter facilities are going to start scaling back production because of the high cost of labour in Canada and producers are starting to panic. Even the government is in agreement that the industry is staring down a massive crisis. When an industry is forced to downsize, it does so indiscriminantly.
Doug Wilson, a Maple Creek rancher, was one of the original 70 full investors in Natural Valley, a slaughterhouse and processor started by producers in Saskatchewan to try and enter the natural and organic beef markets in Canada and abroad. Wilson wanted another option for slaughter and wanted to increase his margin.
“Like everyone else, I was trying to make an extra buck and I was trying to make it in the natural market.”
Natural Valley is only killing horses these days–a contract that has kept the operation alive as it tries to get back into the cow business. Wilson said they were in the blueprint stages when BSE hit. In the aftermath, the CFIA instituted one change after another that caused a change in the plants design and construction plans three or four times.
“None of the changes made anything less expensive, that’s for sure.”
When Natural Valley was in operation, they realized quickly that despite market research citing demand for organic beef, there weren’t a lot of retailers willing to carry it or consumers actively seeking it out.
Wilson said the business plan for Natural Valley included an eight per cent net margin–a drastic difference from the one per cent figure tossed about so frequently.
Manitoba producers recently scrapped the dream of a slaughterhouse in their home province and have now bought into Natural Valley, giving Wilson renewed hope. Investors want the plant to follow through on its original mission now that all the operational hiccups are worked out and producers hope that retailers and consumers are ready for hormone-free, natural beef.
The end of the cattle trail stops at huge chains of retail grocery stores that display an alluring selection of beef cuts for every taste and budget. One glance at their price per pound can cause a producer’s blood pressure to rise higher than feed prices.
As one rancher said recently, “I stop in at the meat counter every time I visit one of those big grocery stores. I can’t help myself. I get mad every time, but I go in anyway and I start adding it up.”
The next installment in our series will dissect the cattle business between the hook and the plate in an interview with Canada Safeway.

[ivbinconned]

One reason there are only three left...but is seldom discussed or easily recognized is the low Canadian dollar we have been subjected to, for far too long. It made foreign ownership a piece of cake!!

If you watch US news and financial shows now, they are worried of the reverse starting to happen and they are alarmed at the ramifications. WHY were we not??
I hope our dollar climbs to 1:50 US so that rich guys like Grass farmer, wilagrow and Horse can buy back some of our industry!!

[grassfarmer]

"Why is there only Three Packers left?"
Well the short answer would be underhanded business tactics and weak Government regulation re anti competition laws.
Remember it was not a "free enterprise" decision that brought the big two US packers to Alberta it was a Government arranged, tax payer funded, subsidy. They have been backed by the AB and federal Governments as winners ever since. Given this unfair advantage to start with they have been able to eliminate competitors to the extent that there is no longer real competition in the Cdn packing industry. This is very different from being the only ones efficient enough to survive. Once in the position of virtual monopoly you do not even have to be efficient to survive. Indeed it's no longer about survival it's about making money - major money.
Don't believe the stories that packers are losing money because it costs them $20 per animal to dispose of SRMs, that is a result of splitting their businesses into many profit centres and accruing all the extra "BSE costs" to the slaughter part of their business.

We retail beef from our farm, paying a small scale butcher $400 to kill, cut and wrap each animal. We sell our beef in bulk cheaper than consumers could buy it from the store by the cut. We still net between $4-500 per animal more than selling commodity fats. So don't tell me there is no profit at the packing or retailing sector. There is more than enough money in the production chain to pay all participants if it were more equitably distributed.

Of course the additional 2003 "bse" multi-million dollar subsidy given to these same packers on the misguided advice of the AB Government/ ABP/CCA greatly strengthened the big three. Apparently the proponents of this aid package chose(or failed to realise) that what was needed was more competition within the packing industry rather than simply more capacity.
How unfortunate that those in power chose to ignore the conclusions of the NFU research that had been available for the last 10 years which clearly identified consolidation at the processing and retailing level as the root of many of our troubles. Doubly unfortunate that in the new round of ministerial talks with producer groups to resolve our on going crisis the NFU are not even invited to the table.

[farmers_son]

Grassfarmer: For the most part I would agree with your analysis. Re the misguided 2003 BSE payments...in fairness we were in a crisis situation and the Alberta government acted quickly but most cattle producers would agree that the packers benefited unfairly from that early support even if later government studies indicated otherwise. Programs that came after tried to correct that problem, with varying degrees of success.

Canada does have very, very weak competition laws, much weaker than in the United States. In the present situation Cargill and Tyson are basically guaranteed a profit. I do not believe for a moment they loose money. If you recall the government was going to look into Cargill's and Tyson's books for unfair profits, once the Conservative government came into power that was quickly stopped. I have not forgotten that.

On the topic of underhanded business tactics, one can only wonder if the rare E Coli bacteria that was eventually traced to Ranchers Beef was an accident or not. If it looks like a rat and smells like a rat...

Cargill and Tyson play hard ball. If Cowman were around he would tell you that. They are one step away from being Mafia.

[grassfarmer]

Farmers_son, you remember the "looking into the packers books" fiasco, I remember the "...later government studies indicated otherwise" scandal regarding packer profiteering. Like you say "most cattle producers would agree that the packers benefited unfairly from that early support..." The part I found most galling was the then ABP chairman standing beside the ag minister proudly making the announcement, grinning like the cat that got the cream. That was the day I realised that ABP does not work for primary producers - it works for the other side. Nothing has changed my opinion on this since then, ABP has continued to defend the profiteering by packers at every opportunity. It is nothing but a puppet organisation for the AB Government and their US masters. Time for a change.

[ivbinconned]

R-CALF United Stockgrowers of America


“Fighting for the U.S. Cattle Producer”



For Immediate Release Contact: Shae Dodson, Communications Coordinator
November 14, 2007 Phone: 406-672-8969; e-mail: sdodson@r-calfusa.com



Op-Ed



NCBA’s Queen Flatly Misleads Producers, Public

About Proposed Competition Reforms in 2007 Farm Bill



Note: R-CALF USA Vice President/Region II Director Randy Stevenson authored this rebuttal to a recent op-ed by NCBA President John Queen, titled “Government Meddling Threatens Cattle Industry’s Future.” Stevenson also co-chairs R-CALF USA’s Marketing Committee and represents the group on the agriculture advisory board for the Commodity Futures Trading Commission. For a photo of Stevenson, contact R-CALF USA Communications Coordinator Shae Dodson.



Mr. Queen has expressed chagrin over some proposed market reforms that may be included in the 2007 Farm Bill. The proposals he opposes would free the market from its limited access, thus encouraging young people to participate, invigorating rural development, and helping small business agriculture – without government expenditure.



His complaint about government meddling rings a little hollow, somewhat like the speeder stopped by the highway patrol. The proposed reforms have kindred restrictions that exist in other markets, and have existed for a very long time. Like traffic laws that make travel safe and efficient, those restrictions are in place because they make the free market work properly.



Mr. Queen raises an objection to the prohibition of packer ownership of cattle, but the prohibition of packer ownership of cattle is like the prohibition of insider trading. Mr. Queen says, “In over 58 million cattle transactions studied between 2002 and 2005, only 5 percent involved any type of direct packer ownership.” In the interest of accuracy, it should be noted that the study covered 590,000 transactions on 58 million cattle. But it doesn't matter what the packer ownership volume is, it’s an issue of market timing. Employees of companies traded on Wall Street own even less than 5 percent of the stock traded, yet insider trading is against the law. When packers own their own cattle, they can use the timing of their slaughter to affect the market. Their timing increases the market access risk endured by cash market sellers. By contrast, no one on Wall Street suffers market access risk.



The independent study Mr. Queen mentions – the Livestock and Meat Marketing Study (LMMS) – acknowledges market access risk and indicates that producers accept a discount on their cattle in order to guarantee market access. The Captive Supply Reform Act (CSRA) addresses the market access problem as well. While the focus of the CSRA is on making sure contracts are tied to a firm price when they are made, it would, in concert with the cattle ownership prohibition for packers, modify current captive supply practices so that market access risk would not exist in the slaughter cattle market.



Mr. Queen also suggests that cattlemen who have made large investments and commitments will be penalized. In contrast, the LMMS indicates that small producers do not widely participate in alternative marketing agreements such as captive supply contracts. They are, therefore, in the group with the greatest likelihood of suffering from the lack of market access. Small production is where young people who are new entrants into the market begin. It is no wonder their numbers are few.



It is important to note that the LMMS clarifies whom Mr. Queen is defending. The study differentiates between “small” cattle producers and “large” cattle producers by stating, “Large beef producers are defined as the 25 largest feedlots and 25 largest cow/calf operations in the United States, and small beef producers are the remainder.” So Mr. Queen's defense of the status quo helps only the 25 largest producers in the U.S. and the rest are left with a market access problem.



Contrary to the suggestion of Mr. Queen that these reforms would move the market in the direction of inordinate government control, they would, in fact, make the livestock markets work more like the old-fashioned capitalism of Wall Street. It’s not socialism. It’s not government meddling. It’s just the enforcement of time-proven free access to a market that is honest and competitive. And without free access, honesty and competition, capitalism is just an illusion.

[grassfarmer]

I don't quite follow you IB'N, do you just post random speeches or do you have an opinion on them?
The last article from R-CaLF makes perfect sense to me, really nothing I would object to in there - it's the kind of thing Canadian producer groups should be writing. This seems to contrast with your first post that showed an Alberta based "packer backer" pointing out concerns about the US beef industry turning into a Detroit. ***Newsflash*** the Alberta/Canadian beef industry at producer level is a lot closer to being a rust belt than the US one, how about concentrating on the home front first Joyce?

[farmers_son]

Grassfarmer: Re the ABP Chairman standing beside the Alberta Ag Minister. As I recall the Alberta government has just come up with $400 million for Alberta cattle producers so that kind of money will get someone from ABP to be there for photo ops just like if the Province comes up with lots of cash for hog producers someone from the hog board will be there too with a big smile on their face even if they are not 100% happy with how the Province is going about it.

As it seems we are going down memory lane we should not forget the countless hours cattle producers, representing a number of cattle organizations, put in going to endless meetings on both sides of the 49th parallel over a period of nearly five years to see live cattle trade resume with the United States. Yes mistakes undoubtedly were made but when you consider what the Canadian live cattle industry was up against, R-Calf, a U.S. government that was looking to punish Canada for not going to war in Iraq and finding more BSE positives even positives born after the feed ban, we are fortunate to have come to this point. Some will say that just supported the status quo but it was a pretty good status quo with access to the world’s number one beef and cattle importer.

[grassfarmer]

Unfortunately the smell of victory doesn't seem to be spreading through the Alberta sky. I think it would be fair to say cow calf producers are in a more severe crises now than at any point during the "BSE" crises.

[rkaiser]

Countless hours farmer_son? I think that even the delegates, let alone the staff and of course the lawyers hired were all counting their hours and sending a bill to the producers and taxpayers of this country.

If you think that that money was well spent to get the border open, fine. Another opinion and reason for forums like this.

I think that just like the money spent by Rcalf, our money was wasted. The border issue was decided every step of the way by the USDA and the most powerful lobby in the western world --- big business.

If the smiley faces of those who gladly spent public money on this farce and applauded the minor handouts to primary producers attached to major handouts to big business would have focused on something different from the start - the BSE situation which everyone seems to want of talk of in the past would not have affected our industry today like it has. Talk about the dollar and feed costs all you like but BSEconomics is still the reason for our huge basis with our "most lucrative market" --- which is still enjoying near record cattle and beef prices.

I noticed on the other thread farmer_son, how you did some math on the cull cow situation and how the price for cull cows in Canada should be affected by the new border opening. Maybe you could share with our readers, a comparison in fed cattle prices. Other than preg testing heifers - the border has been open to fed cattle for a good while now. If your suggestions of American ass kissing are correct - why the huge discrepancy?