Here's for all you irresponsible cowbows

[rusty1]

What do you want out of the beef industry? If you would make it you’re the following could be possible. Look out of the box, think out of the box and get out of the box!

The following testimonies are from producers that put their pants on the same way as you do. Have you got the ambition to phone them and ask them how they did it. I'll provide you with their phone number if you like - better yet check out the web site i mentioned above, their numbers are there, and many more tesimonials. Better yet get in you van and take a drive and go see for yourself.

Downey Ranch, Inc.
Downey Ranch, Inc., (DRI) is a family operation specializing in producing high quality beef and assisting our seedstock customers in doing the same. Since becoming a founding stockholder of U.S. Premium Beef (USPB) in 1997, it has been our only marketing outlet for finished cattle. Our most recent set of calves owned with seedstock partner Kniebel Cattle Co., White City, KS, processed on March 12, 2002, weighed 1,301 lbs., graded 97.39% Choice and above, 52.70% Certified Angus Beef (CAB), and 19.68% Prime. They brought a $59.55 per head premium at a time when the Choice/Select spread was only $3.86.

Gardiner Angus Ranch
In the last three years (1999-2001) GAR customers have received an average of $77.61 more per head, in grid premiums and patronage dividends, by selling their cattle through USPB than they would have from selling them on the cash market. That is a total of $931376 received by our bull buyers using USPB shares owned by GAR.

Larson Angus Ranch
At Larson Angus Ranch (LAR) we are focused on providing the best in maternal and carcass traits available in the industry with an eye on producing high carcass quality cattle that are sound, fertile and functional. From our commercial herd in 2001 we shipped 130 head (85 steers and 45 heifers) to U.S. Premium Beef. The steers brought back premiums of $130.45 per head. They were 86 percent Choice or better, with 58 percent qualifying for Certified Angus Beef (CAB). The heifers brought back premiums of $108.67 per head. They were 91 percent Choice or better, with 58 percent qualifying for CAB. All cattle yielded better then the plant average.

Northwest Cattlemen’s Alliance has about completed our business plan. IF YOU HAVE ENOUGH WANT TO - the opportunity is here and we CAN take back our industry.

If we can find top quality calves we have all our beef sold.

[wd40]

kpb - there are several at least 2 cow kill plants in Alberta aiming at 250 head per day. The cost of entery is not hight, however taking pot shots from the side lines is pretty smug. There is currently around $300 margin per cow for these small plants with a closed border. That would payoff the plant in very short order and they remain off the radar of the big players who don't slaughter cows.

[rusty1]

Maybe I should re-iterate our project plan in Southern Alberta. We have nearly completed our business plan for a 2000 head per day plant for UTM's. It is focused, to bring a large buy in from alot of people with a low entery level fee. Our goal is to make this plant "OURS" meaning someone in Dauphin Manitoba or Prince George BC will feel as attached to it as anyone else. A regionally lable product will be recognized by Mrs. Consumer as "Oh thats the plant that our friends on the farm in Eyebrow Sk have shares in and sell their cattle to, I'll buy those roasts thanks."

And again if we can access the right cattle to match our marketing spec.s we have the meat all sold. A focused, committed, merrit based (value-based) supply chain can basically develope it's own environment and become a bit of an island to itself. (I'm being a little nieve here I know - just trying to paint the picture)

These big packers in Alberta are running at 110% capacity so they can't run us in the market. Plus their plants are out dated and very inefficient.

The plants in the North US are in trouble and very old, plus we have about a $50 to $70 dollar freight advantage over them.

We will become very public after the new year.

But I have a question, I know there are alot of old cows out there stareing you in the face evey day. We we get enough buy in fro cow calf producers we may well start the plant off with cow, till we get this wave of animals back in line. (I will add that we found a market for 50,000 head per year across the pond that Canada has neve particiaped in to any degree, and they don't like the Auzie beef). That being said, and Cowman I'm sure you can shed some light on my question. When a rancher looks at his Income Statment at the end of the year, is not approxiamtely 85% of the income from your calves and 15% from the culls.
So what's your priority?

[grassfarmer]

Rusty, not beating on your slaughter plant plans here but the US examples of cattle you show above making great returns - isn't that proof that selling on a quality grid system rewards good cattle rather than producer owned packing plants make producers more money per se?
As you say the existing big plants are running at 110% just now - but with your new plant up and running and the border open to live cattle will the big 2 still be happy for you to be killing 2000 head a day if they are short of cattle themselves?

[farmers_son]

Just a comment regarding the packers being short of cattle. There is a widespread notion that once the border opens the Canadian packers will be short of cattle. Or that somehow building more packer capacity will somehow short the market of cattle. Not so.

Once the border opens the big 2 Canadian packers will no longer have a captive market for those live calves and will have to bid up to keep them here. But they still have the cost of freighting those live calves south in their favour and they will competitive with the U.S. plants just like they were before. The big 2 will not be short of cattle, they will just have to pay the U.S. price minus the cost of freight.

Likewise once more packer capacity is built the Canadian market will not be short of calves. There is no limit to the number of calves that can be brought north across the border. The only limit on calves available in this market is the amount of silage we can grow and we have not come close to seeing that limit.

Our prices will be improved if the border opens because the Canadian packers will have to compete with their U.S. counterparts for the live fat calf, not because the market is short of cattle. The North American market will have lots of cattle to go around.

If you truly want to improve the returns for your production you need to find another way to market that production other than through the live cattle commodity market. The market for live cattle will never be short other than the extreme example we saw in the U.S. that occurred after our Canadian cattle were not allowed into the U.S. market. That was a very unusual situation, once in a lifetime.

[rusty1]

That's the point - both the packer marketing high quality cattle and the packer communicating their markeing needs to the producers and the producers responding with genetics and selections - allows both to win. That's called a "Win Win" situation.

We really need to think out of our boxes and exaamine situations that are working for others and learn what can be done, again "WE CAN IF WE HAVE ENOUGH WANT TO".

[cowman]

I doubt if there is room for another big player in the fat market in Canada? I suspect if Swifts comes in XL will have to go?
That could be a good thing however as they might consider moving XL Calgary into a cow slaughter plant?
Incidently Sunterra has a small plant in Innisfail Alberta and they are rapidly building on to it. The blurb in the local paper was they intend to kill cattle and further process them. I think it said around 300/day.
The plant in Salmon Arm is apparently killing cattle right now? In the end there were four major shareholders that got it going, as well as a few producer participants. Now I wonder who will make the profit?
I guess the point I'm trying to make is there are some cow plants coming on stream. Over capacity is not necessarily a good thing...especially if you are the packer! Quite frankly, there are going to be a lot of people lose their shirts on these plants? Which is okay...after all it is their shirt!
There was a reason why our packing industry, either died or went to the multi Nationals....the American packers are more efficient and have deeper pockets.
Now that isn't to say that niche market type packers can't make a go of it. But never get the idea in your head that you are going to run IBP/Cargill out of business, because it just ain't going to happen!

[farmers_son]

Based on Canada’s 2002 exports of live cattle to the U.S. of 1.7 million head and assuming a 200 day per year slaughter that works out to 8500 head per day more slaughter capacity needed in Canada just to process our 2002 production, not factoring in the subsequent increase in the size of the Canadian herd. There is presently 17,000 head per day slaughter capacity in this country. The 8500 head per day increase needed to eliminate live cattle exports represents 50% of our present slaughter capacity.

Yes we are not going to run the big 2 out of business. But our industry needs more packing capacity if we are going to reduce our dependency on shipping live cattle to the U.S. and that has to happen.

[JD4ME]

When you get your business plan in place I'd like to have a chance to look at it please. If I wasn't running a 4500 acre mixed farm with 200 cows pretty much by myself except for harvest help. I'd be talking to and emulating as much as possible Harris ranches in California. Or Creekstone beef. So if your business plan is looking along the lines of what they do I may be interested. I very much want to be involved "beyond" the farm gate and have started in other areas, the beef side has been a bit of a problem apart from breeding for the markets tastes and selling on the grid I have yet to get to the "next " level.
Thanks

[greybeard]

The basis of this thread is that small Canadian packers won’t be able to compete with the large multi-nationals. I think other sectors of the Canadian farm economy support don’t completely justify that theory.
In the grain handling business, the Canadian based outfits still have a major market share, despite some suicidal tendencies. Many smaller farmer-owned terminals are operating with good support here in Sask. Look at Weyburn as an example of shareholder loyalty. SWP had legendary support until they put in some VERY bad management who had a near phobia about competing with multi-nationals and started pissing money .
Small independent farm supply dealers control 30% of the market. Why is that? They don’t have any economies of scale in a commodity-based business. They also compete against Cargill and Con-Agra yet their market share is growing.
My point is, I think we underestimate farmers intelligence as a whole. They will chose that they want to deal with and make informed choices in doing so

[kpb]

wd, since you started this thread and, with your last reply, it seems that we've moved past telling each other to shut up, I'd like to say that I think anyone who invests in these new plants has my respect. But the fact is that I almost sank $100,000 into one that is not anywhere yet and I have done my due diligence and am not just standing on the sidelines criticizing.
As I have said before I hope these new plants will succeed and make a meaningful impact on our industry--not just niche markets which do not really interest me. My concern is that they will not be able to compete--time will tell but I think it would be a real shame to sink our hopes and money into something that fails---will make it that much harder in the future.
As I have said in another post, right now is the best opportunity that I have seen, ever, to make money in our industry. I suggested three weeks or so ago that producers with extra feed (just about everyone) buy 5 to 550 weight heifers, rough background them and sell them in the spring or grass them and sell them in the fall. At that time they were going for .85 to .87. They are now around a buck a pound but still, in my opinion, a way to make a real good buck. Think about it--if the border DOES NOT open they should go at 1,000 pounds next fall for .85 and you should net about $150 to $200 per head. That's your worst case scenario--but if the border opens you'll net at least double that. Put that over even just 500 head (say 1250 pounds of silage) and it's a nice pay day. And a producer can easily handle 800 to 1,000 of these feeders.
I don't think we'll ever have a better chance to make a lot of money and you can finance the whole shot through a feeder association. wd, I'd sure rather have my friends and neighbours investing in critters than in packing plants that may or may not happen.

[rusty1]

thanks for all the feed back -
cowman - firstly I would like to try one more time to help you realize that it isn't about "packer capacity", that IS NOT our motivation for our initiative. It's about getting paid for our product what it is worth, it's about becoming 'price makers', and if you don't want to take up your part and responsibility in the beef industry and it's future then like I said to kpb - SHUT UP. (I'm not a cheeky guy atoll) however the rest of the industry that has done the research and knows how and where to apply management change to do that, and has learned that there is opportunity to succeed, then rather than expound on a shortage of resources and research maybe you should ask some questions about 'how can we do it' cause I'm dang sure you would like to see it happen! Like I said before you spend more on a weekend with your wife (and so you should) than we’re asking for to push this along. Plus you can join us is sending a message to our govt. that “we are thankful for the fish, but can we borrow your fishing rod” to catch our own meal”.
And there are plenty of examples of producers taking charge of their destiny and being successful, as greybeard points out above. To correct what you read into my earlier comment - Swift can't come here, it's against the ropes and struggling and many in the industry south think they won't survive. 3 other giants have their sights on them and one is contemplating using us in Canada as a pawn in their chess game if we let them.
secondly - cowman - the American packers up here were more efficient 15 to 20 years ago. However today those plants are old, tired, and way out of date; that poses significant opportunity for us here and now.
About running out these two packers - your right, however as I said they are running at peak capacity, so for them to pay more for live cattle to beat us out won't happen either cause they are full.
And as (i think it was farmes_son) earlier in another thread said, there are 2 questions
1. Is there a future for your son in a beef industry that ships so much raw (live) product out of country?
2. is there a future hanging your hat on a US multi-national that is in a high steaks poker game with bigger thing on it’s mind that you?
And lastly Yes niche markets are begging for your calves (if they are any good) and you can get paid big premiums if you read the examples above. YOU CAN IF YOU HAVE ENOUGH WANT TO.

JD4ME - You're bang on as to who we are emulating, we'll try to follow the winners and learn from them, and they actually want to help us succeed and will help us do so, without control. Thanks we'll keep you posted.
wd - I'm sorry for the cheekiness -I'm sure you'll understand that we really get frustrated with all the negativism and na-sayers. My point is that it has to happen, if there will be a future, so lets band together put our heads together toward success and put together a 'strategic plan' that's a winner. And we happen to feel totally confident.
We examined a $100,000 opportunity and asked for an independent, third party appraisal of assets, to which to our knowledge has never been done, they are not trying to buy the used equipment out of the Cargill plant cause budget is blown.
Yes we might fail – but we’ll be on record as having gone down with a fight, and a little investment, (no more than a good TV) worst case scenario would be that if we get it built and can’t go it alone we could lease to some one else that can, but that’s the last resort.