Here's a plan on how to own our industry

[PureCountry]

Not to pick a fight but, we wouldn't be in any control then would we? Just slinking around for scraps and crumbs - as coyotes do.

[northfarmer]

I should clarify my points further....when I suggested govt's role should be top regulate I am speaking to the issues around concentration of ownership and competition specifically......ie. they stopped bank mergers but not packer mergers, and there is more concentrtion in the packer industry than banking ...I am not supporting supply management and direct government control of supply and distribution.....I beleive a lack of effective competition and direct producer involvemnt in the value chains beyond the typical farmgate is why farmers returns are declining....getting farmers involved in the vlaue chains beyond the farm gate is key to returns improving....producer owned packing and retail sales could and will be viable but we then enter the realm where producers themselves may lack both capital and expertise.....coopetaive ownership structures have not proven to be the most efficient though can work....direct producer ownership is likley better if it can be done...IMHO

[kpb]

I appreciate the input on this post. I know the idea isn't perfect but it might be a starting point for more discussion?

A couple of things--I think PureCountry has it right when he says we don't want to be the coyote--the whole point of this exercise is not to get the scraps of our labour but the whole darn thing. We can have the scraps now--let's try to get as much profit as we can.

NorthCountry and others--I agree that government regulations are not ideal and some will not accept government involvement in our industry. But note that producers are not willing to invest in packing plants on their own--that has been proven by the lack of money put into plants during BSE and afterwards. These plants were crying for money and the producer did not step forward.

Now the plan I have proposed is voluntary--those who cannot stomach the government getting involved do not have to participate. They will be no worse off than they are now--still dealing with the big packers and the big feedlots for the export market.


I am not a fan of government involvement. But the plain fact is that the only way we are going to gain control of our product to the grocery shelf, over both the short and long terms, is through the help of government. This way we can set our price in order to make a profit on our product. Yes there will be a buy-in from producers and some debt there, just like the dairy guys. But the dairy farmers are the most successful in this country and I don't hear the consumer doing any crying about milk prices. If the consumer knows that by paying a price for beef that gives the producer a little profit, than the taxpayer will not have to pay farm welfare to that producer ever again I think the Canadian consumer will be on side.

Just my thoughts.

kpb

[cswilson]

The anology I was getting at was instead of trying to build a megaplant and get government involved to compete-franchise out meatshops and smaller abbatoirs to investors and hit a niche that the bigs aren't servicing. Like A Tim Horton's-every one the same size and you know what you are getting when you go in-use the same concept-a number of easily recognized purveyors of beef-spread the investment and benefits throughout the country.

[smcgrath76]

I like that idea CS. It is along the lines of what I think needed to be done with the regional plant concept.
It could potentially be started small (one or two locals) and grow from there.
The biggest challenge to our industry domestically is probably the regulation and interprovincial pissing match in terms of trade, certfication, foodsafety, brand inspection, animal disease, etc.
I think it matches up some of KPBs vision with less gov't involvement.

[cswilson]

It's easier to think a bit smaller and grow than to think tooo big and shrink. You have to crawl before you can walk-I think this franchise concept would be easier to attract outside investment too also. It's always nicer to float a new venture with somebody elses capital. Most of use are better at raising calves than we are at managing butcher shops and arranging venture capital.

[grassfarmer]

I'm not sure I understand this concept of yours cswilson. What you are talking about are essentially what I would call butcher shops - locally owned or franchised stores selling beef or meat only? These are what we grew up with in the UK, every town had one or two. How widespread are these type of butcher shops in Canada? do they exist in urban areas or only in some rural towns? In the UK they have largely gone the way of the dodo as most younger, and all urban consumers shop at supermarkets. Isn't this the case in Canada also? From what I read it seems that even the straight cuts of beef on the supermarket shelf are an endangered species to be replaced with prepacked "meal solutions" ie a tiny quantity of beef bulked up with some vegetables and sauce and charged at the same price per pound as a decent steak!

[cswilson]

Well the two we have here sell other stuff also-they seem to be competeing fine against the two big box grocery stores in town. If the concept was marketed right it would fly I'm sure.To build a megaplant to compete with Cargill you have to become just like them-then it's same s..t different pile for the producer.

[spudchucker]

No offense meant but I don't like the idea. You say that any young guy could just buy an older guys allocation.
I would like to milk cows again but there is no way that I could afford to pay the $30,000 per cow for quota. I small herd of milk cows these days is 40 which means 1.2 MM before I even put a cent into facilities, animals, land, machinery, etc.
This would go the same way and would ensure that only rich europeans and inherited farms could afford to be in the industry.
Too many of these policies (supply management) are meant to keep the status quo and protect old peoples retirement funds while keeping new entrants out.
Why make the beef business the same way?

[nicolaas]

The biggest problem with the supply management system is that only the rich can enter the industry since dairys were allowed to include the quota as an asset..and activley buy/sell a 'worthless' piece of paper. The trend for the supply managed system in canada is towards fewer but bigger farms, as the big guys buy up the quota. Isn't this the same thing that is happening in the USA dairy industry without the quota? Not to mention the grain/beef farms in Canada? I think we have to focus on getting more money out of the existing system. THat is the only way to save the farm in the long run.....how to do that is the problem. I figure the government would love to get rid of supply management,a major trade irritant, but then they may be on the hook for billions for compensation for the now worthles quota.

[grassfarmer]

Quota cost needn't be a deterrant to new entrants - this post started of quoting $100 per share to buy in to the project that could be fixed as the cost of "quota" for eternity.
Seems to me the "free market economy" we have already is ensuring "only rich europeans and inherited farms could afford to be in the industry" - and oil money people.

[spudchucker]

Do you seriously think it would stay at $100 per head if there is a guaranteed margin? When the quota exchange system first started in my home province quota was about $1500/kg. It is now 30K .
If there was no quota system then I would at least have a chance in the business. With the quota system, it guarantees that I will never have a chance unless I have a million dollars burning a hole in my back pocket.

[grassfarmer]

Some of the latter quotas that were introduced in Europe had a fixed value at time of creation set by the regulaterly bodies and they worked fine. They only increase in value in an uncontrolled marketplace where high margins can be earned. I don't think that that would really apply to the project we are discussing here. If, like the dairy world, you could keep 40 cows on a quarter and make $50,000 a year then the "quota" would be worth bidding up.

[cswilson]

How would quota affect guys who run stocker cattle-develop breeding heifers-etc. I can see it just another means for the government trying to whittle everybody's peg to fit in their preordained hole-when you try and legislate it so nobody fails very few succeed. If the dairy industry is so rosy why are their dairies going under in their supply managed utopia. A quota system would be good for me because I'd get it grandfathered but for my kids-can't see that happening. There'd be more ways to inflate the price of it and hide it than you can shake a stick at.

[kpb]

A couple of thoughts on this. First of all, the plan could be flexible enough, surely, to accomodate stockers, backgrounders, bred heifer producers, etc.

Secondly, there is no denying that, from a purely financial point of view, the dairyman is the most successful farmer in the country. Now you can say that this or that dairyman has gone under but I think that is a mighty rare occurrence. Year in and year out it is the dairy industry that prospers and the small hog and beef guys that wither on the vine.

In regards to quota--I favor grassfarmer's suggestion of a fixed quota. But for sake of argument lets look at spud's objection of a high entry fee to the industry based on rising quota. If it costs $1.2 million to own a viable dairy operation, what do you think it costs to own a sometimes viable beef operation? I figure a commercial cow-calf operator running a herd that sells calves in the fall needs 300 cows. I'm not talking about guys who work off the farm (how many dairy guys need to do that?)--but rather a full-time cow-calf man. The cows will cost $300,000 and in just about anywhere in Alberta the land base to run these animals will be at least $1 million.

All of this to gain entry to the cow-calf industry--an industry with an uncertain future, at least for the small guy (and unless we do something 300 cows will look small in 10 years time) and an industry where the prices the producer gets are set by huge, monopolistic, multi-national corporations and generally provide a poor relative living. As opposed to an industry where the prices are set by the producers themselves. And we like our current system???

Finally, again, the plan is voluntary. If anyone likes the current system, then stay with it, don't join up, keep the government out of your operation. The export market will still exist, just like it does now and you'll get the same price for your cattle you get now.

kpb