Wondering?

[gcreekrch]

I've been thinking about this for the last while and am finally going to put my thoughts out there for someone else to ponder.
We all deal with bankers,feed dealers,machinery companies, fuel agents, accountants, veterinarians,and so on. These companies/individuals all seem to have no qualms about raising prices for their services or products as their own costs increase and we as producers go on paying what the market demands or we go without.
I'm tired of hearing government and "experts" tell us that we need to reduce costs or get bigger in order to stay in business. There are a lot of darn good operators out there that can't cut any more corners short of selling the farm.
My proposal is that in addition to the numerous producer groups/orgs voicing our problems to the powers that be, we all take on the responsibilty of asking our local suppliers for support in acchieving a better playing field for all involved.
Are your local suppliers aware of MCOOL,Canada Gold Beef, the new "improved" Business Risk Management plans that aren't timely enough for a lot of folks etc.?
I have a hunch that there is a lot more support for us out there if we just ask for it. I had a visit with our banker last week and showed him the CGB website, explained to him what I knew of it, and told him that IF it had the support it needed to get off the ground, (ie. voluntary BSE testing)
that it COULD be a valuable tool for us. He was very enthusiastic to say the least.
I am asking all of you to put "the question" to the people you deal with, maybe they aren't as aware of your options and problems as you think they are.
Dave.

[dfarms11]

What is CGB????

[rkaiser]

Canad Gold Beef.

Good post Dave. Paind mymineral bill last week and could not believe the increased price for beef cattle mineral.

Time for us to become price askers instead of price takers.

Canada Gold Beef could do that.

I will take you comments on to the CGB founders Dave. We have already discussed how shareholders in the company need not all be beef producers. Maybe a different share offering for simple investors without the voting power that producers shareholders will definately have.

Any more good suggestions out there?????

[farmers_son]

If I understand the gist of your post correctly you are saying the “powers that be” (I am assuming by that you mean Government) could be influenced by suppliers to create a level playing field. I have no doubt that is going on right now only what suppliers think is a level playing field and what you and I might consider to be a level playing field are probably very different things.

You mentioned your banker. We need to remember bankers are in the business of selling debt. I find bankers can be real enthusiastic as long as you have lots of equity left and as long as land prices continue to rise your friendly banker will be glad to agree with just about everything you say. I speak with two senior people responsible for agriculture credit with the Alberta Treasury Branch and TD Canada Trust at least once a year (I know them personally, not for farm or business reasons) and they could care less about Canada Gold Beef. They want to know what assets you have, what your liabilities are and do you have enough cows which they could force you to sell in the even that you default on your loans; they call it self liquidating. I am not against bankers, they are a tool I can use, but they are not the farmers friend either and I never forget that.

I disagree with your statement “There are a lot of darn good operators out there that can't cut any more corners short of selling the farm.” The reality is that there are producers who are willing to get bigger and see ways to further decrease their costs per unit of production. Those are the producers who are buying at the farm sales, not selling. And there are lots of buyers at the farm sales I have been at this spring.

[smcgrath76]

They say the only thing you get from sitting on the fence is a sore crotch, but I am kind of on the fence on this one.
I agree with FS that there are people willing to get bigger to reduce their per unit cost of production. I am not sure for a lot of them that their return on assets or other measures of return warrant the opportunity cost, but it is their money and their risk.
I also happen to think that within our industry there are miles of slack that can be pulled out of the system. Think of all the producers that feed 200 days a year, or have tons of equipment and 100 or fewer cows.
Conversely, I think we have done a poor job of adding value and/or extracting money out of the marketplace, and to be honest, I don't think that a commodity mindset is going to do it. Someone will always produce a commodity cheaper, faster and better, driving out the margins and reducing the price. We need value chains, and they have to be built on voluntary participation, an investement of some sort from all parties, and a level of commitment.
In my personal experience it is a lot easier to find the commodity mindset in this country, than the value chain one.
I am not a fan of the P & M style of management (Piss and Moan) and believe pretty strongly in personal responsibility for a business. This includes aassessment of debt load, infrastructure, profitability, etc. I don't think our industry will ever lose the smaller guy or those that are not profit oriented. Lots of people are willing to pay to be a cowboy. Is it better to spend $5000 or $10000 on a hobby like skidooing, or to spend it so you can chase cows around?
There are lots of factors that drive the beef industry beyond economics. I think for a lot of the industry we need to forget what our neighbours are doing, or will think of us (other than to learn from innovators) and forge our own paths with willing partners.
Our greatest asset here is not our cattle or our AB barley fed beef, or even our food safety and our mountains and streams. It is our innovative and committed people - even the ones that disagree with each other.

[gcreekrch]

f_s, I should have known that you would be the first-maybe only negative.
It's funny that you and your cronies would turn down an offer of "free help".
As a matter of fact my banker and I talk probably once a month and my equity is doing just fine Thank You.
I have also observed that the folks in
"power" be it govt' or big orgs almost always lose sight of the people they are representing.
Could this be due to fact that they get that disease where the optical nerve gets crossed up with the large intestine? I think so.

[farmers_son]

I agree with smcgrath76’s comments.

gcreekrch: I am sure your equity is just fine. In the past I did speak with the manager of our local UFA to see if they were aware of the issues affecting our industry, and he was. But that is a cooperative. I question whether some of our other suppliers such as Cargill, Imperial Oil, the big banks really have the producers interest first and foremost. Maybe the answer is to change suppliers but increasingly agribusiness is consolidating and it is harder and harder to choose to deal with a supplier that shares the producer’s philosophy. If you think your local machinery dealer is worried about your financial situation you are an optimist. The farm equipment salesmen have orders lined up into 2009, they do not care about Canada Gold Beef any more than the banks do. I tend to think that if I am looking for answers I have only to look in the mirror to see who is going to help me. At the same time I realize the importance of producers working together. However the Prairie Pools are gone and our suppliers now are multinational corporations.

I did not wish to throw cold water on your idea. I was prompted to reply to your post most by the mention of the enthusiastic banker. While I am friends with a number of lenders I always know and I never forget that if push came to shove and the debt is not being repaid they (being lenders in general) will sell you out.

In general terms, the large suppliers know that Canada’s arable farm land will be farmed by someone and quite often it seems they prefer dealing with the large mega operators. Just my opinion, but I think you are barking up the wrong tree if you are looking for support for the small farmer to come from agribusiness.

[rkaiser]

And this folks, is why Canada Gold will not be a mandatory program. Those who choose to make their bankers and lenders think it is a joke will do what they please. I'll bet a thousand bucks that if I talked to the same banker as farmers_son did, he would have a different opinion of Canada Gold.

I'll see you and your buds in the rear view mirror farmers_son.

Randy

[kato]

I think that a good source of support for something like CGB is to be found in the co-operative movement that is to be found everywhere we look in Western Canada. The co-ops and the Wheat Board (No, I will not go down the road to that arguement!), are really the only big entities around even come remotely close to balancing out the power of the multinationals.

The prairie pools worked very well for a long time, and their model needs to be studied. Alberta seems to be a lot farther from the philosophical base of the co-ops, but backing for this business model is very alive and well in Manitoba as well as Saskatchewan. I don't know a single person here who doesn't belong to some sort of co-op or credit union.

If a big entity was going to buy into CGB, I'd put my vote out for an existing co-operative.

[gcreekrch]

SCMcGrath76
I wasn't thinking of the P&M way of getting support, more in the way of: I scratch your back and you scratch mine.

I believe that the only way for us to succeed is to work TOGETHER and not stand back and throw SHI.. on the other guy's ideas. It is better to try and fail than wonder if maybe I had only tried.....
The reason the big boys in this business are succeeding is because they work together. I am a believer that if someone is successful they are probably doing a lot of things RIGHT.

The businesses I deal with would sooner see me succeed so that I stay a part of the DEMAND they SUPPLY

Dave

[farmers_son]

I agree, the prairie pools worked very well for a long time and it is unfortunate that later generations forgot why the pools were started.

[smcgrath76]

I agree with the working together philosophy. I think where we often fall down is trying to get everyone to work together, rather than just those interested in working together.
I think we can work to help each other, but I don't think we can "save" each other or the industry.
There are big challenges, and that is what makes it fun. I think the CGB has some potential, and we will be keeping tabs. I am not sure if it goes far enough down the differentiation, documentation, difficult to copy road or not. Time will tell. I am sure as we learn from experience it will not be the same 10 years from now as it is today.

[per]

Can't help but wonder why some have changed their minds and now want to work together. Pools, Co-ops and coalitions have their place and the time has come. Is not that the root structure of CGB or did I miss something?

[per]

Hope you can think better than you type
Randy
Good post [canad goldbeef]

[farmers_son]

Rkaiser: I revisited the Canada Gold Beef site and am left wondering just what is Canada Gold Beef? What the website describes is system to get carcass data back to producers, not much different than the Canada Beef Advantage program. But you talk about something that involves creating a brand and selling beef internationally that was slaughtered by one of the multi national packing plants. No mention of that in the website. Which is it? Does the Canada Gold Beef concept change according to the audience?

Regarding the pools and the cooperative structure. I am a big fan of the cooperative concept but we need to realize that agribusiness has changed from what it was in the late 1920s early 1930s. see:

http://en.wikipedia.org/wiki/Alberta_Wheat_Pool

The pools were financed mostly with retained profits and deferred dividends. However today business is financed differently with publicly traded corporations obtaining financing from investment vehicles like pension funds. One of the problems with Ranchers Beef was its debt load and its inability to obtain the funding it required to see a successful start-up. It was basically under capitalized. Its debt load was too high and when the cash was not available to meet the next payment the corporation was bankrupt. See my posts above regarding the enthusiastic banker. The need to access investment was the reason the pools had to eventually change from a cooperative to a publicly traded company. The pool or cooperative concept is still valid today but we need to realize that structure limits the ability of the organization to expand. If for no other reason than income tax. The pools expanded in the days before income tax. It is much harder to create that kind of base with retained earnings in today’s world because we are looking at after tax earnings and a corporate tax rate exceeding 30%.