Lakeside Sells to Nilsson Bros. For $107M

[wd40]

Welcome to FREE ANARCHY. While ag-producers place their individaul short sighted independence above any long term solutions. A bunch of barn cats.

WSGA - playes their fiddles while Rome burns.

[wd40]

Boy FS I'm amazed at how far you have your head in the sand. It's beyond belief.

"Nilsson Bros rise from owners of an auction in Clyde to a fully integrated multinational player and owner of Canada’s largest packing plant is truly remarkable, a Canadian success story."

It's called **** and pillage on the backs of peons.

[smcgrath76]

It is interesting. The Nilsson chunk of the $356 million will certainly be a start on a downpayment.
The price of live cattle is based on US beef - processing cost/margin - basis - countervail (if the AB gov program is countervailed). To the guy selling weaned calves it further includes - cost of gain * x pounds of gain.
While I don't think that nilsson's can directly change the fundamentals of beef supply and demand they are in a unique position of controlling nearly all of the sales facilities in western canada, having access to a large mandatory age verified pool of cattle, and the potential to be operating in a countervailed industry, where they can buy live cattle at countervailed price and sell beef at retail (domestically), while recieving government money for the cows they control and the cattle they have on feed.
I don't disagree with FS that they have seen a meteoric growth in their business. Whether it is a Canadian success story or a success for Canada is a matter of opinion.
Interesting days ahead for sure.

[farmers_son]

Indeed, there was a good deal of raping and pillaging going on in 2003-2004, which was the reason for the previous government's Commons Committee wanting to look into the packers books. But this is 2008. Live cattle access to the North American market has resumed and the short but sweet period of easy packer profits at our expense had come to a end several years ago. I do not think anyone believes the packers are making a killing today. That is clearly indicated by the selling price.

[grassfarmer]

"I do not think anyone believes the packers are making a killing today. That is clearly indicated by the selling price."
Well, yes and no F_S the price may be relatively low but on the other hand Nilssons "meteoric growth" and desire to expand their processing capacity indicates there is still an expectation of profitability - why else would they undertake this purchase?
I guess the money for plant automation in the AMLS can't have been that great afterall if Tyson aren't hanging around to collect it.

Sean, "IF the AB gov program is countervailed" your negative comments are based on the assumption that it will be countervailed. Why? it says in the strategy "Several principles guided the development of this plan" one of which was "Minimize the risk of countervail and WTO actions" Do you have evidence that it will be countervailed ? - the AB Government thinks they have designed something that won't be.

As far as anti-competition petitions go I wouldn't get your hopes up Rod.
I was informed today by someone in the know that "In practice, there are no anti-competition laws in Canada."

[ivbinconned]

It can be best described as CORPORATE COMMUNISM because CORPORATIONS own everything - including ALL governments - and run them with COMMUNIST tactics.

Why would an NDPer be afraid...this is what he advocates for the political realm??

In CORPORATE COMMUNISM there are no boundaries. Same for the political arena.

In 1984 Orwell called the system OLIGARCHICAL COLLECTIVISM, because the oligarchs (another name for CEOs) collectively owned everything. He said: "The oligarchs are the lords of the earth. Everything exists for their benefit. The ordinary people, the workers - are their slaves."

I find it puzzling why some who would embrace every left leaning party that comes along seem so perplexed by "vertical integration" or complete control of an industry by any entity!

Anti-combines legislation! Dianne Frances's book twenty years ago described how the corporate world runs Canada.

[wd40]

A little packer heads up. When we were working on the business plan for the Lethbridge (2000 hd/day) producer owned packing plant we hired X-CEO's and X-COO's (retired)from IBP and Cargil and National beef. Here is what they individually said.
1) While one of the men had to defend the books of IBP for an 8 year window of time many years ago because the USDA accused them of control. The showed one (1) RED month with a net profit of 33% after tax.
2) Another said Cargil would not build any major facility without assurance that they could capitalize it out in 3 years.
3) Another said that the common talk around board room table was "well we've kept the beef business down on it's knees long enough, it's time to give them some air."
4) Another said "we don't need to own cattle all the time, just enough cattle at the right time".

Every moment their awake they are thinking "how can we control the market.

So every time a packer opens his mouth just call him a lier.


You don't have to barry your head in the sand all the way to you'r shoulders.

[Willowcreek]

I don't know what it is in Canada- but in the States as of June 25, 2008

The latest beef packer margin index from HedgersEdge.com is at a plus $78.35 per head, compared with the previous index of $68.45.

Not bad money for owning them for only a few hours -Eh!!!!!!!!

[wd40]

Right WC - someone said several years ago that it takes
$3000 capital/hd. to run a cow
$300 capital/hd. feedlot capacity
$30 capacity/hd for a packer

hmmm

[grassfarmer]

Interesting - with margins at $80 a head in the US a plant the size of Lakeside even running at 60% capacity would net $61 million profit annually.
That would be some return on a $100 million plant if you could turn it around.
Hmmm no money in the packing sector eh?

I don't understand how having overcapacity in the packing sector causes the huge financial losses claimed. The big two in Canada had their plants expanded for them using taxpayer money in 2003/4, the plants are not bidding up live cattle prices to keep their plants full so where are the losses incurred? They can't find enough staff so they don't have workers standing idle? This part is a mystery to me, I suspect it is creative accounting.