ABP Resolution

[grassfarmer]

I don't agree with that chain of thought Randy. We delivered 6.25 beefs to Calgary today and came back with over $11,000. The ABP film showed the average retail price of beef at around $12 a kilo? Our rapidly increasing customer base are getting what they perceive to be a far better than store bought product for closer to $9 a kilo and we are making good money supplying them. I do not agree that customers need to pay more for beef to secure a living for producers. In my opinion there is plenty money generated in the production chain - the biggest problem is primary producers are currently not getting their fair share of it.

I also have no desire to have anyone fund my marketing efforts - if you make it easy everyone will be tempted to do it which will cut the margins of the entrepreneurs who have forged their own paths.

[farmers_son]

Grassfarmer: Coming back with $11,000 is pretty impressive, if you were able to share some of the costs of doing that it would be very helpful. I have always been under the impression that the costs of marketing relatively small quantities of beef were too high to make it viable. I know I saw somewhere that there was some work being done on traveling slaughter plants that would come to your place. The Province was doing something like that but I have heard nothing for a while. The cost of custom slaughter is not cheap.

In broad terms I agree with your statement “do not agree that customers need to pay more for beef to secure a living for producers. In my opinion there is plenty money generated in the production chain - the biggest problem is primary producers are currently not getting their fair share of it.”

However the solutions are not easy. I have pointed out many times there is a market for beef and there is a market for live cattle. Right now the market for live cattle is not enough to sustain the cow calf producer. I think it would be fair to say that the same greed that we see destroying the financial markets is alive and well in the beef value chain and that there are players up the value chain that do not have a care for anyone else.

And I certainly agree with Rkaiser’s comment “Directing the checkoff to other groups who are all about talk will get us no where.”

There was really a lot of effort and consultation with people who were ABP supporters as well as people who were definitely not ABP supporters in drafting the ABP Plan Review. Directional and refundable checkoff certainly was discussed and discussed some more but the decision was to keep the checkoff as it was. COOL is hurting us bad right now and the money to fight that issue is going to have to come from somewhere and ABP is in a position to tackle that head on because ABP has secure funding.

[grassfarmer]

Farmers_son, in the roughest of terms without going into a lot of detail we net just over $1200 per animal after paying around $420 to get the basic butchering done plus allocate a fuel cost for delivery. These are 600lb carcase animals. Extra processing like sausages jerky etc boost our gross return but not the net as we just pass on the additional charges for these services from butcher to customer.
Where we really make money is that these are low cost cattle - they are essentially just grassed yearlings (albeit with a higher level of management involved) from our herd that starts calving in mid April. The beef we deliver now comes off calves that were 500lb calves this time last year.
No high cost cow system here and no grain or feed-lotting involved in producing the beef. It works for us and the opportunities that are arising for sales are just amazing us.

[grassfarmer]

Farmers_son, No "the solutions are not easy." as you say - however I'm still looking for an explanation as to why the majority of ABP delegates support packer ownership of cattle. This is clearly a factor influencing the problem of their being enough money paid by consumers for beef yet not enough being paid to producers for live cattle to allow them to survive.

COOL certainly looks to be the scapegoat for poor producer returns just now - last year it was the high dollar, high grain price, before that BSE - always an easy scapegoat that prevents attention being directed to where it should be.
As far as ABP having funds to fight COOL i'm not so sure that is a great idea. Much producer money (and it is producer money not ABP money)was spent trying to open the border during the "BSE crisis" and I question if it achieved anything. Despite what ABP/CCA would have us believe the border opened exactly when the US packers (on both sides of the border) decided it was fortuitous for them to do so. COOL will only be revoked by the packers or their USDA puppets not by a bunch of Canadian cattlemen spending big money on legal fees.

[Sawbones]

All you have to do is looki to the lumber industry and despite numerous victories, markets are still at the whim of the US. We need marketing alternatives such as an EU designated plant. The government has supported these large plants and much like the clear cut forestry examples, the plants will close and move on or set the price to ensure their profit margin. The packing plant should not be the profit center but a service industry owned by the industry to process the beef in as efficient and cost effective manner as possible. As one oldtimer told me, "the only thing worse than socialism is unregulated capitalism. The greed scenario that is being played out in the States is an example of this. It has been happening for some time in our packing sector

[farmers_son]

Now to be clear, it is not fair or right to say the majority of ABP delegates support packer ownership of cattle just because your resolution did not carry the day.

You might want to try your resolution again this year given the changes in our industry.

Personally I have not seen where packer ownership bans have worked in the U.S. and question why it would be any different here. Such bans are simply not effective as there are many ways for the packers to own cattle and frankly there are producers out there who choose to sell, forward price or contract cattle to the packers. And shouldn’t that be their choice?

Really where do we get off telling a cow calf producer or backgrounder who they can or cannot sell their calves to? Why if you looked into it you may find those grassers you sold for good money last August may have been bought by a packing plant.

The line of thought that restricting packer ownership of cattle will somehow increase the market price of live fats is pretty much along the same lines of thinking as we see the Americans believing they can force the packers to bid up the price of their live cattle by shorting their live cattle supply through non tariff barriers like COOL. The problem of chronically marginal live cattle prices will not be solved that easily. My opinion only.

[grassfarmer]

This is where the debate gets interesting farmers_son
"Now to be clear, it is not fair or right to say the majority of ABP delegates support packer ownership of cattle just because your resolution did not carry the day."
Mr Butters told me that it was democracy that defeated this resolution so if that is the case the majority of the delegates present at the ABP AGM last year must have opposed the resolution hence my assertion that they support packer ownership.
There is no grey issue here - they are either for it or against it and if Mr Butters is telling us the truth about the democratic process last years results prove they are for it.

[farmers_son]

When I express my opinion that a ban on packer ownership will not work it does not mean that I support packer ownership of cattle.

It is a complex problem. I suggested you retry your resolution. There are no easy answers but more debate and giving people an opportunity to further think about and discuss the issue can never hurt. But there are no guarantees your resolution would pass because there are good points to be made on both sides of the issue.

[grassfarmer]

So what are the good points in favour of packers owning cattle? that's what I'll be fascinated to find out.

[farmers_son]

I believe I outlined what I see is the side of the debate against a ban on packer ownership. To repeat those points:

• Why should the backgrounder and grasser guy be prohibited from selling their calves to the packers if the packer is the high bidder and why should they take less for their calves because the packer is not able to bid.
• I see no way to make an effective ban on packer ownership as there are just too many ways around it.
• I do not see where bans on packer ownership were effective in the U.S.

I am not in favour of packers owning cattle but I am also not in favour of stupid laws that are unenforceable, do not work and cause more problems then they solve.

[rkaiser]

I would say that at least part of the reason that cow calf folks do not support a packer ownership change is the mistrust in the system. Even if the feedlots were to benefit --- even a little bit, the cow calf guy feels he/she will receive no benefit.

Your last point about finding another way to screw us is a perfect example of the mistrust and fear in the industry.

It has not worked in America because it is not national. Packer ownership changes could work if the producers got together and -- cow calf and feedlot -- and discussed the obvious negatives without adding more themselves.

The potential for market manipulation is as obvious as the nose on each of out faces and that should be enough alone to look for an alternative.

[grassfarmer]

Well it’s a good job there aren’t any cliffs near Breton, AB or I would have driven off one last night when we finally got done with the ABP Producer Meeting at midnight. The minority of beef producers living in the zone who actually bothered to attend spent the evening beating up on the Deputy Ag minister for the state of the industry today – low prices, shrinking cattle herd and packer profiteering. They wrongly blamed all these problems on the introduction of the ALMS which clearly has nothing to do with them.
The slick talking delegates then somehow convinced the audience, without providing one fact as evidence, that there was a positive side to packer ownership of cattle. So not only is it highly likely that a resolution on packer ownership will again fail at the AGM in Calgary, I’m embarrassed to say that the predominantly cow/calf producer audience of Zone 6 doesn’t even want to raise this resolution at the AGM. Congratulations producers, you have just voted for the status quo. Next year you can go back and bitch about the low prices, shrinking cattle herd and packer profiteering again but realize that you have got what you voted for.
Another “victory” for the ABP – and defeat for primary producers who will continue to struggle to make a living. Unbelievable.

[grassfarmer]

So farmers_son actually came up with one reason that could be articulated – that’s more than the delegates last night were able to. Basically - it would mean one less buyer for calves/grassers. What great logic, I remember you/ABP telling us recently F_S that the Nilsson takeover of the Brooks plant was good news as it meant we were adding an extra buyer (the Tyson plants in the US) Just a few weeks later how is that working for us? Tyson is buying zero Canadian cattle – whether fed in the US or here due to COOL. But COOL has been on the cards for years and the ABP didn’t have the vision to forsee this. The ridiculous argument that knocking out one buyer will reduce the price of calves at a time when this industry is strangled by monopolistic control does not bear consideration. On the contrary if you prevent packer ownership of cattle we could have many more buyers of calves, and independent feedlots. ABP – all About Backing Packers.

[smcgrath76]

GF - you have indirectly stated my concerns with the entire state of affairs including ALMS.
ABP, the provincial government or even an individual producer cannot overcome challenges with a negative attitude. Changing an industry is more about changing attitudes within an industry than making sweeping structural or legislative changes.
Attitude stops producers from working together to achieve critical marketing mass, developing branded programs, or even getting funds together to buy Tyson at Brooks.
While I have huge concern for the industry I don't think a bailout or an ALMS or a directional checkoff or banning packer ownership of cattle solves the overriding issue of attitude.
When it gets down to the brass tacks, you either change your business, fund your business from outside sources (government or off farm), or you quit. I think a lot of people are doing one of these three things right now.
For example I think that a better strategy for the AB Gov to take in the long term view of eliminating subsidies would have been to make every producer go through a farm business advisory service assessment.
We know the industry is contracting and will likely continue to do so, pending ethanol, etc. The prediction I saw on one economic enews this week projects 3.2 million cows when it is done. The remaining industry will also likely shift towards a more pasture intensive program and will contain a more engaged producer.

[per]

It seems we are riding along in a big ship. The primary producer is the engine, the feedlot operator is the gas and the packer is on the helm with the retailer directing it through the pass. The government provides the waves and the current.

The engine is running out of steam and if the folks on the helm don't fuel up the tanks we will have no choice but to go along 3 million cows lighter.

Low cost operators, some value chain groups and subsidized outfits will hold those remaining cows at the other end.

Until the will to work together in the same direction as SM says, and the retail sector and packer recognize the damage that is occurring by not looking after the cargo and fuel tanks happens, we will surely contract.