What's Age Verified worth?

[wd40]

Well is some places

USPB is Currently Paying $35 Per Head Age and Source Verified
Premium
USPB is currently paying a $35 per head Age and Source Verified (ASV) premium for cattle that are verified as 20 months of age or younger and delivered to our Liberal and Dodge City facilities. This premium is dependent upon the Japanese trade remaining open to U.S. beef products and our plants continuing to be approved to export to Japan.

Eligible ASV cattle must be shipped from a feedyard that is an approved supplier in a USDA certified supplier program. See Fact Sheet on USDA Age Verification Programs in the USPB Age and Source Verified Program section on USPB’s web page.

Following are key points regarding the benefits of marketing cattle through USPB to receive age and source verified premiums and information that will help you participate
in our ASV program:
● $35 per head for finished, age and source verified cattle that are 20 months of age or younger.
● ASV premiums are in addition to all premiums currently offered on USPB’s grids, including branded beef premiums such as Certified Angus Beef®.
● Individual carcass data is provided at no additional cost.
● A freight credit of up to $0.60 per cwt. to help reduce transportation costs to deliver cattle to our plants.
● A $1 per head rebate for EID tags on cattle marketed to USPB’s Kansas plants, paid upon request.

Anybody ready to build our own packing plant yet?

[grassfarmer]

Sorry, I like the idea of producer owned plants but I'm not risking the capital required in the current environment (packer status quo and the AB Government backing of them)for a possible measly return of $35 or less extra per animal. Just doesn't make business sense for me.

[wd40]

So.... my question GF. You must have been around the block enough times that you think you know how big of an investment you might HAVETO make.

So how much do think that would be?

Secondly how much would you be willing to make with the right proposition?

[per]

wd, are you propositioning Grassfarmer??? ;o)

[wd40]

Well depends on what you mean by propositioning. However, everybody has a price and to make such a blanket statement actually means very little.

Is someone expecting GF to invest $500,000; $100,000; $5000 or maybe $2000?

He said he “I'm not risking the capital required”. So what does that mean? Build it himself or what.

So again the real question is – If the right business plan was properly developed from good advice, etc, etc; -
What is GF or anyone else willing to “put their money where their mouth is”!

And before someone foams out at the mouth with all the problems and questions about all the how to’s.

Let’s suppose, because we can and have to, because it ain’t gonna happen unless the “If the right business plan” is developed and put onto the table.

So again how much, or rather I should say “how little” an amount would GF or anyone else be willing to invest in the future of the beef industry.

The right plan is not the problem. That just takes effort, measurable effort. The really BIG question is do we have the will and how much will it take.

Would you of GF or other put $1000 at risk or $2000 at risk or $3000. I’d like to know. Because once you know what volume of resources are there you build/match a plan to fit it.

[grassfarmer]

Guaranteed 20% return on my capital. That's the price I would want to enter into a producer plant proposal in the future. I want cash too, not cattle processed in lieu. I am not interested in investing and "possibly" getting an enhanced return for cattle down the line if everything goes well, the plant gets built, and if the Cargills and Nilssons don't run you out of business.
Might not be the answer you want but you asked the question.

[wd40]

I respect your position GF. So what you're saying is NO MATTER WHAT THE PICTURE, you'd never put any cash in the venture.

I know your smart enough to know that you (basically) can't invest any capital in a guarateed ROI.

Just to be clear here. Economics 101 - it takes cash to build something.

And I know darn well that nothing you do from day to day 24/7/365 quarantees a fixed ROI.

So no you're not willing to answer the simple basic question as have most of your peers.

How much cold hard cash would I invest along with my neighbors to see a producer owned competitive plant? All thing being equal.

I don't think that's such a hard question to answer. But it's one very few if any have answered yet.

[wd40]

I should add that I believe that with the right picture Cargill would go home and NB would wish they had not bought that old plant in Brooks!

[per]

Wd, come at it from the other direction if you are trying to raise capital for a plant. How many dollars do you need? Several of us have lost money going down this creek already so present your plan and see who steps up. I have to say though that there isn't much left my pot for these pursuits.

[grassfarmer]

Not really true wd40. If you borrow money from a bank you know what it's going to cost you. If you borrow it from a venture capitalist it will come with an expected return or he won't participate. That's all I'm saying - I would invest as an investor for a given return.
I have wasted too much time listening to consultants who don't know the beef business, don't know the cattle business but claim to know how to structure a business plan. I've seen plenty of them do well out of the farmers initial stake investments and move onto their next project. Don't misunderstand me wd40 - I'm not labeling you in this category, I'm just sick of hearing from guys like that who urge investment from desperate producers with no idea if or how the deal will pan out but assured that their own wages and expenses are paid. To me that type of consultant has done more to scupper producer buy-in than anything else.
I honestly cannot see any form of producer owned or funded packing plant working successfully as long as it can be sabotaged by the existing packers and our own Government. That is partly why I would only invest for a 20% guaranteed return. I suspect that is also why we have not been overwhelmed with venture capitalist offers to fund such plants. In my experience if these guys think it can be done they will back you.
I'm unclear whether the situation changes enough if the cattle herd shrinks and we are left with one packer instead of two to open a new window of opportunity for producer owned capacity. How do you see that one play out?

[wd40]

I'd have to refelect on your last paragraph.

However let me tell you that I to sacrificed a year of my life to the point of laying all I had on the line.

Just cleared up my own BSE issue last March. Was in the service industry at the time so didn't benifit from any BSE funds.

However let me also tell you that the first thing a bunch of producers should do is load a bus and tour Kansas and USPB their value chain menbers and feeders.

We don't have to re-invent the wheel. The model is alreay a shinning light.

[smcgrath76]

We invested in a plant and a business
plan and lost our investment. That's
life and that's investing. It's just
money.
For myself, I would consider investing
again, however I have begun to ask, if
it is such a good investment for
investments' sake, shouldn't you just be
able to take the plan public and receive
financing through Bay street or the
general public? I don't see people
lining up to invest in beef processing
capacity. On the other hand, I think
there is some potential for custom kill
for a value chain, or negotiating with
an existing company such as USPB to
operate or come up with a creative plan
to run at least one of the existing
plants in Canada that is currently non
functional.
The chicken and egg, is that a market
has to exist for the beef to obtain a
premium for a producer owner, but the
beef has to exist to obtain a market.

[kato]

Which is why it makes far more sense to take a well run small operation that's already in existence and make it grow. There are more than a few of them around.

Starting from scratch is a difficult thing to do. How many people could start a farm from nothing? If they had to borrow to do it? Zero. Same thing with packing plants. How many people could take a farm that's paid off and has some equity and make it into a bigger farm? Lots of them could. Debt load and cash flow problems are killers.

What we need more than anything is for our government to get it together and restructure the inter-provincial trade regulations, inspection standards, and in general do what they can to encourage a business environment that promotes small processing rather than restricts it.

And guess what? They've already made an announcement about reviewing the inter-provincial regulations. Once we see if they make some good fixes to it, the future of producer owned facilities just may get brighter.

Just my opinion. And yes, we invested in a plant too and watched it scuttled by regulations and financing delays.

[wd40]

In response to GF - A friend who sat under the armpit of Bob Peterson (CEO of IPB now Tyson) said there average ROI after tax was 33% and that was in the 80's!
The Cargill’s of the world will not build huge facilities unless their prospectus shows capitalization in 3 to 4 yrs.
To smc: shouldn't you just be
able to take the plan public and receive
financing through Bay street or the
general public?
Good point – but I think that the only real salvation for the beef industry and to give us the unmitigated world market lead, power, and influence where needed is to…
1) the industry needs to be under its own control. Plus
2)When we have a stake in our own destiny guess where our commitment will lay.
3)Plus may I add there are huge profits as I pointed out above to the packer and when you examine the USPB model, to the producer as well. You will never get those benefits from a corporate entity. You would be surprised how many ag-producers have shares in the Cargill’s, Vitera’s and Monsanto’s of our industry.

Kato - “And yes, we invested in a plant too and watched it scuttled by regulations and financing delays”
I have numerous small meat/butcher/private kills that will talk to you for hours (literally) and tell you how the regulations are trying to kill their business. Shame on Canada and the CFIA! As long as you have the multinationals feeding the govts with the information regarding regulations it will only get worse. They want the small boys out and will never stop working to that end. One way or another!
I applaud the small successful initiatives, don’t get me wrong. However to really impact and give back the opportunity to have a vibrant industry and capitalize on the markets that are there, we have one choice, either do it big enough or capitulate to the Multi-nationals (which unfortunately includes our native Alberta boys).

[Sawbones]

It's obvious WD40 that you have the same addiction as I have
Another plant in Alberta would probably lower the basis by at least $5/cwt and that's a cash infusion into the beef sector of over $70 million/yr
As far as a business investment GF...if you were to take your TFSA (tax free savings account) and invest $10,000 in ACT (Alberta Cattleman's Trust) you could be part of a group that could lease slaughter capacity at an existing facility that would be federally inspected and EU certified with world class management. There would be a national retailer willing to enter into a long term contract for the cattle. As WD40 has stated, there could be a 33% return but as many will also state, you may be another one to add the stories of investments gone wrong.
One thing that I'm certain that WD40 would agree on is the status quo won't work.
We are looking for 200 investors at $10,000 to join with existing partners.
my email is g.etherington@hmsinet.ca and your contact will be kept confidential