Open letter from Rick Paskal

[SheriMonk]

Wait.
One packer is ok?
When we were going from three down to two, a lot
of people spoke out - myself included.

Why on Earth wouldn't we speak out now when we
go from an oligopoly to a certified monopoly?

And do you think that Cargill can ramp up
production enough at High River to make up for
what XL was slaughtering?

There is a lot more to come out from this story. A
lot more. And I will get it.

[grassfarmer]

Competition with less than 10 bidders, certainly less
than 5 is very poor in any case so I'm not convinced
going from 2 to 1 would be that much worse. But of
course there wouldn't really be just 1, just as there
aren't really only 2 now - the US plants could still bid,
maybe a bit more actively than they do now. Tyson,
JBS, XL in Nebraska. All I'm saying is I don't think we
should bail this shower out again because we so
desperately need them, or we couldn't manage
without them. They are bottom feeders with no
ambition to market a quality Canadian product and
without them maybe, just maybe, we have a chance to
build something better.

[ALLFARMER]

We already are down to one plant (basically).

How much competition do you think XL and
Cargill are for each other?? With their horizontal
intigration and captive supply?

I bet XL and Cargill never bump into each other at
the golf coarse. (sark). Ha ha

[ALLFARMER]

The only reason we have good calf prices is
because of competition from the grains and
oilseed sector. If XL and Cargill want to be in the
meat business they better keep calf prices
reasonable and stable, and they already long now
this. 2 years ago NBI was worried about the
number of guys quitting. If prices would have
dropped big time over this current mess hundreds
of more cattle producers would have left. With
$14 canola maybe myself included.

[ASRG]

grassfarmer: I do remember when Cargill came in around 1989. At that time there were basically five plants of any importance in Alberta and the new state of the art Canada Packers plant at Moosejaw. There were a few bit players like Nilssons Edmonton packers and Grand Prairie Packers but the big 5 plants killed the majority of the cattle.
XL Calgary was a complete bust....heavily in debt to the AB government, an aging plant on valuable Calgary real estate.
Lakeside Packers at Brooks was a hole, the pariah of the meatpacking business.
Burns in Calgary was old and again built on some very valuable real estate.
Canada Packers Red Deer was a 20 year old plant that had always upgraded to tha latest technology. Lethbridge Canada Packers was slightly older but well maintained and again with the latest technology.
Cargill got a very sweetheart deal from the AB government. No one else was able to get the kind of deal they got!
The management of Canada Packers saw the writing on the wall and sold out. This packing chain (CP) was a very solid well run business (the best and most profitable packer in Alberta). Burns was well run but not much investment had been going into their plants.
XL was poorly run, heavily in debt and probably facing bankruptcy.
Lakeside Packers was a bottom feeder.
When Cargill opened the management team was almost exclusively former Canada Packers employees.....in fact if you stopped in at the office at High River.....you might have thought you were at CP Red Deer!
In the end the poorest packers went on to eventually become XL Lakeside....the best packers quit because the game was rigged and they took their money and left!
How I know a bit about this was I had a couple of thousand shares in Canada Packers.....and I can honestly say it was one of the few investments I ever made that really paid off!

[ASRG]

grassfarmer: I am not in favor of a bailout or subsidies for the big packers....but then again I'm not a cattle feeder who depends on XL.
Yes, I sell feeder cattle to the feedlots that supply Cargill or XL, but in reality I can break up my land and do something else with it. I should retire anyway.
It is kind of disappointing that we are in this situation? Mismanagement by the government has got us where we are today....and it doesn't look like it is getting any better?
I think when the government screwed us on the BSE deal a lot of cattle farmers lost whatever trust they had? The exodus started then and it isn't over yet.
I can see a day when Canada won't be able to feed itself....all due to piss poor governments!

[kato]

In Manitoba there were plants as well. There was Swifts, Burns, and Canada Packers in Winnipeg, as well as Burns in Brandon.

They are all long gone. Outbid by Alberta money. We didn't like it when it happened, but the Manitoba government wouldn't even consider competing with the treasury of the Alberta government to lure someone else in.

The business has changed from one that pretty much processed Canadian cattle for the Canadian market, to one that processed for export. The way cattle numbers are going, we'll soon be back to growing enough to only supply the Canadian market. Problem is that won't happen. Our beef will still leave the country, and will be replaced by imports that have been processed elsewhere. We will continue to export low value commercial/industrial beef, while importing value added beef products that we didn't add the value to.

What does it take to turn it around? IMHO it takes the will to do it. Problem with that is that not very many have the will or the energy to do it.

ASRG, I agree on the government thing too. It's been a big house of cards that started falling down on May 20, 2003. And it didn't have to happen. Just imagine where we might be if the BSE fiasco hadn't happened??

[wilagro]

Yes, the Canadian government knew all about the BSE in Great Britain and Europe and still allowed importation of live cattle and bonemeal from those countries.

I lay ALL the blame for the BSE outbreak on stupid, stupid people who didn't do their jobs properly. Even after BSE infected cattle were discovered they allowed infected material, as crude protein (from the rendering companies), to be sold to feed mills for mixing with feed as a protein supplement.