Alberta producers are facing a 50% increase in their checkoff from $2 to $3. The majority of these checkoff dollars are being spent on beef promotion. At some point it seems necessary to sit down and determine if the producer is receiving a benefit from the millions of dollars being spent on the generic promotion of beef.
The problem as I see it is not whether generic promotion of a commodity such as beef offers benefits, the problem is whether or not any of those benefits actually reach the producer who is funding the promotion. I suggest there is a disconnect in the value chain that reaches between the consumer down to the producer and that any value generated by beef promotion does not trickle down to the producer but stops at the packer level. As a result all the benefit of promotion goes directly to the retailer and packer, none to the primary producer.
The reason for this disconnect is that American calves, under normal market conditions, come into Canada and Alberta in particular and they establish the market price that Canadian producers receive. Canadian cow calf operators could spend $10 on promotion and still receive no benefit, the price they receive is going to have a ceiling based on what American calves can be purchased for.
In fact, if this new checkoff is approved the Alberta cow calf producer will actually be paying about $10 per head because margin operators such as the backgrounders and the feedlots will pass their $3 head checkoff down to the cow calf man.
I believe we need to sit down and realize that the real problem facing the beef industry is not lack of promotion rather it is that too much of the value of the calf is being sucked off higher up in the value chain leaving too little for the people who are actually producing the product. It is time to stop pouring good money after bad, the retailers and packers are enjoying record profits and dont't need our hard come by promotion dollars. We need to figure out how to spend our checkoff dollars in a way that actually benefits the producers who are funding the programs.
The problem as I see it is not whether generic promotion of a commodity such as beef offers benefits, the problem is whether or not any of those benefits actually reach the producer who is funding the promotion. I suggest there is a disconnect in the value chain that reaches between the consumer down to the producer and that any value generated by beef promotion does not trickle down to the producer but stops at the packer level. As a result all the benefit of promotion goes directly to the retailer and packer, none to the primary producer.
The reason for this disconnect is that American calves, under normal market conditions, come into Canada and Alberta in particular and they establish the market price that Canadian producers receive. Canadian cow calf operators could spend $10 on promotion and still receive no benefit, the price they receive is going to have a ceiling based on what American calves can be purchased for.
In fact, if this new checkoff is approved the Alberta cow calf producer will actually be paying about $10 per head because margin operators such as the backgrounders and the feedlots will pass their $3 head checkoff down to the cow calf man.
I believe we need to sit down and realize that the real problem facing the beef industry is not lack of promotion rather it is that too much of the value of the calf is being sucked off higher up in the value chain leaving too little for the people who are actually producing the product. It is time to stop pouring good money after bad, the retailers and packers are enjoying record profits and dont't need our hard come by promotion dollars. We need to figure out how to spend our checkoff dollars in a way that actually benefits the producers who are funding the programs.
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