$500 gross

[Horse]

I just heard on the radio that the packers are making $500 gross per hd I dont know about now but not so many yrs ago they lived off the ofal I supose the costs have risen but that seem a little high does it not or have they been doing that good for a long tme.

[ValueChainFX]

Horse ask any of those packers and they will cry poverty. But a big hide can bring you $90.00 all the way down the line! I had a guy tell me the average sale price was $12.00 a head for cows. Must be a deal in here somewhere that a producer could get a little coin in his jeans!

[cowman]

On the same radio program (Rutherford)they had this girl representing the grocery stores. She claimed they weren't making one red cent extra out of all this! Yea right!
In July when fat steers got down in that 35 cent range IGA was advertizing halves of beef cut and wrapped for $1000 or $2000 per head. Now a 1200 lb. steer would have brought $420. Maximum costs to butcher work out to less than $200. Cutting and wrapping? Couldn't have been $1600??? Then take the liver, heart, kidneys, pancreas, pituitary gland, hide etc. etc. and you are looking at some major profit!
And at the same time the government was paying the packers for their old stock and putting up some major cash to "retrain" their workers. Oh I think Cargill and IBP and Safeway and IGA have done very well on this wreck? I suspect the shareholders are very happy?

[ValueChainFX]

cowman the word I have been getting is the retails are still working on a 24 % gross margin for the meat departments, however actual averages have been between 9 and 16 %. As I have watched this unfold I think you may find that the packers hold the key! After all didn't we give the american companies the key to the Canadian processing industry when they came here. Not only did we give them the key but also paid them more money on top of that from the government, which probably paid for someone down in the states to lay off at least one shift in each plant while they watched our crisis unflod!

[raymondb]

I would far rather we concentrate our energy on what we as an industry can do to get our margins to where we can survive then on concentrating on what others do to make their profits. Trying to put down another sector of our industry does not increase our margins. Perhaps we can learn at how the packers and meat markets make their profits and somehow put these learnings into our (cow/calf) practises. One example is that I see very few real profitable small meat packers or meat markets. Is there some learning here?

[cowman]

Not too hard to figure that one out raymond. Guys like you and me go broke and quit and then Americans move in with provincially backed loans and buy up our farms...maybe give them an immense tax breaks and some grants to help them out. That would be the Cargill method, I believe? We can definitely learn a lot from this scenario!

[raymondb]

Cowman--surely you can come up with more than one learning-there has to be at least one positive one for every negative one to really get to a well informed conclusion.

[ValueChainFX]

Ray we are learning, first we need to know the way the industry makes the money and see what we can do to set our own margins. As we have discussed we are on that road as we speak here. Margins for those $12.00 cows are being developed but for only a few at the moment. We are able to take many of those and bring the value up to near the level they were. Our challenge is still getting the animals killed (even in a provincial facility) Partnership programs with producers has been working well for us and we now have about 5 producers we are working with to develop programs. As we show proof of delivery more producers are looking at becoming involved in the larger scale project. This goes beyond direct marketing and pulls expertise from all the sectors of the supply chain to make things work. Costs and prices seem to be working out fine so far! I don't think we need to point fingers at the other supply chain participants we do need to understand how we can fit into those sectors and allow the primary producers to gain more value from the product.

[raymondb]

ValueChainFX-great process-Now is this learning and following the learning process future mapped? Then is there an education component to this process? My simple mind gets lost as I try to look into the future and then try and determine or guess at what I can do as other problems hit our industry. My biggest failing today is that I never was truly prepared for an event (such as BSE) to hurt this Industry to this extent Boy did things ever look rosey a couple of years ago when my biggest concern was getting enough pasture and feed and ensuring my alarm went off at 2 A.M. so I could check my cows.