Producer owned Packing House

[rusty1]

Lets remember that 1 million head plus are shipped across the border, we pay them to market our beef and do the labor of cutting and wrapping. da
If we built a producer owned ifrastructure to go a bang up job on for our western Canadian consumer, thats all we need to take care of. We can let the multi-national play their commodity beef just as they have always been doing.

[rusty1]

another thought - If we could design a packing plant commited to vertically passing back the carcass value to the producer, we could make huge genetic improvments in our domestic herd. I see average daily gains in any group of cattle from 1.5 ADG to 6 . And I am sure that the same groups have individaul values ranging from a -$200 to a $300. That's a huge range. But without knowing which ones they are I can't do anything at the ranch. If we designed a Western Canadian solution our own (grass roots owned) I think we could survive.

Right now our system is like a hour glass - With the Retailer(consumer) at the top and us the producers at the bottom, and the packer (3) in the middle. Therefore they are able to get their "pound of flesh" out of who ever they want. When they take it out of the consumer, we lose, when they take it out of our hides we lose. It's time to take back control of our industry!!

[ValueChainFX]

Rusty both the above comments are right on the money! Your money, your future and with cooperation in your pocket. The retails have already been looking at the same picture and some are totally open to making the change.

[rsomer]

rusty1: Canada is not the only country in the world that exports live cattle and as you say hire someone else to cut and wrap it. Canada is the world’s second largest exporter of live cattle, France is number one.

I am a staunch supporter of producer owned packing plants. And I would go one step further and say that producer owned packing plants can compete head on, one on one, with the big packers. Producers could effectively develop a superior brand image and capitalize on the producer image of quality and integrity. Cargill and Tyson Foods cannot compete with producers when it comes to a clean, desireable brand image. For instance right now the RancHers brand image is being used to market beef for Cargill and IBP. Producers would benefit 100 fold more if that producer brand image was marketing their own product. A successful brand image is more important than organization size when it comes to retail marketing.

And I have long advocated passing down information from the packer to the producers. Although I think the real advantage of a producer owned packing plant is price stability not necessarily profitability or information sharing. If gaining further profits were the only reason for a producer to build a packing plant the producer might realize a greater profit from investing directly in Tyson Foods or IBP as ivbinconned has illustrated.

[grassfarmer]

I like the idea of using the RancHers image to promote Alberta beef and hence actual beef producers bottom line. It could be difficult to persuade ABP that the check-off $ they collect not go to directly benefitting their masters, Tyson and Cargill though.

[rusty1]

Sorry Rsomer - I missed one. We have had it pretty good not withstanding we generally allow some multinationals represent our production to the consumer, our biggest asset. da

[cakadu]

I am all for producers making more money and seeing more of the value that they have in their product.

What I wonder about is the return on the investment that goes into the plant in the first place. When talking federal plants, those take a fair chunk of change to build and if you're going to be putting money into the infrastructure, you also have to have a way to realize some return on that money, in addition to getting more, or having price stability, for the product you are putting through.

It is so very true that we must love what we do, but we must learn to respect what the customer wants and be prepared to deliver it.

In this vision of federal plants in many regions in Canada to help rural development, what sort of mechanisms are in place to ensure that it doesn't become a game of "survivor"? Is there a framework to allow for continual partnering to be accomplished? What about mechanisms to ensure that supply does not outstrip demand, thereby eroding the price stability - just as it is in the system we already have? Markets will have to be continually developed and maintained because consumer tastes continue to evolve as do demands such as we have seen in recent months.

Will consumers be prepared to pay more for all of these added food safety mechanisms, or will they want to see them in place and continue to pay the same price? While consumers say they are willing to pay to get what they want, many times when push comes to shove, they don't want to pay the premium to get them. While I would very much like to see a producer get paid what the product is worth, I'm not entirely convinced that building new plants is the way to go.

[rusty1]

cakadu - you say "I'm not entirely convinced that building new plants is the way to go."

What's you're better idea or plan.

[cowman]

Has anyone ever considered this?
The federal government lately brought out the $80/head subsidy for young stuff. I think the bill came to something like $680 million? Which the packers promptly took once again! Would it maybe have made more sense if the government had gone down to Cargill and IBP and told them, they were being bought out! Give them $20 million each and tell them to get over the border by nightfall! Hire the entire staff on the spot(they are just about all Canadians anyway) and it's business as usual the next day? Issue shares to everyone who pays the checkoff and get out of the way!
The government could then regulate the packing industry as they would no longer have two big American pirates whining about unfair practices etc.!

[rusty1]

You're bang on Cowman - it would be way better to create a legitmate environment and take care of things before the horse is out of the barn door than to bail out a disaster. Stop gap measures are only temporary as you know.