Waiting

[magpie]

Well its been a year now and election coming with no resolve. I feel this border will not open until at least after the election in the US and then only in stages. I do hope I’m wrong but the way I see this is that Bush and Kerry are in a dog fight down there and there is not going to be any rocking of the boat until its over. Lets face it things in the cattle industry are doing quite well down there, prices are good, consumers still buying beef, packers able to bring in cheap boxed beef from Canada,no shortages,everyones making some profit. I know there are a few packing plants along the border are possibly in trouble because of lack of kill animals but not enough hurt as far as their election is concerned.I think we should have taken the money we received from the cull program and put it towards a state of the art packing plants since it amounted to very little amount on our farm. It would have amounted to more in the long term if we had a producer owned plants capable of competing with american plants.I would return the funds over if I knew it was going to a huge plant owned by producers. Even if the border does open tomorrow we still need our own plant as we don’t want to be in this situation when the next crisis comes along.Also like cowman says we will need some sort of government legislation protecting start up. The US are only fair traders when it works in their favor hence the millions of dollars lost in value adding in Canada. Every ag commodity traded across the border has been attacked at some point in time. We need this border opened yesterday but we also need our own packing plants and money would have been better spent on our own facilitys for longer term stability. Would open the doors to other markets and would not have our hands tied to whether we test or not.

[ALICIA]

The only trouble with building packing plants is that the same thing will happen that closed them down in the first place. The boarders will open and the USA will offer 10 cents more and all the cattle will be going across the boarder again. Its just a circle, and we just have to what it out the best we can.

[cakadu]

Magpie, you make some valid points and we do need competition for the two big packers. Not to go head to head with them, because that is a battle they would never win, but to provide products that consumers want. New markets need to be discovered and by providing the consumer with what they want, you can get these new markets.

[rsomer]

Cakadu: I have to take exception to your comments that a producer owned packing plant could never go head to head with the big packers. Not only could a producer owned plant go head to head and win, it has to. U.S. Premium Beef has 10% market share in the U.S. and is producer owned. If they can do it, Canadian producers can do it to. It is all about brands and economy of scale. Producers really can take on the big dogs and win. It is a mistake to underestimate what can be done by producers. We have far more competitive advantage than we give ourselves credit for.

[whiteface]

Really not being lippy here rsomer, but when is your next border-will-open prediction? Or is it really time to come up with an alternative plan... and for all of us... a REAL alternative plan that we can actually lobby our government with and get some results beyond just complaining in this forum although it does alleviate some stress for most of us and makes us feel heard. I like your drive and ambition, Joe-2, I personally have never thought anything signifigant ever just "dropped out of the sky" you've got to go after what you want. R-calf sure did. I want Kerry to get in in the states so that the whole border opening thing can get off the table. Kerry has no intention of opening the border and I would like for all of us to just get that whole hope plan right out of our heads and focus on testing, hormone-free beef and open new markets, probably even the states with our country-of-origin labelled Canadian, BSE tested hormone-free unique-quality beef. The "organic" market is taking off, so can tested hormone free meat and we'll bite them in the butt in a few areas. Mostley their Japaneese market but also the European and they think they're so COOL with COOL...maybe the world wants Canadian tested hormoneless COOL meat instead of arrogant-our-beef-is-the-best-US meat. COOL might backfire in their face. Forget about the border already, sorry rsomer, your prophet ain't comeing true, they're pretty dang happy down there and besides, they absolutly will not budge until Japan does and we already know what Japan says, even though the U.S. with all their guns still have not much barganing power with their inability to hear. Let's move ahead and not grieve for the past and certainly I don't care for the "begging" for the US to "play" with us. They won't. Move on. Tell you MP's time to test and kill our own meat and not only that maybe WE decide THEY NEVER get our "cheap" meat again.

[cakadu]

Rsomer, it isn't that a producer owned plant couldn't gain market share, as you have pointed out they can. Why would you want to start a plant that would do exactly what the big boys are doing? That doesn't make sense to me at all. They have deeper pockets than any producer own plant could hope to have and could drive you out of the marketplace if they wanted to. It just does not make sense to me to try and take market share away from Tyson - how would you do it if you were playing the same way they are?

Wouldn't you want the producer plant to provide products that are demanded by consumers and set yourself apart from the big boys? Be able to respond to consumer demands in a more timely fashion and be one step ahead of where the big boys are? Wouldn't it make more sense to have markets where these guys couldn't expect to go by providing products that they cannot or are not able to provide. To go beyond the beef in a box type of scenario.

I suppose you could go head to head with them, but it seems to me you couldn't win and wouldn't want to go there. You don't start out selling crackers and expect to take on Christie.

[cakadu]

I would also say rsomer, that the reason those guys in the states have 10% share is because they haven't taken on the big guys. I bet if you really look at them, they are flying under the big boys "radar screen" and that is how they are winning.

Let the big boys battle it out. Go to where you can make a difference.

[magpie]

Alicia the circle must be broken if we want not to be held hostage every time the trade does not work in their own favor. If this is supposed to be a truly North American market in cattle now, I just don’t see it with the way it is working. The US knows our cattle are safe as they would not be importing our boxed beef. They are only importing it because they see dollar signs for their huge packing industry. Also the rest of the world looks at this as a north American industry integrated sort of. The US is large enough to consume what they produce themselves, the 10% that they exported was the gravy that their packing plants made and yes they made a lot of money in value adding off the backs of the Canadian producers. I believe all those feeders that crossed the line were dollars leaving the pockets of the Canadian producer. You say they would raise the price 10 cents and cattle would be crossing the border again. Well if we had producer owned packing plants, I think we could capture the 10 cents and a lot more for the pockets of the Canadian producer. Those feeders would go to the US as boxed beef and anywhere else in the world as then we would be in control of the final destination of our product as well as price. Why is it that the packers would not open the books to the ag committee and later just swept under the carpet. Someone is hiding something, could it be gov’t moneys and huge profits on the backs of consumers and producers in this country. Why do our cattle have to be processed down their and then shipped back to our Canadian consumers. We will never be in control of our industry until we have the large state of the art packing plants owned by producers or at least partly owned by producers and or private Canadian companies who have a stake in the industry in Canada. I just think about the tidbit funds we received and how much did it really amount to everyone’s bottom line or what’s left of it. Yet collectively those funds could have possibly been an investment in our future of the industry for us and our children. As for the smaller plants that are trying to get started all the power to them and I do see them as filling the niche markets here and abroad and with futuristic planning they will succeed. As far as going hd to hd with huge plants, economies of scale would come into play. There is a whole lot of profit to be made in packaging and we as producers should be part of it.

[rsomer]

Whiteface: You asked when the border is going to open. It opened last September and the packing plants have been selling beef into the United States ever since. But until we either get more packing plant capacity in this country or get access for our live cattle to the United States, we have a problem.

Cakadu: You talk about packing plant competition. Prior to the border being closed to live cattle the competition in the Canadian packing plant industry came from the United States. In effect U.S Premium Beef and others in the U.S. kept the Canadian packers honest by making them bid up for live cattle.

If we were to assume that at some future point Canadian packing plant capacity will increase to meet or slightly exceed the available Canadian live cattle then there will be, by definition, competition for those available supplies. The new packing plants will not be able to hide under the radar screen of the big packers anymore and will be forced to compete for cattle. The money in beef packing is not beef in a box anymore, it is in the branded beef product. There is absolutely no reason to believe that a producer owned packing plant cannot develop a brand image superior to anything Cargill or Tyson might have.

About my next border will open prediction... I think that a certain amount of optimism about the border opening has kept what little strength we have seen in the markets. When I see someone make comments like they hope Kerry gets in I think it is a pretty safe bet that they do not have pens full of market ready calves like I do. Time is running out for the industry.
I still think the border will open sooner rather than later and there will be no advance notice, one day it will be closed, the next there will be an announcement on the USDA rule. I agree with most of magpie comments but believe the border has to open well before the U.S. election. I have a day in mind but will keep it to myself.

[rusty1]

Good comments - I even agree with rsomer.
One other scarry thought. I we don't build our own packing plant and suppose with me that either or both of the multi-national were to expand their kill capacity to take up the slack of the normal life exports, then how long before we all were relegated to sefdom.

you think they have control now, packer ownership of live cattle and feedlots would escalate beyond belief.