Ranchers Own

[grassfarmer]

I had an interesting talk with a guy from Ranchers Own new generation Coop yesterday. They aim to build a plant for over 30 month cattle just west of Edmonton and are seeking shareholders. The deal is $5000 per share which gets you 15 cows a year killed. $500 down now with the rest taken off your cow sales. They aim to break sod in August 04 and be killing by April 05. They have a market for the meat overseas in various countries tested or untested. I was really impressed with their plan and would suggest anyone interested look at their website www.ranchersown.com. It's the brightest light I've seen since this mess began and feel it is a good investment to add value to your culls. Regardless of if/ when the border opens I don't think over 30 month cattle will be going anywhere for several years as live cattle.

[poorboy]

We must remember that we have probably the cheapest cow prices on the planet right now. It is real easy to ship ground beef overseas when we look at the value of our cows. If other markets open and our cows are worth more elsewhere, then ranchers own will have trouble purchasing cows to send overseas. Cows are sold to end users who look at it as all the same product and purchase the cheapest they can find. It is not really a value added product.

If some other plant starts offering more for cows, then ranchers own will have trouble getting a supply. The history of these plants making it is very poor.

Don't get me wrong, I hope that it can make it and has a very prosperous future. No one was talking about building this plant when cows were 70 cents. We must remember that the math makes sense at current cattle prices, but these prices are not what is going to be the average.

[rusty1]

I applaud their efforts. The need is huge no question. Northwest Cattleman's Alliance will be needing around 1000,000 hd. of OTM cattle with a per head capital cost of around $250, maybe less. You can buy a share/membership for $1000 with no restriction or limitations to the number of head you want to sell to it. That investment will also include the opportunity to market your Under Thirty Months cattle. We'll need around 4 to 500,000 head of feeders too.

[cowman]

Rusty: You need cows at a cost to you of $250? Well you might get some no doubt, but how is that sustainable? Not for your plant but for the cow/calf guy? Maybe I'm an idiot or something but I just can't see that as making much sense?
Somehow or other I just don't get it! You pay $250 per cow and sell her hamburger for what? $700...minimum? You sell the hide for what? $60?
Now maybe, like I said I just don't get it or something, but I'm not too keen on getting screwed by a co-op, just to say I sold to a co-op instead of a big packer? Am I going to maybe make up the loss on the back end? Is there some sort of guarantee I'm going to make up for the loss on the other end?
Quite frankly I'd rather shoot the cow than let someone screw me that way!

[rusty1]

Whoa cowman - The capital cost of the plant on a per head basis is $250. The cows will be bought at market value.

[ivbinconned]

According to their web site their capital cost will be around $333 per. head. That’s one thing that will kill the viability of these small plants.

The economy of scale is critical when things are good, let alone now. That includes how long it will take to make a load of product for a buyer to even consider. I wish them well, although we need these initiatives to be here 10- 15 years from now, and that leads me to this thought.

Even though most of you here have probably forgot more about this industry than I know......

Picture this; One plant (not many), built by cow calf shareholders from 4 provinces, located (determined with specific requirements to meet the needs of all shareholders) but lets say, for this discussion, Stettler Alberta, giving it a reach into all 4 Western provinces.


Built by Share holders from four provinces, means building with no debt, making it immediately competitive in the market, and in construction. With today’s steel prices, built for less (one project instead of 4-5).

Built to process 2500 per day means it would deal with all OTM produced per year, plus start eating up the back log.

Built with the assurance that it will always be Western Canadian owned no matter how low the feds keep the dollar. Foreigners can buy the burger but not the plant.
Just imagine if Tyson and Cargil’s two plants where on the other side of the border, but just as dependent on Western Canadian fat cattle, would they not then lobby on are behalf??

[grassfarmer]

I should add Ranchers Own have also plans to sell to some of the big Canadian food stores also - not just overseas. I also put the wrong website URL up it is www.ranchersown.ca. I believe they could be onto a winner - don't kid yourselves the border will open to Canadian cull cows within the next 5 years - it won't happen and nor will prices of 70 cents a pound.

[cswilson]

Now everybody don't faint but I'm tending to agree with cowman on this one-the idea of one central plant is probably as good as any I've heard. My guess that the most central location both geographically and cattle numbers wise would be somewhere around LLoydminister-if were talking brood cows.

[poorboy]

Location would have to be such that it would provide the cheapest freight and a good labor pool. There is no doubt that it will have to be close to a major city in order to find the labor required to operate a plant.

If we look at the grain industry you want to be located such that all the freight for your product is moving towards your major end user. That is why grain terminals are built close to the west coast. The major customers need to have grain loaded on ships on the west coast and so it makes sense to have all the grain from central Saskatchewan and Alberta move by truck to the west as this is its ultimate final destination. It would be too costly to build a giant grain terminal in Regina and truck all Alberta grain to Regina only to reload it onto rail cars and haul back to the west.

The same with a packing plant. If the majority of sales are going to go out of Vancouver then the plant should be built close to West coast access. If sales are mainly south bound it needs to be built on the #2 highway. Either way it needs to be a major city for labor and backhaul freight reasons. Most refridgerated trucks bringing produce up could backhaul beef, be it by road or on a rail car.

[grassfarmer]

Poorboy, you bring up some good points. Ranchers own have chosen their site because it is next door to Edmonton and a big labour pool - they knew it wouldn't work even beside a town of 50,000 people. Also water supply was mentioned as their land sits right on top of the main water supply line - would that be a problem at somewhere like Stettler as someone mentioned? Edmonton obviously is not as close to the TransCanada hiway as Calgary but is still easily accesable by road and is in a good position in relation to the cow supply - with 70% of the Alberta cow population being north of RedDeer.

[PureCountry]

Water is definitely something overlooked in most discussions about plants. They take an absolutely massive amount of water. There is a large building here in Hardisty, AB, recently vacated by the supposedly profitable Encana oil and gas giant. The building is only 10 years old, and some locals were trying to build interest in a Co-op type packing plant. When someone mentioned water, all the air went right out of their sails. Large water supplies are just not to be found in this area, or alot of areas for that matter.

I hope someone gets off the ground though, and I do like the idea of one large 'central' plant. The key to it all will be committment and loyalty from all parties involved.

[ivbinconned]

Brooks Alberta once was a small town. It grew because of industry, Lake side ,oil etc.

If the cows come from the country...whats wrong with growing a town in the country. Many urbanites would jump at the chance to live and make a good living away from the urban jungle.

Also a work force (comunity)that exists because of an industry (packing plant) will be alot more symathetic to the operations and challenges it is sure to face.

[rusty1]

Don't worry about work forces. Labour moves in U-Haul. Labour is never an issue for big business. They make the announcment about industry and labour will be there.

[ivbinconned]

I aggree rusty. Build it and they will come. I think the bigger challange will be for all those who aggree horizontaly, will still get along vertically, and the effort will not get hung up because of personalities and side issues.

Lets stay focused and concentrate on resolving our dilemma.

[nerves]

Grassfarmer have these people also looked at the pet food industry this is also a large industry. Meat quality in alot of cows will be less so I would imagine they would have to market a lot of hamburger jerky and sausage, and hamburger is a hard sell here. Other countries might get excited over cheap meat. We made a meat run sat and sun into northern Alberta last weekend there is a lot of thin cows out there that would be tough even as hamburger.