Time to send money

[greybeard]

I see lots of discusion here abouthow we need more cow-kill capacity, more testing,more comitment from government on packing plants,etc. etc. ....
What I don't hear is progress reports on new plant under construction. Nobody is pouring cement. We haven't progressed at all.
Some say the big packers will break the new plants. How? By raising prices higher than the new guys can pay? Calling on the great loyalty the have with thier producers? I don't thik so!
Thier only chance is on the sales side. Out-market the new guys. This is the one that concerns me. Which of the new plant groups has the best marketing plan. This doesn't include "we'll ship it all to Japan". You beter have some names an references if you go there.
How can a plant go broke with the highest margins in history?Your the new guy on the block and everone hates the bullys down the street. They will continue to be bullies but as the new guy you don't need it all.
With the huge margins you can pay market price and pay any surplus as shareholders dividends.
So, who has the best plan? Who do yopu trust with your money? I don't care if it's a cow plant or a boxed beef plant for the US . Whatever sends the most money home.Boxed beef is where the packers are. It looks like easy pickings.
Why arn't non - ag investors jumping on this? It looks like a way to turn a quick buck. Can you imagine haw easy it you could sell an operating plant. One group said in the Westen Producer that they were going to buy one of the 4 largest plants for $30 million . I'd like to see the sales contract on that one. Like " I'll sell you this plant you can gross $500 an animal on because I'm sick of making these windfall profits".
Sorry ! I'm ranting. Where do we send the money? Lets get going.

[cakadu]

Part of the problem for non-ag investment, greybeard, is that those that invest those kinds of funds like angel investors and/or venture capitalists want a high rate of return and to be in and out of the investment in a short period of time i.e. often 18 months OR LESS.

I'll tell you about one deal that I know of that happened a few years ago. The investment escapes me but to buy into it you needed $40,000. Before the deal even got finished he had made $180,000 and he was out of it as it had been sold as a promising new venture. This wasn't one of those dot com deals, it had to do with some sort of real estate investment. Those people that do equity investing (not debt financing) play hard, play fast and move on.

They want to see a strong management team in place with a solid financial plan of how things are going to be done. The returns in agriculture just aren't enough to make them want to play. Even the ag bio ventures aren't enough yet, although that is slowly changing.

Your points are valid ones, it's easy to talk, but not so easy to get things into action. It is a great cause to try to raise $30 to $60 million for a new plant that will see better returns to producers (and everyone else in the chain). How long it takes to raise it and just what manner of investing there is remains to be seen.

People need to be motivated to do things and I'm not sure what the motivation is here. My experience has been that to just "throw money" at a problem does not get it solved. You need the pieces in place to get the job done.

[cowman]

Greybeard: Yea they'll do whatever it takes...always have always will.
Do you think a Rick Pascal or Cor van Ray are going to take a lower price because they "feel" for the Canadian cattleman? Just isn't going to happen! These guys are in business and business doesn't look further tha 6 months down the road!
Will Tyson/Cargill beat the new guy on price? You'd better believe it! They will take major losses if they can see light at the end of the tunnel! Done it everywhere they've operated.

[greybeard]

Cowman,when they beat them on price our problem is solved. It's called competition. We don't have any now.

[grassfarmer]

Not really true greybeard - the pirate cartel could break any new plant in a couple of months and then you are back to the same buyers. We need Government intervention on this, many have said that the packers are doing nothing illegal but what about immoral, unethical and illegal (with no written evidence)These guys are smart and play dirty - can the Government be made to see that?

[cowman]

And lets not forget what is "legal" here is illegal in the US? The US does have some laws that keep these guys in check while here it is basically wide open.
I actually meant Cargill/IBP will beat the price of meat to the retailers. They will sell it for less than it costs them to produce it. They also are not above bribing the right people to buy their product?
This is their history in the US...out and out predatory business practices! They don't want to compete! They want it all and have proven many times they'll do whatever it takes to get that.

[kato]

Maybe the next 'pestering politicians' project we take on should be to lobby for a bit of protection for ourselves.

What kind of laws do they have down there, and how could we get some ourselves, is what I'd like to know.