no more packing capacity

[cowman]

I was never arguing that we don't need a plant. But somehow or other we do need to get some darned cows killed this fall? Whether that means giving one of the existing packers a sweetheart deal or putting them in the pit doesn't really matter?
And maybe the idea of a $200/animal investment is a bargain, but how come they can do it in PEI for $60? Or maybe it's only $20?
I think if any group could swing a deal like PEI has, they would have no problem getting people signed up? I just don't understand how there can be such a price difference? It's like I go down to PEI and buy a new truck for $5,000 and then I come out here and the same darned truck costs me $50,000! How can that be? Is this the Alberta Advantage?
If PEI can do this(apparently no federal money involved) then why the hell can't Alberta, Sask, and Manitoba? Maybe we need to be asking Ralph, Lorne and Gary that question?

[rsomer]

I agree with the concerns cowman raises about packing plants and he is correct to point out that there are issues that need to be addressed. I clearly see the need for the plants but I also clearly see the challenges that come with producers owning their own processing facility and marketing their beef in competition with entrenched global players like Tyson and Cargill.

Obviously others have concerns as well or else we would see at least some ground being broke somewhere in western Canada where the numbers of cattle are.

However I think we as producers need to realize that it is possible to compete with these large companies. The larger these companies grow the more opportunity there is for a new upstart to enter the marketplace. If these companies are pirates and threaten a competitor then the new upstart can turn that threat into an opportunity because there will be markets out there that do not want to deal with a pirate.

The big players are a lot weaker than most would believe. I do not see any customer loyalty to Tyson Foods or Cargill, either from the producer or the beef customer. Yes, profits can be made by acting like a pirate but you do not win many friends. The big companies can be easily beat on quality, on image, yes even on marketing. A producer owned plant with the right management is a force to be reckoned with.

So why aren’t more plants being built especially when producers are loosing more than enough cash to build a plant with each and every animal they sell into the present market. First there is huge uncertainty in the beef industry right now. BSE yes, but also COOL. But those things are there in our future in any event and we will have to deal with them as an industry. Our cattle industry is not going to disappear the only question is how profitable is it going to be and who is going to get that profit.

Second there is the fear that the plant will fail. It could fail but really so what. We are loosing that money right now on each and every animal we sell. But I guess there is a difference... CAIS makes up 60-70% of our losses when we sell an animal at a loss, CAIS won’t make up our loss if our investment in a packing plant doesn’t pan out. Is that the reason why we don’t see plants going up because it is easier to collect the cheque from CAIS? If so then it is a darn poor reason because CAIS is going to run out for all of us as our reference margins disappear. Still it appears that government is more comfortable subsidizing producers losses than to step up to the plate and help create a profitable beef industry. If that is the case than government has effectively trapped producers in a perpetual loss situation by subsidizing losses but not offering assistance to stop the cycle of loss. And that is a scary situation.

[grassfarmer]

rsomer raises a good point there about customer loyalty. I have spoken to many Albertan urban consumers and they know about the BSE compensation ripoff and do not like the packers one bit. If we had a plant built we could use this consumer dissatisfaction to our advantage by promoting the new producer owned packing plant as the farmers friend - get them to ask at the stores where the meat was killed and that would ensure the plants sucess - at least with the domestic demand.

[kato]

That is so true. Look at the support we have had from our consumers over the last year. I don't think it's a far step to see if they would prefer to buy direct (as possible) from Canadian producers. I bet they would prefer it.
I know I would.

Perhaps we should pay attention to those who are saying there is no future in producer owned packing plants. By attention, I mean find out "where they are coming from". Do these individuals have something to lose if the current situation does not continue? We have to know where our information is coming from in order to make wise decisions.

As far as I am concerned, there never has been and never will be a better time to make a move out from underneath the thumbs of these big packers. When will we ever be more motivated?

As they were saying on Country Canada this weekend, when Cargill and Tyson moved into Canada, we allowed the two biggest predators in the global food industry right into our back yards. First they bought out our cattle industry, now they control it, and the next step is to destroy it.

It's now or never for independent Canadian cattle producers.

[cakadu]

There is great opportunity out there and I for one hope that we can capture it. There does seem to be a part of the equation out there that seems to be missing and that is where is the meat going to go once the animal is killed? Getting it processed can be a timely proposition these days, but that isn't the biggest problem.

If the borders of other countries remain closed to our beef, that will not increase the price of beef, or cull cows for that matter, because there is no place for it to go once it is dead.

The Canadian consumer has been fantastic and support for locally grown and knowing where your "beef" is coming from is on the rise and I am truly grateful that the consumer has remained on side. Having said that though, there isn't too much more that they can eat in terms of per capita consumption, so while having more packing plants is something that we need to change, we also need to be working simultaneously - or even before the meat is available for sale - on markets.

Even for those that are going to be doing more direct marketing, this is an absolute necessity. You need to know who your market is going to be, how much they will pay, what they want to see in cuts, who is going to be your direct and indirect competition and how often they want it.

Direct marketing is not for the faint of heart. It takes a lot of work, doing your homework and forever being one step ahead of your competition. The benefits are great, but they don't come easy.

[cakadu]

Another thing that will have to grow alongside the packing capacity is storage capacity - both short and long term.

We'll need short term capacity for aging and for holding fresh meat that will go to customers almost right away. The long term capacity will have to come in freezer space as the meat will likely have to be frozen. Does anyone have any idea how much storage capacity is out there, how much is available and what level it is at i.e. provincial or federal? To my knowledge you can't store things at Versa Cold unless they have been federally killed and inspected as they are a federal facility. Does anyone know whether this is the case or not?

[rusty1]

rsomer,grassfarmer, kato, cakadu. Your comments are like music to my ears. If it's going to be it's up to me. I've put my last bit of resources into this initiative, because I belive so totally that Western Canada needs to build our own - owned by us - packing plant. The benefits are huge, and can be beneficial to all producers who make a committment to get involved. And it can suceed. I have gone from a 3 man and a secutary opperation with 3 new F-350 quad cabs pre BSE to one car for my wife and I since BSE. And am giving all I have left to see this go.

And if we all give a little we will turn the current direction of the beef industry around.

But it will take you and I focused of a long term goal to do it.

The cure and opportunity in in your pants !

[cowman]

I am sure you are trying hard Rusty but the fact is the system is plugged up right now and I don't see any cats out working? In fact even the little abbatoires are booked up solid? The only plant coming on line, that I know of is the one in PEI?
The meat roundtable in Calgary just came out with a statement that packing capacity is up 20% since 2003...I assume that means the big boys are running double shifts? They also stated very clearly that testing is not in the cards and would actually be detrimental!
So I guess so much for that idea?
The politicians continue to dither, with vague promises of doing something but no action! All the cattle guys holding tight while the wolf pounds on the door!

[rsomer]

Rusty1: I would say the cure is in our hearts and the question is have producers had enough pain to actually cause change to happen.

Cowman said "The politicians continue to dither, with vague promises of doing something but no action!" I don’t think politicians are getting a clear signal from producers here. You mention the Beef Industry Round Table. This is the group that is talking to government and has government’s ear but when you realize that Cargill and the Canadian Meat Council sits at this table the message that is likely to come out is yes, we need more packing plant capacity but that that extra capacity should be built by existing members of the CMC.

The need is there but right now the challenge is how to galvanize producers into action to seize the opportunity before it is grabbed by another big packer? I have not seen any support from our industry leaders for a major producer owned packing plant capable of providing some real competition and opportunity for our producers. How a minority federal government is going to act in the upcoming months is uncertain. Maybe more dithering is what we will see unless the grassroots producers can get the message out to government themselves that producers need to have at least the option to sell their cattle to a packing plant they own themselves to ensure fairness and competition is in the marketplace.

I think government would offer help but that is all, government is not going to do it for producers. BIG C had producers attention. In my view BIG C could have focused more on a packing plant and less on controversial issues such as testing and Asian markets. I haven’t heard anything from them since the Ponoka meeting.

[kato]

Speaking of the round table...

The industry-government Beef Industry Value Chain Roundtable completed its most recent meeting on Friday and moved forward several strategies to help the industry recover from BSE and be more resilient in the future. Strategies under development were presented to Federal Minister of Agriculture Andrew Mitchell. Next to re-opening the U.S. border to live cattle, increasing slaughter of Canadian cattle, with a high priority on increasing Canadian processing capacity, is the most effective way to help the industry. Tax incentives for increased equity investment and risk capital to help build and sustain capacity are being pursued. Canadian beef usage and export market diversification strategies are being developed to ensure markets for additional beef produced in Canada. A delayed marketing strategy to better match numbers of cattle coming to market to the slaughter capacity available is being developed.



The Roundtable also supported the Canadian Food Inspection Agency’s proposal to enhance the current feed ban by removing Specified Risk Materials from all animal feed. Roundtable members agreed to develop a paper that examines all aspects of testing cattle for export to help facilitate better understanding of the issue by members of the industry and to help guide decisions into the future.



This update has been brought to you by the Canadian Cattlemen’s Association.

[cakadu]

Don't you think we should be looking beyond the US for our beef? Why do we still appear to be so bent on just waiting for the border to open and that solves our problems?

To me, it just doesn't seem to be in our own best interests to rely so heavily on one market. There is some truth to the saying "if it happened once, it could happen again." Shouldn't we be preparing ourselves to never, ever be caught in that scenario again?

I quite frankly just don't get building more packing capacity to have it go primarily to the US. Isn't one of the risk management strategies to spread the risk around so that you aren't in a bind when something goes awry?

[cakadu]

The last few meetings of BIG C have been focusing more on building a cow kill plant in Saskatchewan, while allowing some of us members to push the testing issue at the same time.

I am sorry that we all have lives to live. Cam had around 600 acres of hay to put up, and I needed to promote and market my cattle and beef product, along with Grant, in Calgary at the Stampede. Things are happening, and I am glad to hear that good old rsomer admits that BIG C has at least garnered some attention.

If there is any question about "should have", maybe ABP should have done a few things themselves. But I'd rather not go there.

I think everyone is on the same page with this packing capacity issue, and I only hope that hitting it from every angle possible will generate the action we need.

[cakadu]

One of my favorite movies is "Patch Adams" and aside from the squirrel scene with Rudy, the best part of it is when Patch is speaking to Arthur Mendelson about the fingers. The message in that is if you focus on the problem, you don't see the many solutions that are potentially there. We need to "see beyond the fingers" and generate as many ideas and solutions as we can. Maybe some won't work, some are just too out there, but maybe some will work. What is evident is that we have to quit looking at the fingers and maintaining the status quo.

[grassfarmer]

I think rsomer is right when he states producers are not hurting enough yet. The average cow/calf man that sold his calves last fall is waiting for this years sale having done nothing but grumble on coffee row since last year. It is unfortunate that BIG-C could be said to have lost some momentum since the Ponoka meeting - but as RPK says they have lives to lead and work to do. Crucial to remember in all this is that the BIG-C directors got off their backsides and did an awful lot in a short time - out of their own pockets. Meanwhile ABP and CCA members have sat back and done nothing all the time collecting their wages from us - the primary producer.
On a personal note, a call to the Beef Information Centre a week ago to help me with marketing my beef direct has produced no goods despite the promise to mail and email information to me "when they got time". What a surprise that the BIC is the child of ABP - again paid for by our checkoff dollars.

[rusty1]

To "one up ya" as far as BIC is concerned. The markets they find working on check of dollars go to Cargill/Tyson without commission.