Any Business Would Do the Same?

[cowman]

rpkaiser: I found your comment"cut back our numbers and face all the agricultural ramifications" very interesting.
I too, wonder what would happen if the cattle industry basically fails and we go into decline? Lets face it, it was grain that got us in this mess in the first place? The lack of government support for our grain industry, pushed farmers into cattle and hogs? Really no other alternative...I mean what else can you do in a country where you can basically only grow small grains and grass?
So today our oversupply in cattle is a direct result of the government failing to step up to the plate and play hardball on the international grain wars? No money, too small of a population, were the excuses!
But lets suppose the cattle herd, in Canada, shrinks in a meaningful way? Where will all that feed grain go? Who wants it...who needs it?
In my area we can basically grow two things...canola and barley. Now the canola always seems to find a market but what about the darned barley? You can only make so much beer, right? And we have to rotate these two crops because of disease problems!
It looks like soon the CWB will be gone and the government loan guarantees to foreign buyers of our grain? How do you see things shaping up for the grain farmer if the cow herd shrinks?

[greybeard]

Well said rpkaiser.
A neilson rep called recently looking for 8 weight cattle. I was giving him some needles that the packers must need some more captive cattle to keep the plants going full steam. I said I planed on putting up lots of feed and delaying sales as long as possible hoping the border opens. His reply was “ he was afraid the American will come in and offer 3 or 4 cent more and our packers won’t be able to get any cattle”. This was obviously a scripted reply. I have seen the same line in some news releases.
They truly must think we are all stupid. Like “We screwed you over the best we could, but you shouldn’t stop selling to us because he Americans are worse”.
I don’t think I will sell to NB again if there are ANY choices. But where does that put us? A large part of our capacity will be these same pirates.

[greybeard]

The hay thig is true supply and demand. If 3 bales an acre I am happy to sell to my neighbor for $45 a bale. $135 an acre. If I get one bale an acre I will send it down the road for $1oo a bale and tell my neighbor I don't have any so he doesn't call me a thief. The one bale an acre means bale all day for 75 bales. Sometimes a lot less. Why should I do that and then sell them to my neighbor who knows she can buy hay cheaper than buying land and equipment to put it up herself.
One mans opinion.

[cakadu]

From what I could gather cowman with respect to the missions overseas to sell beef, it was from the perspective of "here's what we have to sell" not "what do you want to buy". There was still more interest in selling that beef in a box than truly getting down to what the potential customers wanted to buy.

Even today, there still seems to be too much watching and waiting for the US border to open. What about sending these missions to other countries to find out what they will need in order to buy beef?

If all we do is increase our packing capacity without finding new markets or gaining more of existing markets - excluding the US - then it seems to me we are not solving some of our underlying problem which is not having enough markets for the beef that we produce.

What about investment in the ability to value-add more to the beef here in Canada and ship those products? We still cling to the commodity side of things and the time for that has passed. We should be looking at what will bring us the most value.

[cakadu]

Fire Ted Haney....... Nuff said!

[cakadu]

Actually, firing Ted Haney would do no more than allow for someone else to come in and carry out the wishes of those that are directing the CBEF. Board governance usually implies that the board sets policy and staff carry it out.

Without changing the underlying policy and direction you really wouldn't be accomplishing much.

[BFW]

RPKAISER, give Ben Thorlakson a call, he is chairman of CBEF and a neighbor of yours I think (Crossfield area?). I think that they have worked fairly hard to develop new markets in the past but BSE has undone a lot of that work.

[cowman]

Whenever Haney had a report on the export situation, they were always positive, and they were always moving more product. It seemed to me they were trying? Now I don't know if they were over there telling the Asians what they needed or not. I assume they should probably have known how the game was played?
When I was young and worked in a packing house, we regularily shipped a specialty product to Japan. Diaphrams(the piece of meat that holds the lungs onto the body cavity)! They had to be skinned and cut in very uniform strips...they actually were labelled"Delmonico strips"! They sold for $12/lb....at a time when a T-bone was around $3.50! Talk about value adding!

[rsomer]

Interesting comments on board governance. What about the board governance of Tyson Foods and Cargill? What responsibility do they have for the crisis facing our producers? Their record high profits, 700% or more of pre BSE levels have come directly out of the pockets of Mr. and Mrs. Average Beef Producer. The packers have realized excess profits of over $300 per head as a result of their monopoly stranglehold on a captive beef market. In the last year that has amounted to nearly $1 Billion in unfair profits taken directly from the pockets of the 90,000 men and women who are the backbone of our cattle industry.

Since WorldCom Inc., Enron Corp., Arthur Andersen LLP and and Martha Stewart, business is being held accountable for their lack of ethics. There is a new realization that the end does not justify the means and that profits without morals or ethics can see the leaders of a business land in jail. Corporate governance is being held responsible and the new business ethic is not profit at all cost. Boards of directors need to adhere to, or exceed, principles of good governance, and need to represent the interests of all stakeholders. In the U.S. Treasury Secretary Paul O'Neill recommended jail terms for executives who stepped beyond the bounds of what is right and we have seen executives of Enron jailed for their criminal behaviour.

The Antitrust Division of the U.S. Department of Justice ("Division") has employed a strategy of concentrating its enforcement resources on international cartels that victimize American businesses and consumers. Where is Canada’s Antitrust Department?

[rusty1]

rpkaiser - I agree. An old saying says "Screwed once shame on you, screwed twice shame on me."

The board room chatter in these packing houses for decades has been a plotting process to see how they could "bring the beef industry to it's knees, and once there for long enough then they decide when it's time to let them back up again". Notice the quotes.
It's bee a moffia style for decades, that's not ethical business. Will it change - no - not until we as producers decide to quite taking pot shots at each other and devise a plan to benefit producers and become price makers.

[cakadu]

Rsomer, I do believe that you are trying to compare apples and oranges with respect to the various entities, if I'm not mistaken.

Canada Beef Export Federation is a not-for-profit organization (I believe) and would have a different outcome than the boards of Cargill/Tyson and XL, which are purely profit driven in terms of getting a return for shareholders. What the packers are doing may not be morally or ethically correct, but as far as I can tell, they didn't break any laws, which Martha, the people at Enron and some of the others did. Enron manipulated the books and outright lied, which I don't think the packers have.

Your outrage is understandable given the current situation. The system under which the packers profitted was seriously flawed and forced producers into a bad situation, which persists to this day.

The ethical thing to do would be for the packers to drop their prices on beef so that more of this can be spread around. Thing is they won't and they haven't whenever the various meats have run into trouble. Let's face it, it isn't only the packers that are keeping the price of beef up in the store. What are retailers making right now?

Does anybody know if the packers are charging retailers and food service more, or are the windfall profits a result of being able to pay so little for the initial product?

It's easy to continue to blame the packers, but what are we - the producers, ABP, CCA, CBEF and whomever else you want to name, going to do about it? What do you want ABP to do for you? What should you be talking to your representatives and delegates about?

Now is the time for change.

[rsomer]

I never confused CBEF with the packers, just noted the comment on governance and pointed out the packers have serious issues in this area. I think if the matter were looked into the packers have broken laws on fair trade as outlined in the Competition Act. I thought the ethical thing for the packers to do was raise the price they pay for fat cattle so they are not strangling the producer while the packers realize huge profits.

The price the packers pay our producers is not determined by supply/demand. The packers have conspired to artificially fix the price of fat cattle at a price lower than the real market demand would suggest it should be. The actual market demand is represented by the very strong prices for boxed beef which the packers can access but the producer cannot. The packers are profiting from the difference in demand between the two levels of the supply chain.

I did a little checking and in Canada our anti trust body is the Competition Bureau which enforces the Competition Act. Some of the issues addressed by the Competition Act include:
· regulation of mergers and acquisitions among businesses with the policy goal of ensuring adequate and healthy competition within the economy;
· conspiracy to lessen competition;
· agreements to fix prices;

The Commissioner of Competition heads the Competition Bureau and is Canada's chief antitrust enforcement official. The Commissioner can launch inquiries, challenge civil matters before the Competition Tribunal and refer evidence of criminal offenses to Canada's Attorney General (who then decides whether to launch criminal proceedings).

The Commissioner is obliged to commence a formal inquiry whenever:
· a criminal offense has been, or is about to be, committed;
· grounds exist for the Tribunal to make an order regarding a reviewable practice;
· so directed by the federal Minister of Industry; or
· on the sworn application of six Canadian residents

What are we going to do about it? How about bring the issue before the Competition Bureau to have criminal charges brought against the two packers as a start to bringing fairness back to the industry.

The Competition Bureau can be contacted at 1-800/348-5358
See: http://cb-bc.gc.ca/epic/internet/incb-bc.nsf/en/home

[cakadu]

This has piqued my curiosity and I'm going to start a new thread so that this one doesn't get too long-winded.