Is this typical?

[cakadu]

I forgot to mention that the producer will be getting more value for what he produces.

[cowman]

Well Linda the reality is this: The US market is the "show" and we will always depend on it? The fact is we are a high cost producer and we just can't compete for the low cost beef trade.
It is always nice to contemplate taking over the "wealthy markets" in Japan, Europe etc. but it just isn't going to happen. Europe will never let our beef in...hormones or no hormones! Japan needs to trade big time with the US, but not with us? They can just continue to buy our raw materials when it suits them, but they don't really care about or need our puny market?
Trading systems usually develop for a reason and that reason is money? This little blip on the North American trade scene won't last forever? Eventually we'll get it straightened out with the US...one way or the other! Maybe we'll have to become the 51st state to do it!

[kpb]

I think we should recognize that even when the border opens (if it does) our prices are not going back to where they were before this fiasco. I recall getting $2 a lb for a light feeder a few years back. That's not going to happen again in the near future simply because, as farmers son said, our dollar has risen so much. In fact, I'd say our 5-weight feeders are only a little shy right now of where they would be if the border opens because of the exchange rate. Also we should all be aware that Brazil is going to be importing huge quantities of beef to the U.S. within a year as the States are lifting their ban.We cannot compete in Canada against low-price competitors. Hate to be glum, it's not in my nature, but I do not see a bright picture for our industry in the future. A few years ago our herd was 440 cows, now down to 240 plus 600 grassers. I frankly do not see how a stockman can make a reasonable return on his investment. The bottom line is I could sell the cows now, and sell maybe a half of land, put the money in dividend-paying stocks or bonds and have more annual income than I do now and still have lots of land to play with and no worries. My kids have been told they are not going to ranch when they get old enough and they are all well on their way to getting good educations and great jobs. They all want to live in the country but not make a living in the country. No one in their right mind, in my humble opinion, would encourage their children to work in an industry that, even in so-called good times, has such a low return on capital.

[cakadu]

Cowman, that is where killing it here and shipping it elsewhere will be the key. It may take some time for us to shift from our commodity thinking, but I do believe that we will eventually move away from that. Maybe not entirely, but we will have shifted a long way from it.

As perceived "low cost producers" it often seems to me that we are also low price takers as well. It is an entire paradigm shift when it comes to many of the industries that we operate in, not just in agriculture.

While there is much grumbling about what the UPA and Quebec get/do, they are working together producing value-added products and doing well. We have some lessons that we could learn from them.

There is a small flame going here and I'm sure that it will grow larger as time - and much needed changes in leadership - go by.

[kpb]

Again, I hate to be a nay-sayer but I think we have to be realistic about the chances of independent packing plants operating successfully on a long-term basis. The fact is that we used to have a viable domestic packing plant industry in this country and it could not compete with the big multi-nationals. The people who ran those domestic plants were not foolish or uneducated but simply found it impossible to maintain reasonable margins and upgrade in the face of huge competition. Why do you think it will be different this time when the multis are already well-entrenched in this country, are making big bucks and will jealously protect their markets. There is a reason why the proposed new packing plants are having trouble attracting investments dollars and that reason is that venture capitalists and investors with big dollars will not touch them with a pole because they do not think they can succeed.

[cakadu]

Venture capitalists and angel investors want a quick and return on their money, which could be one reason for their lack of involvement. Another could be that before they invest they look at the leadership and management of the organization - they need to like what they see before they invest. From what I can gather, most of the plans for these new plants don't take a look at new markets, rather they are looking at going into the same old markets as before. The risk isn't being spread around, which is part of risk management.

It seems to me that a lot of support was withdrawn for the smaller domestic plants that you refer to and given to these larger packers thus enabling them to get the stranglehold that they have today.

I don't believe that it was any one thing that lead to the demise of the domestic packers, but a collection of events that made it difficult to operate.

Separating the production end of things from the business side will be a huge challenge for the producer owned plants and the mechanisms must be in place for any and/or all of the plants to function first and foremost as a business in a very cut-throat marketplace.

[kpb]

cakadu, I agree with almost everything you said in your last post but came up with a different conclusion. The old domestic plants did fail because of a combination of events, the new plants will have be profit-oriented, the multi's do have a stranglehold on Canadia's packing industry and it is true that some venture capitalists want a quick return. But it is also true that all investors want some sort of return and if the new start-ups were viable and had business plans that showed that they could make money without a huge risk of going under, there would be a line-up of people with money at the door. The fact that there isn't shows me that these new plants are not viable. In fact, as you point out, there is actually less chance of them succeeding than before since the multi's now have a strangehold on things. The only way for a domestic industry to succeed, in my opinion, is to tie it in with a complete overhaul of our agricultural system.

[cowman]

Have to agree 100% with what you have said kpb! Unfortunately our illustrious federal government will never change the rules so why does anyone think anything will change?
If that border opened tommorrow that would be the end of all this talk of new packing plants...and that is a fact.
We should never forget that Cargill and IBP are planning expansions that will in effect be able to handle pretty well all the fats available?
Now a cow plant is another matter...at least until the border opens to cows! Then what? Very simple answer...the cows head south or the plant is bought out by Cargill or IBP!
People on this site seem to have some kind of naive notion that everyone will be loyal to their "native" plant? Not going to happen! Very few people are going to be so loyal as to lose money to keep a "native" plant going! And I will contend they shouldn't? Business is business and you go with the guy who is going to make you the most money. That's reality!

[cakadu]

I suppose the other side of that is that even the producer owned plants will have to conduct themselves in a business that is known to be cut-throat. Witness XL beef. They are doing what both the other big packers are, yet the venom does not seem to flow their way and I wonder why that is?

[ALLFARMER]

kpb & Cowman
You guys are nay-sayer's but your speaking the truth. I also would never let my kids get into farming, not the way things are today or looking to be going, Its bad and getting worse. All are crop input are going up Fuel,Seed, Fertilizer, Spray, Crop Insurance and crop prices are going down significantly. We have two options diversify into cattle or sell. I love farming but will not pay to farm.