fatherson... rpkaiser... bfw...

[kpb]

I think that the old Eatons, Stedmans, etc. not to mention local hardware stores all thought they were "flying under the radar" and had their own brand or niche market. None of them were able to compete against Wal-Mart. And in our industry the old packing houses were run by people who knew the packing business inside and out. These were not innocents. The fact is that the business scene both here and south of the border is littered with the carcasses of companies that thought they could be niche players or capture a small market share that the mulit's have missed. The latest example in retailing is Toys R Us which is being ground into dirt by Wal-Mart after thinking they owned the niche market of toys and were unassailable. The multi's want it all, they want the total market and will not stop until they get it. It's no different in packing houses than in retail or fast food or banking or downstream oil companies. I'm afraid I don't believe that any domestic company will fly under Cargill's radar.

[grassfarmer]

They maybe want it all but that doesn't mean we have to roll over and give in. We can start to seriously fight back and recreate a production chain we own. The Canadian consumers I've spoken to are very much on the side of the primary producers and against US corporations owning everything.
I think we just need to be looking at the glass as being half full rather than half empty.

[grassfarmer]

I agree grassfarmer. One thing the BSE mess has done is raise an awareness among comsumers about the issues such as monopoly of packing plants etc. Before BSE how many urban consumers would have known or cared about IBP or Cargill ??

[kpb]

I respect the opinions of both grassfarmer and emerald but I disagree that we can create our own production chain in Canada and I also think it is unrealistic to think that Canadian consumers will support domestic packing plants simply because they are made in Canada. If you again look at other examples it is quite clear that while the consumer talks a good story, he will go to the place which offers the lowest price. That's why Wal-Mart thrives and your local town store dies. If Cargill can undercut proposed Canadian packing plants, they will and will eventually make the domestic plants go under. In my opinion this is not looking at the glass half empty--it is, in my judgement, being realistic. There is no benefit in going into a revitalized Canadian packing industry with rose-colored glasses on. I believe that the only way a Canadian packing industry can survive is with strict government support and regulation.

[farmers_son]

kpb: You raise some interesting points. You are correct when you say there is no benefit in going into a revitalized Canadian packing industry with rose-colored glasses on. Cargill and Tyson Foods are fierce competitors but not with one another. I think you are wrong when you suggest the reason our new packing plants are having so much trouble raising money is because no knowledgeable big investors think they can succeed on a long-term basis. I think it is because the market is so uncertain right now. Until our access to the U.S. market is a lot clearer it is questionable investing millions in packing capacity that will depend upon U.S. exports to be viable long term. I agree, the only way a Canadian packing industry can survive is with strict government support and regulation. That is the only way a U.S. packing industry survives too. The U.S. government is very involved in the U.S. packing industry with controls on competition, packer owned cattle, controls on off-shore imports as well as going to bat for its industry over issues of foreign trade. We need Canada to do the same if a Canadian packing industry can prosper.

There is a saying that whether you think you can or you think you can’t you are right. I think the present degree of foreign ownership of the Canadian packing industry is absolutely unacceptable. I believe a producer owned packing plant has huge brand potential when compared to traditional players such as Cargill. And make no mistake about it, any new packing plant might fail. But there are success stories out there too. I would expect the real benefit of a producer packing plant would not be its huge earning potential but its potential to inject competition into the market place. Because without competition at the level where producers sell their calves into there is absolutely no future for anyone in this industry.

[cowman]

Well kpb it is re-freshing to hear someone say it like it is! However be warned, reality isn't something a lot of us like to hear on here! We are more into hoping a "utopia" can happen and things like Cargill, IBP and Wal-mart will simply disappear and we'll all become honest caring packers and the world will beat a path to our door to buy our superior "green fed" beef!

[kpb]

farmers son, We are in agreement that a domestic packing industry will only survive with strict government support and regulation. Also, I believe you are correct when you say that a concern of investors is the border situation. But since our government is doing nothing to ensure the survival of the packing industry in Canada, long-term, with the border open or not, your points end up being the same as mine---a domestic packing industry will not attract investment dollars and be able to survive in the current climate. And all these domestic packing houses are at risk as long as they do not have committed, long-term investors with very deep pockets and government support. I agree with you that an optimistic outlook can help determine a positive outcome but we need seriously to get this packing issue right this time. If these plants open with investors unable to compete against Cargill (i.e. unable to absorb huge losses for a long time) and without government shelter, they will fail and it will be a disaster for our industry. It is no good saying our consumers will buy local beef or saying we will only go after niche markets. Do we want a domestic packing industry or not? If we do, then let's get the government to shelter our plants to they can compete with the big boys. Otherwise we'll just be niche players in our own market. This would be truly sad--we might as well just give the country to the Americans.

[cakadu]

Please help me to understand this. If the government listens to the likes of ABP, CCA etc in terms of what to do in the beef industry because these organizations are deemed to be the voice of the industry, then how can the government decide to do more to protect the entire sector when these organizations are stating that they want the US border to open?

If we keep doing the same thing, how can we expect a different result, better treatment, more money for producers and whatever else you might want to add?

I have to believe that we have learned more than that over the last 18 months.

[grassfarmer]

Cowman, I appreciate you get a kick out of playing Mr doom and gloom on Agriville - you were doing it in 2002 when I first joined this forum and you couldn't wait to see the whole Canadian cowherd killed because of drought. I do resent this ongoing sneering at anyone that dares to suggest we might have a chance to survive and build a successful Canadian industry - many people are working damn hard through a variety of groups and organisations to try and improve the situation for primary producers - if you don't want to fine, but give a break to those who are giving of their time and energy. And before you tell me I'm naive and don't know how the world turns like you "older" guys who have seen it all before I will tell you these US corporations can be broken. Just think about it, they only really grew into a position of global strength in the 1980s - they are the new kids on the block, as indeed is the US as a global force (really only post WW2)Compared to all the farmers and ranchers in Canada with backgrounds stretching back hundreds of years into Europe. Empires rise and fall and these ones are not invincible.

[grassfarmer]

http://www.beef-initiative-group.com/

Hey cowman and kpb. When you have a moment, could you read the packing plant proposal Beef Initiative Group is backing.

One of the reasons we all believe is holding up investors, is the proverbial black ink in the business plan. The proposal to build a plant with producer money generated from a levy gets around this issue to a certain extent. Ranchers know all about risk. And the risk associated with $3.00 per head to put another large player in the marketplace rather appeals to me.
What do you guys think?

[kato]

I'm sure no one will believe this, but I believe the day will come when the big multinationals will lose their powers. It may not be today, or tomorrow, but it will happen, of that I have no doubt. There is a life cycle to expansion that we have seen over and over as long as history has been recorded.

In the past it has been the expansion of nations into empires. Now it is the expansion of small corporations into huge ones that span the globe. Just as empires are not sustainable, neither are these multinationals, over the long term.

Sooner or later, cracks appear, and then it all starts to come apart. I don't know what will start it, but it is bound to happen. Remember Nortel? Formerly considered invincible...Or back a few years ago when Chrysler almost went broke? It's not that far fectched of an idea.

Maybe the border should stay closed. That way we will get on with re-inventing the Canadian cattle industry in a way that has a better long term picture for us. Just going back to doing business like before is only going to get us kicked in the butts again.

If we go through this whole debacle without coming out of it any wiser, what a waste that would be.

[kpb]

rp kaiser, I read the Beef Initiative Group proposal several weeks ago and will re-read it as you suggest. I think the idea of a $3 levy to build a big, competitive packing plant is an excellent idea with one condition--it must be protected until it can show an operating profit. In other words, either the producers who own it must be prepared to answer a cash call in the first few years if necessary or the government must protect the plant until it can get up and running. Either way, to me, is fine and once the plant is running then I think, if it is big enough, it will be competitive, again, if the government enacts legislation that is favorable to domestic plants. I am not interested in niche markets or speciality plants---if we really want to own our own industry surely to goodness we can get together to build, own and get the good management in place to run a large domestic plant. We need government help to support, nurture and protect this plant but is this not what government is for? As far as the comments about monopolies having a fixed life and waiting until they whither and die I must say that I find these naive. There are certainly examples of large companies going bankrupt or having financial troubles but the economic history of the last 50 years is not towards small but, rather, towards large, dominating companies. I think that anyone who thinks that the Wal-Marts, Cargills or Citi-banks of this world are going away is living in a different reality than me. The only way these companies are going away is if they are bought by even bigger monopolies. History shows us that empires don't last forever but none of us, individually, are going to be around to see the end of these multi's.The only thing these powerful companies respond to is something more powerful--if we respond as a group, with the support of our government, we have a chance of changing and benefiting our way of life. Grassfarmer, I am new on this site but, in defence of cowman, I agree with much of what he said today and believe it is best to go into something with a realistic view of the way the world works. There's no sense us building all sorts of domestic plants that are doomed to failure. I do not believe there is a hope that the multi's will, through their own good will, let these plants survive. They only respond to a greater force than themselves. And finally, grassfarmer, if cowman did propose a cow cull in 2002, it's just too bad we didn't all follow his advice, isn't it.

[grassfarmer]

kpb, If you allow me to extract a couple of sentences from your paragraphs I can show what I want to seehappening. In reference to new plants "I do not believe there is a hope that the multi's will, through their own good will, let these plants survive. They only respond to a greater force than themselves" - exactly right. As you say " The only thing these powerful companies respond to is something more powerful--if we respond as a group, with the support of our government, we have a chance of changing and benefiting our way of life." exactly right again . The last sentence totally baffles me though - you wished we had culled the herd in 2002? why would we ever wish to have destroyed our livliehood? our factory if you like? If people don't like any sector of agriculture that is their choice but I cannot understand these guys who seemingly want to pull the whole industry down because they are no longer enjoying it or finding it profitable. I'm the eigth generation to farm in our family and the point I was trying to make is that although individually none of us last for ever, primary producers (family farms usually) are what agriculture has been about for hundreds of years - these mega corporations are insignificant in terms of history. There are millions of farmers around the world - but only one Cargill, one Tyson Foods we outnumber them and we can defeat them.

[grassfarmer]

Was reading over the packing plant proposal myself and realize, due to your statement kpb, that nothing is mentioned concerning the first two years of operation. The bridge financing needed to build this plant would include operating funds for those first years. The levy would be on every animal sold; just like the ABP levy, with the exeption of packer owned cattle (which we hope becomes less anyway) This money would pay down the bridge financing over time - - - the rest is explained very well in the paper.

One bright note to announce. The Deputy Premier of Saskatchewan stood up at the last BIG C producer meeting and proclaimed that his government, along with the Manitoba government would supply funding for a feasability study on this proposal.

I like the fact that this proposal is being tweeked at these meetings by the very people who will be part of the good and the challenging aspects.

[kpb]

grassfarmer, you and I are just about on the same wavelength here, I think, but our answers to the current woes differ. We are in agreement that the multi's will only repond to a greater force but I think that force has to come in an organized fashion--namely from the government, which is supposed to represent the people, and from industry groups which represent us. The individual rancher has no power with the big packing plants. In regards to my last sentence, it was flip I admit, but my point is not that the whole herd should be culled but rather what a better position we would all be in if we had sold some cows prior to BSE. I, too, have a strong sense of history and it grieves me more than I can tell you to see good men with 100-year farms in my neighbourhood having to get jobs to support their families. That is simply not right. And you must know that while there are still lots of farmers and ranchers in Canada there's a whole lot less than there were 50 or 100 years ago. That's because many left the farm because they could not make a living. And that was because we all bought into bigger being better and more being more profitable. As long as we pursue these policies we will lose more and more good farmers and ranchers. We do not need more cows in our herds, more acreage for our grain or more hogs in our barns. What we need is a decent secure price for what we produce so that you and I and our good neighbours will still be here in another 100 years. That's what really worries me and that's why I think we need a restructuring in our industry. Grassfarmer, we both have a high regard for our industry and a pride in what we do but I recognize that we cannot continue along our current path and expect good results in the future.