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

[farmers_son]

It is true that packer ownership is not the main problem at the moment, but may I consider the big picture.

Canada has more fat cattle than the packers have room to kil. Thus price is affected. This is simply an issue of numbers. Large numbers of packer owned cattle coming to market at a similar time have this same supply and demand effect. This is also simply an issue of numbers. Like I said before, whether you want to believe that this affect on pricing is accidental, just business, or price fixing, no one can deny that it does not happen.

Certainly there would be problems associated with limiting, or eliminated packer ownership, however acting like there is nothing wrong is even a bigger problem in my mind.

Don't worry folks, packer ownership will never go away. Cargil and Tyson have so many company names, and numbered associate companies that we will always be able to depend on their
"good paying" pens of custom feeders.

Is there a cattle feeder out there who can truely say that they are making good profit from the custom fed cattle owned by Cargil, or is it simply a good cash flow situation for the banker to see those cheques coming in every month.
The feeders I have spoken with say that the margins are so tight on "Cargil custom fed" that they make very little profit.

With the changes in Producer ownership of packing plants coming on Cakadu, the packer ownership question must be delt with carefully, but it must be delt with.

[kpb]

The issue of creating larger domestic packing plant capacity is an absolute red herring. The fact is that our domestic packers were not able to compete with the large multi-nationals years ago and the competitive situation is worse today. The multi's are better established and will not give up their market share. They have no fear of domestic competition or, indeed, of our federal government. 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. The business plan of a domestic packing industry failed before and the conditions are worse now. I think it is naive to think it can succeed now anymore than 5 and 10 cent stores can compete against Wal-Mart.

[cakadu]

The big picture is what is important, rpk. The issue of packers owning cattle is one that must be looked at carefully because you don't want the producer owned plants to run into problems because of cattle ownership. By-laws, organizational rules etc. will have to ensure that the wording allows for such eventualities.

As far as trying to run with the big packers I think that the only way for them to make it is to stay under the radar of the big plants. They won't make it if they go head-to-head with them, so the best way to ensure success is to stay under their radar screens. You wouldn't start up an independent store thinking that you would take over Wal-Mart's share. Besides, wouldn't you want to create your own brand and your own identity? That is what will help to make it rather than break it.

[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.