Allowable US Imports

[grassfarmer]

I certainly try to get the top dollar for all the things I sell. Having said that you should be able to sell your culls to a producer owned plant that you have a stake in for less money than if you sell to a pirate corporation. Reason being your price will be "topped up" when you get your dividend from the success of your slaughter plant. This gives your slaughter plant the advantage of slightly cheaper inputs which should help them be successful.

Having said that, in my experience, farmers are not good at being loyal to their local plant. In Ireland the big packing plants totally destroyed the live auctions over a period of few short years by offering about a penny per kg (@2.5cents/lb)extra on liveweight cattle. They boasted later that they had broken the auction system and it only cost them a penny.
Similarily in the UK the buyers started paying slightly more at a few key auctions to turn them into mega-auctions - sure enough farmers started hauling them in from far and wide (me included)but with time we realised that by taking our big lots and best quality to these mega auctions our local markets were struggling - and were no longer there when we had 1 cull cow to sell so eventually you need to truck everything a long distance and don't get premiums for them any longer.

[kpb]

BFW is right on the mark--there is no way that anyone can operate any business for very long by taking less than they can possibly get. And BFW is also right about the domestic packing plants--if they can't survive in the market against the big guys then they are doomed to fail.
Sometimes our arguments on this forum are very inconsistent--everyone wants control of the big packers and wants the government to control their influence but at the same time cry free enterprise when we talk about supply management. And everyone likes their set-aside cheques, their CAIS payments and all the other multitude of funds we've gotten in the past year and a half but then moan like crazy about the packers making money off the industry. That's what capitalism and free enterprise is--the big eat the little, everyone gets as much as they can for their products and you try to make as much money as you can.
I said before and I'll say it again, we cannot build a packing industry here that can compete with the big packers on a big scale--all the chest thumping and patriotic palathering in the world isn't going to get around that. If you think I'm wrong then my question for you is Why can none of these plants raise the money they need? The answer is that they are lousy investments.
And, on the subject of free enterprise and making money, I hope everyone bought lots of calves a couple of months ago to background as I suggested. We're going to make big time money this year (we've already made small-time money) and, if you want the truth, that's how a fellow can make money in this business. Forget about the packing plants--focus on your own business, try to make it as big and efficient as possible and you can make a good living.

[BFW]

Pandiana, I certainly do not assume that a Canadian owned plant cannot be competitive with any of the existing plants however they will have to be extremely well financed and have a solid business plan from the getgo. Even then success is not guaranteed in the extremely cut-throat business of meatpacking. Horse your logic escapes me. What mess have we created by trying to get the most for our cattle for our individual businesses as we can? I bid on cattle everyday and cannot remember one instance where I received the cattle and wasn't the high bid. I suppose all the feeder sellers will be willing to sell to Canadian feeders when the border reopens and forego the potentially higher bids of the American feedlot?! I don't expect any Canadian feeders will get or expect any breaks. I understand clearly what the problems are in the environment the beef industry operates under BSE or not, but don't crap on others for looking after their own business just because you are unable to.

[kpb]

BFW, You're right on the mark again. Some of the cattlemen here don't understand that they don't have a God-given right to operate their business. Like any other business they have to be able to turn a profit if they want to survive.
Here's what it is--if you want to stay in the cattle business and make a living off it without an outside job, than learn what it takes to stick around. Get bigger, get better, get more efficient. Instead of talking about how your trying to make money with real small herds by meeting a niche need which may or may not exist, grow your herds or keep your calves to finish or buy some calves to background or a thousand other strategies. If you want to survive in this business you've got to get bigger and run more cows and calves. That's the bottom line and that's no different than any other business these days. If you want to work outside the ranch, that's fine, but don't expect anyone else to support your cattle habit and don't go asking for any more government funds.
The days of a herd of 100 cows supporting a family are long gone. Try 300 cows at least or maybe 600 or 800 backgrounded calves. One good rancher can handle these numbers and that's what an economic unit is. Why should we be any different than your neighbourhood hardware store? You either got to go big or go home.

[kato]

Just one problem with that. Sooner or later there's only one player left in the game. Haven't we seen that enough already?

It may seem that the bigger boys can pay you more for your cattle, and you should be selling to them. But are they really giving you more?

You start figuring out the real costs of shipping out of province, and the price you are bid gets a little smaller than you may think. An overnight stand and a 10 hour truck ride will contribute enough shrink to knock a couple of cents off right off the bat. Then there's the cost of trucking, and the stress on the cattle.

It's easy to say that the big mega plants are the way to go if you live near one, but not all of us do. At least here in Manitoba, I think that factors like shrink, and hidden costs will work in our favour to make the long truck ride to Alberta a bit less attractive.

We've got two plants proposed within an hour of us, and we intend to support them.

[greybeard]

Great thread! No doubt if you want to be in commodity production, you better strive to be among the low cost producers. They set the price. If you are happy to be average, it’s only a matter of time and you will be looking for another way to make a living.
This isn’t something new. It’s always been that way. The settlers came to this country because they could get MORE land. They wanted to be bigger.
Packers are commodity producers too. The same rules apply. Efficiency is king.
That said, I still see examples of producer involvement in commodity-based business that are very successful. But only the well run will survive.
The 300 cow number changes with the margin available per animal. Most of us have never divided our expenses on a per cow basis. The feedlots do it on every turn. That’s why the got so big.

[rkaiser]

Where is everyone getting the notion that Canadian Plants will need to source cattle cheaper than the multinationals to survive. The whole business world has it in their heads these days that the only way to receive more profit is to cut expenses.

kpb talks of his turn at profits by being able to buy cattle at "the right price". What is that about except for lowering expense. Only problem with that logic is that in the big picture, someone had to suffer a loss. Cargil and Tyson have been so proud about legally taking insane profits this last year; but it has all been at producer, or taxpayers expense. Yes we have all taken our dole money kpb, and we would have to be really dumb not to. Even though some of us are attempting to change things we feel would be beneficial to all producers, we are looking after things at home as well.

You can drive into Calgary or Okotoks Alberta tommorrow morning and by beef raised and owned by 3 of the most active 4 members of Beef Initiative Group, and the fourth has a very active farm gate market going.

Even though I personally do not agree with some of the stands that ABP/CCA make, I appreciate the fact that these people are also making an effort to change the way things are done to benefit the producers of this country.

Sure kpb, let's all stay at home and get bigger, and let someone else set the rules. Cargil and Tyson have people hired just for that, and guess what those rules are. Profit at any cost, cut expenses to make more profit, buy cheaper cattle, buy MORE cheaper cattle. Give me a break!

[cowman]

300 cows...one man? Sure seems like one hell of a lot of work to me! Hope you boys don't burn out too easily?
If a person is old enough to remember, this is just what happened in the hog industry? The number of sows needed to make some money just kept rising. Mechanization and more expensive barns solved that for awhile but in the end the hog farmer had to start hiring labor...and that was most of their downfall! Because while you may just find being a slave on the farm just peachy, most people aren't really into working 24/7 in a dirty job for low pay. How many hog farmers are left?
Also I would suggest you should try to do all this expansion with as little debt as possible and get it paid off as soon as you can? Of course this will probably mean doing without a lot of the good things in life...but fear not you will die rich and your kids can have a ball pissing it away!
But I will agree that, that is the way it is going...get big or get out. Has been for quite awhile.
Now the jury is still out on whether buying yearlings was a good thing or not(but I will agree it looks pretty smart). I guess we'll see if that border actually does open this year and just how that will affect markets? It still is a gamble and like any good gambler you shouldn't be playing if you can't afford to lose.

[pandiana]

BFW do you believe that in order for a Canadian plant to survive it must pay less for cattle?

While in Canada Cargill, Tyson etc are all working with the same dollars. Undoubtedly, their advantage is economies of scale and deep pockets spread out over diversified enterprises. However, big is not a guarantee of success as witnessed by Enron, Black, even Trump as well as many airlines worldwide. All can fail. Swift, as well as other US packers are struggling because they have been unable to keep their plants running at capacity, hence, their support of re-opening the border to live cattle.

[pandiana]

The cost of getting bigger will vary depending on where an operator is located. In your area cowman, or in rkaisers getting bigger and acquiring more land would be a very costy venture. Land in this area is usually sold to cattlemen from other areas that want to expand their holdings and add pasture land, or in some cases, people have sold operations in central AB. and relocated further north.
I have a neighbour with a 450 cow herd and a feedlot of about 1000. He runs the whole thing with the help of his teenaged son, who is going to be heading off to college in September. The fellow very seldom takes any kind of holiday, his wife works full time off the farm and they both seem to be aging real fast !!!! Working at an off farm job isn't an option with a large operation, where those with even a 100 cowherd seem to be able to manage to earn a few off farm dollars in the slower time of the year on the farm.

[cowman]

Well I don't like to discourage a young man in his pursuit of wealth and I also think the time to work like a slave is when you are young, because over the years you will find you are less and less keen on keeping your nose to the grindstone! Somehow our whole society is kind of screwed up? When you could really enjoy having money...you don't have any... and by the time you have some you are too damned old to really enjoy it!
My own son just bought 320 more acres and intends on doubling his herd over the next couple of years. I am now officially "cow-less" as I signed the last ones I owned over to him yesterday. I still own about thirty heifer calves but part of the deal is he has to take care of them!
He seems to think he can handle 200 cows with few problems...and perhaps he is right? He moved the calving dates back to April instead of January, which is probably a good thing, as he is not very good at getting up at 2 AM!
Now I guess with even 200 cows he isn't really viable but he does have some off farm oil/gas income and I made it very clear that I expect him to hold up his end of that deal. I don't intend to work harder so he can go play cowboy!
I am still relatively young(turn 50 in April) and I intend to take some time to smell the roses!

[BFW]

Pandiana, I was only questioning why anyone would take less for their cattle in order to sell to a producer owned local plant as was indicated earlier in this thread. These plants will have to compete to survive and being only niche players is not an option given the scope of our industry. Your examples of large companies failing only supports the reasons why these initiatives will have to be rock solid if they are to survive.