Corporate question

[grassfarmer]

I'd like ask a question of the guys on this site that argue that the packers have done nothing wrong either legally or ethically since BSE.
A while after the first BSE case there was media attention given to some kids in Saskatchewan that organised a boycott of a US owned burger chain that was still selling US beef despite the suffering of producers in Canada.

Did you guys support the school kids and Canadian producers or did you back that US corporations decision to continue to source beef from the US. After all it was only business and the corporation had a duty to it's shareholders? We all want the most money right?

[SASH]

Ethics and business are mutually exclusive. Sometimes the ethical thing is the right thing because it makes you a good corporate citizen which basically a marketing tool to draw in more customers. If I had to guess, I would say that the big burger chains probably buy as many futures as they can to take the risk out of price fluctuations in the market. Obviously, those contracts would have still been outstanding when the BSE crisis hit. I would imagine that it would have still made them money selling those futures at a lower price rather than taking delivery at that price. Like I said, what is right from an ethical perspective often is not what is right from a business perspective. If you are expecting corporate business to be ethical, you must be living in a dreamworld. This is another one of these things where you see alot people standing around talking about how it should be instead of dealing with the reality of what is.

[greybeard]

Last week I was in California visiting my son. They took us to a store called Trader Joe's who have made a big deal about being "ethical". They use the example of the coffee where the grower gets 10 cents a pound and it end up on the shelf at $3 a pound. It sells very well for them, as they are expanding rapidly. Obviously, any successful business is based on giving people what they want, and "ethical" is part of it here. They have a website you might want to look at.
While there I checked out their beef. They had two labels, One for grass-fed, and one for all natural grain fed. They weren't "feature" items, as they only had about 8 feet of shelf space. I'm sure it came to them "case ready".
The grass fed came from a farmers co-op at www.westerngrasslands.com that may interest you grass farmer.

[kpb]

grassfarmer, I think SASH basically said most of what I think about ethics in business. I know you are a thoughtful person from your previous posts and I'm sure that you recognize that trying to establish what is ethically correct is a moving target. What is ethically right for you may not be for me.
I think the school kids in your example did what they thought was the right thing and I support them for it. But I just bought a load of barley for feeding from a guy and paid just over $2 a bushel. Last year I paid him $3. He told me that he lost money on all the barley he planted this year and he might have to sell a quarter to stay around. He's my neighbour. Now should I have paid him what I paid him last year? What was ethically correct? I have to background calves and compete against everyone else that does it who bought barley at $2 a bushel this year. And I have a large family to raise and, like everyone else, a host of bills to pay. So?? I'm not trying to be a smart aleck here--I dont know the right answer to these questions. But I think my example of filling my bin today is really what this all comes down to. The packers have shareholders and owners that they are responsible to as well and if they don't do the best for them, then I guess the case could be made that they are not acting ethically by not maximizing their profits.

[gwf]

kpb:
The fact that you are questioning yourself about the transaction you made to buy the barley, speaks well of you. Not too many of us would take the time to question our dealings with another fellow as you have. I think there are two other considerations that may apply, and they are 'was it honorable' and 'was it moral'. Ethically if you paid the market price for the barley, you have been ‘ethically correct’. I think you are maybe really questioning your self as to whether you did the ‘honorable’ thing. Being ‘honorable’ includes being moral and being ethical, but leaves the door open to go little beyond these and lets you include your conscience in your decision.

[blackjack]

grassfarmer...I remember making a post about the teenagers last summer and I was extremely upset how slow our government reacted to the packers... I think the packers defininitely crossed the line and should have had to pay back the taxpayers money from last summers fiasco ...as for us farmers when we get older and want to retire ...do we sell our land for what we payed for it or do we sell it for what the market will bear...maybe morally we should have sold our land to the next generation for what we payed to keep rural communities strong...but thats not reality... we all sell our product for as much as the next guy is willing to pay...

[farmers_son]

I think when it is suggested that the packers were only paying what the market would bear the fact that was no market is overlooked. The packers had a monopoly and were fixing the price they paid producers who were forced to sell the packers their fat cattle. Without the U.S. plants to offer competition the Canadian packers ****d and pillaged the producers of this country. It was not ethical and it was not legal.

There is no comparison between someone with no market power such as a farmer buying barley from another farmer and two multinational corporations conspiring to fix live cattle prices in a captive Canadian marketplace.

Business is ethical for the most part. Of course there are some exceptions just as there are individuals who lack morals. Corporations do have obligations beyond their shareholders. They have ethical obligations to their employees, suppliers, customers, community, country.

I would point out that corporations are made up of people. The fact that the people are organized in a corporation rather than a church or political party makes no difference to the ethical standards those people should abide by.

[grassfarmer]

Sash, you say "This is another one of these things where you see alot people standing around talking about how it should be instead of dealing with the reality of what is."
Perhaps the world would be a better place if more people talked about some of the factors adversly affecting humanity in this world and started putting some things right. As over-fed North Americans swagger down the isles of Walmart looking for more useless trinkets to spend their surplus dollars on they should perhaps reflect on the third world children that are sold as slaves to make the items."Always low prices" indeed!

kpb, as farmers_son says there is no comparison between your case of two farmers trading grain with each other versus corporate piracy. If you wanted to be a true corporate player I suggest you take a leaf from McCain's book in the PEI potato fiasco. First phone up some of the politicians on your payroll and tell them you have discovered a deadly disease in your barley - get them to phone their "friend" at CFIA to confirm the disease.Then insist your politicians lobby for an immediate movement ban of barley in your area and a stop to exports. Wait a few weeks and then go to your neighbour and offer him 75 cents a bushel - you know he has got to take it. With the extra money you make you should get a hefty corporate bonus at the end of the year - even after you have made your political
"donations" you'll still be well ahead.

[wd40]

Corporate ethics in the above case 19 months ago is better termed "Situational ethics".
Making a fair profit is one thing. And a fair standard profit for the corporate multi-national spoken above is typically around 35 to 50%.

Their past profits of 300% don't apply to this thread!

[kpb]

farmers_son and grassfarmer, If the packers did something that was illegal then they should be charged and, if convicted, punished. My point is that they have not been convicted of anything and making big profits is not illegal.
The packers aren't the only ones who reap big rewards from questionable practices. Consider the big Canadian banks which give you 2% on your money and charge 20% on credit cards. Or your local John Deere or Cat dealer with the absurd prices on replacement parts. Or Wal-Mart which, as one of you so rightly pointed out, is all about putting local small businesses out of business and selling useless junk to gullible consumers.
In my mind these are all ongoing ripoffs but they arent illegal, likely not unethical (I'm not sure what that means in a capitalist economy). And what if you're a shareholder of Wal-Mart--you likely want them to maximize their profits as long as they stay within the law. That's what all these companies, and the packers, are doing.
I agree that my example stretched things a bit--it was on my mind because it took place today. And, as farmers_son pointed out, I'm not a multi-national dealing with a single farmer. But there are some similarities that will always exist in a capitalistic system--one person always has more power than the other because the transaction is more important to one than the other. My friend wanted to sell the barley because he needed the cash--he was in the weaker position and the plain, unfortunate fact is that the weaker position in any deal always ends up with the worst results. That applies if you're dealing with a multi or the guy down the road who really doesn't need the barley you're trying to sell.
I'm certainly not trying to defend the ethics of big business but the simple reality is that profits always prevail within the boundaries of the law. And if you're big you've got more influence to get your way. I'm sorry but my experience with business has taught me that most businessmen value the bottom line over ethics that cannot be objectively defined. That's not to be negative about businessmen--as you can see from my barley example I'm in the same boat.
This is all the more reason, in my view, to have a beef marketing board that can be made up of producers, working together, to be an equal to the big boys.

[Cedar]

"I'm sorry but my experience with business has taught me that most businessmen value the bottom line over ethics that cannot be objectively defined."

I guess maybe that's why farmers don't seem to make good businessmen, eh? Too much ethics, not enough bottom line...!?!? (I have to wonder who the consumer would rather buy from/deal with if they only knew all the "nitty-gritty"?

[farmers_son]

If someone is driving 110 in a 100 km zone and the police do not pull them over it does not mean driving 110 is legal, they just got away with it.

Actually the business people I know are very ethical. Personal reputation is everything in business. Sure there are Enrons out there but I think the momemtum today is for a much higher standard of ethics in the way businesses conduct themselves. Cargill and Tyson are exceptions, not the norm.

[Bez]

Cedar

THe consumer does not care. They are taxed and beat up so badly that all they want is the cheapest price - in most cases - and to be left alone.

As for packers and any business - well, they are PROFIT driven. The shareholders in any major corporation demand the profits be kept up. Any CEO will attempt to preserve his salary and bonus by maximizing profit above almost all else.

Bez

[cowman]

Cedar:I wonder if the consumer really gives a rip one way or the other? I guess the success of Wal-mart pretty well illustrates that?
In any transaction there is a buyer and a seller. No one is forced to buy and no one is forced to sell. As an example if kpbs' neighbor didn't like the $2 offered he didn't need to take it? He could store it and hope the price went up somewhere down the road? Now I realize he probably needed some money to pay the bills and obviously he thought selling was better than holding it...but everyone has options! Who knows barley might be $3 by next year?
The same argument goes for cattle...if you don't like the price then make a decision to hold them or fold them! If you think the packers are raping you then go into the packing business...there are lots of schemes out there to build packing houses!

[SASH]

grassfarmer wrote:
Sash, you say "This is another one of these things where you see alot people standing around talking about how it should be instead of dealing with the reality of what is."
Perhaps the world would be a better place if more people talked about some of the factors adversly affecting humanity in this world and started putting some things right.

I agree that having a social conscience is a good thing. As far as trying to help out the third world, how do you help out the people in the third world If not by giving them industry. If you just send money, you risk turning them into a dependant welfare state. We already have groups in Canada who seem to have given up on working because it is way easier just to wait for thatgovernment cheque. The other thing is that this situation will only get worse because as the baby boomers retire, they will put a strain on Canada's social programs and somebody will need to pay for it. Taxes will either have to go higher which means people will have a tougher time making a living and less money for charity or government spending must decrease which means there will be less disaster relief both in Canada and abroad. The way I see it, maybe we can import some of these third world immigrants to come work in Canada to help pay for these programs and help them out in that way.