ABP/CCA Welcome Increased Cargill Presence

[farmers_son]

This message from the Alberta Beef Producers website:

Cargill Announcement Recognizes Growing Strength of Canadian Packing Sector
The Canadian Cattlemen’s Association (CCA) says the announcement by Cargill Ltd. of the purchase of a second major packing facility in Canada shows that the growing strength of Canada’s beef processing sector is being recognized internationally.

Cargill, which already operates a major beef processing facility in High River, Alberta, recently announced production cuts at seven U.S. facilities due to the tight supply of market-ready cattle and the continued closure of the U.S. border to Canadian cattle. Cutbacks have taken place at Cargill plants in Plainview and Friona, Texas; Dodge City, Kansas; Schuyler, Nebraska; Fort Morgan, Colorado; Milwaukee, Wisconsin; and Wyalusing, Pennsylvania.

A strategic plan to reposition the Canadian beef cattle industry has been developed by the beef industry to be effective whether or not there is a prolonged disruption of the U.S. market. A key aspect of that plan is expanding slaughter capacity in Canada. While the CCA and ABP continue to work with new entrants to the packing industry to remove any impediments to their sustainability, the announcement from Cargill is welcomed as recognition by a world-renowned meat processor of the advantages of operating in Canada.

“Canadian slaughter increased 24 per cent in 2004 and is expected to increase a further 19 per cent by the end of 2007,” says CCA President Stan Eby. “It’s clear that Cargill wants to be part of that growth. Other aspects of the strategic plan to reposition the Canadian beef cattle industry include building on the Canadian advantage of our mandatory cattle identification program to include age verification, and aggressive expansion of international markets for Canadian beef.”

[grassfarmer]

Incredible!!

[cakadu]

You are too right grassfarmer. I caught the Ag Vision interview with Stan Eby that SASH wrote about in another thread - that was an interesting dialogue to say the least.

From what I gathered from it as long as Cargill and Tyson are able to increase their capacity into the US, then we are building packing capacity in the country.

The other thing that I found quite interesting is his comment on how the CCA views full competition. Once the border opens to live cattle, then we will have full competition. Interesting that they see the ability of American packers to bid on cattle as competition.

What about increasing the packing capacity on this side of the border so that competition gets created domestically and that the increased volume of value added products gets shipped to new markets that are not tied to the US?

If the article that farmers_son has posted is a true indication of what these two groups are thinking, then producers are truly in for a rougher ride than they have already been on (as hard as that is to imagine.)

[wd40]

Tresion of the worst kind.

[rkaiser]

How Pathetic!

[kato]

Dancin' with the devil ......

[kpb]

So does anyone still think there is hope for support from our producer groups for a producer-owned packing plant? I still say disband them--we'd all save money and would lose absolutely nothing.

kpb

[grassfarmer]

I was just reading an email I received regarding the Competition Board's ongoing investigation into accusations of price fixing and improper business practises in the beef industry. This relates to the long running issues as well as possibly dealing with the Better Beef takeover by Cargill. They are certainly very concerned with what they are finding but need hard evidence to prosecute. Beef Associations etc had been contacted to provide evidence to help the inquiry gather firm evidence of auction market boycotts, packer control of feedlot cattle etc etc. I wonder if ABP or CCA actually availed themselves of this opportunity or are they too busy working against producers interests as evidenced by their statement above?

[15444]

And now who was it that was questioning me a couple months ago for calling Eby a #@$$%&.? He is looking for a quick fix for this industry, which just shows how little he knows about it at all. I am with kpb on this one...dissolve them all.

[cowman]

Cargill is in the beef business and if they see an opportunity to expand/make a profit it makes sense to do it? Instead of continually beating up on companies trying to make a profit maybe the blame should be laid on those who deserve it?...the federal government?
Who is in charge of food safety? Who is in charge of international trade? Who is in charge of rules for business practices? Who is paid extremely well to do these things?
It is very obvious that no Canadian entrepreneur wants to finance or own a packing industry? Therefore be happy we have at least one packer who sees a future for Canadian beef.
Cargill is not some sort of evil entity! The people who run it and manage it in Canada were the same people who ran the Canadian packing plants before they went under! I believe the head of the US division is a Canadian? Bill Buckner?
IBP/Tyson are a completely different story.

[farmers_son]

While Cargill is indeed in the beef business to make a profit, I believe the question that is before the Competition Bureau and was before the Parliamentary Committee was does Cargill make unfair profits. That question has been at least partly answered by the Parliamentary Committee’s report that Cargill did not unfairly gouge producers. The gouging that took place was determined to by Parliament to be fair.

I think Cowman is right on the mark when he says Cargill is not some sort of evil entity. And I note the unhappy tone of the comments concerning the CCA but producers would be well advised to try and understand the reasoning behind the CCA’s support of Cargill. Since the CCA is their voice, producers need to be knowledgeable about directions the CCA is taking even if they do not approve.

I disagree when Cowman says it is very obvious that no Canadian entrepreneur wants to finance or own a packing plant. I think there are many. However there are some fundamental problems with making that decision, not the least of which is how to compete with Cargill. On top of that is a federal inspection/regulatory system involving CCIA that adds huge costs to the packing industry that tends to force plants to be large at the expense of smaller more affordable plants. These costs work to keep out new smaller entrants.

I think the CCA’s support of the Cargill expansion is significant because the Cargill buyout of Better Beef would have to pass regulatory approval since Cargill is a foreign owned corporation. Given the Parliamentary Committee’s recent review of Cargill’s unfair profits as well as the ongoing review of Cargill by the Competition Bureau the CCA could have objected and the sale of Better Beef perhaps could have been halted.

It will be interesting to see if the Competition Bureau will step in to halt the sale of Better Beef until their investigation of Cargill is complete. Do I sense a trade off of some sort? Increased American ownership of the Canadian packing industry in return for opening the border. It is very possible.

[grassfarmer]

"Therefore be happy we have at least one packer who sees a future for Canadian beef." thanks for that encouragement Pack-man I see you obviously support Eby then.

As far as producers are concerned Cargill is some sort of evil entity!
The Better Beef deal is a good example - if the border stays closed it allows them to increase their monopoly and drive down producer prices through market manipulation and control. If the border opens and there are not enough cattle left to fill the new, large slaughter capacity in Canada they can asset strip the company and close it down - knocking out a competitor increasing their monopoly and driving down producer prices through market manipulation and control.
It's a win -win situation for them, financed by the money they have stolen from primary producers and Canadian taxpayers through the various "BSE" bailout packages. Wake up and smell the coffee!

[Dale02]

It was told to me by some body at CCA that this press release was only sent out in the US and was supposed to remind them that Canada isn't sitting still and that the border being shut is costing American jobs. If you read it again I think you will see they are'nt congrajulating Cargill they are pointing out Cargill is expanding in Canada and cutting jobs in US. Not a bad thing to be reminding Americans of.