Cattleman2: I appreciate your comments. Those are valid questions and ones that need to be answered. I see the solution as creating an environment where the packers have to compete to purchase our live cattle, which I believe they have not had to do up to now.
You mentioned "tyson/cargill/XL" plants. And that their job is to source cattle for processing at the least cost to the plant. Actually the “job” for these plants is to maximize shareholder value and they have been very good at that. It needs to become our job to maximize value for the producer. Most would agree that the big packers have been fixing live cattle prices at artificially low levels to maximize their returns. That is something we need to influence and to extent possible stop.
Producer packing plants are not the only way to improve the nearly pure competitive environment producers find themselves in. I have been suggesting that producers need to quit competing with themselves by forming alliances and seeking other methods of cooperation. A viable option is to put organize to pressure government for policies that discourage packer monopolies. The packers presently enjoy their monopoly position directly as a result of various federal government regulations that allow the packer monopoly to flourish. Restrictions on inter-provincial trade of non federally inspected beef is one example. CFIA regulations tend to encourage large scale plants that only the majors can afford and discriminate against smaller producer scale plants. Just a couple of examples...
I am not looking to supply management as a solution although I would point out that pre BSE the supply of beef in this country was managed by federal allocation or non allocation of import permits over the TRQ. It never has been a “free market”. The federal governments of both the U.S. and Canada continue to “manage” the importation of beef through various tariff and non tariff barriers. I am envisioning a North American solution rather than a Canadian solution so any suggestions need to be something the U.S. producer would buy into.
Producer packing plants do exist in the United States more than in Canada, we are just getting started on this side of the border. They are one possible solution. Just what the successful model will be is still being developed and there is a learning curve associated with anything new. They certainly should not be ignored as a solution or discarded outright as being socialist or union. We need to consider any and all options to see returns to the producer improve because the present situation is not sustainable through another generation.
As an individual producer there are options to avoid selling into a non functional marketplace. However if you are taking an industry wide point of view then solutions must be found to restore or create a functioning, working viable market for live cattle. Our free enterprise system depends upon functioning markets to fairly distribute wealth throughout the economy. When monopolies are in a position to fix prices to their advantage the marketplace and the free enterprise system is threatened. Without competition all else fails.
You mentioned "tyson/cargill/XL" plants. And that their job is to source cattle for processing at the least cost to the plant. Actually the “job” for these plants is to maximize shareholder value and they have been very good at that. It needs to become our job to maximize value for the producer. Most would agree that the big packers have been fixing live cattle prices at artificially low levels to maximize their returns. That is something we need to influence and to extent possible stop.
Producer packing plants are not the only way to improve the nearly pure competitive environment producers find themselves in. I have been suggesting that producers need to quit competing with themselves by forming alliances and seeking other methods of cooperation. A viable option is to put organize to pressure government for policies that discourage packer monopolies. The packers presently enjoy their monopoly position directly as a result of various federal government regulations that allow the packer monopoly to flourish. Restrictions on inter-provincial trade of non federally inspected beef is one example. CFIA regulations tend to encourage large scale plants that only the majors can afford and discriminate against smaller producer scale plants. Just a couple of examples...
I am not looking to supply management as a solution although I would point out that pre BSE the supply of beef in this country was managed by federal allocation or non allocation of import permits over the TRQ. It never has been a “free market”. The federal governments of both the U.S. and Canada continue to “manage” the importation of beef through various tariff and non tariff barriers. I am envisioning a North American solution rather than a Canadian solution so any suggestions need to be something the U.S. producer would buy into.
Producer packing plants do exist in the United States more than in Canada, we are just getting started on this side of the border. They are one possible solution. Just what the successful model will be is still being developed and there is a learning curve associated with anything new. They certainly should not be ignored as a solution or discarded outright as being socialist or union. We need to consider any and all options to see returns to the producer improve because the present situation is not sustainable through another generation.
As an individual producer there are options to avoid selling into a non functional marketplace. However if you are taking an industry wide point of view then solutions must be found to restore or create a functioning, working viable market for live cattle. Our free enterprise system depends upon functioning markets to fairly distribute wealth throughout the economy. When monopolies are in a position to fix prices to their advantage the marketplace and the free enterprise system is threatened. Without competition all else fails.
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