Poor Packers?

[cowman]

In yesterdays edition of the Western Producer there is an article on western beef packers and how they are struggling to survive? The article says tight margins have forced them to scale back kills? Most are running in the red?
Now what is this? The last two years we were told, by some people on here, that being a packer was the road to prosperity? That those evil old corporations controlled the world and the gold flowed right into their bank accounts?
We were also led to believe that the evil American market would be our downfall? Hmmm...the article also says 18,000 fats and in the market report another 13,400 head of feeders headed south last week! Apparently the main Canadian based packers are killing 10,000 head under capacity?
So how do the utopian farmer owned co-ops look now? Will they open their doors...and then shut them in a week? Will the money put up by farmers dissappear up in smoke?
I said it once and I'll say it again...it won't be Cargill or Tyson that go down the road! Leave the packing business to the guys who know what they are doing if you want to keep your money!

[Cedar]

Cowman: Who the hell are you workin' for? ;-)

[cowman]

Well I hope for myself? Sometimes I think a few oil companies own me?LOL
The fact is I was just laying out what the Western Producer said? I would hope they are reporting the facts and not just pulling them out of a hat?
The question is when these new plants open...where do they get the cattle to operate? Are they going to bid up the market and outbid Cargill or Tyson? Are they going to outbid the packers in the USA....because that is the only way they are going to get cattle?
And if they do...how do they operate at a profit? The wholesale beef trade sets a price and the packers supply at that price? Really...it is almost impossible for a new kid on the block to muscle in...unless they have very deep pockets and can operate at a loss for a long time...and also consider they are going up against longtime sales teams that have an established relationship with wholesalers?
Now I'll probably be called a packer lover and pessimist etc.? Sometimes reality is a hard thing to accept!

[wade]

Now I know I am new to all this but i do have an opinion. It seems to me that it would be foolish to not procede with nre packing plants. Other forums are complaining about all the land going back to grass, prices to be in the toilet in a coupla years, blah, blah,blah. BSE- Japan presently likes us- not the USA- why not send them beef from here?. We are sending work south-why? If there is more grass- more cows- where do they go then? Avian flu-poultry panic- maybe we convert them to good ole ALBERTA BEEF!(That will get some of you goin if the rest doesn't!)Like I said, I'm still in agriculture so apparently I am short a few brain cells, but I had to get in my 2 cents.

[PureCountry]

Cowman, how many of these 'other' or 'new' plants have you heard of that are actually wading into the deep end to compete DIRECTLY with Cargill or IBP? Think about it before you post it.

I don't care what the Western Producer wrote. No plant that I've seen or heard of is going to take them head on. They are ALL trying to have producers committed - in writing - to guarantee a minimum supply of cattle. They are not that dumb to just jump into the buying market. Of course they'd get eaten alive if they did.

[dalek]

I'm not sure what's happening with western packers but Cargill has just put a 2nd shift on at the Better Beef plant, killing 100% Western cattle.

[blackjack]

...just my opinion but does it not seem the packers are pushing the envelope again or has retail sales fallen off that much ... there always seems to be an excuse whether there is to much supply of fats...or the lack of demand for the beef ... now with the threat of bird flu ...poultry in the usa is selling for very low prices at the retail level putting extreme pressure on all red meats...whether we like government or not they can help support the primary producer or watch us fall by the wayside one at a time...after all its all about competition right or lack of depending on what part of the industry we're in...

[mb_rancher]

I think some of the big packers are killing alot more cows now then they are fat cattle. More profit margins in .35-.40 cows then .85 fats.

[wd40]

Poor Cowman - "And if they do...how do they operate at a profit? The wholesale beef trade sets a price and the packers supply at that price?"

WRONG!! Cowman if you don't know the facts then you'd best keep you're mouth shut. The retail industry has NO, NONE, 0 control of the prices on their invoices. Just go and ask some. Stupid assumption.

"It's best to keep silent and let every one think your a fool than to open your mouth and remove all doubt."

When a packer opens his mouth - just call him a lier!

[cowman]

Well please enlighten me?
When I was young I worked in a packing house. Heres how it worked then: The sales staff offered carcasses at a certain price to the various buyers. Lucerne an Steinbecks(think that was the name-Montreal) either accepted or counter offered. If trade was good at the meat counter or they were featuring beef as a price loss leader they might accept...but when they wanted to move the price lower they certainly had no problem backing right off and effectively controlling the price?
These big retailers also had no problem grabbing up any efficiency incentives? So when CPR cut freight rates for packers who adjusted to larger freight cars...within two weeks they grabbed the incentive by lowering prices?
Now that was in the days when carcass beef was all going one way and none to the USA(at this plant) so don't know if it is a bold new world out there?

[cowman]

Pure Country: Of course you are right. The new plants are not looking at competing head to head in the commodity market, and that should be taken into consideration? Because the fact is nobody can compete with Cargill or Tyson in the commodity market.
I do wonder though what will happen to cow beef when (if) that border opens? A lot of these new plants are/were designed to process cow beef? Tyson and XL are killing cows right now in a big way...and why not...as it is still a captive market? Might not be if/when the border opens?...and by the way, what is with that? Are we ever going to get some sanity at the border?

[Cedar]

Cowman: "Because the fact is nobody can compete with Cargill or Tyson in the commodity market. "

Oh? One has to wonder (well, ok, this is just another one of my hair-brained thoughts!!!) if it could be done through a co-op with a western (or maybe even Canada-wide) perspective as far as management, but a local perspective as far as beef supplies....maybe...just maybe! Think about it: beef all supplied locally...say one plant within a 500 mile (or whatever) radius of a certain town or city...born, grown, finished and processed locally.....extreme fuel savings! ...as well as efficiency savings as the cost of carrying live animals versus carrying beef in boxes to market is a very substantial saving...especially if fuel prices continue to rise (as some predict).. The only question would be whether or not it would "pay" to have more, smaller packing plants all over the place versus the huge plants we now have. After all, who pays, in the end, for the transport of these animals???? Especiallly here in MB, further from the plants, it is such a long trip and such a huge expense, it has not done our feedlot industry any good (the shrink is so huge it just doesn't pay). The
"experts", after all, have been telling us for years and years: get bigger, get more efficient...HA!.... looks like " the bigger they come, the harder they fall"!!!!! Maybe now the better answer is a more localized, perhaps smaller approach.

Anyway, just a few thoughts to kick around....

[cowman]

Well I don't think that could happen...but who knows? It is a crazy world anymore!
I doubt the Safeways or Sobeys of the world would want to deal with several small companies unless there was a real economic advantage?
You know, love them or hate them, Cargill and Tyson run a tight ship? They control their costs, including supplies to a certain extent, run efficient plants and market agressively? They use their power and money to effectively lobby government at pretty well every level?
I often wonder at their stated return on investment of 1% to 3%? I suspect they are fairly adept at cooking the books and getting out numbers that plead poverty?

[Cedar]

Cowman: "I doubt the Safeways or Sobeys of the world would want to deal with several small companies unless there was a real economic advantage? "

Hence the suggestion of one ...hmmm... how shall I say....unified "umbrella" organization to oversee the whole operation. This "head office" could maybe be responsible for organizing the sales from certain locations that are close to each Safeway (or whatever store). Once we realize that every penny of expense incurred by the entire industry gets passed back to us, the farmers, it stands to reason that reducing all the shipping costs (and associated disease problems) would benefit us, perhaps even give the consumer a break on the price, or...at least match the multinationals. Ever read that article "power steer" ? if memory serves, I think that poor critter got hauled around to different places about 6 times....everybody along the way adjusts their prices so they make a profit..end result: we pay!!

Cowman: "You know, love them or hate them, Cargill and Tyson run a tight ship?"

Ya...maybe a little too tight! Ever see that documentary "Big Sugar"......is that where agriculture is heading???

Cowman: "....run efficient plants and market agressively?"

Why the heck would they have to market aggressively when they are practically the only one "in the game"???!!??!!!

Cowman: "They use their power and money to effectively lobby government at pretty well every level? "

There's where we need a serious change of mindset...not sure why our "lords and masters" are seemingly trying to destroy us!

Cowman: "I often wonder at their stated return on investment of 1% to 3%? I suspect they are fairly adept at cooking the books and getting out numbers that plead poverty?"

Ya, so it seems! Too bad our Conservatives wouldn't allow the opening of their books...that would've been interesting, eh?

[wd40]

Cargill completes Beef Packers acquisition

by Pete Hisey on 4/4/2006 for Meatingplace.com


Cargill Meat Solutions announced that its acquisition of four California meat companies, now doing business as Beef Packers Inc., has been completed.

The company originally announced the acquisition in September 2005. The four companies were Beef Packers, Inc., Fresno Meat Co., RPM Beef Inc. and King-O-Meat Inc. A fifth company, Ore-Cal Transportation, was originally part of the deal, but will be dissolved instead.

J.B. Hunt Transport Services and HR Livestock Transportation will be responsible for the trucking of live animals and chilled beef.


Another reason why we need to collectively build our own packing plant.

The 2 big packers run a net margin of around 30%. Cargil won't even get into a facility unless they know it will be paid for in 3 to 5 years.

Cowman - if you were to examine the industry properly you would fine there is really no real price discovery.

The food industry even stores like Safeway, Sobeys, SaveOn take what they get and pay what they are charged.

Wake up and smell the Dandilliaons.