packer profits?

[cowman]

This isn't meant as a provocative post or anything...just got thinking about who(if anyone) is making the big bucks on beef?
On the Alberta farm website for May 12 fat steers are listed at an average of $84.63 at Calgary. Wholsale carcasses are listed at $144/cwt at Calgary.
So if we take a 1200 lb. steer he would bring $1015.56 live and at 60% dress would bring $1036.80? Or $21.24 above what the packer paid for him?
Now I realize there is a hide, liver, heart etc. but I suspect there is also some fairly heavy costs to getting rid of some of the offal? They actually list the by product value of a steer at right around $90. Don't know if that is net or what?
Now I wonder just what the profit might be on that steer? It used to be generally assumed that the byproducts paid for the cost of killing and chilling...is that still true?
If the byproducts do still pay for the processing costs, does the $21.24 profit have to pay for marketing, management, etc.? Seems to me these packers are working with a pretty slim margin.

[rkaiser]

All you need now cowman ---- is to be elected in your zone. You will be well on your way to become the next Chairman of ABP LOL.

[grassfarmer]

Funny how your ficticious profit of $21.24 is suddenly considered a very slim margin. When we discuss feedlot profitability and they were able to make a $20 profit in the bad times they would be happy. Both are high turnover, low margin businesses but look how long they own the animal respectively - a feedlot making $20 profit for having $800 plus feed invested in a steer for 6 months versus a packing plant that owns it for 24 hours. Add this to the packing plants times of several hundred dollars a head profit and I won't be feeling sorry for them any time soon.

[cowman]

Well I don't see several hundreds per head profit, I see $21...maybe? Assuming the by products pay all costs?
I didn't pull those numbers out of a hat...they are Alberta Ag facts?
Or is Alberta Ag liars?

[grassfarmer]

I think you were showing May 12 2006 figures, can you remember a few months back? or a year or two? Why are you so eager to show the packers to be the good guys?

[cowman]

Well I don't think I'm trying to show they are good guys. Just trying to figure out if they are making the killing some people have suggested on here?
I often wonder if packing is such a lucrative business...how come more companies aren't involved? If the windfall profits are so great?
I think I found the answer....$21.

[grassfarmer]

Looks like you found the answer you were looking for anyway Cowman, only $21 a head, guess they'll be heading to the oil patch soon too.
"if packing is such a lucrative business how come more companies aren't involved?" I think maybe you should reread some of the debates we have had on MONOPOLIES or OLIGOPOLIES. The millions of dollars of taxpayer money given to the transnational corporations to run packing plants in the province of Alberta also makes a mockery of your naive idea that Government shouldn't pick winners and losers. They already have - the transnational corporations are the winners and the primary producers the losers.

[cowman]

Oh I see! Cargill and Tyson are evil while our own little domestic packers and abbatoires aren't? And Canada Packers, Burns and XL were probably saints compared to Cargill and Tyson?
Unfortunately that theory just won't wash. All of the above played just as dirty as the newcomers!
It's a tough cut throat business in which only the strongest survive!
XL was probably the poorest competitor in the beef business. They survived for one reason: The provincial government had $40 million in loans at stake! They virtually gave the company to Nillsons to stop the hemoraging of taxpayer money! Once Nillson Bros got hold of it they put it into a profitable position, by good mangement and going after niche markets. Could a producer type co-op have done the same...I doubt it...those Nillson Bros. are a pretty shrewd bunch!