ABP Magazine

[rkaiser]

Well Grassfarmer - now that I am back in your ABP zone - we're at least going to have a lively night or two next fall. And ya - I'll stay out of the Vodka on those happy happy evenings.

[gwf]

I wondered how long it would take to have this topic discussed again. I cancelled my subscription to Alberta Beef sometime ago. I like Lee Gunderson as a decent, clever and caring individual, but unfortunately he doesn’t call all the shot at the magazine. One of the few articles to appear in the magazine on producer funded packing had to be paid for. Ten parties put up $250 each. I am sure the support from the ABP for the magazine must be worth more than this. If one is going to pick sides, you will likely go with the one that is in the drivers seat. The ABP.

The original proposal that BIG-C adopted, called for a levy on all cattle to finance the capital requirements necessary to build and support new and/or existing facilities provided the product was marketed other than the US. The reason for this was to not be in competition with existing processors and at the same time provide an alternative market for our beef products with the least amount of risk. It was proposed that the corporate vehicle would be a public company that would provide liquidity for investor’s head levy. It was never the intention to have producers directly involved in the operation of the plant. Cargill and Tyson are going to be around for quite a while and they are playing, and will continue to play a big part in exporting most of our beef. We have an over supply of cattle for the present markets to utilize, and it would appear that Cargill/Tyson will continue to look to the US for their main market.

Calf prices this fall scare me. The feedlots have pulled their horns in on the prices that they can afford to pay. Most backgrounders have lost money the past three years, so they are not going to be too bullish in the near future. It all comes back to the cow/calf producer who is at the end of the line.

[rkaiser]

Thanks for that gwf - any rain down yer way ---- if so how's the whiskey --- or vodka - or whatever.

Hope things are well with you.

Randallofsky - the Rcalf supporting socialist LOL

[cowman]

randy: The $21 was the difference between the wholesale carcass beef price and the daily quote on live cattle. I am assuming they are talking AAA or AA steers? Consider that if the price rose 2 cents on live cattle, without a corresponding rise in wholsale...the packer would then be into negative margins? Now I don't know if Ag Canada is cooking the books or not...I like to believe they are telling the truth?
I am sure Cargill adds value to their product when they can and probably has found they can supply some of their own services to cut costs, eg. trucking? But bottom line is the packing business? I don't think we can include all the subsiduaries or maybe we should be throwing in the grain and fertilizer business too?
I have no idea where anyone ever got the idea I support in any way the ABP? I don't even get the newsletter! Somewhere in the ABP files I am probably labelled as a total traitor! The ABP is just another cost of doing business in my opinion...another tax if you will. I spent time and money trying to get rid of them back in the early nineties...probably as much as you did promoting BIG C! That didn't work.
I guess one thing is very clear though? Manitoba will get a packing house. The great experiment will take place! We'll all just have to wait for the results.

[cowman]

kpb: Sorry to hear Salmon Arm closed. When Ed Paul came to the mart cow prices went up right now! He bought a fair number of cull cows in central Alberta, for awhile!
Not sure who in the end owned Salmon Arm? I know they were offering shares but I think in the end only a few big boys owned it? I heard basically Ed was the main owner? I guess he'll have to regroup back to his bar business! Never a loss in the booze business!

[cowman]

and finally mb rancher: I do not have a job with an oil company! I do have a joint venture company that privately contracts services. To oil and gas companies, municipalities, Alberta Highways, both railroads, industrial, and lots of farmers!
Without a doubt these ventures are my bread and butter! I also have an 1100 acre farm...again in a seperate joint venture...that occupies a lot of my time! It is NOT a tax write off and has never failed to turn a profit....I pay taxes every year!

[coppertop]

randy,if the rain has driven you to the bottle, I sure hope that it doesn't rain all summer or you will be in a mess by fall, and I for one, am looking forward to seeing you run as an ABP delegate. Sure will help you as much as I can at this end of the zone.

ABP is a classic example of an organization run from the top down vs being run by the grassroots. The provincial government, particularly AAFRD is run along the same lines. For as much as Ralph was always the peoples premier, that is gone with the wind. The government is run by bureaucrats, and patronage appointments so is it any wonder that ABP top dogs want to stay ingratiate themselves with government, then they can tag along on the ministerial sojurns around the world !!!

[cowman]

Now I will wade into troubled waters a bit here!
My ABP rep here is a truly good guy...doesn't mean I don't agree with him! What can I say...we were in grade one together...we played on the same ball and hockey teams?
He believes in the ABP! Obviously I don't! We certainly don't get all bent out of shape about it! We have a good relationship. We can just accept that we have a different viewpoint?
Why is this so hard to understand? Some people on here get very passonite about these kind of things? In the end does it really make any difference?

[coppertop]

cowman, without a doubt many of the ABP reps are very good people, work hard in their own communities and likely ran as delegates with the best of intentions. I do know that some of them have become very disillusioned with the direction ABP has gone, and many good delegates don't serve for long because they don't want to continut to butt their head against a brick wall.

I think the BSE crisis is what really turned the majority of cow/calf producers againsg ABP, prior to that things were good in the cattle industry for a few years so many people didn't pay much attention to how their check off dollars were spent or what the ABP executive was doing.

Having said that, it never ceases to amaze me at how some of the delegates seem to get elected year after year. In my zone, in 2004 I felt that at the zone meeting I attended there were what seemed to be clear cut choices, which weren't the old standby delegates, but after all the zone meetings, some of the old boys were back in all their glory !!!

One addition to the ABP staff that is an excellent choice in my view is Rich Smith. He is a former engineer with AAFRD, then worked for a time in a senior management position with Elite Swine prior to being hired as the ABP environmental expert. His expertise should be what is listened to by government vs the good old boys that seem to have the ear of bureaucrats and ministers alike.

[kpb]

I'm afraid this issue of packer concentration will not be resolved unless the government is willing to step in to regulate the multi's.

Since that is not going to happen I do not realistically see an answer to this fundamental problem. I don't think a producer-owned plant can make it without government support and protection from predatory pricing--at least at the beginning. The government has no will to do this and our own producer groups--whom the government look to for input--do not support producer-owned plants.

What we are really discussing here is a different economic system than we currently have. Should the government limit the multi-national control of the packing industry only? How about the gas retail business? Or department stores? How about the disappearance of your local hardware store in the face of Home Depot and Wal-Mart?

Hate to sound like an old goat but I remember when I was young shopping at all sorts of little retail stores that just couldn't cut it competing against the multi-national invasion. We'd never heard of Home Depot then and maybe we were better off. But I think the chances of any government turning back the clock and trying to limit companies like Wal-Mart or Esso or Cargill are zero. It just is not going to happen.

There is also no inclination in the government to put public money into competition with any of these companies. And, apparently, no wish on the part of most producers to do this either--let's face it not only do our elected CCA reps oppose it but producers did not step forward en masse to ante up during the BSE crisis when these plants were crying for money. Sad but true.

So that leaves us with something smcgrath talked about a little while ago--look after your own costs, produce as cheaply as you can and hope you last longer than your neighbour. Of course that just postpones the inevitable but it does postpone it for a little while.

kpb

[grassfarmer]

Maybe someone could tell me more about the competition laws in Canada and their enforcement?

In the UK we have the Competition Commission (formerly the monopolies and mergers commision) which has governed takeovers since 1948. I looked at their website for an example of a recent relevant ruling.
In 2005 they heard a case involving supermarket chains. Morrisons(4th largest chain in the country) bought 115 stores from Safeway a couple of years earlier. After investigation Morrisons were ordered to sell 52 of their 115 purchased stores as they contravened the monopolies rules. So Somerfield (5th largest chain in the country) bought 115 stores from Morrisons in another deal. This deal on examination was not satisfactory either and they had to divest their interest in a good proportion of the 52 stores. The reports are long, detailed, legal gobbldeygook but in essence they make it clear that chains buying competitors stores with the intention of shutting down either of them to reduce competition are not allowed. Their laws are by no means perfect and many mergers are allowed to go through that look dubious to consumer groups but never the less they show me the kind of government that I think should be involved in corporate takeovers. It is one of the duties of Government afterall to protect the interests of consumers.
I think the following divestment ruling against Sommerfield could well be applied as a model to many of the ag industry monopolies in western Canada:

"Each store will be divested to a suitable purchaser that is independant of Somerfield and has the resources, expertise and incentive to maintain and develop the divested store as a viable and active competitor to the stores in the local relevant market, and would not be likely to recreate the expected adverse affects as a result of the divestiture."

[cowman]

I think there are some kind of laws regarding competition in Canada, but don't think they get triggered very often? A few times the government has told banks they must sell certain banking properties they have aquired but not very often?
I think when Cargill aquired Better Beef in Ontario they looked into the competition thing but ruled Cargill could go ahead?
The fact is without some sort of competition rules the likes of a Walmart will eventually run just about everyone else out? I'm not sure if that is a good thing or not, but seems to be the way things are going?

[coppertop]

Not unlike the way the downtown core of our communities seem to start dying out when the big box stores start to appear.

[rkaiser]

Do we all think that Cargil and Tyson only think about killing cattle boys. Their think tanks are all over this rules thing.

Why has Tyson or Cargill not bought out Nillsens Bros.? Prior to BSE their was far better potential in the UTM market than in the OTM market, and probably always will be with their American customers for our cattle right next door. If BSE could only stop Cargill and Tyson from this market for a matter of months "what will ever stop it for any longer"?

They know exactly where they can go with the competition thing and will push it to the limit every step along the way. Along the way, while they lobby and obtain through thaqt lobbying more room to move.

The better beef thing became about distance. How on earth could Cargill's little old plant in High River have anything to do with one in Ontario. BIG C pressed the Competiton beureau a lot harder on this one than ABP did (and I guarantee that) however it made sence to the Feds. Cargill won out. Seemed to overlook the truckloads of cattle that streamed across the country during the height of the BSE thing when stolen cattle made it easy to offset shipping costs.

Ranchers (at Balzac) will be left alone for a while, as long as they keep talking off shore marketing. If it starts to work, Cargill and Tyson will be all over them.

80% is likely all they can do for now, and they will be satisfied with that. No need to worry about the two becoming one - won't happen. Gotta keep enough wool over folks eyes now don't they.

[PureCountry]

They do a fine job of the old wool-pulling. It's turned into quite a mod-squad of acronyms hasn't it? ABP, CCA, and BBP-Broke Back Packers.lol Sorry, thought I'd just throw some humor into this political debate.