ABP Magazine

[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.

[cowman]

I often wonder though if the problem is the Cargills of the world making massive profits...or is it the fact that beef(or all food for that matter) has not kept up with inflation?
Before you roast me consider this: What did you get for a calf 15 years ago? What do you get today? What did a steak cost..then and today?
Heres my own guess. In 1992(use that year because I remember it clearly) I sold calves in that $1.25 range, in 2005...about the same! Now I think a steak was around $5 at Safeway...maybe up to $7 now? My numbers might not be real accurate here as I don't do much shopping!
How much has inflation gone up in those ensuing 13 years? If we average it at 2.5% thats 32.5%? That means that calf should be worth $1.66...just to keep up to inflation? I guess the steak has mostly kept up?
The fact is everything you put into raising that calf has kept up with inflation(or maybe better) so defacto you are really not getting enough for that calf? We all know what a new pickup costs, how much to fill the fuel tank, heat the house, put the lights on! I would suggest most of these costs have excceeded inflation? In some cases by a great deal!
I would assume Cargills/Safeways costs to process and market that beef have probably kept up with inflation?
Bottom line is the North American consumer is paying less for food today(adjusted for inflation) that they were thirteen years ago. I believe the portion of income spent on food is below the 10% mark? It used to be close to 25%? I think in Europe the portion is over 30%?
It has always been in a governments interest to keep food prices low. Keeps the majority happy, lets the manufacturers pay low wages, puts money in peoples pockets to buy industries goods...you know the essentials like an RV, luxury car, speed boat, motorcycle, exotic vacation, etc.!
Whether acknowledged or not there is a "cheap food policy"? If hamburger climbed to $4/lb. just watch the cheap beef flood in! Happens every time. And this is not necessarily anything to do with free market competition...often it is subsidized dumping of a foreign product...like the Irish beef scandal of the seventies or the subsidized corn of the last few years?
The government is out to protect their interests...the urban voter, not the tiny minority of food producers.

[whiteface]

"Before anyone roasts you" cowman. It's exactly your economic thinking that gets me to put a post on here once in a while (although I'm sure it brings out some others too but for different reasons). I don't need to regurgetate everything you just said, suffice it to say I agree one thousand percent that the people of this country are spending more of thier money on toys, houses, and the energy to run their toys and heat and light their houses than on their food. I stay in touch with my tenants all the time on this issue and beyond any doubt, the ones that do better, pay a little more for their food ( and alot better toys), the ones that don't are eating maccaroni and paying as much as they can afford on their trucks and SUV's. I didn't make the rules, I just listen to what they tell me. Food is a loooong way down the list of people other than cow-calf and grain guys. Mind you, I don't have millions of tenants so maybe my census is not accurate, however my guess is that with the mix of people and the different cities they're in, and the comments being quite similar, I would say I have a fairly good reading on this type of need. The government is doing simply what the majority asks for. Sorry about our luck. Maybe y'all should have oil and gas jobs, then will no longer be this "over supply" of cattle. I do still give credit to the drive that has some of you literally banging your heads against the wall, but at some point if you stop banging, your head will stop hurting. I bang my head too alot of days, just for things that I feel I can actually change. Have a good day all, enjoy the rain and sunshine together, great calf and crop growing weather!

[grassfarmer]

Well I would disagree with that thread 1000% although I don't think there is such a percentage, Whiteface.
It's a one dimensional look at costs, inflation and food prices with a view to backing the packers once again. The price consumers are paying in the store for beef is high enough to justify a very good return to beef producers if there were a more equitable distribution of the profits. This is the problem. Equally Cowman could post the figures that show the producers return for the grain in a loaf of bread or the ranchers return for the steak now compared to 1992. These most clearly show that the big change has been in the take the middleman gets due to processor concentration over the years. Blaming the consumer or the Government for insisting on cheap food is a smoke screen.

[whiteface]

Fair enough grassfarmer, you're entitled to your opinion and while I may disagree with anyone wholeheartedly from time to time, I do appreciate the opinions of everyone... it is part of my job to know where my buyers are comeing from. Hope you're all enjoying this perfect weather, have a good one all!

[cswilson]

Heck my kids like macoroni lol. By the way Meadow Lake will be crowned Hockeyville-(my fearless prediction) probably due to my boys KD addiction lol.

[whiteface]

GOOOOOOOOO OILERS!!!!!!!