ABP Magazine

[grassfarmer]

Cowman,
The changes that have happened in the hog sector are often highlighted as the way we are heading in the beef sector. Here are some figures that highlight what has happened in the hog sector between 1988 and 2002 and prove to me why we need to fight any move to go down a similar path.

1988 - 33,760 hog farmers
2002 - 11,565 hog farmers

1988 - pork chops grocery price $6.88/ kg
2002 - pork chops grocery price $9.54/ kg

1988 - farmgate hog price $1.44/kg
2002 - farmgate hog price $1.46/kg

1988 - hog plant starting wage $9.38/hour
2002 - hog plant starting wage $9.65/hour

So who has prospered most in the hog production chain in this time period? the hog farmer? the hog plant worker? the consumer buying pork? - It's quite clear that the processor/retailer sectors are the ones that have done exceptionally well in this time period. This is the reality of the concentration of the agri businesses that handle farmers production once it leaves the farm. Clear proof that this "free trade" does not work in the interests of primary producers.

[PureCountry]

Great post GF.

[kpb]

grassfarmer, I quite often cite what happened in the hog industry not because I want us to go that route but because I see it looming on the horizon.

The hog industry used to be set up quite a bit like our industry--lots of independent operations. Almost overnight, it seems to me, it pretty much changed to a few huge operations and lots of contract feeders. You can see that in your numbers. With a huge operation--like a huge feedlot--you don't have to make big margin on every animal, you just need to have a lot of animals.

If things don't change I see this as inevitable in our business. What I'm trying to get my head around--and what I think about a lot--is how to stop this from happening. Consider that the interests in favor of this taking place are entrenched and powerful--the packing industry has most of the slaughter capacity and won't give it up easily--they have connections with the biggest feedlots which have connections with the biggest cow-calf guys. All of them produce what is dictated by the big retailers. All of them control the producer groups that are listened to by the government when the politicians make decisions. And all of them have lots of money.

rkaiser, I agree with your sentiments but I'm afraid there is no hope that the Cargills and Tysons of this world will go back to a pure system of capitalism. They thrive in an environment of monopolies--they don't want competition and will stamp out any hint of it.

Lastly I have read that Wal-Mart is going to start stocking organic food. Does anyone really think that organic meat, stocked by Wal-Mart, is far behind? And I can tell you that that meat will not come from the small producer--it will come from the big feedlots-contracted-to-the-packer and from ranches-contracted-to-the-feedlot with specific breeding and feeding contracts. And the worst part is that the general public will buy their organic beef from Wal-Mart and not from my neighbour just like they buy their hammer there instead of in town.


kpb

[grassfarmer]

kpb, I agree with you on the magnitude of the threat family farms are facing. That is why I believe we have to be involved politically (and that includes the ABP) rather than join the "well it's going to happen anyway" camp or "cost cutting will allow me to survive" camp. Ultimately I don't think either of these will succeed.
On the other hand look at who is hurt by the corporate agri-businesses monopolies - primary producers,
truckers and workers in the industry (including packing plant staff as shown above)and most of all consumers. The few nameless people that get rich of all our backs are very, very few relatively. I think educating all the people who are hurt by these actions is the way ahead. To do so we must fight, must protest and must educate consumers. CSwilson was saying that he never made sales by running down competitors, well I gain quite a lot of customers by pointing out to the consumers of our grassfed beef what is really going on in our industry. The fallacy that there is a cheap food policy always interests them when they are informed that although something might look cheap on the store shelf by the time they have paid their taxes to support the corporate processors expansion plans and paid their taxes again to fund bail out packages for hard up farmers/ranchers their food isn't so cheap. The "fair trade coffee" model is one most consumers understand - we just need them to understand it is also applicable to beef among other things.

[rkaiser]

Great post with the hog numbers grassfarmer.

I'll add a few words penned by the president of BIG C in his newest article which will hit store shelves soon (Probably be a pullout in the next ABP magazine LOL)

Cam writes -"In Behind the Veil of Science I asked a thinly veiled question as to whether CCA directors strings were being pulled and ellicited a very indignant response from one of them. That same one is now on record as having said, in a discussion pertaining to BSE testing to create export markets, I quote "we live beside the most lucrative market in the world, why would we do anything to annoy that market?" Again I ask, lucrative to whom? We have extensive data and statistics, most of it in CCA's own canfax archives, proving that while we ramped up beef production by 60% in about ten years, family farm income decreased at often identical rates."

[grassfarmer]

rkaiser, the figures came from an NFU document(... gasp, horror, those lunatic socialists!) showing how free trade wasn't workingfor farmers. It was commissioned to show the negative effects the 1989 Canada-US free trade agreement,1994 NAFTA agreement and 1995 WTO agreement on agriculture had on producers. The result of these 14 years of free trade were:

1988 - Canadian agri-food exports $10.9 billion
2002 - Canadian agri-food exports $28.2 billion

1988 - realised net farm income $3.9 billion
2002 - realised net farm income $4.1 billion

1988 - farm debt $22.5 billion
2002 - farm debt $44.2 billion

These figures obviously will pale into insignificance when compared to the 2003-2005 results with the major ramping up of tran-national piracy through the "BSE" crisis and low grain prices.

[grassfarmer]

Further to the last post I just noticed an interesting research piece out of Quebec. They highlight a 1kg T-bone steak that retails in the store for $22.00, the farmer got paid $2.80 for it and they reckoned the farmer would have made a profit from the beef if he had got only an extra $1.25 for it. The question they ask is would it be unreasonable for the processor/retailer to give up the extra $1.25 from his $19.20 share of the steak rather than asking the consumer to pay an extra $1.25?

Just think about that $19.20 share off one T-bone steak that's close to Cowmans $20 per animal margin for processing a whole beef!

[cowman]

These are very interesting and informative posts! Sort of makes me question some of the things I have believed in!
Grassfarmer: The $19.20 "profit" didn't all go to Cargill? Assuming the beef was sold as a carcass they would have gotten very little of that mark up? The retailer/cutter would have made the majority of the money?
You know what it costs to get an animal killed and chilled, and you know what it costs to get him cut up. Kill and chill is fairly cheap? Cutting and packaging isn't.

[PureCountry]

Kill and chill is far from cheap anymore Cowman. Check with some abbatoirs - it's scary.