cow grades?

[cowman]

Usually a D1 or D2 cow is a pretty good animal, while a D3 might not be that great?
The fact is once that cow hits the boning line, yield is more important than quality? So the big well muscled cow is worth a lot more than the small slabby cow?
All cows that enter the boning line produce a lot of cuts and a relatively small amount of hamburger? Basically the whole hind quarter goes into high priced cuts...minus the flank(flank steak removed) and the shank. In the front end the chuck tender, rib eye, plate and one other large cut under the blade all come out and go into a premium market! The bones are cleaned off with a wizard knife and sure don't show much red! This pruduct also sells at a high premium!
Where do all these cuts go? Well some of the better cuts go right to your local supermarket, some go to the sandwich companies, some go to jerky companies. They all sell for considerably more than hamburger!
Now pre BSE a lot of these specialty cuts went offshore...an example: The diaphram(strip of meat that holds the lungs on) regularily went to Japan($16/lb-1984)! The tendon on the back leg to Taiwan($14 lb.-1984) for won ton soup! Now it seems to me what was left after all the cuts were out brought about $1.25/lb. but not real sure anymore(a long time ago)and it all went to Caraville foods. Again hard to remember but I think the Ribeyes and New York strips were in that $4/lb range and tenderloin right up around $10. The hamsets(round) and sirloin tips and butts were close to $4. The eye of the round was about $4.50.
I think bone waste was around 25% of carcass weight? I think the carcass price was right around $1.15 but might be wrong? Live cows probably averaged 45 cents and dressed around 55%?
The cow line at Canada Packers was the most profitable sector in relation to the amount of people working there! It cost approx. $22/cow in wages(piece work) to turn her into a goldmine! Canada Packers used to buy cow carcasses from Lakeside, XL, Burns and other CP plants beside killing all they could get their hands on!
I wonder how much money she makes today?

[rkaiser]

We can talk about it or try to do something about it.

Open Letter to Alberta Beef Producers

At a recent ABP fall election meeting I moved a resolution forward suggesting ABP work toward changing the Canadian OTM grade system from "D" grade to a system that properly grades OTM based on carcass quality, thereby allowing producers price discovery based on individual carcass quality. We currently know that approximately 190,000 cow carcasses were graded post slaughter last year, allowing packers the ability to remove primal cuts for wholesale to Canadian consumers from any deemed of sufficient quality. This packer niche added considerable value to processors, but there exists no regulatory process to compensate producers for these younger "white fat cows" sold by producers in this current captive market for OTM. One could argue that if producers booked their cows for slaughter at any of the cow plants on a rail grade basis, they would be paid based on the current "D" grade system, based on quality. Have you tried booking a load of cows for slaughter at any of these plants in the past three and a half years? The odd feedlot may connect, however, when there is approximately 20 percent more live product than the market demands, good luck. The packers simply buy the cull cows at auction at the Canadian captive market price, store them in a feed pen until they're ready to kill them, apply the grade and segregate the white fat younger cows post slaughter. Producers have no means to profit from this niche, and really no accurate idea as to how many qualified nor what the premium really amounted to.

We all accept that producers have shown a natural resistance to cull their herds based on price discovery in the past 3&1/2 years. This is the conundrum. How do we initiate implementing a grade system for OTM based on quality, thus allowing price discovery for primary producers based on quality? It has been clearly demonstrated that OTM beef, completely captive to within Canada's borders for consumption, has gained ground in terms of disappearance mainly by adding carcass value to the processor. By sourcing this product at the Canadian. Captive market value and promoting more and more of it to Canadian retailers, processors have exploited a very lucrative niche. We have recently witnessed routine "dark days" at UTM processing plants, not shutdown, merely switching to days of OTM slaughter as per head profits were more attractive killing OTM in recent market conditions. It is clear that resistance to implementing changes to cow grading will come from ALL of the processors operating in Canada. Therefore, one can conclude that the only way to increase value of cull cows to the primary producer will be to break the "captive market" for OTM.. This presents another conundrum, since the favoured solution agreed upon by industry leadership to Canada's OTM captive market is that of hastening the implementation of America's Rule Two. History shows us that for twenty years prior to BSE we eroded OTM slaughter capacity in Canada by exporting continually more live cows and bulls to America.. When Rule Two is implemented, we will once again revert to clearing out our surplus OTM by succumbing to that attraction. The Rancher's Beef and Rancher's Choice etc. will not be able to compete. Eric Butters, ABP vice pres. recently referred to govt. subsidy as the "crystal meth" of agriculture. I liken the American market to the "crystal meth" of the Canadian beef industry. We now have grudgingly recognized that to our detriment, we are dependant on it, but have demonstrated our weakness in resisting it. BIC pointing to the potential to expand into the US market alone while not being mandated to focus on any other demonstrates our addiction. Like any addict, we ignore the long term vulnerability and control over us that goes with the addiction.

This second conundrum demonstrates the need to discuss BSE testing for market development. Assuming, for conversation sake, that testing, as it has done for almost all countries that have been forced to deal with BSE, opened enough markets for OTM to increase slaughter rate by even ten or fifteen percent above the current rate, consider the immediate potential benefits:

1] - Immediately eliminate the "captive market" for Canadian OTM.

2] - Increase the utilization of existing OTM slaughter capacity, both now and in the future.

3] - Help assure long term survivability of Canadian owned slaughter capacity, i.e.: Rancher's Beef, etc.

4] - Less resistance from packers regarding implementation of changes to OTM grading. As more outlets for Canadian OTM developed, packers would need more OTM to draw from. Theoretically, honest competition would enable all levels of industry to profit.

5] - Increased market for OTM would likely cause increased Canadian owned slaughter capacity for OTM, something history has shown us is essential to the health of the Canadian beef industry.

6] - Aggressive culling of the beef herd would be the immediate result of breaking the captive market for Canadian OTM, thus eliminating many of the worries expressed in the "Economic Loss" study by Informa.

7] - By finally exporting any amount of OTM, we would create vacancies in the market for an identical amount of UTM, beneficial to all sectors of the beef industry, even the processors who resist testing.

8] - Successful implementation of BSE testing for market re-entry would allow Canada to prevent further vacancies in foreign markets being filled by our competitors, i.e. Australia, New Zealand, Uruguay, or for that matter, the US as well.[note the recent cozy deal between the US and S Korea and Taiwan, to the exclusion of ALL Canadian product] The longer the current stalemate continues, the smaller our chances of recovery of those markets. Japan is heavily investing in the Australian feedlot industry, to our detriment.

9] - Have you ever considered that our resistance to testing may, twenty years down the road, be setting us up as an industry, to look culpable regarding health risk? Suppose science determines a connection between Alzheimer's disease, CJD, and the batching of grinding meat. McDonald's obviously paid heed, hence their ass covering announcement a couple years ago regarding their sourcing of hamburger.We may draw some future solace from finally acquiescing. e-Coli and our leaky feed ban should serve as all the reminder we need to be pro active. ABP has failed to implement a professional scientific panel as suggested by Charlie Gracey almost two years ago, and agreed to at the time by ABP.

10] - BSE tested product would be a hell of an argument to re-enter any market, including the crystal meth market next door.

11] - If testing created re-entry into global markets for any amount of OTM, it would decrease the need to "fund-raise" for BIC. How long should taxpayers remain patient in supporting these programs? We could build a hell of a case for market testing based on the tax savings to the country, eliminating govt props for the sagging beef industry.

This explains Beef Initiative Groups concept from early 2004 to the present. If we had in Canada a producer owned slaughter industry, one that truly involved as many producers as possible, as opposed to a few deep pocket key players as exists with the status quo, we would to a degree circumvent the need for changes to the present cow grading system. The producers owning the brick and mortar would realize price discovery based on quality and the supply demand market. This by simply amalgamating to become both the supplier of the raw commodity and the purveyors of the beef derived from it. It only makes sense that they would wholesale the final product at the highest price possible, they being the owner all the way along. Simply put, vertical integration into the supply and value chain. Unfortunately, we learned that the resistance to discuss this idea at the ABP and CCA level effectively killed it. BSE testing was and is the key to producer's vertical integration into the supply and value chain. I have kept a letter from ABP signed by Adrienne Waller stating "the boards" rejection of our request to simply ask the Alberta govt. to consider assisting us with a feasibility study on our concept. We weren't asking ABP for money, merely a letter of referral. This at the time that govt. and industry are seemingly struggling with loss of family farm income. Thus, looking at the present situation from the primary producers perch, we conclude that ABP endorses the concentrated control that the multi national processing industry and the retail beef sector holds over us, and that we may be powerless to resist it. Quite possibly Jerry Bouma [Globe and Mail Report on Business Magazine. story "Bum Steer" Oct. 06] is correct when he states that there really is no Canadian beef industry, and trying to salvage it is a "zero sum game". I hope not. So you may conclude by now that in my opinion, changes to the grade system would be a mere tinkering with the timing when a major engine overhaul is obviously required. The changes this countries producers need in order to survive are a "package deal". They require more courage than we've seen thus far and certainly won't be easy nor without controversy. I confess, when I presented the resolution at Strathmore to lobby for changes to OTM grading, I did so knowing full well that it could not be done under the status quo. Under the current packer control of profits to OTM and BIC's very limited effectiveness in increasing disappearance of OTM, changing the grade system would cause slaughter rates to revert back to at least 2004 levels, perhaps worse. As packers would no longer recognize the current profitability of OTM, there would be even less enthusiasm to process them. So, it would appear, changing the grade system would be virtually redundant without the "package deal".

Last week the first shipment of US beef went to South Korea since that countries borders closed in Dec 2003. The reason it has taken so long for the South Koreans to resume US imports was the painstaking process to satisfy South Korea's demand that no Canadian beef would be included and that all Canadian cattle were segregated at any US plant wishing to ship US beef to South Korea. Canadian cattle have once again been portrayed in a bad light and sent to the back of the bus. For three and a half years we've largely, as an industry, denied our problems and discussion as to how Canada could improve the lot of the average primary producer. Had we, by charting our own course early on in the BSE bungle, by using all of the tools available to us in market creation, by demonstrating to the US that they are as geographically dependant on us as we are on them, [this at the time they suffer a thirty five year mother cow low] I feel that by now our position as an industry would be far advanced from where we are. We've remained passive and polite and obedient for three and a half years and have now clearly ended up more vulnerable than in May 2003. We did all of this out of fear of reprisal if we "pissed them off". I ask you now, - what more could they do to us than they've already done?

And by the way, for two years now, a couple of ABP's directors have indicated that if I really want to change ABP's focus, the solution is accepting a nomination. My pledge to you is this. The day that ABP becomes an organization which has won my respect, I'll issue a public announcement to that effect. I'd far rather work with you than against you.

Sincerely, Cam Ostercamp

President

Beef Initiative Group - Canada

[kpb]

rkaiser, does BIG have a new strategy to try to implement their recomendations given that ABP has shut them down, time and again? Does a direct appeal to government and/or producers have merit?

kpb

[rkaiser]

- I don't know if ABP has shut down BIG C kpb, however BIG C has never grown beyond a group who feels there are other ways of dealing with the debacle we know as BSEconomics and the trend we have seen over the last 20 odd years to satisfy Uncle Sam. We have not asked our membership for a yearly monetary renewal at this point, and are basically going it on our own.

We are still a group of checkoff paying producers who brought a lot of resolutions to the fall meetings. The letters that Cam writes are all read by a number of us and edited and sent to Loophole the Lawyer prior to release to a growing list of politicians and so called industry leaders. Most politicians refer to ABP/CCA as the voice of the producer, thus our continued attempts to use their system. If however ABP/CCA continues to shut the door on BIG C, we would like to somehow convince primary producers that a new voice for this cow/calf///small feeder -- family farm is needed. One thought is to throw support behind the Western Stock Growers and try to attract membership and attempt to wrestle some of the checkoff money into their hands. This groups ideas basically, but quietly, parallel the ideas of BIG C, and their history may garner some attention at the Provincial and Federal levels.

[cowman]

I suspect there always was more money killing and processing cows than there ever was doing fats? Of course now it is a virtual goldmine? Which is why Cargill got in on the game?
BIG C had a good idea on building a cow plant, but it wasn't to be.
I hear the cow plant at Salmon Arm has pretty well ceased operating, not sure if that is true? Heard the proposed plant at Pincher Creek is a no-show? How are the other new plants(or proposed plants) doing? Anyone heard anything? How is the plant at SpruceGrove doing?