Cresrud--Tysons New Partner

[northfarmer]

I have checked out the site, and toured Argentina a few years back. The opportunities there are immense for this type of coordinated professional activity.

They are structured as a REIT, real estate income trust.....this is the form of trust that will continue exist even in Canada after the trust law changes promted by Flaherty. Not sure if it would be applicable to farm land and an integrates cattle/agricultureal business in it current legislative form but is a form by which the income can be distrubuted to shareholders before tax.

This could be a format of investment from current producers to build value chains that integrate production into processing and downstream marketing of the products. This of course requires a relinquishing of the many individual freedoms to make decisions that many farmers and ranchers relish, but could be a means to offer direct particiapation in the value chains we so dearly desire, at least I would. IN doing the scale of these activity could be large enough to offer economies of scale and be competitive yet small enough to exploit higher margin niche markets.

Being the market contrarian that I am, we are currently building a cattle business that will compliment our large scale grain farm and have recently reorgainzed out business seperatating the two entities into a corporate structure. Our current business plan calls for a 400 to 500 cow/calf herd (we are half that size now)with future backgrounding activities in the plan. We would like to seek out partnerships to to take these cattle to finish and beyond. would love to do this with like minded producers building into the future.

Excellent points f/s and rk.....I am not looking back, nothing to gain by that except the lessons of the past...just moving forward, we need to get our own organized and well thought out agenda on the table and enough of this asskicking we are getting by the few that countrol the market....the big guys have a divide and conquer strategy going on...we need to put them aside and promote our own selfish agenda....from the producers perspective....

[cowman]

That sure is one big outfit! 388,000 owned hectares, 160,000 leased hectares, 94,000 head of cattle! Not sure but I think a hectare is 2.47 acres so would translate into about 960,000 owned acres, 395,000 leased acres!
One thing you have to say about Cargill...they know how to build business links and capture every penny in a product!...oh sorry, I forgot...it is sacriledge to say anything good about a packer!

[farmers_son]

Cowman: Yes, Cargill does know how to build business links and capture every penny in a product as you point out. Some of those pennies should have been ours.

Cargill will not pay us any more for our live cattle than they have to. The key for livestock producers is to be able to "demand" our fair share. That would give new meaning to the phrase supply and demand.

The best way to demand fair payment is to have alternative markets for our live cattle. Since Cargill and Tyson are not going to compete with one another for our live cattle without being forced to then it would seem that we may need to create our own alternative market. As rkaiser points out, groups within Alberta have been advocating just such a thing for some time now.

I read your thread in Rural Issues about whether future farm managers need to have different expertise. It could be that quite a few primary lack a sufficient comfort level with moving up the value chain in order to demand their fair share of the consumer food dollar. Perhaps the benefits of more education and different experiences will not be seen at the primary production level, rather in the ability to be comfortable being part of the food chain beyond the farm gate.

Reading between the lines, it is my impression that Cresrud has attracted just such a team of people with that expertise and they are putting it to their advantage. How much longer the Willowcreeks and other such protectionists can survive in a cattle industry along side this new talent is debateable but I think their days are numbered.

I would suggest that any country's real competitive advantage in raising cattle is not their climate, or their cattle or their packing plants; it is their people. Even Cargill is just an organization consisting of people with resources. Those resources can be duplicated and other passionate, educated people could do what they do, only better.

[cowman]

And I might suggest to you farmers son, the people who own Cargill probably understand very well where they are going and why they are going there? In fact the so called "expertise" are basically the hired help?
I'm not saying a group of like minded souls can't come together to solve a problem. I am not against the BIG C concept...in fact the boy is a member and thinks strongly along those lines(we disagree at times!)!
My real problem is I know a thing or two about the packing business(not much...(maybe enough to be dangerous) and I know it is not a business for the faint hearted or dreamers! And quite frankly...a lot of the schemes I've heard...are hopeless dreamers!
At the end of the day, it is our own dollar we choose to invest? Be very careful how you choose to invest!
There is a sucker born every minute...and someone just waiting to take their money! Be very sure, where your investment dollar is going.
I think you probably have a pretty good grasp of how things work...but be careful...you might get caught in a situation where you are playing out of your league?

[farmers_son]

I agree with those comments. Especially being careful about investing. I would point out that we already have a considerable investment in the agri-food industry as primary producers. And for the most part that investement has been underperforming for some time now, especially since 2003 if not before. I would suggest for quite a while before.

Re hopeless dreamers. That is one way to put it but I would put it that we need people with vision. If I think back to my grandfather coming to this part of the bald headed prairie to homestead I am sure some back home would have thought that fool hardy, a hopeless dreamer. And in this part of the country it did not work out for everyone but the ones that stayed and tried did succeed. I would put it to you that those early pioneers had vision and were not hopeless dreamers.

In some ways it will take the same pioneering spirit and the same sense of community/working together to see primary producers successfully move up the value chain and demand their fair share of the retail food dollar instead of just taking what Cargill gives us. Which will always be just enough to barely keep us going.

I am on my way to a meeting on Raising Cows Raising Profits which is dealing with integrated marketing group alliances. Another meeting tomorrow in Peace River on the same topic. I am hoping to learn more about how producers can come together to increase their profits. The packing plant ideas would be along the same lines only on a larger scale. Some in the U.S. would rather go to R-Calf meetings but I think there are better options available to Canadian producers.

[Cattleman]

I thought I would add my 2 cents. To be honest I haven't had a chance to read the site, but from Cowman's numbers in terms of size. It sounds like Australia, maybe you should check out the Australian Agriculture corporation's website. I worked for them for a bit, spent some time on a couple stations. The one manager said I should go check out some of the big stations, (his was only a million acres, although it wasn't as intense because there were only 25,000 head on the million acres. I know when I was there 5 years ago, they wanted to own half a million head of cattle out on the stations. These are big outfits, with a very good marketing plan in place. They have existed for a while, and will continue to be the way more and more production is done. I am not saying not to worry about these developments, or to be scared of them, but as Farmers son has said, we should focus on our own business, and find the best way for you to be successful in the future under the new systems of agricultural production and marketing that are/will exist.

[kato]

It would be interesting to know the exact history of a typical million acre ranch in Argentina. I would think it likely that in the past, the same million acres raised the same number of cattle, with the difference being the number of owners of those cattle. It's not like new land was made to form such a ranch.

Is this our future? All of us being ranch hands for the corporation that buys Saskatchewan? Or the one that owns Manitoba or Alberta? I would like to think not.

[Cattleman]

Well Kato, who knows what will happen to each of us, but if you are not willing to change and move with the times, your time will limited compared to someone who is progressive and willing to seek opportunities how ever they come.
On that note, I had a friend who was a small family operation.....400,000 acres. Now the areas may seem a bit difficult to understand, but in terms of investment, they were complaining about high land values, at $40/Acre!! Out in the outback, and I think they had around 12,000 head of cattle. They also had one little tractor and a couple of trucks, so there are farm operations with more investment than these.

[Cattleman]

Sorry for the terrible writing skills I am displaying....need to slow down a little!! Hopefully the point came across that there are family operations still operating along side the large operations, but it takes good management to stay in the game.
The interesting comparison I liked to think about is the investment, and return on investment in these large scale operations who are our competitors. There are quite a lot of different systems in the world that produce beef, but the return on investment is the driver, and has to be measured as you move forward.