Regulated beef industry

[dfarms11]

Qwestion? What would be the pros and cons to a regulated beef industry like the dairy and poultry industry? What if we had a quota system for beef like they do? What would things be like for us? I don't know much about the quota systems but I would like to learn.

[cowman]

Way back in the 1970s Eugene Waylon offered supply management to the beef and hog industry? Both turned him down.
Might have been the biggest mistake we ever made?
I believe there were some basic flaws in how supply management was managed. The fact that quota became a commodity that became much more valuable than the farm, shouldn't have been allowed to happen? Today the quota value for one dairy cows production, trades at over $35,000! Great if you were one of the lucky ones who got your quota for free...not so great if you have to buy quota to get into the business or need to expand?
The basic principle of matching the supply to the demand was a good idea I believe! The prices are set so the producer has a profit. Brings a whole lot of stability into an operation and allows the consumer a good product at fairly consistant and affordable
prices?

[brian99]

maybe look at the potato industry. These boys are doing very well for themselves and are dealing with very large processors(McCain, Lamb Weston) as their buyers. They negotiate thru a producer board.

[smcgrath76]

So let me get this straight. We want to get rid of the wheat board, protect supply management and regulate the beef industry.
Sign me up if it means I qualify for free initial quota and then can bail out.
I am not sure what to do with the extra couple of million beef cows we will have kicking around.
How about structuring policy to allow for innovative approaches to business?
Does supply management mean I can't sell grassfed beef from my farmgate? Does it mean that we have to pool our production? Does it mean that we can't seek premium markets or that we take the average of the day?
There are a lot of trade implications in moving this direction, some of which may affect industries larger than ours. The POY (piss on you) approach is not commodity specific. You mess with beef, we mess with softwood lumber or grain or cars or steel, etc. It would be pretty tough to go into the next round of WTO with a straight face if this were to happen.
Also, while I appreciate that supply management does create some certainty in industry, don't be fooled into thinking that all producers in supply managed industries are making a profit. There are still good and poor managers in every business.
Maybe BSE has broken the free enterpriser myth that we used to hold so near and dear.

[grassfarmer]

I would agree that supply management is not a good fit for an industry that needs to export the percentage of beef that Canada does. Saying that the "free market" system isn't working either - pound cows were selling until after 8pm last night in Ponoka, the current exodus from the cow/calf sector looks to be huge.
I think the solution lies somewhere in between. Supply management in the Cdn dairy sector works because producers get a return that covers the costs of production of all but the poorest managers. Quarter section farms with 70 cows can make two salary incomes - that is what agriculture should be like - people need food Contrast this to the US free market system where dairies sometimes run thousands of cows and can't make money. Over the years store bought milk price has been lower in Canada than in the US.
We could achieve sustainable incomes from beef production if Government stepped up to the plate - not the charity plate, the political one. Proper anti-monopoly rules would ensure we actually did have a competitive free market for our production. There is enough money in the beef production chain to allow this all it needs is the political will. As far as WTO goes who cares? it is nothing more than a gathering of corporate gangsters deciding how to split the world economic pie up between themselves. It has nothing to do with free trade.

[Willowcreek]

grassfarmer{"As far as WTO goes who cares? it is nothing more than a gathering of corporate gangsters deciding how to split the world economic pie up between themselves. It has nothing to do with free trade."}

AMEN

[cowman]

Well I don't think anybody has to worry about supply management in beef...because it will never happen!
The day when this was a possibility is long gone. In fact I doubt supply management in poultry/eggs/milk will be around much longer.
The fact is our export market for beef, pork, grain is pretty vulnerable? There is enough money in the Canadian supermarket to take care of us...if we had supply and demand in balance?
I think we have to look at the "cheap food policy" of North America? There is no "official"cheap food policy but it is there none the less? An excellent book on this is "The politics of food" by Don Mitchell?
Bottom line is cheap food is a necessity to fuel industrial North America! We are the peasants...and no one cares about the peasants? They really don't.

[kpb]

grassfarmer, I agree that there is no political will to break up the monopolistic nature of our business. However I think there is no chance at all of this changing. The Canadian populace gets less and less in tune with farmers and a smaller and smaller percentage of citizens actually produce food.

That to me is a reality and the other reality is that we live in a democracy where the majority rules. As long as this is true the majority will want cheaper and cheaper food. If that means beef from Argentina than so be it. If it means importing all our meat and all our vegetables than our politicans, responding to the desires of the majority of the electorate, will do everything needed to make it happen. After all that's what the "majority rules" means, right?

kpb

[grassfarmer]

kpb, I would argue that the customer should be our best friend and greatest ally. They are already paying a more than adequate price for the food they consume (more than adequate to give us as primary producers a viable return) plus they are also paying for all the aid packages (to producers) needed to keep the food supply rolling into the supermarkets. Don't ever make the mistake of thinking farmers aren't needed. Global movement of food will increasingly be looked upon as poor practice in terms of energy use given the transport requirements. A move to more local food could be a big help to us. Moving beef in from Argentina does not make sense when we already have more than we could eat.
As Cowman says "There is enough money in the Canadian supermarket to take care of us..." - he keeps getting the punchline wrong though!! instead of "...if we had supply and demand in balance?" it should be "... if there were more equitable distribution of the returns throughout the production chain."

[cowman]

Well I think you saw it differently than I saw it grassfarmer?
I don't know if the supermarket is getting filthy rich or not? I think I showed that the packing house isn't making excessive profits on a fat steer right now?
Really though, here is how the wholesale beef trade works: Monday morning the packers offer the retail trade a price on wholesale beef. Usually it is counteroffered, sometimes accepted? It all depends on how good the demand is on the supermarket shelf? If meat isn't moving at the price offered...the supermarket must lower the price to the consumer....and therefore must offer the packer less for his product?
The packer in reality is a middle man between the fat market and the retail store.
It could be argued that the retail store is also a middle man?
Study after study has shown the packing industry operates on a very small margin? Not sure about the retail store, but would suspect they probably work on a thirty to forty per cent markup on basic product?
Marketing, processing, advertizing all have a cost?
Reduce the supply and there will be more dollars chasing less product...what happens? The price goes up!
Cargill, Tyson, Safeway, and Sobeys never got where they were because they were stupid? They out competed all the other guys...and they did it by being efficient and squeezing every last dollar out of the marketplace.

[grassfarmer]

You did not prove to me Cowman how little money was being made by the packers. This is a very well guarded secret - remember the inquiry into packer profiteering? When the packers basically told the Government of the country that there was no way they would comply? Kind of like Willy Pickton refusing to go to the police station to be interviewed on suspicion of mass murder and the police saying "oh well, ok then we won't pursue this any further." Personally I think they should have had 60 days to comply or be told to conclude their business and leave the country. It has also been pointed out before that the companies are called Cargill Foods and Tyson Foods - they do a lot more than kill and box beef.
As to your other points:

"Marketing, processing, advertizing all have a cost?" - yes they do but producers like us pay a huge part of the marketing and generic advertising cost of beef through the beef checkoff.

"Reduce the supply and there will be more dollars chasing less product...what happens? The price goes up!" - er well no, not really. What happens in this global marketplace is they import a little more beef from offshore specifically to destabilise our price here. This is their protection against having to pay any price increase on fat cattle caused by a supply shortage.

"Cargill, Tyson, Safeway, and Sobeys never got where they were because they were stupid? They out competed all the other guys...and they did it by being efficient and squeezing every last dollar out of the marketplace." - Again I would disagree. They out competed the other guys by externalising costs - a startup producer plant can't compete with one set up with Government money and allowed a monopolistic free reign of the industry. Consolidation in the food chain sectors beyond the farm gate has allowed a few companies to dominate. Once in this position they don't have to be efficient. Primary producers on the other hand, the survivors, are many,many times more efficient - they have had to be to survive.

[rkaiser]

I might I add cowman - influencing government regulation and policy.

My thought on a regulated beef industry are simply this - regulate and that will be the end of any producer power we might have left. Cargill and Tyson would love it. Nothing would change as far as producer profits except that the highs and lows would be challenged. No big opportunity for legal theft by the packers, but no opportunity for producers to move into further packing and processing areas.

Cowman's description of how the wholesale - retail market works is a joke. Cargill and Tyson do not simply offer one price for the week for crying out loud. They negotiate with almost every customer,have contracts,and share retail profits with integrated chains. I will agree that they got where they are with cagey business maneuvers, but manipulation is Cargill's middle name.

[blackjack]

...that is the whole scary part about north american society...all they understand is that they can go safeway and get there food...makes you wonder sometimes down the road if we will be like the third world countries when other nations come to teach our society how to feed itself...with no young farmers learning the trade (other than maybe the hutterites)no one will know how to farm or manage it...

[kpb]

grassfarmer, I would agree with you that moving beef from Argentina into Canada is dumb when we have too much already.

But the plain fact is that capitalism works on economic realities not common sense. So it is actually not relevant if we have lots of beef if Argentina can produce it at a quarter of our price, landed at our ports. The economic reality is that it will not matter, in that event, how much beef is produced in Canada--only that someone else can provide it cheaper and supply it here--which is what the consumer wants.

Insofar as the city folks being our friends, I am afraid that this is also not the case. People who have no conception of what it is to farm will more and more dictate how to farm. Through their purchasing of cheap food--as cheap as they can get it--and through telling us how we can use our land and raise our animals.


kpb

[perfecho]

would have to disagree that all Canadians and homemakers are looking for the cheapest product. Starbucks and bottled water would not be making huge dividends if this were the case. I have discussed this topic with many consumers, and a good majority would gladly pay a little more for top quality product, that supports local producers. Some smaller, branded beef programs are successfully marketing such, doing well at it. I feel our major problem is education to the consumers. They, for the majority, do not know what is really happening. With beef prices going up and being blamed on the rise of grain, the assumption is that the increase is going to the producers, even though fats are at the same level as a year ago. But people are still buying, thinking exactly what processors want them to think....and no government or packer is going to change that unless they have to.