Natural Valley?

[kato]

What's with Natural Valley? Maybe someone from Saskatchewan can fill me in.

There are four people in our area, that we've talked to, who sold cattle last summer and haven't been paid. The ones we know about add up to close to a couple of hundred thousand dollars. What is going on????? There are several more locals that we haven't spoken to lately, that we suspect are in the same boat.

Talking to these guys leaves you with a sick feeling in your stomach. One has told us that he'd just like to walk away from it all After 40 years of farming, now his son says he doesn't want to farm, after wanting nothing else all the time he was growing up.

These promoters came storming through town all pumped up with all kinds of hype and promises, and talked a lot of people into putting money they couldn't afford into a theoretical plant that was supposed to be built here in Manitoba. Now it's on hold, and the cattle are being shipped to Saskatchewan with not much assurance of ever being paid for. Some have sent the cattle elsewhere, and just eaten the cost of the hook rental that they put up front.

We're glad we didn't get involved, but we can't help get stressed out just watching what friends are going through. It's painful to watch. They were just trying the best way they could to find a way to get out from under the BSE fiasco, and landed in even deeper trouble. It's just not fair.

Has this been happening with the Saskatchewan producers? Or are the Manitoba ones being put to the back of the line?

[grassfarmer]

I'm not from Saskatchewan and I don't have any inside information on the situation at Natural Valley other than hearing the rumors like everybody else. Sadly though the situation does not surprise me, the packing business is a ruthless, cut throat industry where upstart, inexperienced companies are going to find it very tough to survive. Part of that comes back to the overall picture - sector domination by 3 companies in Canada and only one or two more across North America. Without Government intervention in the marketplace to ensure fair trade all new plants will struggle. Before I get shot down for suggesting a "commie" system let me point out that the existing "free enterprise" packers already have Government on their side - bought and paid for through weak politicians. I'm only talking about extending the same advantage to new producer controlled plants. It will take a sea change in thinking to alter the packing industry across North America - but it must be changed.

Despite the situation producers and shareholders find themselves in with start up beef processors I wouldn't hold too much against the founders - they tried to make the processing sector a better place for all of us but likely were beaten by unsurmountable odds. I don't think they are crooks - they aren't sending producer money to bank accounts in the Caymen Islands or anything. It is all very unfortunate and a reminder to us that nothing has changed since 2003 in the beef sector, the packer monopolies that caused the "bse crisis" are still running the show and producers are hurting because of it.

[DiamondSCattleCo]

Kato, the last I heard about Natural Valley was that the cheques were indeed still moving out the door, however they were well behind in payments. I know several Sask producers who have been waiting about the same amount of time as your friends have been, so I don't think MB producers have been shuttled to the back. Your friends may want to give them another call, and see where they sit on the list.

Rod

[smcgrath76]

I might shed a little light.
We are looking at NVF as in investment and have heard the same things as postedon this thread. They are very open about what happened and the fact that they basically ran out of cash in the startup phase due to several things such as construction overruns.
NVF has set up a producer trust where the payments to producers come from. The plant charges a processing fee. Basically my understanding is that an initial payment of roughly 80% of the rail value is made to the producer and the remainder is paid out once the animal has been broken down and a retail value figured out.
I am not sure I have explained it very well, but they are very open about what happened, what is happening currently and what they want to happen.
They have faced some tough competition, particularly on the cull cow purchasing side. I am sure that anyone who is interested could give them a ring and ask and they would be more than happy to explain the details of the producer trust and what they have in place to protect producers.

[kato]

I'm not sure what they are doing with the producer trust, as these guys have not received a dime.

It's a tough situation all around, but if I was in this position, and was looking at losing my farm, I'd be a little short on sympathy for anyone who owed me money. I think that when they saw they were going to come up short, the least they could have done was let the producers know about it, and allowed the cattle to go elsewhere. They could have extended the hook lease agreement by a year, and kept the goodwill of the producers by giving them the option.

Lots of people just can't wait a year for payment. They would have far preferred to put the NVF cattle delivery off until next year, than go another year waiting for payment.

Imagine being sixty years old, almost out of debt, then having BSE hit you, and after that a whole year's production income delayed? Deeper in debt than ever before at a time when life should be getting easier.

I guess what I'm getting at is that sure, it's tough to start up an enterprise like this, but someone must have seen the shortfall coming, and it would have been just common courtesy to keep the sellers informed. The plant is short of money, and that's almost a certainty in this sort of startup, but it's being financed by the people who can least afford it. Anyone in business knows that if you don't keep your suppliers happy, you don't have a business.

[Cattleman]

I have heard similar things smcgrath, but your one comment on facing extra competition on the cull cow buying side is a little scary. What if the border was already open? Then what?

[smcgrath76]

I do not disagree with that. I certainly see the hardships involved in starting up a plant and also the need to be up front with everyone.

[spudchucker]

How is Gencor in Ontario structured? They seem to be doing very well from what I understand.

[catlman]

The latest news i have heard from NVF is they are laying off 1/2 the staff for the immediate future until they start shipping boxed beef to the EU and because the magins are too small on cull cows to make a real profit. They are cutting the thru the red tape, management is expect to be thru it and the first shipment of boxed beef the EU is expected to be shipped in July or August. At that time they will call back the laidoff staff. It seems to me they have have made a good decision on focusing on shipping a premium product to a niche market that has been closed to canadian beef for too long. If they are to kill older cattle they should focus on bulls the magins are better on them than old cows. I as a investor i want this venture to be profitible longterm and not going under to trying to please other investors who just want a place to get rid of their old crocks.

[rkaiser]

Any word on a contract to harvest horses catlman? Heard they may be looking at this as an option.

[catlman]

Not really heard alot about horses other than rumors. If done on contract a profit would be guarenteed . The problem i see is the CFIA rules pertaining to multispecies plants and the cost associated with complying with the rules for a multispecies plant.

[kato]

Cow markets shouldn't affect what happened to our neighbours. They did not ship cows. They shipped young finished steers and heifers.