Wrote a letter today....

[Sawbones]

I didn't follow the math Sean but I do think the packing industry is ready for a major shake up but we're not. JBS made quite a splash and currently can kill about 10% of the total world production. They however have a very high debt and there is a possibility that with the current economic situation and the devaluation of their stocks, they may implode. The Nilsson story is similar with a stong patriarch and three sons. A history of leverage and expansion. There has to be a massive debt load. With the decrease in numbers of Canadian cattle, there is probably only room for one major plant. Cargill has an annual budget in excess of $50 billion. Who do you think will survive? When the crash occurs, who will be ready to pick up the pieces? Alberta may finish 69% of the cattle in Canada but they only have (or had) 39% of the cowherd. There may be other plants developed in other regions. As Kato predicted, there will be a lobby to the gov to save the majors..Maybe we should be ready to save ourselves and at $90/head in COOL savings, a 500 head/day plant would generate $9 million/year.

[smcgrath76]

so about the math problem.
3500 head * 6 days a week kill = 21000 a week. 50 weeks of killing = 1,050,000 head. Add lakeside and XL Calgary and you can kill every calf in the country after the cowherd contraction. We also have Moose jaw doing several hundred a day and some large regional plants in the East (ON, PEI). There are just not enough cattle to go around without pulling US cattle in for slaughter.
I don't know what the financial debt/equity situation is for Nilsson, but I suspect they are large enough and connected enough and employ enough people in Alberta that they are more protected than us poor regular folks who must rely on standard programs such as CAIS and ALMS. But maybe I am just a pessimistic skeptic.

[kato]

Exactly how often do official numbers come out on the size of the Canadian cow herd? I'd sure like to see what it is now.

[smcgrath76]

just over 4.86 million as of july 1st according to a USDA report from August 08 (95% of 2007 levels). We should get some 2008 numbers in February. As well the report states 655,000 heifers kept as replacements (98% of 2007).
Based on Canfax reporting 371,000 cows slaughtered from the first week of July on, and additional non reported kill, I would say that number has to be down around 4.5 million at the moment, if not lower.