Charlie: I believe this was addressed already (SEE: cowman Reply posted Jan 14, 2006 7:43)
I believe a few small time operators, such as the organic farmers are the exception, in that they aren’t even a blimp on the radar (yet) to the main players (ADM Cargill Bunge Maple Leaf Toepfer et al) and can succeed in value-added because their part of the market is so small, nobody cares.
But Charlie,
Do you really think that 30, 50, or 100 farmers from a certain region of the prairies can actually work together and “buy” their own grain back for the cheapest price possible so that they can sell pasta cheaper than the multinationals?
If you want a good example of a recent failure look at the Manitoba cattle farmers who were probably the most affected by Alberta BSE. These cattlemen were almost completely dependent on marketing their cattle to either the USA, or the AB processors. Once BSE hit, Cargill and IBP in AB both refused MB cattle because they were not "past loyal customers", effectively shutting them out of all markets.
So they decided to try build a co-operative processing plant in Dauphin MB so that they will never be shut out of a market again.
To date, they still have not raised any significant equity or participation in the plant, and it will most likely be a complete failure.
Manitoba cattlemen are again fixated on the USA market, because it is paying a higher price than what THEIR OWN plant can afford to pay.
This last sentence explains why farmers in Western Canada cannot capture or will not participate in any agricultural value added projects on the prairies. They don’t want to sell their hard earned commodities at a lower price to their own value-added enterprises hoping to capture these same profits further up the value added chain.
I believe a few small time operators, such as the organic farmers are the exception, in that they aren’t even a blimp on the radar (yet) to the main players (ADM Cargill Bunge Maple Leaf Toepfer et al) and can succeed in value-added because their part of the market is so small, nobody cares.
But Charlie,
Do you really think that 30, 50, or 100 farmers from a certain region of the prairies can actually work together and “buy” their own grain back for the cheapest price possible so that they can sell pasta cheaper than the multinationals?
If you want a good example of a recent failure look at the Manitoba cattle farmers who were probably the most affected by Alberta BSE. These cattlemen were almost completely dependent on marketing their cattle to either the USA, or the AB processors. Once BSE hit, Cargill and IBP in AB both refused MB cattle because they were not "past loyal customers", effectively shutting them out of all markets.
So they decided to try build a co-operative processing plant in Dauphin MB so that they will never be shut out of a market again.
To date, they still have not raised any significant equity or participation in the plant, and it will most likely be a complete failure.
Manitoba cattlemen are again fixated on the USA market, because it is paying a higher price than what THEIR OWN plant can afford to pay.
This last sentence explains why farmers in Western Canada cannot capture or will not participate in any agricultural value added projects on the prairies. They don’t want to sell their hard earned commodities at a lower price to their own value-added enterprises hoping to capture these same profits further up the value added chain.
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