The Rural Voice, 2005-02, Page 35News in Agriculture
Beef marketing alternatives explained
. Representatives of two different
groups told farmers attending the
Beef Day at Grey Bruce Farmers'
Week about their efforts to put more
dollars in the pockets of hard-hit beef
farmers.
Robert Huber of Beef
Connections explained how this co-
operative direct -to -consumers boxed
beef sales effort returned an extra
$297.50 per cattle beast to members
taking part. Urad Sayles of Gencor
Foods said producers who had sold
their cull cows through the new plant
had gained an extra $1.6 million over
market prices in phase one of the new
operation. •
Huber noted that net farm income
had dropped from $30,000 in 1973 to
a loss of $20,000 in 2003. At the
same time, he said, packer profits had
increased from $75 per animal to
$210.
In 1984 cattle producers were
getting about 63 cents of every dollar
spent by consumers on beef but by
2001, that had fallen to 21 cents.
Beef Connections suppliers are
getting about 65-67 cents, he said.
"We need more of the consumer's
dollar to stay in our pockets," he said.
Typically, an animal supplied to
Beef Connections will provi 'e a 725
pound carcass with 65 per cent of it
being saleable meat, or about nine of
the co-op's 50 pound boxes. This
produces a total income for the
animal of $2025. Cutting and
wrapping costs $325 while Beef
Connections takes a marketing fee of
$315.
"Consumers want to eat your
beef," said Anne Finlay -Stewart, in
charge of marketing for Beef
Connections. "The problem is getting
your beef to consumers."
"We want to change the way
people buy beef," she said, noting
most people buy fresh portion -sized
packages and must be convinced to
buy a 50 -pound box of frozen cuts
that must be thawed before cooking.
As Beef Connections moves
toward a more formalized co-
operative structure one of the key
decisions will be on a quality control
system. "So far there's been about 99
per cent satisfaction," she says. "It's
much easier to keep a repeat
customer than find a new one."
Once the U.S. border reopens its
important to make sure consumers
continue to show the tremendous
support they have to Canadian beef.
"We want to convince them they
can't get beef like this anywhere
else," she said.
Sayles said when Gencor
reopened the MGI Packers plant in
Guelph, one of the concerns was
finding a market for the meat from
cull cows but that hasn't been a
problem in the early going as a
steady list of buyers was developed.
"Our customers can take all we can
produce until we get to 1,000 head a
week," he said. "We're fast becom-
ing known as a quality supplier."
When the Gencor board and
senior staff started researching the
cull cow processing market after the
border closure they quickly learned
there is a lot of money in the business
that wasn't finding its way back to
the farmers.
Keys to profitability in running a
processing plant include running at
capacity and not starting out with a
lot of debt.
That second item is why Gencor is
now setting out of offset debt from
the $11.5 million purchase and
expansion by leasing hook space to
farmers who want to have their cattle
processed at the plant. "We need to
generate cashflow in 2005 to help
with start-up," he said.
For $27 cash per year (or $30 with
one-third down and two-thirds
deducted from the payment for the
first animal processed), a producer
buys the right to ship one animal to
the plant on a four, five or six-year
lease. There will be 75,000 spaces
available each year with hooks leased
in two -month -overlapping blocks to
allow some flexibility in the time
needs of the, farmer.
Farmers considering participating
need to determine their needs,
determine their payment options for
paying for the hooks they need and
decide if they want to purchase
insurance against condemned animals
(on all animals shipped, not just
some).
"As of March 1, if you don't have
a hook, you won't be shipping (to
us)" Sayles said. For about two
months first chance at the hook space
is being given to cow -calf and dairy
operators but if they don't take up the
opportunity, the processing time will
be filled up with other cattle to keep
the plant full, he said.
As well as getting a higher price
for their cull cattle farmers can
expect a share of profits if the plant is
profitable. "We're not trying to pull a
lot of profit back into the plant,"
Sayles said.0
Export policy failing
Trade agreements designed to
increase exports of Canadian
agricultural products have worked in
increasing exports but farmers
haven't benefited, Paul Steckle, MP
for Huron -Bruce and chair of the
commons agriculture committee told
producers at Beef Day of Grey -Bruce
Farmers Week.
Steckle noted that before the
WTO agreement, agricultural exports
totalled $13 billion in 1993. By
2003-2004 that had doubled to $26
billion but farmers are in one of the
worst crises ever.
"Justify to me why agriculture is
at an all-time low in morale and the
Steckle
ability of farmers to pay their bills,"
Steckle said. "Marketing more
product doesn't mean we get better
incomes."
It's not a case that farmers aren't
efficient enough, Steckle claimed.
"Only the best managers are left, but
it just doesn't pencil out. People are
coming to me every day saying they
can't afford to plant their crops."
The one segment that is doing
well is supply management which
doesn't depend on exports but
Steckle worried that thi price of
quota was at a record high at a time
when WTO talks were beginning that
will likely reduce tariffs on imports.0
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