by KATE PROCTER
Local was the focus at a meeting last week organized by the political action committee of the Perth County Pork Producers. Speakers told the group to use Ontario’s large population base to bring profit back to the red meat sector.
Organizers suggested a united front of red meat and horticulture might generate more support from government, but the crowd of about 250 producers at the Sept. 17 meeting arrived at no clear consensus about pursing a partnership.
Ken Strawbridge, president and CEO of Alpha Strategic Consulting Inc. based in Waterloo, is working with several beef producers to develop a sustainable business model for their industry. Why and what change is needed? “If you can answer those two questions, the rest is just work,” said Strawbridge.
Production, consumers and finance are the three main components of business and they work against each other, he explained. Successful businesses learn how to manage those relationships.
Strawbridge said all producers must pay more attention to the entire supply chain. When cheap corn drives expansion in the livestock industry, nobody is better off. “You’ve got to step up and say ‘this is wrong; this isn’t working for any of us.’”
He observed through his study of the beef industry that local markets are more manageable for farmers. But producers face challenges: currently there are no means to co-ordinate stakeholders of the supply chain and there is no mechanism to manage change. Producers also have no way to manage investment or cash flow.
On the consumer side, the local market is more manageable than the global market, he said, adding the consumer cannot always distinguish which characteristics are important “The notion that I’m going to build it and they will come is a fallacy,” said Strawbridge. Producers need to instill understanding in consumers that high-quality food produced in Ontario is something they want to pay for.
Elbert van Donkersgoed, another speaker at the meeting, agreed that Ontarians want to eat locally grown food. Retailers are the main bottleneck between a diverse group of producers and a diverse group of consumers. “If we are going to get a better price, we need to build a bridge to the consumers,” he said.
Strawbridge’s solution? “A paradigm shift. Completely changing our way of thinking.” It is all about the consumer. Build a system to manage consumers, producers and finance in order to achieve sustainability. BF
Comments
I wonder how many hogs and cattle Strawbridge has bred, or fed or butchered or sold hands on in his lifetime to hold himself out as some kind of expert to be advising farmers.
E von D hasn't produced much either but always has an answer of how we should be paying our bills selling to a neighbor.
What is the difference if he hasn't bred or fed one ,he believes there is a better way for all sees it from business and not tied to the emotions of doing the hands on.
World's largest pork producer, Smithfield Foods has reduced sow herd ten percent. Average pork producers have reduced sow herd three percent. Something smells here and it is not pig manure.
If the problem in beef and pork was related to how livestock is raised, your point would be well taken. However, what is causing the beef and pork industries to fail is a business problem. When the group took their findings to critical path supply chain stakeholders (consumer groups, health, retail, packers, feed suppliers, pharmaceuticals, banks) they, the stakeholders agreed - 100%. So to the point raised, when the bus breaks down you take it to a mechanic not a bus driver to get it fixed.
Too bad farming is not as simple as driving a bus. Loud mouth so called experts got hog farmers into their mess and now some hog farmers think those same types will solve their problems. When hogs are profitable farmers need to pay down loans and mortgages, pre pay feed accounts and collect interest on the pre paid accounts and build cash reserves. When hogs are not profitable, batten down the hatches, reduce production and wait for margins to return. If you have 1,000 sows farrow to finish selling 25,000 hogs per year at a profit of $60. per hog in four years you have $6,000,000.
If you sell those same hogs at a loss of $30. per hog you have a loss of $3,000,000. If you study the Balance Sheets of North American corporations you will see their are many with large cash reserves and no debt. They are financed by equity not borrowed money. When times are tough they hang on by their cash reserves and when times get better they replentish their cash on hand for the next rough time ahead.
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