History may repeat itself inthe meat marketing business

Lamb co-op The new lamb marketing scheme has 
good intentions but, so have others in the past

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In the agriculture industry, particularly the livestock sector, there is a disconcerting tendency to repeat history. One of those repetitions involves schemes to market meat directly to retailers and consumers. It seems cattle, hog and sheep producers are either fascinated or frustrated by the way the meat they raise is marketed and sold. That’s the only way to explain the never-ending attempts by producers to get involved with marketing their own products.

The latest such endeavour is the creation of the Canadian Lamb Producers Cooperative (CLPC), a producer-owned and controlled marketing scheme designed to return more money to the producer. That’s always the noble goal. It comes from the enduring conspiracy theory where many producers believe that meat packers make all the money and producers get screwed with low prices. In the same vein they believe that if they could just control the processing and marketing themselves, they could reap all the vast profits that meat marketers are making from the producers’ livestock. Its all so simple, and that wishful notion gets revived generation after generation.

The cattle industry has a long history of producers getting involved in such schemes. Most fail sooner or later. The defunct Ranchers Beef plant would be the latest example. Not surprisingly, attempts continue to try and resuscitate that venture. Canada Gold Beef and Heritage Beef are two other marketing programs that are still alive, but they are facing challenges and hurdles. It should be noted that these programs involve physically marketing the actual product. They are different from programs like Certified Angus beef and others which are quality branding programs involving just the grading of the product.

The CLPC program was hatched by the Saskatchewan Sheep Development Board, which claims to have tested the concept. From that modest local effort the plan now is to launch it into becoming a national marketing scheme. The promoters say they do not want to own any physical facilities, but only to market the lamb after it has been custom killed and processed by established packers. Good luck to them, but it seems they just might have forgotten a bit of history about the fate of a previous sheep producer-led marketing attempt.

The most famous producer lamb marketing scheme in Canada was the ill-fated Lamb Processors Co-op (I had one of the original shares). It was created in the 1970s and involved the building of a lamb-packing plant in Innisfail. Like the CLPC concept it too sold shares to producers and promised to share the profits of the lamb-marketing business. Within two years it was bankrupt and was taken over by the Alberta government, which operated it for about 15 years before selling it to a private operator. Since then it has been sold several times. It still processes lambs, but to stay in business it also processes other species in an expanded facility.

Powerful enemies

To be fair, the old Lamb Processors Co-op faced a lot of hurdles and even conspiracies that contributed to its quick demise. It was initially managed by folks who had no meat packing or marketing experience and the board was made up of naive lamb producers. That was a sure-fire recipe for disaster in the cut-throat meat-packing business. The co-op was also subject to a real conspiracy by mainstream packers to see it fail, for fear its success might set a precedence for hog producers. That ended when the government took over the plant, and the agriculture minister of the day laid down the law to the packers to back off with their unholy actions to destroy the plant.

However, what was learned was that the meat marketing business was ruthless. Even as a government-backed entity, the former co-op then known as Lambco, had great difficulty competing with the iconic New Zealand Lamb Company of Canada (NZLC), which dominates the Canadian lamb market to this day. Curiously the NZLC has some similarities to the CLPC concept. It too owns no packing plants, but just markets imported lamb and value-added products for their owners. But it has a huge advantage — long-established fearsome competitors with deep pockets backed by giant meat packers from New Zealand. I know Canadian lamb has a premium advantage, but predatory discounting and shelf-stocking incentives by imported lamb eats up that advantage quickly.

I wish the new lamb co-op well, but I expect the plan to go national will soon be needing millions of dollars to finance the buying of lambs, custom killing, processing, storing and distributing product to and from various parts of the country. The CLPC may not own a plant, but all those logistics and marketing has to be paid for — usually up front. Add into that staffing and administration costs and the plan will soon face the downfall of every meat-marketing scheme, not enough capitalization to cover establishment and inventory costs and ferocious competition and downturns in the market. That financing wall could either bankrupt the CLPC, or absorb all those extra profits they planned to make by doing the marketing themselves. I hope I am wrong, but it would seem another generation of lamb producers may have to learn the hard way about the painful realities of meat marketing.

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