LETHBRIDGE – A beef promotion project has been designed to give producers an economic boost after five years of trade embargoes, lacklustre markets and shrinking incomes.
Canada Gold Beef is promoting a verified beef program in which all participants share in potential profits from the farm to the time the beef is sold.
“Anybody who participates will share in any royalties, premiums, savings and discounts Canada Gold negotiates,” said newly appointed chief executive officer Frank Goetz, formerly of Centennial Meats and Schneider’s Foods.
“You will get the better pricing for quality cattle and you will get specific information on your cattle’s performance.”
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The concept, which was recently explained to 75 producers in Lethbridge, grew out of a meeting last October when Alberta agriculture minister George Groeneveld told industry representatives they could no longer survive following traditional business practices.
Canada Gold Beef was incorporated in June and is starting with a pilot project that will sell 66,000 head – 5,500 per week – beginning this fall.
It has issued two million common A class voting shares to raise money, of which 301,000 have been sold for $1 each. The minimum number of shares that can be owned by a single person is 1,000 and the maximum is 100,000. This measure is designed to ensure no individual has too much control.
Organizers want 10 accredited feedlots that could offer competitive bidding on a Canada Gold developed grid.
The company grid should be able to reward those producing AAA and Prime carcasses and pay them accordingly within the correct weight and age range.
“This whole thing only works if the money is right and you are getting a fair return on the sale of your calves,” said board chair Rick Paskal of Picture Butte, Alta.
“We are opening up the door as to what we can do here to be sustainable. If we are doing it the other way, I’m telling you, you are not going to be here.”
Producers buy participation units at $13 per animal. Each unit allows the owner to sell one animal through the chain and receive royalties later. Producers can retain ownership of calves all the way to processing or sell them at weaning. For retained ownership, the unit price is $13 based on a 1,300 pound animal but if the calf is sold to a feedlot, the unit cost is $6.50.
“On an annual basis we will calculate how much you invested in participation units related to how much we got back in royalties and premiums and give you a return on your participation units,” Goetz said.
Canada Gold will share in the royalties for administration purposes.
“Our long-term target is to generate $125 per animal in premiums,” he said.
Each participant in the pilot project is required to provide a minimum of 50 head of British or British cross cattle that are younger than 21 months at time of slaughter. They must be traceable, and the producer must follow basic protocols for food safety, animal welfare and environmental care. Information will be attached to the Canadian Cattle Identification Agency ear tag number so that participants receive feedback on individuals after processing.
Buying the participation units confirms producer commitment to deliver what was promised.
“For us to be successful and get the premiums and royalties we need, we need to be able to deliver cattle on a consistent basis,” Goetz said.
Canada Gold does not own cattle or beef. It handles marketing, production protocol and labelling.
The catch is getting enough cattle enrolled because buyers do not want to negotiate anything until producer commitments are guaranteed.
“Nobody really wants to talk to us, retailers or processors, until we start lining up the cattle. That is the one thing we have learned,” Paskal said.
Additional programs may be developed within the business plan that offer grass-fed beef, certified Angus, natural or organic beef. It is hoped this program can uniquely identify the Canadian product rather than blending it with generic commodity beef sold for an average price.
Rancher Bill Newton of Fort Macleod, Alta., who is the board’s secretary treasurer, said he supports the program.
“Canada Gold is an opportunity to differentiate your product from the average, whether it is the calf, the finished animal or the meat,” he said.
“It had better be better than average or Canada Gold will fail fairly quickly, but if it is better than average then it will return more than average dollars.”
A similar program is U.S. Premium Beef, which started in 1995 as a 150 member producer group meeting specific production criteria to sell higher quality beef and receive profits from the farm to the retail level. Today, 2,100 producers from 36 states are involved.
During fiscal year 2007, U.S. Premium Beef members earned $25 per head over the cash market by selling their cattle through the producer-owned beef company.
