The CFO News Insight of Oct. 3, 2013 details the live chicken price dropping from $1.871/kg. to $1.802/kg., a 3.83% decrease, or a 6.9 cents per kg. drop.
With eviscerated weights being 73.72% of the live weight, that's a 9.36 cents per kg of eviscerated meat price drop. Since the abattoir and everybody else usually charges a percentage markup, rather than a fixed price markup for handling and converting live birds to packaged meat on retail meat display cases in grocery stores, the savings in cents per kg.
Of course, everybody else along the distribution chain will likely grab all or some of the savings for themselves, and the consumer won't see any price drop at retail.
So live chicken prices are dropping. At the same time, the volume of chicken legally raised in Ontario is also dropping. Combined together, these simultaneous double dips will have a significant drop in the payoffs received by each and every one of the Chicken Mafia boys when they get their monthly cheques.
That tells me the monopoly chicken producers won't be happy when they get those cheques.
Did CFO give the chicken producers the bad news straight up?
For example, CFO said,
"In future quota periods, while the existing pricing mechanism with the revised feed adjustment factor will remain in effect, the change in the live price associated with a given change in the feed price will be lower. For example, if the feed price decreases by $20/tonne the live price will now decrease by 3.44 cents compared to a decrease of 4.00 cents under the old calculation regime. The same relationship of results would arise if the price of feed increases."I had to read it twice before I caught on to CFO's propaganda ploy. Notice how CFO says the live price under the new rules will drop by just 3.44 cents, but under the old rules the live price would have dropped by a whopping 4.00 cents. Chicken producers, like all of us, skim quickly and don't read fully. Live prices are good when they go up, so anything that keeps the live price higher is good for the producer.
The sneaky part is when CFO said, "The same relationship of results would arise if the price of feed increases.". CFO fails to provide an illustrative example, as that would have exposed CFO's trickery. If feed prices rise (don't they always ?), under the new regime, the live prices will go up less than under the old rules. That's when the producers will be caught in the squeeze. That's when it will hurt.
CFO sugar coats the bad news so as to pacify the Chicken Mafia. CFO doesn't mind misleading their own henchmen so that a palace revolt is delayed or avoided. At least CFO is consistent, as they will try misleading the public, the government, and their own people. Pathological psychosis, losing touch with reality.
CFO candy coated the news to make it look like a positive. Wait till the producers get their monthly cheques and see a huge hole appear in their lifestyle. I guess they won't be buying a new pickup and barn renovations this year after they find out the bad news.
Due to the bogus and fraudulent FCR previously used (see Blog posting here for full details), Ontario's chicken producers got a bonus windfall payment every time their feed supplier raised their prices. Since the chicken producers previously got a bonus with every feed price increase, why would they ever complain? Unfortunately, it was the Canadian consumer who paid for it all, victimized by the unholy conspiracy between the feed mills and the chicken producers. That's why chicken feed went up in price by 60% when other similar feeds only went up 20%.
With the new FCR, no more bonus for the chicken producers. While that takes away the incentive, the feed prices are still sky high. What CFO did was hide the sad truth from the producers that their gravy train is coming to an end. When feed prices go up again (as they soon will), the live price won't go up as much as what it did in the past.
The Chicken Mafia will have to tighten their belts. Perhaps they should buy some of those "spent chickens" that are been smuggled into Canada so they can make some home made chicken soup for themselves. The Chicken Mafia won't be eating steak and lobster at the finest restaurants for much longer.
By the way, consumers shouldn't be happy with this live price decrease either. It should have dropped significantly more, 9.78% (not a paltry 3.83%) as I previously calculated in this Blog. Of course, CFO won't share exactly how they calculated the magnitude of the price drop. They "negotiated" it with their co-conspirators AOCP.
CFO's "negotiations" with Association of Ontario Chicken Processors ("AOCP") is the same as two robbers negotiating the splitting of the loot between themselves, then once they are in agreement, they go rob the convenience store. The store owner ends up paying the full price, no matter what the robbers negotiated between themselves for the splitting of the loot. Some negotiation! Perhaps the store owner should be invited to attend those negotiations, and be given a veto, so that they propose the crooks each get 0%, and the store owner keeps 100%. That would be true and effective negotiations, with all interested parties at the negotiating table.
The other thing of interest in CFO's bulletin is that they say,
"Once the new formula is complete, the COPF-based pricing mechanism, including a fact-based feed conversion, will replace the Commission-imposed feed conversion."You see, it's not the CFO who is bad, it's that nasty provincial government and their Ontario Farm Products Marketing Commission ("OFPMC") who imposed the bogus FCR on the Chicken Mafia.
|Snidley Whiplash, the arch villan|
a.k.a. Chicken Farmers of Ontario
Of course, CFO can't show that they did the honorable thing, because they chuckled up their sleeve like Snidley Whiplash as their gang of misfits were repeatedly over-compensated.
To me, that behaviour of CFO is the same as taking advantage of a cashier who give you change for a $100 bill when all you gave them was a $10 bill. Their pathological narcissism likely causes them to rationalize to themselves as follows,
"I didn't do anything wrong. It was the cashier who made the error. The pain of losing that $90 will help teach them an important lesson. If I was to expose their error, they would lose the opportunity to learn, and could go on to make an even bigger mistake. By keeping quiet, I gain $90 and the cashier gains valuable experience."
In short, CFO shows their true colours. They can't be trusted by anybody, not even their fellow members of the Chicken Mafia.