Monday, January 12, 2009

Just Because Bill Gates...

A retired meat industry executive said there are very few situations in which he would advise producers to get into the meat packing business.  Most cooperatives ultimately fail because of flawed business models and marketing plans.  Only six months after beginning operations, Majestic Food Group, a pork processing company owned by 120 Iowa hog producers, ceased operations in spring 2005 when the cooperative was unable to repay a $1.6 million loan. 
Feedstuffs, Jan 5, 2009

Of Meadowbrook's 210 original producer-owners, only around half remain.  After five years of delivering hogs for less than fair market value and no dividends, many of the producers are opting out.
Feedstuffs, Dec 22, 2008

Farmers consistently believe that just believe a packer makes "profits" by purchasing their animals and turning those live animals into wholesale meat, that the farmers can create a meat processing cooperative and channel those profits back to the farmer. This is due to a flawed understanding of what profits represent.  A packer makes money by creating a spectacular business model. Unless you know you have that business model or a better one, why would you think you could also make similar profits?

Just because Bill Gates makes a fortune writing software doesn't mean that...well, you know.

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