And, as I am up early.. "bioniching" as my wife likes to banter me bout this.... here's some very interesting excerpts from article that just came across my screen...
Beef recall left Edmonton’s XL Foods no choice but to sell: experts By Marty Klinkenberg, Edmonton JournalOctober 18, 2012
https://www.edmontonjournal.com/business/Beef+recall+left+Edmonton+Foods+choice+sell+experts/7413038/story.html
Even before the biggest recall in Canadian history, the beef industry was paying a heavy cost due to E. coli. Recent studies done by researchers Kevin Grier and Claudia Schmidt at the George Morris Centre, an agricultural think-tank in Guelph, Ont., estimated that negative publicity generated by E. coli-related recalls costs cattle producers $100 million in lost sales a year.
That cost is above and beyond the cost of the recalls themselves, which become gradually more expensive based on scope and size. Recalling and then disposing products in a larger recall costs companies a minimum of $2 million, but complications in the XL Foods case would drive the cost dramatically higher.
In addition, demand and cattle future prices have been driven down by publicity generated by the recalls. At present, Grier estimates buyers are paying farmers in Alberta about less $50 per head than normal because feedlots are overcrowded and the closure of XL Foods’ plant has made it more difficult to find a processor.
“It has been very damaging when it comes to demand,” Grier said. “Every retailer I have spoken to tells me beef purchases are down 40 to 50 per cent. And during the height of the crisis, future process dropped dramatically.
“E. coli recalls scare traders, and that causes lower prices for the short term.”
The Morris Centre’s research shows that the beef packing industry spends more on E. coli prevention than on any other intervention — approximately $14.1 million each year. Those estimates do not include the cost of having to retool or clean a plant after multiple findings of E. coli bacteria, such as the case involving XL Foods.
In the closing of the article...
Sheri Monk, a reporter for Alberta Farmer with extensive knowledge of the cattle industry, said Thursday that 16 million pounds is the bare minimum of beef products that XL Foods would have recalled. The company ended up having to recall everything it produced over five days — and was slaughtering 4,000 animals each day, with each carcass weighing an average of 800 pounds.
In addition, she estimates that 12 to 15 million pounds of detained meat was still in the plant at the time it was shut down, much of which will likely be lost. Retailers may have also returned another 10 to 15 million pounds of other products to XL Foods that were manufactured around those same dates, Monk said.
Using an average price of $3 per pound — an amount that Grier said is plausible — the cost to XL Foods could range from a low of $48 million to a high of $135 million.
“That’s simply the value of the product lost,” Schroeder said. “But the value of the product is only a fraction of their cost. Other costs often times are at least as large, if not more.
“You would quickly find yourself in a bad financial situation.”
A bigger problem to the company — and for the industry as a whole — is a loss of confidence from consumers.
“Consumers respond adversely to recalls,” Schroeder said. “They don’t necessarily associate it with the company as much as the product, which in this case means they are reducing their consumption of beef.
“This is broader than XL Foods and it is broader than Canada-wide. It is causing consumers in the U.S. to pause and think twice and step away from the product a bit, too.
Hmmm...is there anything else available that could help restore confidence and show leadership for the cattle industry and Canada??? Have a good one!rg