Regarding the Distribution Center, those are old pictures. There are much better, more recent, pictures available on Facebook or some other place. Showing beef trading and tanks holding fish. Send Peter an email because the webpage needs an update.
Regarding SJAP, they have quite a few (24?) cattle houses which can each house up to 300? head of cattle. They rotate, meaning they buy young cattle and fatten them for 6 months. They even rotated faster at some point, taking it down to 3 months? SIAF is in the rotational business, lol. They lease these houses to farmers.
But the bulk comes from cooperations with farmers. Selling young cattle to them through an agent, and buying them back after one year? Selling special feed to them which makes them grow faster than what they were used to. I think they have contracted more than 1,000 farmers this way but as you can see my memory fails me when it comes to the exact figures. It's all in the SEC filings, somewhere, though.
Now, cattle prices coming down or sleepy cod, is not the whole story. SIAF would still have made good money on sleepy cod, IMO. But, the sleepy cod prices paid to suppliers was fixed, at least for a year or two. So when prices came down, SIAF was effectively overpaying for the 350g supply. Solomon gambled, the way the contract was designed, and lost... All IMO.
And we could see something similar with the cattle they are buying back from the farmers. Were they guaranteed a certain price? For how long? My impression is, it's somewhere in the middle, with both parties taking a hit. But I can't be sure. And, is SIAF obligated to buy the cattle from them, regardless? The SEC has raised some questions about this as part of their review of the 2016 10-K.
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