July 12, 2010

Commodity Beef Part II

    There are two things in the cattle business I firmly believe in.  One is that we must purposefully and realistically choose a direction for our ranch that will keep us in business.  And we must deliver to the consumer a product that promotes itself long after consumption.  Unfortunately, these two things do not always seem to be in balance.  Producers do not always get paid more at selling time for raising a good product for our end customer, enabling us to be profitable and to stay in business.

     As Business Coordinator for Angus America I was fortunate to be a part of one of the rare ventures that was beneficial to all parties involved.  The quality cattle that earned a premium were good enough to allow for both the packer and the seller to both get a piece of the pie on a consistent basis during the seven years I was allowed to design the pricing grid to do just that.  

     But even then, I had to realize and regularly remind myself and others that a big part of the premium in doing things right in terms of genetics, management, health, etc, did not realize its full reward in just price paid at the point of sale.  If price reward was the only intent for doing things right you will be let down.  No matter what kind of pricing arrangement you have, sooner or later that will change.  People are involved in pricing arrangements.

     While marketing will always remain crucial to our profitability (the biggest dollars are always in the buying and selling), good management pays big dividends in so many other ways that don't escape us nearly as easily.

     Investing in good genetics can seem expensive to some, but in the long run using poor genetics is much more expensive.  Percent calf crop at weaning, weight gain and efficiency, (to list just a few) are greatly affected by genetics and drive all producers profitability, even if they don't retain replacement females or retain ownership past weaning.  The same can be said of good health and overall responsible management.  We have to realize a big part of our premium for doing things in a quality manner is realized in the production process.  This is an every year thing, while hoping and planning for someone else to pay us more at selling can be extremely elusive.

     And to add to the "premium" good management brings you  the same investment in genetics, health, and a focus on the ideal end point of our product usually leads to a better product for our customer, the consumer, to appreciate and want to buy again, even if we don't get paid more for it.  An increase in per capita beef consumption makes a bigger pie for all of us to at least be able to try to position ourselves to cut a bigger slice.

                                                Mark

July 7, 2010

Commodity Beef

     When I worked in the packing plant, it really struck me how a single packing plant kills 5000 cattle a day and most ranchers I knew raised maybe 300 head a year. No matter how important those 300 head seemed to the person who raised them, they were a mere blink at the packing plant.

     You can talk all you want about grids, programs, contracts, etc, but individual producers and their cattle are generally barely noticed by packers, even if the cattle are exceptional.  The sheer numbers say this is the way it is likely to be and will be, that’s just life.  If you want to get noticed by the packer for your cattle it is more apt to happen if your cattle cause them a problem, then you have their attention.  Of course this is not the kind of attention any of us are looking for.

     Due to the imbalance of size between suppliers and packers, the packers develop a commodity mind-set.  Even with large feedyards that can supply blocks of cattle, the consistency of desired traits the feedyards can amass from their suppliers does not enthuse packers.  So partly out of necessity the packers have a commodity mind-set for the huge bulk of their business.  And they do like it that way.  They can buy all their cattle each week at a commodity price and sort them for value adding opportunities after they are safely in their possession and graded in their sales cooler. And there are a lot less details in their day to day business to worry about if they wait until this point to identify the higher value carcasses.

     Even if you were a feedyard that could gather a supply of enough high quality cattle to drive a product line for a packer and on a consistent steady basis with a particular trait the packer is looking for, the packer would still not be all that interested.  Because then he would be reliant on you and you may bolt to a competitor for a better deal and leave him with a product line he has developed his customers for and now can’t supply.  He would have to pay you a bigger premium to keep you.  Like I said before, the packer would rather buy what he needs at commodity price and sort through and find what they need for their premium markets and then keep the profit.

       And after all, they are the ones that built and invested in the product line to make it a premium price, so they intend on keeping any profit it may bring.  They are careful to develop product claims that can be met within their regular mix so they can always deliver to their customers. They look for any type of claim they can make to get a consumer to feel they are getting something special and pay a bit more for which creates profit opportunities for the themselves.  And I really do wish them well, they are one of my customers and I need for them to be successful so I can be too.    

     So how do we raise the cattle we want to and still position ourselves to an advantage that keeps us viable?  And how do we do our part to profitably make a positive impact for the beef industry?  Bear with me and I will try to tackle that in the next couple weeks.

                                               Mark

Weekly Blog, June 21, 2010

Locally Grown Branded Beef

     Most every producer I know believes in the quality of product they produce and most every producer I know laments their profit margin. So it is only a logical response that some consider developing their own branded beef program and by-pass the packer and retailers.

     Fact is most packers have developed and added more product lines than we would dreamed 15 years ago.  One would think this would drive more premium opportunities to fill these specific needs.  However,. the unexpected happened instead (even though we should have all seen it coming). 

     What I observe is the larger packers have developed product lines that have label claims that can be fulfilled through buying finished cattle at commodity prices and that they can identify and sort with in their own coolers after harvest.  So just when I thought this would lead to higher quality producers having some premium opportunities,  we are stuck in the same old commodity price blues.

     Internet Cattle Sales has several clients who have opted to overcome this by developing their own Branded Beef Products.  If you can put all parts of this into play and that's really the business you want to get into it is do-able.  But you will find yourself learning a lot of new things like: how to get a label approved, what red meat yield really is, what the difference between state and federal inspection and how that affects your marketing, how much it costs to get small numbers of cattle processed compared to the large packers and why, how important whole carcass utilization is, and people skills in dealing with your final customer.

     With all that said, I did not mean to discourage any one from giving it a try.  I just like for people to know what they are getting into before they make a decision to pursue something new.  And I don't think a branded beef program is not a good fit for most people.

     I do believe for some there is a real opportunity shaping up.  Home raised beef processed at your local locker plant can make for a product superior to what consumers can buy at most retail stores.  Many things drive this, but I am not going to get into that long list now.

     The locally grown food market is really getting to be important to a lot of people.  And I don't think it is going to change any time soon. So if you have considered your own marketing your own branded beef but don't know where to start or how, give us a call and maybe we offer you the help you need to proceed.

                                                     Mark

Weekly Blog, June 14, 2010

Adding Value with Age and Source Verification

     As I stated in the prior column, premiums are seasonal in the Source and Age marketplace.  Level of premiums for feedyards is driven by supply and demand.  Export demand is good and on the rise.  Seasonal supply is driven by calving seasons and subsequent management.

     For those of you who have recently weaned your fall calves and still have them I would strongly suggest you consider getting them Age and Source Verified and tagged as such. Most feedyards actively look for  this class of feeder cattle.  Also stockers and background yards have a pretty good appetite for them as well.  Summer born calves you are running as yearlings also fit VERY well for the Age and Source market.

     Setting up your calves is fairly simple.  First off you need to have a documented first born date on your calf crop, which was recorded on that date.  Remembering your first calf came on Labor Day and writing in in a calving book or calender now doesn't count!  Individual dates are nice, but not required.  A calving book, day planner, diary (be careful what else you write on that day as you will have to provide a copy of that day to your PVP provider!), Big Chief tablet, or wall calender all work for forms of recording calving records.

     Second, your calves need to have proper Identification and Segregation to ensure only calves you birthed and can be attributed to your calving records get enrolled.  If you buy pairs or stockers, they cannot be enrolled as your AV calves, and if you co-mingle them with your home raised calves prior to applying some distinguishing ID then you can't enroll your home raised calves either.  A brand or ear tag (ear notches don't qualify), or pasture or pen segregation of your home raised calves from any other source of calves is required for you to enroll your calves.  Year round calver's must be able to define weaning and calving management to ensure your calves fit provided calving dates.

     If you have an interest or any questions on this process give me a call at 402-705-3907.  I could do a ranch set up with you over the phone (takes about 20 minutes) and you could order tags through Samson PVP the same day if you want.

     For AV premiums your customer may recieve, cattle need to be harvested by one day less than 21 months of age.  So a September 1 Labor Day born calf needs to be harvested before Memorial day a year and a half later to fit (or by May 31 to be exact). A May 1 born calf would need to be harvested by January 31 a year and a half later to qualify for export value. 

     Calves born in the spring and put on feed in the fall pretty much fill the market place during the Mid May through August finished market.  I am not saying you should reject Source and Age Verifying your spring born calves, just be aware of the demand in comparison to your cost (which is still minimal).  Last week I still saw $15 per head premiums in the finished market on Age and Source Verified finished cattle.

     The best way to capitalize on your adding Age and Source Value is to retain ownership. If you have hopes of realizing the full premium while selling to a feedyard, this just does not happen.  The feedyard still stands the risk of the Export Market being closed or his Packer customers losing Export privileges.  But if your customer is getting a $30 to $45 per head premium at harvest and you are positioning them for that, I would not be afraid to price your 6 weight calves $2.50 to $4.00 per cwt higher.  At $3 per cwt you would get an $18 premium and still leave them room to profit as well!  After costs you would net about $15 per head in your pocket.

                                                 Mark

Weekly Blog, June 2, 2010

Age and Source Verification

     As I mentioned last week I am a Field Rep for the Samson Process Verified Program (PVP). Samson is one of the leading Third Party Validators for Age and Source (AV) and for Non Hormone Treated Cattle (NHTC) Verification.  These programs make cattle eligible for export to Japan (AV) and Europe (NHTC). 

     Cow Calf Producers, Back-ground yards, Feedyards, Yearling Stocker programs, and Auction barns can all be set up for Age and Source through Samson. 

     As you begin thinking about marketing calves this fall many will tell you that you need to get your calves Age and Source Verified.  The average premium paid can make it worth your time and expense.  But I would also add that if you expect to get any type of value you need to position yourself for it. 

     Feeders only get a premium if the packer pays them for it.  Premiums are seasonal due to supply variations which are driven by calving seasons.  And remember that export markets can close and feeders are leary of paying too much more for AV feeder calves as there is no guarantee of the market being there when calves you sell them are fat.

     The best cattle to set up for AV are the ones that will hit a finished market between September and April.  In recent years, calves born in late February and March which are harvested June through August, more than exceed packers needs for AV cattle and premiums dry up quickly.  So early spring calves that can be put on feed early fall and late spring and summer born calves that can go to grass as yearlings have more AV value potential.  Of course Fall born calves work very nicely in an AV program.

     If you are selling on a video sale you can get set up now as a ranch and list your calves as source and age verified if they qualify.  If you sell at an auction barn I recommend that you consign them to a special sale that has other AV cattle.  I don't see alot of premium paid for cattle just thrown into a regular sale.

     The best way to ensure a premium is when you sell private treaty and only set up your calves when your buyer is willing to pay you for it.

     One of the nice things about PVP programs are that cattle from one PVP can be enrolled into other PVPs with minimal cost. For example, if you have Angus Source AV tagged cattle they can be enrolled as AV by a feedyard which uses the Samson PVP.

     If you have any questions on AV or NHTC give me a call.

                                           Mark

                                           402-705-3907

Weekly Blog, May 24, 2010

Background

     For those of you who have gotten in the routine of choosing to spend part of your week looking to see what is new on ICS, I sincerely appreciate your interest.  The type of things posted here are the result of what I see as valuable in the cattle industry and are from sources who are contacts I have made over the last several decades. 

    As you are taking the time to browse this site, I thought it may be of interest to you to know what my background is.  Over the next months blogs I will sprinkle in some of the things that I have been exposed to and how it dictates what ends up on ICS.

     My professional career includes B.S. degrees in Animal Science and Agricultural Education from the University of Nebraska at Lincoln where I graduated in 1987.  I went to work for Excel in Friona, TX as a Production Foreman.  I had the unique opportunity to fill the role of relief pitcher for whatever department had a foreman on vacation, a shortage of management, or some type of problem that required extra attention.  As a result, I was able to spend time in every nook and cranny of the packing plant and gain an understanding of that business.  This never ceases to be of value to me.

     I worked for a year and half in the packing plant before taking a position within Excel as a Cattle Buyer. 

     I spent the next 2 years in Ft. Morgan as a buyer trainee. The majority of this time I was the cattle scheduler for both the Ft Morgan and Sterling plants.  The rest of the time I spent in the country learning to trade.

    Next I bought finished cattle for 7 years out of Hastings, Nebraska.  This central location allowed me to buy and ship cattle to Schuyler, NE, Dodge City, KS, and Ft. Morgan, CO.  I bought cattle in the cash market both on a live and dressed basis, contracted, and gridded cattle.

    An opportunity to be the Business Coordinator for Angus America came along and I did that for another 7 years.  This was a partnership venture between Excel and Scotch Cap Angus Ranch from South Dakota.  We gridded cattle, collected carcass data and worked with individual breeders, cowcalf producers and feeders to build a supply of quality cattle that had enough added value that it could be shared between the packer and producers.

    Then for 3 years I was the Executive Vice President of the Braunvieh Association of America. The carcass premiums earned by Braunvieh cattle had long been catching my attention at the packing plant and the maternal strength that came along with made this a breed I could believe in and work with. 

     During this time and up to present I have been a Field Rep for the Samson PVP, dealing mostly with Age and Source cattle, doing Ranch Evaluations and Feedyard Set up and Training.

     For the past year and half I have lived the American dream and been self employed.  I started ICS about one year ago.

                                                   Mark

First Weekly Blog, May, 2010

     In various positions I have held, I've had the chore or opportunity (not sure which one it is) to write a column or newsletter on a regular basis. 

     Now, with ICS I have the same opportunity (or a chore on some days), but I think when its on a web site, its called a blog.  I could be wrong on my terminology of what its called.  Just like many of you who have websites, I have come to the realization pretty quick that cowboys in general are not techy enough to really have websites. But then again, if we paid attention to all the qualifications "required" to do parts of what we do on any given day, we would never even be allowed to leave the house. 

     At any rate, what I hope to accomplish in this space (after this week anyway) is to include content that brings some value to you that read it.  It may be some info on a breeder or business I have visited and passing on my thoughts about how they have a value adding service or program you may want to consider, or an observation on some industry related topic that may effect you in some way and may have either some built in benefit or cost you should be aware of. 

     I do intend to do this on a weekly basis and will attempt to keep it just short enough you will read it and have content of value.  Hopefully I have achieved at least one of these goals my first time out.  But thats dependant on your definition of what "short" is.

                                                                        Mark

Our Focus is Representing Quality Cattle and Programs that will add value for “Real World” producers.

Browse our site to find the Cattle or Services to

add value to your program.

 Current Special Features:

Promoting on the Cattle Show

Samson Third Party Verification 

Marketing Your Cattle

    With marketing these days you have many options, the least of which is doing nothing and waiting for buyers to come to you.  Pro-active marketing can be challenging and expensive, but we all know what no promotion at all accomplishes!

     Our relationship with The Cattle Show has afforded us the opportunity to offer you an incredible marketing opportunity to put your program and cattle on television for a very affordable rate. 

     Promote your AI Sire or your entire program, promote your upcoming sale or offer cattle for sale right on the show.  Use the two minutes of national airtime the way it best helps you to market.  If you have a cattle ranch for sale this would be a great way to offer it to a national group of buyers.

     For more information contact us at 402-705-3907 or email us. Or click on our Services page for more information.

Samson Third Party Verification

          The Samson Process Verified Program (PVP) was one of the first program's approved to set up cattle for Japanese Export shortly after we all became all too informed about BSE.  In the 5 years since, Samson has grown from a offshoot business officing out of the Samson Feedyard Office to one of the largest PVP's and come with a National reputation for  their quality and easy to use programs. 

    Based out of Columbus, Nebraska, Samson has quietly building their services, only allowing themselves to grow at a pace that ensures doing things right for the producers enrolling calves under their umbrella. They have grown from 3 people working part time to 8 employees today.

     Today, Samsons' Source and Age Verification is only the first and second tier of their progressive PVP. A third tier offers verification for Non Hormone Treated Cattle (NHTC) for European Export and a fourth tier offers the Never Ever 3 (NE3) standard for No Hormones or Antibiotics.  In addition Unique Program Verification can be set up as well as Beef Quality Assurance Verification and Verification for Quality Feed.  For more information on what they offer go the Services page on Internet Cattle Sales.  

    

    

    

The CATTLE SHOW and AG LIFESTYLES have moved! 

If you have been left behind and don't know where they went, wonder no longer.  They have joined the Awesome new network INCOUNTRY Television

and can be found on Dish Network channel 230 and DirecTV Channel 344.

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The CATTLE SHOW is the original cattle television program and airs on Tuesdays at 8:30 and 11:30 PM EST.  This great show is focused on delivering educational programming. For over 7 years the CATTLE SHOW has been traveling across the US searching for the stories that ranchers want to share, the ones that can help other operations.  

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  BROKEN OAK RANCH

Sale Report

    Broken Oak Ranch, (BOR) Seguin, TX is the premier Braunvieh Breeder in the US. Their production offering was showcased in their annual sale on April 17 at the ranch.  

     High selling lot was half interest in the pick of their fall ET calf crop.  BOR Draft Pick was the selection at $11,000 made by a progressive group of breeders.  Bodine Braunvieh, from North Dakota, Bear Lake Braunvieh from Wisconsin, J & L Braunvieh from Oklahoma, Bagely Braunvieh from Georgia, and Diamond N from Nebraska formed a partnership on this powerful young Herd Sire out of the National Champion Silverado

and the BOR Donor DIA N Goldberry. 

     Damon Stotts from Texas bought second pick for $10,000 and will exercise his choice at weaning.

     The rest of the sale brought solid prices on solid cattle going into multiple states and two countries.

Broken Oak Ranch

Includes a Full Range of

Customer Services

    BOR is a no nonsense operation,  forcing their cattle to perform while being managed in a commercial fashion. This helps to ensure that their genetics will work at the homes of their buyers.  Sure, they flesh them up for sales, but if they didn't their sales would suffer, and as you will see they are better managers than that.

     BOR is tightly managed with their selection criteria being very data driven.  After years of ruthless culling and selective retaining of females, anyone who goes through their cows will appreciate the result.  This makes their production sales a buyers opportunity!

    Today's seedstock and commercial ranches face a lot of the same challenges to stay in existence the same as prior generations.  We also face many new ones.  BOR recognizes this and manages accordingly just like their customers must.  At BOR individual cow production and per cow costs are analyzed on a regular basis so that each is cow and the entire ranch do their part to keep BOR in the seedstock business. So even if you don't have time to manage this tightly, you can be assured that your investments from a BOR sale will contribute to your cattle operations successful future. 

     In addition to offering the very top in Braunvieh genetics to producers, BOR now offers: a Feeder Calf Program, Commercial Females, and Simbravieh genetics.  Refer to their website for more info on the many opportunities they can offer.  BOR recognizes they cannot stay in business just doing the same old things every year. As they move forward for what's best for them, they don't intend to leave their customers behind, but instead offer them the opportunity to come along with them in any area's of opportunity.   

     BOR has a top flite bull battery and an impressive donor line-up.  Silverado and Joker lead their Polled Purebred sires (both pictured at right), Lynrd Skynrd and Dozer are the top young Fullblood sires in the US, Texas Rojo is their new Red Braunvieh Herdsire, and LMC Hero is their top Simbrah sire being used to develop their Simbravieh Program.

 

Black Joker-Leading Black and Polled Calving Ease Sire

 

 Dozer-Fullblood Herd Sire at BOR

Value Adding Measurement and Expertise at

Green Springs Bull Test

     If Performance Tested Bulls developed in balanced fashion of both performing and expressing differences to select from, while still providing you with a functionally developed bull, then Green Springs Bull Test is for you.

    Cowmen who get the opportunity to see their program first hand are quick to notice how GSBT's development facility is laid out with functional results in mind.  Their lots are large and rolling allowing bulls room to travel and stay sound. The way their turf lots are set up bulls travel every day up and down hills as they move from feed to water to shade or in the case of this winter, dryer ground.

    A Truly Unique and Value Adding benefit of their Bull Test is the GrowSafe Residual Feed Intake System.  GSBT has been one of the pioneers of measuring and testing genetics for Feed Efficiency.  Their facility and experience are valuable asset to take advantage of for discerning bull buyers.  Feed Efficiency is undeniable one of the most important traits for every aspect of the cattle business. 

     The benefits and value of their expertise are showcased at their fall and spring bull sales.  Angus, Balancer, Gelbvieh, Limousin, Lim-Flex, Maine-Anjou, MainTainer, Hereford, Red Angus, Simmental and Sim Angus bulls are offered.  For more info visit GSBT Website at greenspringsbulltest.com.