Future of the Beef Industry
Mr. Fred Kirschenmann has publicly expressed displeasure with an article
written in The Kerr Center for Sustainable Agriculture Newsletter titled
"Future of the Beef Industry." His
comments were posted on SANET-mg. The article addressed the problems the
beef industry is facing concerning the inconsistency in beef quality as
reported in the 1995 National Beef Quality Audit. The concept of
value-based marketing was offered as one solution to the beef quality
problem. When producers are paid based on value rather than averages, they
are encouraged to produce a higher quality and more consistent product.
Marketing alliances between producers, feedlot operators, processors, and
retailers are a means to supply consumers with quality beef. Producers reap
the benefits of management through premiums paid for a quality product.
Participating in a marketing alliance could be considered a form of
integration in the industry. The difference between this form of
integration and vertical integration is that producers can choose one of
many marketing alliances that best fit their cattle and management style.
The article stated: "most of these problems could be solved through
vertical integration, but cattle producers value their independence and do
not want to mimic the swine and poultry industries." Mr. Kirschenmann took
this statement to promote vertical integration. By no means did the
context of the article promote or offer vertical integration as a solution
to the problems facing the beef industry. This statement was made to warn
producers that the beef cattle industry could mimic the poultry and swine
industries if they fail to take the quality of their product seriously.
The article also stated, "50% of the beef cows in the United States were in
herds of less than 100 cows in 1995, according to USDA reports. Raising
cattle is a hobby and not a business in herds of this size." A better
choice of words would have read "Income from cattle is usually not the main
source of family income in herds this size." The article was referring to
the difficulty of producers with less than 100 head of cows to participate
in a marketing alliance. They do not have enough steers or heifers to fill
a semi-truck or a pen in the feedlot. The article also stated, "Survival
of small-scale producers depends on their willingness to unite in a
cooperative effort to supply quality cattle." Small-scale meant less than
100 head of cows. It will be difficult to market small groups of cattle in
the future unless several small-scale producers, with similar types of
cattle and management join together and market their cattle as one larger
group. This would allow them the opportunity to participate in value-based
marketing. Marketing through local auction yards may not be an option in
the future because they are hurting financially, and many have gone out of
Standardized Performance Analysis (SPA) has shown the economic disadvantage
of owning less than 100 cows. Data consisting of 200,000 cows from 20
different states has shown a net return of a negative $38.02/cow in herds
with less than 50 cows and a net return of only $28.21/cow in herds of 50
to 99 cows. These returns could be greatly improved with better marketing
alternatives. Of course there are exceptions, but in general, small-scale
producers are hurting.
The goal of The Kerr Center is to help producers stay in business.
Marketing is one of the major obstacles facing the survival of the family
farm. Value-based marketing provides hope for those farmers and ranchers
producing a quality product. The Kerr Center ranch has participated in
value-based marketing the last two years. Steers are marketed through
Bradley's Natural Beef (B3R), and we are paid based on carcass grade and
yield. We chose this program for several reasons. B3R and the feedlot
used are independently owned, and B3R markets under the USDA "Natural Beef
" label. They pay a premium for non-implanted cattle, and we do not use
hormone implants. Also, animal fat is not allowed in the ration. Our
breeding program (Angus cross) matches their product goals (choice, yield
grade 2). The B3R program is flexible enough so that we can background the
steers on forage until they average 850 to 900 lbs and shorten the length
of the feedlot phase to 100 days. Net return to land, labor, and
management has averaged $163.62/head over the last two years. Retaining
ownership and value-based marketing has so far proven to be a viable
marketing option for us and other cattle producers.
The management goal should be to maximize the use of your feed resource.
Our program is forage-based. Efficiently utilizing forage and limiting the
use of concentrate feeds is the core of The Kerr Center cattle program. We
are aware of the benefits of integrating cattle in cropping systems, but
cattle are not generally the cash crop.
For more than 30 years, The Kerr Center has been an advocate of small-scale
farmers, as well as other farmers that are moving towards sustainability.
We believe that livestock farmers should remain independent and
collectively organize whenever possible and halt the movement to vertical
integration in the livestock industry.
The Kerr Center for Sustainable Agriculture, Inc.