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“Take Charge”

“Take Charge”. National Angus Conference September 25, 2003 Manden, ND Ron Lemenager Purdue University. How can we compete - - in a commodity market?. TOP CONCERNS FOR BEEF INDUSTRY:. Aggregate Response from Purveyors, Retailers and Restaurateurs: Low Overall Uniformity and Consistency

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“Take Charge”

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  1. “Take Charge” National Angus ConferenceSeptember 25, 2003 Manden, ND Ron Lemenager Purdue University

  2. How can we compete- - in a commodity market?

  3. TOP CONCERNS FOR BEEF INDUSTRY: Aggregate Response from Purveyors, Retailers and Restaurateurs: • Low Overall Uniformity and Consistency • Inappropriate carcass weight • Inadequate Tenderness National Beef Quality Audit, 2000

  4. What Do Consumers Want? • Food Safety – it’s expected • Implants • Antibiotics • Disease (E.coli, Salmonella, etc.) • Value-added, convenience products Meal solutions - yes  Uncooked pot roasts - no • “Guaranteed tender” • Aged 14 to 21 days • Process verified

  5. What Do Consumers Want?  Source verified Now - some  Future - yes • Vitamin E fed cattle • RHI trade - no • Retail trade - yes • Environmental stewardship

  6. What Do Consumers Want? Black Angus (CAB-like programs) Middle meats – maybe  End meats – not necessarily  Other “niche” markets • “Locally grown” • Animal handling/well-being Demand for our product starts here!

  7. What Do Retailers/RHI Want? • Differentiated product • Consistent product • Consistent supply • Minimal out’s • Products that are worth more $$$ • Portion Control This group responds to, and affects change.

  8. WHAT DOES THE FUTURE HOLD? Cattle that are part of a system, alliance, cooperative marketing arrangement, … Cattle that are outs, misfits, extras, small lots, …

  9. The Challenge We are a “Segmented” Industry with many small- to medium-sized independent operations

  10. A Changing Beef Industry Number of new USDA Certified Programs 2001

  11. Industry is moving away from producing commodity beef

  12. By 2007 70% of the product will sell through alliances, branded programs, forward contracts or value grids (30% daily cash market) CattleFax, 2002

  13. Where do You Fit ? SEED STOCK COW / CALF STOCKER FEEDLOT PACKER Commodity Beef Branded Beef

  14. Value-added Considerations? As a producer: • Selling seedstock • Considering an alliance • Considering a branded product • Looking into the future

  15. Companion Programs Vision: Increase Producer Profitability

  16. Office of the Commissioner of Agriculture Kentucky Department of Agriculture 5-State Beef Initiative Partners

  17. Executive Board Ron Lemenager Executive Director Mark Straw KY Dept. of Ag. Ernie Birchmeier MI Farm Bureau Jim Culp Feedlot, IN Mike Bumgarner United Producers Maralee Johnson IL Cattlemen’s Gary Wilson Cow-calf, OH Board of Directors Exec. Dir. & Universities (5) State Dept. of Agriculture (5) Farm Bureau(5) Feedlot, backgrounders (5) MarketingOrganizations (1) State Cattlemen’sAssoc. (5) Cow-calf producers (5) 5-State Beef Initiative Management Organization Ron Lemenager Executive Director Stakeholders

  18. How can a partnership help? By creating the infrastructure that will allow producers to: target and meet one market at a time.

  19. Data Management-Dan Buskirk, MSU IRM/SPA-Rich Knipe, UI Certification- Jeff Arseneau, PU Kevin Gould, MI BQA/Health-Steve Loerch, OSU Patty Scharko, UK Genetics-Matt Claeys, PU, Nevil Speer, WKU CSRM -Steve Rust, MSU Economics - Lee Meyer, UK Product quality-Phil Anderson, IBCA Reproduction-John Johns, UK Post-Harvest Marketing– Steve Rust, MSU FSBI Action Teams and Chairs All Teams Have State and Producer Representation

  20. ProducerCertification

  21. Why? • Market Access • Marketing tool: • for producers • for retailers • Customer trust • Something to point to

  22. Web Certification and Re-certification www.iqbeef.org

  23. Goal of BQA • To ensure that all cattle shipped from a beef production unit are: • Healthy • Safe • Wholesome • Meet federal management guidelines • Meets or exceeds consumer expectations

  24. Preconditioning To increase value • Viruses x 2 (IBR, PI3, BVD, BRSV) • Clostridia • Deworm • Castration & Dehorning • Weaning • Feed and water broke

  25. Producer PC Data

  26. Bull Certification Certification is good for 3 years Power Scores rank individual bulls using breed specific EPD percentile rankings.

  27. Power Score System 2 Score System • Performance Power Score (BWt, WWt, YWt, MM) • Carcass Power Score (Marbling/%IMF, %RP) As in golf a lower number potentially indicates a more desirable bull. (Over 1500 bulls certified from 6 states)

  28. Importance of Data Management Building Résumés for your Cattle “Want access to the competitive value-based market of the future? Better start getting together a résumé for your cattle.” John Sticka, CAB Dir. Packer Feeder Relations • What’s in a resume? • Documentation of : • Genetic history • Source verification • Management practices • Feedlot and carcass history

  29. The Emerging Age of Beef Informedaction • Beyond data • Beyond information • Building knowledge • Integrity

  30. A Responsive Beef System Consumer “Listens” “Trusts” Retailer Foodservice Packer Product Flow Feeder Information Auction Market Information Feedback Cow/Calf Profit Flow Seedstock

  31. Data Management • FSBI has partnered with eMerge Interactive to accommodate data collection, data warehousing, and information sharing • CattleLog ME was created for “us”

  32. Apply Unique Identification • All FSBI animals are required to be tagged with an EID tag and a visual tag • Tags can be obtained through FSBI State Coordinator • Bulls and cows should have a permanent, unique identification within herd (unique ear tag) • (C.O.O.L. and Mandatory National ID)

  33. 2001 FSBI n = 2332

  34. 2001 FSBI n = 2332

  35. Value of Financial Information >$170 Total Cost reduction per Cow

  36. ? ? $ How can producers get rewarded for enhanced quality?

  37. “The lion’s share of producer value in their alliance comes from having the information to make improvements.” Don Schiefelbein, Monfort

  38. Larger Premiums Fed Cattle Feeders Calves Larger Discounts As fed cattle prices show more differentiation So will feeder and calf prices New Market

  39. What’s in it for me? Receive carcass information on cattle (résumé) This Select is often worth $5 to $15 per cwt. of carcass less than this Mid Choice This Yield Grade 4 is typically worth $20 per cwt. of carcass less than this Yield Grade 2

  40. Carcass weight and steak size.

  41. Carcass Weight and Steak Size 600-800 carcass REA, sq. in. Ribeye steak size, oz. 10.5 8.7 11.75 9.8 13.0 10.8 15.5 12.0 Iowa State University

  42. Importance of Frame size Frame Size Live Wt Carcass Wt 1 750 475 2 850 540 3 950 600 4 1050 660 5 1150 730 6 1250 790 7 1350850 8 1450 920 9 1550 985

  43. Eliminate “Outs”by Avoiding Extremes • Carcass size • Quality grade • Yield grade • Defects

  44. Importance of Animal Well-being • An industry issue • A consumer’s issue • A retailer’s issue • An animal issue

  45. Perception of animal agriculture • Perception is reality

  46. New Perception of Agriculture

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