Beef Industry Direction

The Good News - The Beef Industry Will Never Completely Fail
It is honestly to vast and inconceivable to believe that people will completely stop eating beef.
The Bad News - It will become so regulated and downsized that BEEF will become a "Delicacy"
A delicacy that will be raised under strict regulations & micro managed by government agencies.
It will become so expensive to make that only the highest end of the high end restaurants and richest persons would be able to afford.
Herds will be reduced down to "Family Sized Farms" of 50 head of less that are raised in small lush pastures. Each of these "Family Sized Farms" will have their own processing equipment on site and will process cattle 4 times a year. The cattle will grow while eating a special diet of grass and select grains with very limited use of medicines. Cattle that become sick will be destroyed immediately to make sure that no other animals will become infected.
Each animal will be worth the same because the price can go no higher and there are no other markets available to sell cattle at. Exports to foreign countries will consist of small packages of pre-cut beef destined for the highest end restaurants and customers.

This will not happen overnight. It will be a slow and painful death that will take about 150 to 200 years of bitter fighting and arguing for our industry to come to this point. A few of the "Cause Lawyers" and "Savvy Business Men" (Peta, HSUS, R-Calf, John Marvel & Western Watersheds) will become very rich by continuing to create "Drama" and "Conflict" over short sited & narrow minded issues that plague our industry today.
But for the most part, the typical middle to large sized, western states cattle ranches of yore, will no longer exist. They will be gobbled up by government entities, the "Savvy Business Men" & "Cause Lawyers" and will be placed in conservation easements and government parks. And in the middle of the best parts of these ranches, where the grass and water is the best, will be these little "Family Sized Farms" that the "Savvy Business Men" and "Cause Lawyers" will own and operate.
Kit

Heifers: Breed Not Feed

Breed Those Heifers - Build our Cow Herd.
I say OUR because we need to take ownership in what has become the determining factor as to where our industry will be in the future.

• Yes we are producing just as much beef as we always have
• Yes we have cut costs - become more efficient - Found ways to do more with less

But:

• Populations are increasing 
• Global demand is increasing
• Our competition can MEAT those demands much faster
• We CAN'T STOP BICKERING

Pull your heads out, put away your EGOS and get to work.
Build our COW Herd.
Get out of those meetings, go home,  get your work boots on, and Breed Your HEIFERS.
Breed Those Heifers and get our industry out of this whole we have placed ourselves in.
If we do not make this a number one priority - We will have nothing to fight about.
If our industry was sound and we needed to just tweek things here and there I would say put on your gloves and take it to them
BUT Our Industry is not well.
Our Market share is declining.
People are making a killing at Killing us because we are a weak industry.
That is why we have the Enviros and all their counterparts taking shots at us and making  money doing it.
Take ownership in our faults and fix them.
Kit West

A SALUTE TO THE TRADERS

Generally, the public’s perception of a trader is negative. Traders are the ones that cause all the turmoil in our lives. When prices move a certain direction unfriendly to our lives, it is thought to be the work of traders. Traders cause the stock market to go down when we need it to go up. Traders run up the price of oil and crash the prices of our bonds. Farmers blame Traders for driving down the price of their crops or running them up after they hedge. Cattle feeders question fair prices when they buy and sell futures because they are under the control of Traders. The Government vilified and prosecuted Goldman Sachs for behaving as a market maker in the middle of an over the counter product betting on mortgage yields. Basically, anyone making a living, betting on the price of anything, runs the risk of offending someone.

Traders fall into two categories. There are long term traders who make bets on price trends over an extended period of time. These traders take a view of a particular market and are willing to wait to exit the position for longer terms -- generally months before they see results. Traders forecasting inflation have been placing trades based on this forecast for over a year and to date there is no payoff. Then there are short term traders who are basically arbitrageurs. They see an offering at a price they feel is under or overvalued and purchase it hoping to turn around and flip it for a profit. 

Traders in both categories fall into several different types. Some are intuitive and gather information in unique methods and then feel a certain direction is right for the trade. Others are analytical pouring over mountains of facts and historical patterns arriving at a conclusion on the market direction. There are technical traders who watch the charts to detect pricing patterns for the future. Others look only to fundamental data on supply/demand relationships.

The function of a trader is to discover the price of a product or commodity. To this end they serve an invaluable benefit to markets. They send market signals to the producers of the product -- offering encouragement or discouragement in their production plans. The reaction of the producers determines the supply of the product for months to come based upon what a trader will give for future deliveries of the product.

It is only when moral terms become attached to the actions of Traders that our economic system suffers. Self interest is NOT bad. Accompanying every trader choice to buy or sell is a risk that the bet will be wrong. The person on the other side of the transaction is betting the opposite direction for prices. There is nothing “good” or “bad” about the bet unless the transaction violates a law or trading protocol. The fact that a Trader profited from his purchase or sale, is not wrong or bad. Frequently the press and public are alarmed by the fact of Traders making money in the marketplace.

It would be helpful to educate the public in the role and benefits a Trader offers to the marketplace. Academics and analysts offer their views every day and some of us listen, but traders place their money at risk and put their money where their mouth is.

Written By: The Ag Center

SHOT YOURSELF IN THE FOOT

Self destruction is not normal. Commerce usually encourages participants to avoid actions that threaten their livelihood. The beef industry is fairly reliable in looking after its own interest. Sometimes those interests are not commonly shared and disparate views emerge among industry members. Animal ID and COOL are two examples. Animal ID is an important strategic effort that is necessary to grow our export markets and protect herd heath. Nothing immediate occurs when we don't compel animal ID, but we suffer financial penalties every day.

COOL is a more egregious misstep.  COOL was a chauvinistic effort to promote American beef and it sounds like something everyone would support. Under this noble aim of promoting American products is a self destructive outcome, borne of misguided advocates supported by politicians who jump at the idea of anything to promote American without ever considering the ramifications. The result has added dollars to production costs and offered no value to consumers. The average American consumer in a recent poll never reads the labels about origin or cares. Consumers care about how much it costs and how it tastes.

Mexican producers have for years found better markets for their cattle in the U.S.. Cross border trade was good for operations on both sides of the border. American registered breeders found good outlets for high quality bulls from Mexican ranchers. U.S. beef operations found a reliable source for stocker cattle. A U.S. born bull bred to a Mexican cow raised a few miles from the border has little to distinguish it from another animal a few miles away on the American side.

The legislation has had a large and long lasting outcome on the Mexican beef structure. Mexican's began immediately building pens for finishing their own cattle in Mexican feedlots. This change created a need for more grain and the source was U.S. corn and milo. It also has created more beef domestically and less need for U.S. imports leaving U.S beef exports to Mexico in a large decline.

U.S. beef processors joined in the effort to sabotage our own industry. They assessed a $40 discount to Mexican cattle in spite of the fact they suffer no discount when selling the generic beef. Mexican ranchers were left with the option of selling into the U.S. with a large discount, to cattle of the same quality in the U.S., or feeding their stock into the Mexican beef trade.

Undoing wrongheaded legislation is a slow process. In the meantime when the U.S, herd is shrinking and we are in need of all the cattle we can use, one of our major sources is drying up.  

PROTECTING MARGINS -- THE BIG SQUEEZE

The beef industry has never been integrated like much of the pork production or all of the chicken raisers. The various sectors compete horizontally with each other and vertically with other segments of the supply chain. The USDA July inventory was a reminder of the decline in the number of cattle in the country and a preview of the struggles to come.

Industry growth happens for a reason. Profit margins are plentiful and rising prices are signaling the need for more product. The industry responds by producing more product. Nothing is more exciting than the hustle and bustle caused by growth.

The beef industry is in decline. Some feeding operations have closed and some beef plants are dark. Both cattle feeding and beef processing are plagued with over capacity. The nation's cattle herd is shrinking and with it will be tough times for all but the breeders. Oversized facilities will be competing with each other to fill their needs. In the process some more closures may be necessary.

The breeder has not been squeezed by over capacity. Breeders have survived the past few years in good shape and will be benefited by the upcoming shortage of cattle. However, expanding the breeding herd is not as easy as adding a few more pens to a feedyard or killing a few more hours in the beef plant. Urban sprawl and alternative cropping options are taking land away from the breeder and reviving the breeding herd is not an easy task. Expansion requires more subtle changes like fertilizer to increase carrying capacities on grassland.

In the meantime, stocker operators, feeders, and processors will be left to scramble and compete for the dwindling supply of cattle. Competing for a fixed supply that is inadequate forces parties to outbid the other in order to fuel the needs of the physical facilities. The net result is smaller to non existent margins for most.

Begin At The End When Thinking Beef

Ask cattle producers what business they’re in, and often they’ll say the cattle business. “But really it’s a business that begins with the American mom,” says Mary Lou Quinlan, CEO of “Just Ask a Woman,” a strategic marketing consulting firm in New York.

“Start to think not just of the steer, but the steak,” she told a group of cattle feeders recently. “You say you’re in the cattle business. She says you’re in the beef business – you’re in the ‘what’s on my plate’ business.”

To make sure beef stays on the plate, Quinlan challenged cattle feeders to become part of the conversation about the safety and healthfulness of conventionally-produced beef. “Conventional beef isn’t being out-sold by organic, it’s being out-told,” she says. “So before a greater number of shoppers get to the point where they’re making purchases out of fear or frustration, they need support so they can become more confident in the beef they’re buying.”

Quinlan suggests cattle producers first consider how they describe who they are and what they do. If you’re not producing natural or organic beef, you probably think of yourself as a “conventional” beef producer. However, Quinlan suggests that “traditional” may resonate better.

“Traditional means a lot of things. Traditional is the emotional high ground. It recalls those family dinners. And it’s also beef that is raised with traditional care – best practices, things that have been learned and hold true from generation to generation.”

Quinlan says three pillars describe who you are and what you do as a beef producer.

The first is trust. “(American moms) know you must take good care of your cattle because your own families depend on it.”

The second is safety and Quinlan says because of USDA inspection and oversight of the beef business, cattle producers have that in spades.

The third, and perhaps most important, is freedom of choice. “Organic isn’t the enemy. The enemy is anyone who takes away her freedom of choice. Her common sense has been assaulted by propaganda in an effort to convert her and control her options, and make her feel guilty,” Quinlan says. American moms resist and resent that, because they feel their ability to choose what’s best for their families is being challenged.

To help cattle feeders become more involved in telling their own story, Quinlan suggested a phrase to use as part of their elevator speech: “We produce beef you can count on, beef you can depend on, that is going to come through for you and your family. Traditional beef, grown with traditional care, grown by America’s cattle farmer families, perfected from farm to market to table.”

Confined Livestock Are Better For The Planet

Stanford University recently startled the world with its conclusion that conventional high-yield farming is far better for the planet than low-yield farming (see “Beef’s Environmental Sustainability Considerably Improved”). And this includes the First World’s current icon – organic farming.

We know high-yield farms need less land to produce the same amount of food, protecting the huge amounts of soil carbon that would be gassed off if we plowed more land for low-yield crops. However, the Stanford study says high-yield farming may have saved 600 billion tons of CO₂ emissions – equal to one-third of the greenhouses gasses emitted from the whole industrial revolution since 1850!

“Our results dispel the notion that modern intensive agriculture is inherently worse for the environment than a more 'old-fashioned' way of doing things,” said Jennifer Burney, lead author of the Stanford study.

And, that’s not all: Confinement feeding of livestock – that favorite whipping boy for Greens – also helps sharply reduce greenhouse emissions. I recently estimated it would take the land area of New Jersey for chicken “playgrounds” if we put all our birds outdoors. It would take the land area of Pennsylvania to raise our hogs on free ranges. Stanford should now estimate the soil carbon losses if we plowed those millions of additional hectares for animal “playgrounds.”

Indoor animals are also more comfortable, and thus need about 15% less feed per pound of protein produced, saving still more acres of land for Nature and still more carbon left in the soil.

Feedlot cattle, eating grain from high-yield fields, produce less methane in their guts than cattle digesting grass – because grass is harder to digest. Studies on beef cattle show methane emissions reduced by 38-70%.

Jude Capper of Cornell University reported last year (Journal of Animal Science, March 13, 2009) that more milk, from higher-yielding cows that are fed more grain and less grass, have helped reduce the carbon footprint of the U.S. dairy industry by 43% since 1944.

“Interestingly, many of the characteristics of 1940s dairy production – including low milk yields, pasture-based management and no antibiotics, inorganic fertilizers, or chemical pesticides – are similar to those of modern organic dairy systems,” Capper notes.

Capper’s study also found that supplementing dairy rations with genetically modified rBST would use 2.3 million fewer tons of feedstuffs, need 540,000 fewer acres of land for crop production, and require considerably less chemical fertilizer and pesticides

Confinement feeding also protects our streams and rivers. The manure from outdoor animals washes into the nearest creek. The wastes from confinement animals are collected and used as organic fertilizer on crops.

Are confinement animals less happy? Probably not. Cattle, hogs and chickens are all prey animals, and they see safety in numbers. They like being together. Cattle graze and travel in herds. I’ve watched free-range turkeys, which always seemed to be huddled together in a corner of their pasture.

If the environmental movement really believes humans are warming the planet, these studies tell us that Greens must recant on their criticisms of high-yield farming and confinement feeding. They need to stop demonizing the chemical fertilizers, the pesticides, the confinement feedlots and the biotechnology which will be needed to produce twice as much food – from today’s farmed acres – in 2050.

Or is demonizing modern farming too important to fund-raising in the cities?

Resources:
Jennifer Burney, et al, “Greenhouse Gas Mitigation by Agricultural Intensification,” Proceedings of the National Academy of Sciences, pnas.org/cgi/doi/10.1073/pnas.0914216107; 2010.

Jessica Marshall, “Grass-Fed Beef Has Bigger Carbon Footprint, Discovery News, Jan. 27, 2010.

Jude Capper, et al., “The Environmental Impact of Dairy Production: 1944 Compared with 2007,” Journal of Animal Science, March 13, 2009.

-- Dennis Avery, Hudson Institute environmental economist (cgfi@hughes.net)

Government in the Market -- A Recipe for Disaster

Government in the Market -- A Recipe for Disaster
.
Producer A markets one pen of cattle a year. The quality is excellent and the marketing weight is 1,300 lbs.. Producer B markets a pen of similar cattle each week year around. Producer B enters into a marketing agreement with a local processor. Producer B earns a $1 cwt. premium to the market under the marketing agreement. Is Producer A entitled to the same price?

The question of equity in markets is as old as the markets themselves. The question is not only should every animal of similar quality be compelled by government to bring the same price, but also the broader question of rights of parties to engage in contracts binding the parties to various and diverse price arrangements.

An attempt by government to mandate price for all cattle of similar quality sold at a similar time is a form of price control. Any cattle feeder with memories of Nixon's price freeze in the 1970s will understand the meaning of government control of pricing. It is a recipe for disaster and will result in the opposite of free markets and open price discovery.

Banning packer feeding, formula contracts, or forward contracting is the first step to eliminating the freedom of choice that guides commerce creating efficiency and lowering food cost for all consumers. There will be no competition for best price if every best price is matched by a government order awarding the same price to all producers. If a producer is able to convince a processor of a benefit from a certain group of cattle, and the packer awards a premium, it doesn't even matter if the benefit is real or perceived.

Flipping the equation over, there is little motivation for processors to pay formula contractors a higher price than cattle might bring in the open marketplace. This logically confirms the fact that any premiums are earned and deliver added value.

Packers and Stockyards have recently issued a new directive intended to deliver more equitable pricing to producers. This is a comment period and it is important for the cattle industry to hold on to the existing price discovery mechanisms. Turning fair pricing over to the government is bad for everyone and has been proven time and time again.

Flawed Science & Manipulated Numbers:

Flawed Science & Manipulated Numbers:

.

The ethanol industry was an early and strong supporter of President Obama and he hasn't forgotten it. The much delayed change to the blend level of ethanol in gasoline is sitting on the horizon for determination. The subsidy for ethanol is before Congress as well as the review of the excise tax placed on foreign ethanol shipped to this country. Never has an energy policy moved so logically awry and never has the government run so afoul of economic fundamentals in pursuit of a political objective. The corn based ethanol program will be a case study for government incompetence for years to come. Government officials are not unaware of the flawed science they are using to support policy. Study after study have confirmed the failure of ethanol to save energy and the impact ethanol has had on raising food cost for all consumers. This has not been a trade off, but has squarely caused a net harm judged purely on the economics. Government officials have reacted by cooking the books and revising downward the energy requirements for corn use in ethanol plants and raising the benefits of ethanol in gasoline. No one wants to admit support for a program that doesn't prove up so the easiest solution is to change the values used in the inputs and outputs until the program proves a benefit. The problem is there is no support among independent researchers. Congress has recognized the inability of the ethanol industry to move away from corn and develop cellulosic sources for feedstocks so they have reduced the percentage of cellulosic inputs required for the coming years. Alternative energy sources are needed and the list of possibilities is a long one but somewhere along the way there is a need for economic justification of the cost and benefits. Any industry must have sound fundamentals. The nation's ethanol plants have already gone through one reorganization. It time to stop and get it right before moving forward.

Livestock Marketing Solutions

Southeastern Wyoming & Regional Livestock Marketing Solutions

• Country Wide Internet Auction Markets

Cattle USA -/- Livestock Marketing Association -/- DV Auctions -/- Big Blue Sale Barn -/-
Country Cattle(Cattle USA) -/- Stampede(Superior Livestock) -/-

• Video Livestock Auctions

Superior Livestock -/- Northern Livestock -/- Western Video -/- Cattle USA

• Regional Livestock Markets

Torrington Livestock -/- Platte Valley (Gearing, NE) -/- Centennial Livestock (Ft. Collins, CO)
High Plains (Brush, CO) -/- Sterling Live (Sterling, CO) -/- Buffalo Livestock Auction(Buffalo, WY) -/- Riverton Cattle Auction -/- HUSS(Kearney, NE) -/- Kearney Livestock -/-

• Chicago Mercantile Exchange

Feeder Cattle -/- Live Cattle -/- Corn Futures

• Breed Specific Cattle Listings

Red Angus -/- Black Angus -/- Gelbvieh -/- Pharo -/- Simmental Association

• Web Site Listing

Cattle Range