Be Afraid!

[sjcattleco]

I would worry more about HSUS and the tree hugin bleeding heart hippies than I would a big corporate  out fit trying to take over the world one cow at a time!

 

[JoeBnTN]

OH NO - He’s back!  Sorry but for those of you who know me I thought I better offer the warning.  This is a topic that has been a concern of mine for many years and I have to weigh in – so here goes (just remember you were warned!).  I promise to try not to wear out my welcome.

The idea of corporate controlled beef cattle production is not new – in fact it’s been discussed for nearly 20 years – it’s just reemerged over the past few years.  The reasoning behind the push is, and always has been, based on the HUGE disconnect that exists between the producer of beef and the consumer.  Consumers of beef around the world have asked for a more consistent product for many years, but their requests have often fallen on deaf ears.  Beef cattle producers were just too independent, too stubborn or too committed to their own beliefs to listen to the consumer who ultimately determined the value of their product.  

Over the past 25 years there have been at least 3 major US studies, including the USDA’s Beef Quality Audit, that have reached almost identical conclusions – the American consumer wants beef that they can purchase that is portion sized (about a 10-12 sq in rib-eye at ¾” thick), moderately marbled, free of excess fat ( a YG 2, Low Choice) and flavorful.  With the exception of portion size decreasing slightly over the past 3-5 years, as people became more health conscious, this hasn’t varied in more than 25 years.  How have beef producers responded – with breeding decisions based on maximizing (or minimizing) frame score, selection pressure being paced on maximums instead of optimums, and little focus on the ultimate end product – the beef on the table.  

Why has this occurred - because each component of the industry has failed to recognize their role in the “total picture.”  Elite, purebred seedstock producers are often removed from multipliers (those purebred producers who sell the majority of commercial bulls), they in turn are often out of touch with propagators (cow-calf producers), then you have stockers, feeders and feedlot owners, packers, wholesale purveyors, retailers and finally consumers.  Each basically independent of and disconnected from the others, leaving each link in the beef chain to develop its own standards, production practices and priorities.  

At least that’s the way it’s been for nearly 200 years, up until recently.  Now we see integration starting to occur.  Today it’s far more common to see the feedlot, packer and purveyor to be one in the same or at least part of the same corporate family.  IBP, Monfort, Cargill, etc. are all testament that corporate integration is taking place in the beef cattle industry.  For the actual cattle producers, many continue to feel they are safe- it’s too much work for corporate America to want to take over the actual breeding and production of beef.  I have to strongly disagree.  

Why?  Because it’s already taking place – very subtly, but corporate America is coming to a herd near you.  What’s the hottest topic in beef cattle circles today – genetic testing and the ability to identify not only damaging traits, like TH or PHA, but also value added traits like marbling, tenderness, etc.  Not far behind will be DNA mapping for feed efficiency, mature size, and so on. Who’s paying for all these test and developing the laboratories that provide this information – many of the same companies that own the feedlots, packers, feed mills, etc that represent the rest of the industry.  It is not out of the realm of possibility to think that in the next 10-15 years, feeders and packers will be able to identify and pay a premium for cattle that have been genetically designed to meet the consumers need.  While they may not actually own the cows and claves, they could very well own and control the sire genetics used in our herds.  Anyone not using the “correct” genetic mix could find marketing very difficulty.  If that’s not corporate integration I don’t know what is.  

For those who say it’s not going to happen, go to a library and look back at ag magazines from the 70’s and early 80’s.  The exact same arguments cited today were used by swine producers and poultry farmers 20-30 years ago and look where they are now.

Does it have to happen – NO.  But if we as producers don’t begin to better understand the needs and demands of our true end customer (the housewife in the grocery store or the diner in the restaurant) rather than just knowing the needs of those who buy cattle directly from us, somebody will untimely make those decisions for us.

 

[ROAD WARRIOR]

Everytime this is discussed the keynote statement made is that they want to produce a consistant product for the consumer. The problem I see with this is that while the product produced in the swine and poultry business is consistant , it is also consistantly bad. For those of us who have actually grown our own food - raised and butcher our own pigs, chickens etc there is absolutely no comparison between our home raised meat and the garbage that is being sold through the retail out lets. The simple fact is that the average consumer doesn't know the difference anymore and are more concerned with the price per pound than the quality of the product. The whole "giving the consumer what they demand" argument is BS in my oppinion. They are educated to think they are getting what they want but in reality are clueless. RW

 

[SouthWest]

I agree with alot of you on what is being said.  But the article is about what the packer is doing.  Yes its happening.  In order to participate in different value added programs, there is a list of approved ranches that I can buy from.  I cannot buy from anyone else.  So are they controlling on what cattle, type, color, etc., yes they are.  I believe the train has left the station.  It got tired waiting for everyone to get on board.  Now that it has left, we cannot stop it, we might be able to change its destination a bit.  This is thier perfect storm.  It got us on a down market.  Cattle producers have too little money left to fund a change.  We have to work with them in order to keep cattle on feed.

 

[justa cowman]

  It seems to me that i would be more afraid of proposition 2 ,Cass Sunstein ,and HSUS than verticle alignment

 

[Telos]

Being a layman and not involved in the production of beef, I try to be logical. Consistancy is important but it is not realistic to think we can even get close to producing cattle that fall within a spectrum of desirable carcass traits through  identication of specific marker genes.
History tells us of the train wrecks that come with limited trait selection. Plus, you will never get producers on the same "genetic page" in order to produce this consistancy the beef industry and consumer is searching for.

Focusing on the cow/calf producer for this consistancy IMO is not where we need to be looking but feel we need to be doing more research on new fabrication techniques after slaughter. Producers needs to produce cattle that they can afford to produce, period. The packers have become the boss in this industry and it's time producers somehow get the ball back in their court. I question the impact of the Beef Check Off Program and think they could be doing a better job with our dollars. How much of it is going into research and development of new techniques and inventive packaging.

 

[knabe]

i question the notion that packers are looking for a consistent product.  the pricing structure fools everyone into thinking they want one product.  nothing could be further from the truth.

what is clear is that the current cattle herd (dairy included) is capable of supplying what the customer is purchasing. 

50% goes to fast food restaurants, 25% goes to restaurants and high end markets, 25% goes to grocery stores. 

current thinking revolves around a larger share of a shrinking market. 

telos hit it on the head.  different packaging.

the mind set is BBQ in the US, which is really a lack of ingenuity.

there are so many creative things to do with low cost cuts.

rolled meat with fixings in the middle is extremely popular in europe but no one over here does it.

you can't find cabeza anywhere.  hispanic populations are looking to branch out of their tired obesity driven cooking styles.

the opportunity is there.  take it, don't wait for it to be given to you.

 

[JoeBnTN]

Let’s see if I can understand RW’s and knabe’s arguments against uniformity and consistency.  Consumers don’t know what quality is, price per pound is the major driver and that packers really don’t want a consistent product – it’s a pricing gimmick.    If that’s the case then I wasted several years working with a variety of people across the industry in trying to figure out how to take dissimilar cattle and manage them to a common end point and understand what the barriers were to uniformity.  Let me see if I can address each of these points separately.

While I agree with RW that most consumers don’t know what truly good beef is or tastes like, very few would argue that part of that problem is that many don’t know how to cook and prepare beef properly.  Why?  Part of it is a lack of general culinary skills, but more importantly is the fact that, with current beef purchased over the counter, it’s almost impossible to treat two pieces of meat the same way and get the same result.  What does an 10 ounce rib-eye look like?  Is it always ¾ of an inch thick and 9 sq inches?  No it may be a small REA that’s very thick or a big REA that’s less than ½” thick.  The only constant is that it’s 10 ounces.  With that much variability the cooking time, preparation, etc. are all across the board, making it very difficult for the consumer to know what they are supposed to do to get a truly great piece of meat. 

And if it’s a problem for the household consumer, it’s a ten-fold problem for the restaurateur.  Go ask any top restaurant what they want and they will tell you they want every steak to look and taste exactly the same.  Why?  They want customers to come back and the only way they do that is to provide them the same quality experience every time. A few years ago I worked with a producer who had an arrangement with a private, high-end steak house to provide rib-eyes and sirloins for their high end sales.  His deal fell apart because he couldn’t keep his steaks at a constant size on a portion basis.  Since the restaurant sold beef on a weight basis, he couldn’t provide 12 ounce rib-eyes that were similar in area and thickness which meant that the chefs had to adjust cooking times and methods for each piece of meat.  Not very efficient and very difficulty to guarantee that the customer got the same thing every time.  That’s the biggest reason the industry wants uniformity and consistency.

As to price controls to assure maximum value across the system, it is widely acknowledged that the most cost efficient method of producing any product is mass repetition.  Standardization and uniformity provide the packer with the greatest opportunity to convert a live animal to a “box of beef”.  If they have to treat each carcass as a unique item, custom cut based on its size and muscling, then the production line slows and costs go up.  Go to any major packer, and I’ve been in more than 30 facilities, and the key goals are speed and efficiency.  Anything that slows that down is eliminated.  And since packaging was mentioned – go to any store and what do you find?  Beef in 2-3 different sized trays – each weighing approximately the same, with a consistent number of the same cut.  The odd sized cuts are usually sold as singles, and I find them in the discounted section.  For my family, I want 4 rib-eyes, all about the same weight, shape and size.  Isn’t that the way the consumer shops?  Add more tray sizes and packing options and you increase the shelf space required and the storage space for the trays, etc.  Doing this will only increase the costs of beef as the economies of scale are reduced.

I’m really not wanting to replicate my old classroom lectures and philosophically we should all be concerned –not about the need for greater consistency, but for who is going to determine how we create a more consistent product.  As producers we can impact this, but if we choose not to, don’t be surprised to see many of our cattle operations suddenly become corporate production units. 

 

[knabe]

Let’s see if I can understand RW’s and knabe’s arguments against uniformity and consistency.  Consumers don’t know what quality is, price per pound is the major driver and that packers really don’t want a consistent product – it’s a pricing gimmick.    If that’s the case then I wasted several years working with a variety of people across the industry in trying to figure out how to take dissimilar cattle and manage them to a common end point and understand what the barriers were to uniformity.  Let me see if I can address each of these points separately. i said there is at least 4 markets, all with a different quality.

While I agree with RW that most consumers don’t know what truly good beef is or tastes like you just contradicted yourself, very few would argue that part of that problem is that many don’t know how to cook and prepare beef properly.  Why?  Part of it is a lack of general culinary skills, but more importantly is the fact that, with current beef purchased over the counter, it’s almost impossible to treat two pieces of meat the same way and get the same result not it's not, it's pretty easy.  What does an 10 ounce rib-eye look like?  Is it always ¾ of an inch thick and 9 sq inches?  No it may be a small REA that’s very thick or a big REA that’s less than ½” thick.  The only constant is that it’s 10 ounces.   With that much variability the cooking time, preparation, etc. are all across the board, making it very difficult for the consumer to know what they are supposed to do to get a truly great piece of meat.  some people don't want great taste, they want it well done

And if it’s a problem for the household consumer, it’s a ten-fold problem for the restaurateur, wrong again. it's easy for them to get what they want, right now, there is too much of it which is why it's basically being given away at costco.  Go ask any top restaurant what they want and they will tell you they want every steak to look and taste exactly the same.  Why?  They want customers to come back and the only way they do that is to provide them the same quality experience every time. A few years ago I worked with a producer who had an arrangement with a private, high-end steak house to provide rib-eyes and sirloins for their high end sales.   His deal fell apart because he couldn’t keep his steaks at a constant size on a portion basis, that had nothing to do with the beef, but the human.  Since the restaurant sold beef on a weight basis, he couldn’t provide 12 ounce rib-eyes that were similar in area and thickness which meant that the chefs had to adjust cooking times and methods for each piece of meat then he deserved to lose the contract, as a distributor, from my experiences, it's not that difficult.  Not very efficient and very difficulty to guarantee that the customer got the same thing every time.  That’s the biggest reason the industry wants uniformity and consistency.

As to price controls to assure maximum value across the system, it is widely acknowledged that the most cost efficient method of producing any product is mass repetition.  Standardization and uniformity provide the packer with the greatest opportunity to convert a live animal to a “box of beef”.  If they have to treat each carcass as a unique item, custom cut based on its size and muscling, then the production line slows and costs go up.  Go to any major packer, and I’ve been in more than 30 facilities, and the key goals are speed and efficiency.  Anything that slows that down is eliminated.  And since packaging was mentioned – go to any store and what do you find?  Beef in 2-3 different sized trays – each weighing approximately the same, with a consistent number of the same cut.  The odd sized cuts are usually sold as singles, and I find them in the discounted section.  For my family, I want 4 rib-eyes, all about the same weight, shape and size.  Isn’t that the way the consumer shops NO, some people want big steaks, others want small ones.  if you cook with the cheaper cuts, people can cut off what they want?  Add more tray sizes and packing options and you increase the shelf space required and the storage space for the trays, etc.  Doing this will only increase the costs of beef as the economies of scale are reduced.

I’m really not wanting to replicate my old classroom lectures and philosophically we should all be concerned –not about the need for greater consistency, but for who is going to determine how we create a more consistent product.  As producers we can impact this, but if we choose not to, don’t be surprised to see many of our cattle operations suddenly become corporate production units. 


you did a nice summary, but tastes are changing.  i can't really see the difficulty in killing cattle at the same size and adjusting feed a little bit to compensate.  looking at snouts should tell you a lot.

 

[Telos]

The consumer must have faith, when they go to the meat counter, that their product is going to be as good as it was the week before. Neither poultry or pork have this problem. There is too much variability in beef and lamb and the consumer has become skeptical. All these specified brands are becoming too overbearing and confusing for most shoppers. Stores such as Whole Foods are pushing this natural,organic, grass fed gimmicky stuff and it is really hurting the industry because it is not very palatable.

Tyson and Hormel have the right idea with their prepackaged products and they are tasty, easy to prepare and always consistant. These are the Corporations that know how to market their product and deserve a good percentage of the market. I think we will start seeing the smaller boutique/bistro style operators with more gourmet type ready to heat products in the future. I really like the Beef in Bourbon Sauce from Tyson and eat it once a week. Beats spending several hours in the kitchen.

 

[knabe]

Stores such as Whole Foods are pushing this natural,organic, grass fed gimmicky stuff and it is really hurting the industry because it is not very palatable.

amen.  even in the restaurant, it's not very palatable and people are afraid to say so.  so they just say so with their wallet.

 

[Diamond]

never say never...in my area there so few farms left its pathetic. Even the horse farms are being developed and around here board averages $500 a month. When I was a kid  we had two local sale barns that it was standing room only, by the time I was 8 one had shut its doors. Now I am 21, the remaining sale has 2 beef buyers that set the price, and its not pretty. What was booming cattle business in 15 years time, died, and houses where popped up over night. The worse part is, we where to occupied hating each other based on prejudice, aka I hate you your angus, well I hate shorthorn ect. , that we did not help each other, did not save each other, so we died. Think this cant happen, to many farms no one will develop, think again. The population keeps on doubling, and your meat will never be worth what a home is. If farmers don’t figure something out we are done, how much more conforming to corporations can we do? Between peta, who tells the general public we are monsters and the companies that keep us in a strangle hold we have lost to much ground. Do you think they care where the cattle are raised, do you think they care about you, your family, your lifestyle? Look at what has happened in the past 100 years, in time this country will be nothing but wall to wall concrete and cattle will be raised in 3rd world country’s, pumped full of chemical that promotes a product on nothing. If farmers don’t do something now there is no future, we can rally around to walk a cow around a ring, you think we could gather to have a voice. Some of you will disagree with me, swear it will never happen, some of you may agree, but all of you will wait for someone else to do something about it.

 

[simtal]

Stores such as Whole Foods are pushing this natural,organic, grass fed gimmicky stuff and it is really hurting the industry because it is not very palatable.

amen.  even in the restaurant, it's not very palatable and people are afraid to say so.  so they just say so with their wallet.

Hit the nail on the head!

Agriculture in general is a tight margin business, doesn't matter if your raising grain or cattle.  Economies of scale are prevalent in any industry. 

 

[knabe]

i really don't get it.  stop complaining and be an ambassador.  you can't believe how many city dwellers out there are waiting to hear your story.  it's so easy to sell to these people it's ridiculous.  i just had some of my latest steer from total package.  not quite as dense tasting as the last one from draft pick, i had them on less grass this time, but just the fine texture of the grain, the juiciness, it blew away the store filet.  i spend time at work talking to people about agriculture changing their mind and believe it or not, they want to hear it.  be a salesmen, that is really the only advantage the grocery store has over you, people just refuse to sell.  by the way, stats on the steer, 1750 pounds with 1090 meat for a 62% hanging weight with back fat at 0.5 (measured at 12/13 rib by me).  really, i just can't believe how evenly fibered this steer is.