The Industry Isn't Changing. It Has Changed!

If I had a nickel for every time I heard an industry speaker talk about the rapid rate of industry change, I'd be a wealthy man. Of course, the important thing about all of those speeches is they're spot on.

This industry is drastically different than just a few short years ago. In fact, it would probably be easier to make the case these warnings of dire change are, if anything, understated.

The inherent danger of such remarks, however, is they usually depict these changes as being off in the future, things for which a person has plenty of time to prepare. Perhaps the message shouldn't be that things are changing but that the industry has changed, and the window to catch up to those changes -- without suffering penalties -- is closing.

Sure, the beef market still sports a lot of facets indicative of a commodity product. But the reality is that, if you're still selling your cattle as an undifferentiated commodity today, you're doing it by choice not necessity. On any given day in the market, we still see price spreads as large as $20/cwt. within weights of cattle; that's without including differences in condition, pre-conditioning programs, etc., that can increase that price differential even more.

In a post-BSE world, there's no longer any discussion about whether there will be value in source-, age- and process-verified cattle. The premiums are there, the systems have been developed, and the early adaptors have already reaped the premiums.

Feed yards, packers and everyone up the chain from the cow-calf level have been building extensive databases. They not only know incredible value differences exist between cattle, but they're defining what those value differences are, and who is providing cattle above and below the norm.

The ramifications are huge for every business segment. The days of buying cow fresheners, or people raising their own bull because he looked good, are well past. The days of buying a pen of cattle you know doesn't have any carcass merit but you figure can sell within $2/cwt. of the best pen of fed steers are past.

I worry that the industry has wasted these last years of great profits; that we didn't prepare for the changes like we should have. We're all geniuses in good market times, but we really haven't felt the impact of all these changes, and we won't until supplies get to the point where the market can really begin to differentiate. That day is rapidly approaching.