You don't hear much about alliances these days. Their novelty has worn off; their warts exposed. There's been no revolution, no mass exodus to alliances per se, though the number of cattle flowing through them is growing.
But, the fact they've become a standard part of how cattle business is conducted — one of the reasons they're talked about less these days — affirms their value.
If there's a lesson to be learned from alliance evolution thus far, it simply may be that changing the industry — carcass value and retrieving that value in this case — is as hard as it is slow.
At least that's the case when you compare the details in aggregate and individually of the alliances listed in this year's BEEF Alliance Yellow Pages (see insert in this issue on page A1) to those in the 2001 edition.
Up front, the review and interpretation by this author are completely unscientific, sure to curl the toes of even amateur statisticians. But the overall trends and lessons make sense relative to what seems to be happening in the industry.
Still lots of variation
For instance, by and large, most of the alliances listed tend to be as mainstream as apple pie. Of those sharing par value points on their pricing grids, 86% list Choice (up from 60% in 2001); and only about 25% continue to demand better than Yield Grade 3 cut-ability for par.
Likewise, the range in allowable carcass weights across the alliances (500-1,000 lbs.) remains virtually unchanged. Of course, this 500-lb. window continues to be much more restrictive than the range seen on the commodity chain day in and out, which should make aficionados of product consistency quiver.
That said, 20% of the alliances sharing carcass weight information do limit the range to 200 lbs. or less, while 44% allow a range of 400 lbs. or more.
Perhaps unsurprisingly, while the range in premiums reported has grown substantially ($5-$109/head this year, compared to $10-$60/head in 2001), just a few more than in 2001 report average premiums of more than $20/head. But then, the direct cost (fee) of participation has remained even more static at $0-$12/head over time.
However, fewer alliances this year report being cost-free (32%) than five years ago (44%). Whether that reflects initiating a charge or failing to report it in the past isn't known.
Incidentally, when you compare just the 21 alliances reporting cattle numbers in this year's listing and also in 2001, you find the same basic trends.
Really, the greatest change revealed in the comparison of annual surveys is the substantial increase in the number of alliances requiring specific management practices for participation, in tandem with carcass specifications. In 2001, 33% of those responding to the question had no requirements for source verification, weaning, preconditioning or natural beef management. This year, only 8% are as carefree.
The most prevalent management practice required is source verification, followed by preconditioning, then weaning. Only one more alliance in this year's edition has a natural beef management requirement than in 2001. What's more, this year, three alliances cite process verification as a requirement. In 2001, I'm not sure that term had even been coined.
In fact, while some new consumer-based alliances always seem to crop up to replace those exiting the business, it's the calf-based alliances — identifying, sorting and getting cattle ready to enter value-added programs within alliances or without — that have been growing the fastest the past few years.
Overall, while the total number of alliances listed remains close — 36 consumer-based alliances in 2001 vs. 33 this year — the number flowing through these alliances is 28% more than five years ago; 2.5 million head this year vs. 1.99 million head in 2001.
The figure may surprise some who sense alliance participation has waned, especially in light of historically high fed cattle prices the past couple of years that have, in some cases, overwhelmed the incentives to accept the added risk of grid pricing and lengthier ownership. However, some alliances have become such a standard practice that the cattle flow through them, though they're not necessarily thought of as alliances anymore.
On the flip side, even with the modest increase in the volume of alliance cattle, alliances still represent the mass minority of fed cattle being aggregated, managed and marketed. However, it's likely these alliance cattle influence far more numbers than actually flow through them.
Remember the industry war on fat, its battle against injection site blemishes, or the industry's thirst for pricing mechanisms that valued something other than average? Arguably, the alliance structure continues to foster the environment and quantifiable measurements to demonstrate industry challenges, along with spurring collective opportunities to address them.
And, isn't more open communication between industry segments what alliances were really all about to start with?