Washington Beef is looking for producer partners in order to expand its value-added, branded lines.
It's very simple. Gayland Pedhirney needs cattle for his packing plant.
The problem the president and chief operating officer of Washington Beef, Inc., Toppenish, WA, faces is that he must go head to head every day with packing giant IBP for those cattle. Pedhirney's plant processes 1,100 head of fed cattle/day under a one-shift schedule. IBP operates a much larger beef plant just 75 miles away in Pasco.
By being smaller, however, Pedhirney thinks his company can offer some creative marketing options for cattle producers and feeders. And, he's looking to entice Pacific Northwest cattle folk to take a look at what the branded product firm with expansion plans has to offer.
“We want to partner with people who respect our abilities and are willing to throw in with us for the long-run,” he says. “We want to talk to people who can deliver reasonable numbers of cattle on an on-going basis.”
Washington Beef has retained ownership arrangements with a handful of feeders and ranchers. These are one-third partnerships where each party shares in the end result.
That's the kind of concept Pedhirney hopes to expand. His overall strategy is to develop relationships with people based on trust that goes beyond somebody jumping ship the first time they see a higher price.
“At the end of the day, if the cattle are short, and the competition needs cattle, they're going pay what they need to pay, irrespective of what the market is,” adds Pedhirney. “And, there are people out there who will want to go after the highest price on a day-to-day basis.”
And that's fine, as long as they know there are risks associated with chasing prices, he adds.
“It's a risk and rewards game,” concludes Pedhirney. “We want to find people who recognize that their longer-term interest is in being partners with us. We'll do our best to make sure we meet their needs.”
Grid Buying Dominates
Most of Washington Beef's cattle are valued on a quality grid system.
“We use a base price — starting with a national average weekly live price, and we work through some type of yield factor — with a schedule of premiums for grade and cutability.”
The grids are confidential between Washington Beef and their suppliers — and the terms vary. The grids reflect Washington Beef's need for a consistent supply of quality cattle, according to Pedhirney. Carcasses falling outside the window of 550-950 lbs. are discounted, as are yield grade (YG) 4 and 5 cattle.
“Our market area needs Choice grade beef — both in the Pacific Northwest retail markets and the overseas markets. Those are our primary target markets.”
But buying cattle through grids is only part of the story. Seasonal supplies are one of the biggest problems for Washington Beef.
“We've had to get more active in the feedlot side of the business — not because we want to feed cattle, but to ensure that we have enough cattle to feed the plant,” explains Pedhirney.
Realistically, 700-800 miles in any direction is the reach for Washington Beef. The issue becomes whether or not Washington Beef can be competitive with packers that are closer to the fringe of its areas.
And Pedhirney would like to get away from relying on Canadian cattle imports — an issue he knows is emotional for many cattle producers and feeders. “We'd love to be in a position where we would not have to import cattle.”
Keith Taylor, manager of Beus Feeders, Pasco, WA, ships about 4,000 head of cattle each year to Toppenish.
“Their grids are working for us,” says Taylor. “We feel like we're making better money, and it's not that hard to feed cattle that fall into that Choice, YG1 and 2 range.”
Taylor and feedlot owner Don Beus enjoy having the competition for fed cattle that Washington Beef offers producers in the region.
“And, we're always looking for the kind of cattle that we can feed to fit their needs,” adds Taylor. “So I guess everybody benefits when we can get a little better price.”
A “Direct” Connection
Finding fed cattle with English breeding for Washington Beef's branded programs is one of the jobs of Bill Bennett, Connell, WA, and Arden Gremmert, Carnation, WA. They are partners in Direct Cattle Marketing, LLC (DCM).
DCM has moved about 1,000 head of cattle each week through the Pacific Northwest's food pipeline for the past three years. Gremmert uses his food marketing experience to help retailers move Washington Beef products through Pacific Northwest supermarkets.
Bennett grew up around purebred Hereford cattle, so he's familiar about cattle marketing. Now, however, he's getting a new education on marketing beef.
“Let me tell you, marketing beef is a whole other ballgame,” says Bennett. But, he's a firm believer that branded beef is the way to go. “These branded programs are gaining a lot of steam,” he says. And, Gremmert agrees.
“Whatever the product, brand identity gives consumers confidence as well as a sense of loyalty,” Gremmert says. “For too long we've been trying to push beef through the system.”
Branded programs allow the consumer to pull what they want from the marketplace. “Not only will they keep coming back. They'll pay a little more for the security a branded product provides,” he says.
Bennett likes the Washington Beef connection with producers.
“The feeders do a better job because they can get a little more money for sorting off their better cattle,” he says. “This gives Pedhirney a better product to work with and he's more willing to get information back to the feeders so they can keep producing a superior animal.”
A Value-Added Array
Today, Washington Beef processes under the Washington Beef and St. Helen's brands and several other private brands. The Washington Beef brand has great consumer appeal in western Washington, says Alison Nolz, Washington Beef's director of quality assurance.
The firm is putting together an impressive array of value-added, non-commodity products. The list numbers in the hundreds.
“From portion-controlled steaks to specially marinated roasts, our product line is only limited by customer desires and the technology available to the industry,” she says. “We'll work with our end-use customers to develop whatever kind of product they want for their market.”
“In addition, we're moving ahead with our branded beef programs,” adds Pedhirney. “Those programs will require primarily British-type cattle.”
The company also is looking to expand its efforts in the food service sector.
“If you look at the number of small packers that are in business today, it's very difficult to compete in the commodity beef arena,” notes Pedhirney. “The only way we can stay in the game is to expand our product lines and create additional value that our customers will ultimately recognize and pay us for.”
As Washington Beef moves forward, one strategy is to find a substantial retail partner.
“That's easier to do with the smaller independent retailers that want to separate themselves from the pack, either through branding or establishing a quality image,” says Pedhirney. “We've had some successes in that area, although they are not high-volume accounts.”
For more information on Washington Beef call 509/865-2121 or e-mail [email protected].
Gayland Pedhirney has been involved in the meat business for nearly 30 years. His career began with Safeway's beef fabrication division as a cost accountant. He worked for Safeway in Canada and California until Safeway elected to get out of the beef fabrication business in the mid-1980s. He's spent 12 of the past 14 years with Washington Beef.
Washington Beef is the result of a consolidation of several packers that operated in the area in the 1960s and 70s. Washington Beef was owned by a cooperative of cattle feeders from 1980-1988, when it was sold to Japanese investors who have owned it since.
The slaughter plant is a 1960s vintage facility that's undergone extensive remodeling incorporating the latest technology available. The fabrication, value-added products division, hide processing plant and warehouses were built in 1995.
Japan is the largest export market. Korea, Hong Kong, Singapore, Taiwan and Canada are major export markets. Some Washington Beef is exported to Eastern Europe and the company has been finding a little business in China, a market that is slowly beginning to grow.