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Tough As Flint

For U.S. beef producers, January 2004 arrived with all the tranquility of an adrenaline-crazed bull bucking and whirling to shake a rider from his back. Late on the afternoon of Dec. 23, 2003, USDA announced a single case of BSE had been confirmed in a Washington State dairy cow. By the first few days of January, 95% of a $3.86-billion U.S. beef export market had been sucked away. The new trading

For U.S. beef producers, January 2004 arrived with all the tranquility of an adrenaline-crazed bull bucking and whirling to shake a rider from his back.

  • Late on the afternoon of Dec. 23, 2003, USDA announced a single case of BSE had been confirmed in a Washington State dairy cow. By the first few days of January, 95% of a $3.86-billion U.S. beef export market had been sucked away.

    The new trading year began with four days of limit-down in the futures market, even with the limit extended to $5/day. Futures prices dropped 20%. So did cash — from $95 to $75 — or more than $200/head.

  • Meanwhile, the industry waited anxiously to see how consumers would react to the news. The U.S. beef industry was riding a surge of optimism after having halted in 1998 a 20-year demand slide. Since then, U.S. beef demand had increased by a whopping 15.4% — 5% in 2003 alone.

    Would U.S. consumers flee beef like British and Japanese consumers had following outbreaks in those countries? Or would they trust the industry and USDA programs in place and rally around U.S. producers like Canada had for its domestic industry just six months before?

  • Adding to the turmoil was an internal battle raging within the industry between two competing visions for the future. One side championed trade expansion and less government regulation. The other espoused more government intervention and trade protectionism.

  • Clouding the picture further was the limbo state of the industry's self-help program, the national beef checkoff. The fate of the 15-year-old, promotion and research program that had never recorded less than a 68% approval rating from participants is now in the hands of the U.S. Supreme Court, which will rule on its constitutionality next month.

It was into that maelstrom that Flint Hills rancher Jan Lyons, of Manhattan, KS, stepped as 2004 president of the National Cattlemen's Beef Association (NCBA) late last January.

“It's a team effort. There's no question,” Lyons told BEEF one month before USDA announced the discovery of BSE in the U.S. “What we accomplish during the coming year will be as an organization not just one person. But I do feel the pressure to do and say the right thing on behalf of producers because I want to communicate to the public appropriately and openly.”

Lyons passed the test. By any objective measure, her performance in a year that arguably could be called the toughest ever for the U.S. beef industry has been impressive. And it is for that seasoned and resolute performance, as well as a lifetime of volunteer service to state and national cattle organizations, that Jan Lyons is named BEEF magazine's 2004 Trailblazer Award honoree.

Simply Extraordinary

“Her leadership has been extraordinary in extraordinary times,” says NCBA CEO Terry Stokes. “She clearly stood on principle and sound science as all these issues were addressed on behalf of the beef industry.

“She kept producers top of mind and made sure any decisions were consistent with the policy and objectives established and outlined by membership regarding consumer confidence, fair trade and protecting the health of the U.S. beef industry. And, she continues to aggressively work to reopen our beef export markets while making sure the U.S. cattle industry is protected,” Stokes says.

“Jan has effectively contributed because of her depth of understanding of the industry, her experience and her inherent leadership ability,” he adds. “She established a professional relationship with USDA Secretary Ann Veneman and clearly was able to communicate with her effectively on these critical issues.”

Stokes' sentiments are echoed by Veneman, who tells BEEF, “Jan Lyons has been an outstanding leader of NCBA. She effectively communicated with the public during the BSE incident to help maintain confidence in the safety of beef. I have truly enjoyed our close working relationship and I am proud to call her a friend.”

Best and Worst of times

For her part, Lyons describes the first 10 months of her administration as: “It was the best of times and it was the worst of times.” It's a characterization that seems apropos. Though scattered with landmines, 2004 has thus far been the industry's most magnificent in terms of profitability.

Before the Washington BSE case erupted, a fortuitous combination of low supplies and surging demand promised big things for 2004. Cattle numbers were at their cycle low, while on the demand side, beef was riding the crest of the high-protein diet craze.

In addition, a checkoff-funded push to develop new beef products that began in 1996 has brought more than 2,200 new beef products to market. These are products that better fit modern demands for convenience, taste and consistency.

And, third, the closure of the U.S. border to Canadian beef and cattle following the May 2003 announcement of a BSE-infected cow in Manitoba had further shrunk supplies. The border has since opened to boneless beef products but live animals are still not allowed from Canada.

“The BSE scare last winter could have devastated our U.S. industry, but it didn't,” Lyons says. “And it didn't because we had the research and the information to back our claims that U.S. beef is safe.”

Consumers react positively

For the first quarter of 2004 — the three-month period immediately after USDA's BSE announcement — demand figures indicated more than a 9% increase over the same period in 2003. Since then, cattle prices have soared to heights no one felt possible.

“Consumer confidence in U.S. beef is at 91% right now,” Lyons says. “That's higher than before the BSE announcement.” She credits the progress to the industry-coordinated effort on research and information made possible with checkoff dollars.

“Initially, the challenge was addressing the BSE event itself but throughout the year we've continued to address the aftermath, which has been more difficult,” Lyons says.

She adds the effort includes working to resist the emotion and the attempts to over-regulate the industry, as well as reassuring consumers about the safety of U.S. beef.

“It was critical to maintain consumer confidence at a high level,” she says. “Consumer confidence is directly related to improving the bottom line of producers. And that's what NCBA is all about.”

She says consumer confidence has been maintained and grown because “consumers not only trust U.S. producers but the U.S. government.”

“We must keep USDA in a strong position in consumer minds. NCBA has not agreed with everything USDA has done over the past year but, rather than put that in a press release, we communicate our concerns directly to USDA. We just want to make sure the situation is corrected,” she says. “Companies and organizations that continually challenge USDA openly about its actions risk undermining consumer confidence.”

Reopening markets

The other leg of the table is reopening U.S. export markets for beef. Before the BSE incident, Cattle-Fax estimates that exports accounted for $15/cwt. on the price of a fed steer. That's a factor that winds its way down the chain to the cow-calf producer, Lyons points out.

“This trade area is a distinction between NCBA and other groups. We feel it's important to grow this industry, and that opportunity lies in moving beef products to the 96% of consumers who live outside U.S. borders,” she says. “We've worked hard to protect cow-calf producers' interests in any of these negotiations. But, we believe we have to establish trade outside U.S. borders for the opportunities that will keep American families on the farm and ranch.”

Thus far, about a third of the U.S. export markets lost have been regained, about $1.2 billion of the $3.86 billion in 2003 export trade. Progress continues slower than she expected in reopening the Asian markets, Lyons says, something she considers as one of her “biggest disappointments.”

“Going in I felt that if the solution was based on science and risk, that our markets would be opened fairly quickly. While we haven't been able to accomplish that, I feel we will very soon,” she says.

Another disappointment, Lyons says, is the continuing divisiveness within the industry.

“It's beyond just sitting down at the same table to dialog. For us at NCBA, our vision, philosophy and policy are developed by our membership,” Lyons says. “As leadership and staff we are empowered to move that vision, philosophy and policy forward. We don't have the option to change what our membership has decided. Some people have found that hard to understand.”

Resolving the divisiveness, she says, lies in producers joining together to arrive at a common vision.

“NCBA wants to allow an open and inclusive process where everyone can come forward and participate. Those opportunities exist today for folks who don't agree with current NCBA policy,” she says.

She says it's imperative the unity issue be resolved. The effects of the industry division, she adds, are being felt.

“Our industry voice has become confused at the national level, particularly when you approach legislators in Washington,” she says. “Some legislators have flat out told us that they have heard two sides and don't know which side to come down on. That message leads to ineffective policy, or no policy at all, which can be just as harmful.”

Lyons points out the NCBA vision as this:

“Our members believe in minimizing the government's involvement in our business. We believe individuals should have freedom of choice in managing the land and resources they deal with every day, as well as freedom of choice on how to market their product,” she says.