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Articles from 2004 In October

Daring To Fail Is Also A Key To Success

One of the keys to success in the cattle business is minimizing risk. Avoiding risk is a great management tactic but it can also have the unintended consequence of preventing you from trying innovative and new approaches to management or marketing.

Avoiding risk is often interpreted as avoiding doing anything you might do poorly. Zig Ziglar, motivational speaker extraordinaire, puts a different take to the tried and true statement that anything worth doing is worth doing well. He says, "Anything worth doing is worth doing poorly -- until you can learn to do it well."

The message is simple: if you determine a change in management, marketing, etc., can be advantageous to your operation, then attempt it. Of course, one needs to learn all they can about any new skill set that will be required, but be willing to accept that few things in life are simple the first time you do them.

Baseball slugger Barry Bond's first at-bat wasn't a homerun, but doing something less than perfect is usually the first step in eventually doing something well.

Managing risk must be a top priority. After all, no one can afford a 50% calf crop, for example. But, managing risk should not preclude anything but the status quo.

Attitude Remains A Key To Cattle Business Success

Yesterday, in talking to a market analyst renowned for his bearish outlook, he said to me, "Sometimes I wish I wasn't always right, but this industry is headed down the tubes."

I wasn't necessarily surprised to hear his take on the industry but, given the price levels the market has been experiencing for the last 18 months or so, his confidence in the industry's demise seems hard to justify.

The following quotes are two of my favorites: "Motivation triggers luck" -- Mike Wallace; and "Sometimes success is due less to ability than to zeal." -- Charles Buxton. Their message is succinct but powerful -- attitude matters.

We've all heard it 100 times -- the people you associate with have a profound effect on your mindset and achievement. Yet, the irony of many of life's greatest truths is that while we understand them in theory we usually have immense difficulty putting them into practice.

In my life, I've had coaches who expected greatness and those who anticipated failure, and they were usually proven right. I've had bosses who believed the organization was meant to accomplish something special, and those who hoped the status quo was sufficient. I've had friends who made me feel better about life, and friends who made me question my own abilities.

Most of us are fortunate to have spouses and family who are truly supportive, believe in our abilities and who provide the foundation for any success. Generally, the really toxic people we associate with tend to be those with whom we choose to spend time.

Associating with negative people effectively brings you down to their level, just as associating with positive people lifts you up. The reason it's so important to avoid negative people is that negativism is so powerful. Associating with negative people has a way of killing dreams. Minimize your contact with them.

More importantly, determine which people make a positive contribution to your life and you spend time with them. If you spend time with the people who not only accept you as you are but challenge you to be the best you can be, you'll find success comes much more easily.

Checkoff Launches New Beef Web Site For Retailers is a new checkoff-funded Web site designed to help retailers move more beef. A round-the-clock information resource for meat retailers, contains beef program materials and research that is quick to load and easy to navigate. The site houses marketing/merchandising programs, new product concepts, nutrition research, plus much more, for the busy retail professional.

Among the beef retail programs easily accessed on the site are:

  • Display tools for "Beef Made Easy," a program that simplifies stocking the meat case for retailers and makes shopping for beef easier for consumers. Beef cuts are organized by color-coded cooking methods with corresponding point-of-sale tools to help shoppers understand exactly how to prepare each cut.

  • "The Beef & Veal Ad Planner," a colorful, 80-page book that includes two CD-ROMs of both hi- and low-resolution graphics for marketing beef and veal.
  • "Beef Training Camp," a new comprehensive beef at retail training program designed to educate meat department associates on all facets of beef. Created for retailers of all sizes, the program provides retailers with a competitive edge at the meat case.
  • Overviews of the "Beef Value Cuts" program and "Hot Foods Deli" initiative. Recipes created and tested by the checkoff-funded Beef & Veal Culinary Center are also available for download.
  • Sales data and market research to help with case management strategies and maximize profitability at the meat case.

"This site provides retailers, large and small, with the opportunity to learn more about beef programs available to them," said Randy Irion, director, retail marketing, National Cattlemen's Beef Association.

High On High Moisture

When the late Ladd Hitch decided in the 1960s to put in concrete silo pits to hold 1 million-plus bu. each of ground, high-moisture corn (HMC) for his feedyards, many cattle feeders didn't see the value in it that he did.

But like other innovators and shakers in the cattle business, Hitch created a win-win situation. Hitch had virtually a yearlong supply of quality corn at a price fair to the company, its feeding customers and the farmers who supplied the grain.

“We still put up high-moisture corn in all three of our yards,” says Rod Schemm, manager of Henry C. Hitch Feedyard outside Guymon, OK, headquarters of Hitch Enterprises. “We can manage it well and it still works for us.”

There's less HMC used by commercial feedyards than a few years ago, especially in the southern High Plains. The availability of Midwest corn via unit trains helped ease tight corn supplies in an area that's always been a feed-grain deficit region.

Plus, more feedyards have sufficient steam-flaking mills capable of handling all the 15% moisture corn needed. Hitch feedyards, which have a 160,000-head capacity in Guymon and Hooker, OK, and near Garden City, KS, also have sufficient feedmill capacity. So why continue with HMC?

“We can acquire corn early, monitor harvesting and then bring in 70-80% of our total year's grain usage in 1-1½ months,” says Schemm, who has managed HMC more than 25 years. “We don't have to worry about fluctuating prices throughout the year. By buying corn when prices are seasonably low, we can hold our costs of gain down.”

The system also avoids the transport problems that can affect winter feed shipments. “We have sufficient corn to matter what type of weather or conditions we face,” Schemm says.

Some HMC pointers

Terry Mader, University of Nebraska Extension beef cattle specialist, says HMC can be processed and stored as whole shelled corn, ground shelled corn or ground ear corn. HMC stored in bunker silos should be harvested at moistures above 22%. “The preferred harvesting moisture is 24-26%,” Mader says.

“Corn stored by this method should be ground or rolled, and well packed into the silo. Since proper packing depends on the moisture and particle size, corn stored in a bunker silo can be coarsely ground, with as much as 40-50% whole corn passing through,” Mader adds.

Ground or coarse corn can also be stored in upright silos. The large bagging systems that have been primarily used for storing silage can also be used for HMC storage, he adds.

Hitch feedyards pack 1 million-plus bu. into concrete bunker pits every fall. They start receiving HMC about the first week of September, when moisture content is 24-32%. All the corn is ground on arrival.

“The HMC harvest period is intense because of the constant flow of corn into the feedyards,” Schemm says. “We use 4WD tractors to pack it, and it's packed about 20-ft. high. The corn ferments well and makes for a very good ration throughout the year.”

You can count AzTx Cattle, a 90,000-head yard in Garden City, as another HMC fan. Manager Larry Bilberry says AzTx depends more on steam-flaked corn than high moisture, but still feeds a ration of 15-20% HMC.

“With the evolution of steam flaking, we don't put up as much HMC,” he says. “But we still like the blend of HMC with flaked corn or milo. It's an excellent product fed in combination with flaked grain.”

Bilberry says Hitch contracts with about 30 area farmers to deliver HMC.

“It's an advantage for them, because they can harvest sooner and have better opportunities to market their corn,” he adds. “We offer four or five different ways for farmers to market their corn with us.”

The “10-10” program

One popular marketing method is a “10-10” program, in which growers sell corn over a 10-month period, with prices based on the average cash price of four regional grain elevators. There are also basis contracts in which growers can set their corn basis early, based on either December or March corn futures prices.

“Growers who marketed their corn early hit a home run this year,” Bilberry says, “because corn prices were in the $3.50 range in March [compared to below $2.50 in late summer].”

Schemm says Hitch experiences excellent cattle performance with the HMC ration. “We see very competitive gains and conversion rates,” he says. “The ration of HMC and steam-flaked corn works well.”

Mader notes that, in some cases, the feeding value of ground HMC tends to vary with the roughage level and storage method, when compared to dry corn.

“In a high-concentrate ration with 5-10% roughage, utilized as the sole source of grain, will on average produce daily gains 5% lower than dry rolled corn,” he says. “Feed efficiencies are similar for both corn types, however.”

Nebraska beef specialists say any lower gains experienced with HMC may be due to a more rapid ruminal digestion of the corn starch.

“This can cause more digestive disturbances, such as acute or subclinical acidosis,” Mader says. He adds that recent research from Nebraska's Haskell Lab shows the decreased performance observed with ground HMC occurred primarily during the step-up or adjustment period. That's the period in which cattle normally have the greatest chance of acidotic problems.

Adding dry corn to the ground HMC ration lowers acidosis incidence and improves steer gains and feed efficiencies, Mader says. When compared to steers fed only ground HMC or dry corn, Oklahoma and Nebraska studies show that mixtures of these corn types improve steer weight gains and feed efficiencies by 5-10%.

“Once cattle were on the high-concentrate ration (10% roughage or less), performance was similar regardless of corn type fed,” he says.

Managing HMC

Since the corn is fermented, packing ground corn and subsequent bunk management are critical, Schemm says. “Make sure bunks are read several times a day to prevent a buildup of stale ration that can hamper cattle gains,” he advises.

Bilberry agrees.“We read bunks two or three times a day,” he says. “But, if you get your corn put up tightly in a pit, HMC isn't any harder to manage than flaked corn. And, you also have a good supply of corn on hand, which is money in the bank.”

Mader says postponing harvest to decrease corn moisture doesn't increase yield or energy per acre, and often increases field losses.

Corn kernels starting to dent have about 50% moisture and are in a medium-soft stage, but are not mature. He says 12-16 days are usually needed to reduce kernel moisture from 50% to 40%. During this time, yield can increase ½-¾ bu./acre/day.

He says field losses at harvest can be significantly affected by corn moisture content. For instance, harvesting and handling become easier as moisture content falls, but ear droppage and downed stalks increase due to wind, stalk rot and insect damage. But, that loss can be minimized by proper machinery adjustment, initiating harvest when corn is at 32% moisture and finishing before corn falls below 25% moisture, he adds.

Larry Stalcup is a freelance writer based in Amarillo, TX.


DNA Parenting Technology Answers Genetic Questions

If you ever wonder about the variation associated with the actual outcome of progeny that share the same genetic profile, just take a look around the supper table at the next family gathering. Or, match calves to their specific sires.

“We expected differences in sires, but considering the high quality of the bulls and how well they had been selected, I was surprised by the range of difference,” says Dave Daley, a professor of animal science at the Califor-nia State University (CSU)-Chico.

Daley is referring to the completion this summer of a three-year project aimed to demonstrate how commercial producers could economically and effectively utilize DNA fingerprinting as a parentage verification tool to improve selection for economically relevant traits.

The study included electronically identifying and matching more than 4,000 steers and heifers (annually) resulting from multi-sire pastures to their sires, complete with feedlot and carcass information. Pick out only calves sired by five different bulls in one year, and there's an average difference of $89.32 between calves sired by the highest value bull and the lowest value bull. And that's just looking at carcass premiums and discounts.

Understand, too, that all the bulls in the study possessed what most commercial producers would consider top-drawer expected progeny differences (EPDs).

“We had bulls that far out-produced their EPDs and others that far underachieved. We had bulls sire as many as 60 calves/year, and some that sired none,” says Mark Lacey of Lacey Livestock, Paso Robles, CA. “DNA fingerprinting allows you to measure bull productivity, so it's a tool you can use to decrease stocking rate.”

The Lacey operation and the Wood Ranch of Coalinga, CA — both participants in the Harris Ranch Partnership for Quality — were the study's producer participants. Keep in mind, the bulls Lacey refers to were all semen checked after breeding season, so that wasn't the problem.

Multiply the average carcass premium or discount/progeny across the numbers sired by each bull described earlier (Table 1), and you're talking a $3,840 difference between the most and least valuable bulls. And that's just looking at carcass value resulting from a single year.

Knock out the two least productive bulls in this example, even if you replace them with one, and you're saving bull cost and upkeep. Plus, Lacey points out, fewer bulls meant fewer bull injuries, which increases the average productive life of each bull.

Lacey has already used the fingerprinting information to change bull management. Despite claims to the contrary, and even allowing for lower stocking rates and an expected extra year of service, he says, “These yearling bulls are not nearly as productive as our two-year-olds. Some were fairly productive, but some didn't even get a cow bred. Bulls that started out productive, remained that way; the opposite was also true.”

Lacey says conventional wisdom holds that it's best to manage bulls in contemporary groups for socialization purposes. The production differences revealed by DNA fingerprinting ran counter to that, so he started mixing yearlings with older peers. There were fewer yearling injuries and their average conception rate increased.

An industry-wide effect

Bull productivity is only the tip of the proverbial iceberg, though.

“On an individual bull basis, we saw tremendous differences in the health of cattle in the feedlot, from no morbidity to 60%,” Lacey says. “We saw a trend in sire lines for feedlot morbidity.”

Between that and sire trends in feedlot performance uncovered with DNA fingerprinting, he believes the feedlot industry probably could achieve more economic gain with this technology than any other segment.

Never mind the fact that the ability to match calves to sires via DNA fingerprinting allows producers to more easily conduct their own research trials. Whether it's comparing specific animal health products, implants, management practices, etc., on their own ranches, comparisons can be made that include sire-gene interaction.

“Genes don't always behave the same way in different environments,” Daley says. “I'm not sure the absolute performance numbers for a bull are as critical in selection as being able to rank the bulls for profitability.”

Drill deeper into the possibilities and both Lacey and Daley believe DNA fingerprinting could help develop genetic selection tools for economic traits that matter most at ranch level. What if you knew a sire's daughters reached puberty sooner or at a lighter weight than those of other sires? What if you knew daughters from one sire cost a certain percentage more to develop than those from another?

For instance, Lacey explains, “We really want to identify the females that will breed within the first 45-60 days of the breeding season at a lower body condition score.”

But even before such multi-trait, profit-based selection tools and value indexes are available, the returns from DNA fingerprinting can be significant.

“After the third year of the study we were able to look at the females. We were able to track producing females back to their sires and look at fertility performance,” Lacey says. “As a cow-calf producer, I think that's probably the biggest pay-off, to not only see progeny in the feedlot and packing plant, but to be able to incorporate their siblings back into the herd.”

Short of artificial insemination (AI), Lacey believes retaining replacements out of superior bulls is the most effective way to multiply desired genetics within a herd.

As with the AI they utilize on first-calf heifers, Lacey says he looks to be able to make similar improvements through DNA fingerprinting. With AI, he explains, they increased weaning weights in calves out of first-calf heifers 25-30 lbs., along with increasing uniformity and consistency.

Moreover, even when superior sires are identified, there's no guarantee commercial producers will still be able to find sons or grandsons to use in their pastures. Lacey tackled the challenge by contracting with seedstock suppliers to produce matings with the sires he wants, even when that means he also must buy the females produced in the process.

It isn't easy or free

The notion of differences in progeny performance between bulls, even ones that share a high degree of relationship isn't new, but the degree of difference revealed by the project will likely raise eyebrows. What is new is how commercial producers may be able to identify and capitalize on these differences.

“The dairy industry at least knows which bulls sired which calves. In the beef industry, we don't have a clue about which calves are sired by which bulls,” Daley says. The project demonstrates it's possible to collect and track a volume of data and manage cattle individually in sprawling Western ranching operations, he adds.

But that doesn't mean incorporating the management tool at ranch level, and at the speed of commerce, is easy.

“Try running a computer in Bridgeport, CA, when it's snowing and you've got 500 head to preg-check and collect DNA samples on in five hours,” Daley says. “The first concern we always had to address was not slowing down processing speeds.”

For that matter, gathering the necessary information early enough in a bull's production life can be as logistically tough as it is critical.

“If we can ID the calves and get their DNA sample at branding (2-4 months of age) and get turnaround time on the parentage analysis to three weeks or less, we'll already know how productive the calves' sires have been. That will speed up culling non-productive bulls and identifying female offspring out of superior productivity bulls for replacement selection,” Lacey says.

But there's currently no single, simple method to allow tagging and retrieving of a DNA sample in one step. In the project, blood was drawn for DNA samples, which added to labor intensiveness. Some DNA service providers also accept hair and tissue for the DNA sample.

“Can it be done easily today at ranch level? No,” Lacey says. “Is the technology there to accomplish it? Yes.”

Cost is also an issue. In the CSU-Chico study, the cost per head, including electronic ID and data collection, was $11-$20/head, depending on the data collected.

Looking at just the cost of DNA fingerprinting, Tom Corah, director of sales for Bovigen Solutions, explains his firm's fingerprinting starts at $25/head. It declines as volume increases.

Currently, Daley believes larger, progressive commercial operations are most likely to utilize DNA fingerprints. That's especially true for those already involved in systems that pay premiums for building value into their cattle.

“Initially, I think it's too expensive for many operations, but there are ways to decrease costs,” Daley explains. “One model would be to get a genetic snapshot of all your steers. In today's calf market, that would be relatively inexpensive.”

As an example, say you had 100 calves. Presumably about 50 of them will be steers. Fingerprinting the steers and sires would, in effect, provide a snapshot of the heifers, too.

Corah suggests folks retrieving feedlot and carcass data could collect DNA samples on the top and bottom carcasses. Say you had 100 calves and five sires. Fingerprinting the bulls and the 10 most profitable and 10 least profitable carcasses, would cost about $625 based on Bovigen Solution's rates.

In each case, producers have an opportunity to exploit the top end while reducing the bottom end.

Even though the CSU-Chico project has ended, Lacey says his operation continues to DNA fingerprint all new bulls and females.

“The cattle business isn't getting easier, it's getting tougher. You don't look for the dollars you can make anymore; you look for the pennies,” Lacey says.

Table 1. Sample of carcass value difference between sires
Bull value No. of calves sired in year Carcass premium/discount (average $/carcass) Total carcass (total $/bull)*
A 26 -$38.16 -$922.16
B 65 $43.82 $2,848.40
C 53 -$4.66 -$246.98
D 5 -$28.32 -$141.60
E 1 -$45.40 -$45.50
*Number of progeny x Average carcass premium/discount Source: California State University-Chico

How fingerprinting works

DNA fingerprinting is fairly straightforward. Basically, you collect a sample of blood, hair or tissue that serves as the fingerprint, possessing DNA unique to that animal. Matching common DNA between a prospective parent and potential progeny is how DNA service providers determine the probability that a particular bull sired a particular calf.

More specifically, says Tom Corah, director of sales for Bovigen Solutions, his company and most others in the U.S. utilize nine common genetic markers recommended by the International Society of Animal Genetics (ISAG) in determining bovine parentage. Each company may also match additional DNA markers. In the case of Bovigen for example, their SireTrace program employs the nine ISAG markers plus five others.

Arguably, any of the tests from reputable companies today will share similar high accuracies for determining parentage, though different companies may report results differently. As an example, Bovigen reports the probability of an animal matching a parent in the form of odds that a bull is in fact the sire. Others may report probability as a percentage, but the concept is the same.

Given that, Corah says producers need to understand that since different companies use different panels of DNA markers, a DNA analysis for Company A can't be used to compare to one from Company B.

Beyond that, much of the difference between companies revolves around service, products offered and cost. Bovigen, for instance, offers parentage analysis, along with DNA diagnostics for marbling, tenderness and coat color.

Producers also should keep in mind that, with statistical probability, there is no such thing as 100%.

“The more markers you match the higher the validity of the probability,” Corah says. Most unrelated bulls can be matched to calves in multi-sire pastures with a great deal of certainty. Related bulls can be matched, too, but less accurately because they share common genes.

For perspective, in the California State University (CSU)-Chico study, researchers matched 70% of the calves to a single sire. Sean Earley, CSU research assistant, expects a much higher percentage in pastures with unrelated bulls.

In fact, while he realizes it's not always practical, Corah says, “In multi-sire pastures where DNA fingerprinting will be utilized, we recommend placing bulls with genetic differences.”

Prairie Populism Then and Now

Whether it's a story about the upcoming elections, BSE, country-of-origin labeling or global trade, the term “prairie populists” keeps popping up with all the predictability and persistence of pesky Canadian thistle.

The politicians the term refers to range across the U.S., but usually hail from the Great Plains and Midwest. Most, but not all, seem to be Democrats, although that wasn't always so, says William Pratt, history professor at the University of Nebraska-Omaha.

The word populist has lost much of its original meaning, Pratt says. It's used broadly today to describe outspoken politicians ranging from segregationist Gov. George Wallace to liberal Sen. George McGovern. The two Democrats ran for the presidency in 1972 (Wallace as an independent) and lost to Richard Nixon.

But in 1892, there was a Populist Party that held its presidential convention in Omaha, NE. The party adopted a platform containing language striking for its day, Pratt says. He cites these words:

“We believe the power of government — in other words, of the people — should be expanded (as in the case of the postal service) as rapidly and as far as the good sense of an intelligent people and the teachings of experience shall justify, to the end that oppression, injustice, and poverty shall eventually cease in the land.”

Referring to justice and calling for larger government was unusual then, Pratt says. The USDA was a small agency. In fact, an 1867 photo of just 10 people captured one-third of the agency's employees.

The Populists opposed monopolies of railroads and finance, and commodity speculators. The party “sought to restore the government of the Republic to the hands of the ‘plain people,’ with which class it originated,” the platform stated. The party never elected a president, but did seat candidates in state legislatures and in Congress.

Populism today

“Populism to me is standing up for the interests of the family farmer, business owners on main street and the rancher,” says Sen. Byron Dorgan (D-ND).

“It doesn't make any difference what you call it,” says Sen. Charles Grassley (R-IA). It depends, he says, on the question: “Do you believe the government should be a strong referee in the free-market system?”

Iowa's senior senator cites his efforts to ensure “farmers can market their hogs every day instead of half an hour per week,” reduce USDA farm payments, support of the Packers and Stockyards Act and en-forcement of anti-trust laws.

These positions fit with the usual descriptions of Grassley: independent, plainspoken, conservative and a fiscal watchdog. But he's only rarely called a prairie populist.

For Sen. Kent Conrad (D-ND), being a prairie populist means standing up to outside interests — packers, the Canadian Wheat Board and the World Trade Organization — that threaten the livelihood of farmers and rural communities.

But economist P.J. Hill doesn't believe populism helps ranchers and farmers.

“The rhetoric for the last 30-40 years has been, ‘We are on the side of the small producer,’ ” says Hill, an economics professor at Wheaton College in Chicago, and owner of a 100-cow operation in his native Montana.

“I think there are economic forces at work that are very powerful,” says Hill, who questions the effectiveness of populist rhetoric. “I don't think it has a very positive impact” for small farm operations, he adds.

Historical perspective

Dorgan traces the roots of prairie populism to the early 20th century, when farmers organized, developed an agenda and took control of the political process. In 1916, North Dakota's Non-Partisan League (NPL) surprised the state's dominant Republican Party and elected a governor. In 1918, the NPL reelected the governor and won control of the legislature. It passed legislation creating the Bank of North Dakota (BND), still the nation's only state bank, along with North Dakota Mill and Elevator Association and state hail insurance.

“It was never intended for the BND to compete with or replace existing banks,” the bank's Web site says. It “was created to partner with other banks and assist them in meeting the needs of the citizens of North Dakota.”

Critics assailed the NPL, claiming it contained socialists and communists, says Tom Isern, history professor at North Dakota State University. And there were some among the membership, he says. But the average hard-working Norwegian farmer just cared about getting a fair price for his grain, he adds. He wanted better rail rates and honest grading of their wheat at mills in Minneapolis.

Farmers were “shipping grain and getting a bill for more than the grain was worth,” Conrad says. “People were being manipulated.”

The NPL eventually lost power and joined the North Dakota Democratic Party in 1956. The state has been a hotbed for starting value-added ag cooperatives since the early 1980s. But these co-ops are usually run by Republican, commercial-oriented farmers for regional economic development, Isern says.

Fred Kirschenmann, North Dakota cattleman and organic farmer, says state voters favor Republican governors and presidential candidates, but elect Democrats to the U.S. House and Senate. Above all, voters are loyal to people who do a good job, says Kirschenmann, who also directs the Leopold Center for Sustainable Agriculture at Iowa State University.

“I'm a Republican, but I think Byron Dorgan is one hell of a U.S. senator,” Isern says. “He's one senator with a vision for renewal of the land.”

Isern cites Dorgan's proposal of a New Homestead Act and his push to develop a high-tech corridor in the Red River Valley.

And, North Dakota recently established a Beef Systems Center of Excellence to grow cattle feeding and profitability for the state's cow-calf operators. The plan is to develop a small slaughter/fabrication plant using “rinse-chill” technology, Kirschenmann says.

If this plant succeeds, more small plants could be built throughout North Dakota. This reflects the state's political and economic tradition and also makes economic sense, Conrad says. He admits a large facility can achieve economies of scale, but other economic principles are important, too. This includes spreading assets and reducing risk, good strategies given possible terrorist threats to the nation's food supply.

“I think concentration, when it reaches a certain level, is a negative in almost every way — economically, environmentally and in terms of risk,” Conrad says.

Pratt says populism today often comes down to rhetoric, but Sen. Tom Daschle (D-SD), the U.S. Senate minority leader, says banning “captive supplies,” opposing packer concentration and creating a Small Farm Administration within USDA are more than words.

“These issues are important because they're the essence of survival for agriculture as we know it in South Dakota,” Daschle says. “These fights take on real meaning when you realize that for many of our farmers and ranchers, how well we do in winning these fights will determine how well they do in surviving in the way of life they love.”

Hill loves life on the Great Plains. At one time, he had a commercial cow-calf ranch, running 500 cows on 25,000 acres in eastern Montana. He believes market differentiation — not legislation — holds more promise for ranchers.

Some ranches now sell the experience of ranching — hunting and fishing, wagon trains and working vacations. Others seek niche markets, producing grass fed and/or organic beef, Hill says.

And that's the way the business should operate, he adds. Agriculture and society are best served when “markets tell us what to do,” he adds.

Unlike his close friends, Hill stresses that his income as a college faculty member relieves him of being solely dependent on ranching.

“I went through the 1980s in Montana,'' he says, recalling the drought and grasshoppers that ravaged the region.

“I don't want to minimize those struggles,” he adds. “One of my regrets (is that) small towns across the Great Plains are struggling.”

Cross-border populism

U.S. and Canadian farmers often face common issues, but tend to fight each other, Canadian cattleman John Kolk says. That's in contrast, he adds, to how European Union (EU) farmers work with their counterparts throughout the world.

With common issues straddling international borders, it would seem possible for farmers to cooperate, at least theoretically, Kolk says.

Sen. Kent Conrad (D-ND) agrees — in theory. Conrad says farmers worldwide should work together to achieve a balance between supply and demand so they can receive a fair price. Farmers need power in the marketplace.

“I don't see it as gouging consumers,” Conrad says. “We've been fighting each other in the marketplace to try to get a fair return.

“It's very clear with the movement in the World Trade Organization (toward eliminating subsidies) that we're going to have to find new ways to give farmers a new chance,” he adds. “We've become the residual food supplier to the world and all the expense falls on our taxpayers.”

He suggests establishing “some emergency set-aside of food” for the world. And he says it's reasonable to have global coordination between conservation programs for both land and water.

In the meantime, the U.S. must ensure that the livelihood of farmers and rural communities isn't lost in global trade negotiations, Conrad says. “I'm increasingly concerned that ag will be unwittingly traded away because people don't know what they're dealing with,” he says.

There's A Lot On The Line

The November elections could be a watershed for the U.S. beef industry. Many issues, including a record federal budget deficit, a worldwide rise in protectionist trade sentiment and soaring energy prices, threaten the cattle business. Plus, they come at a time when the industry is already coping with a drought in the West and fallout from a single case of BSE.

To help beef producers sort through the election, leading ag economists were asked to explain the possible impacts of such issues. Then, BEEF pulled together the candidates' positions on those issues from their campaign organizations and other sources such as the National Cattlemen's Beef Association.

Here is a summary of the issues and the candidates' positions:


    The federal deficit, which had disappeared just a few years ago, has roared back to record levels. The next president and Congress will likely have to deal with it; the result may not be pleasant for agriculture.

    “There are only a couple of levers you can pull to deal with the deficit,” says Bob Young, chief economist for the American Farm Bureau Federation. “You can increase federal revenues, or you can cut spending.”

    The first option usually means higher fees and taxes. The second could mean cuts to farm/ranch programs. If it comes to program cuts, “I don't think anything will necessarily be off limits,” Young says.

    President George W. Bush says he wants to cut the deficit in half by limiting growth in discretionary federal spending. “This will require that Congress focus on priorities, cut wasteful spending and be wise with the people's money,” Bush said in his 2004 State of the Union address.

    John Kerry says he'd cut the deficit in half by rescinding recent tax cuts for the wealthiest Americans. He'd also slice tax breaks for corporations.


    Rising oil and natural gas prices can rip through the beef industry like a Kansas tornado. Such price inflation raises the cost of everything from corn production to barbed wire to new pickups.

    Nor do economists expect quick relief. “It won't surprise me if we stay at $35/barrel oil or better for a long time,” Young says.

    Bush wants new energy conservation measures, increased domestic oil and gas production, and more use of alternative fuels such as ethanol and hydrogen.

    Kerry is pushing energy conservation. He wants to slash U.S. reliance on imported fuel by investing in ethanol, biomass, biodiesel and other alternative energy sources.


    Four years ago, the cattle industry worried about ecoterroism. Today, a big fear is international terrorism targeting U.S. ag with bioweapons like foot-and-mouth disease.

    “The worst potential problem for ag is bioterrorism,” says Luther Tweeten, an Ohio State University ag economist. “If anybody wanted to do it, you couldn't stop it. The challenge would be to contain it.”

    Both Kerry and Bush have made counter-terrorism a campaign centerpiece. Each insists he can best protect the nation from such strikes. Bush cites his efforts after the 9/11/01 attacks; Kerry highlights his military and Senate experience.


    U.S. producers need foreign markets. Without them, domestic prices suffer, says Barry Flinchbaugh, Kansas State University professor of ag economics. He says the most telling example is the loss of Japanese markets to U.S. exports, but there are other signs of strain in international trade.

    Protectionist sentiments are rising worldwide, Tweeten says. In the U.S., the loss of millions of industrial jobs and the growth of outsourcing in white collar and service jobs is adding fuel to that fire.

    The problem, Tweeten says, is if the U.S. moves to protect those jobs, foreign nations could respond with barriers against U.S. ag products, one of the few bright spots in U.S. trade. The U.S. now sells $60 billion in farm and ranch products on the foreign market.

    “There's a real danger of protectionism. Once it gets going, it just escalates,” Tweeten says.

    The Bush administration says it's created the strongest free and fair trade program in U.S. history. Bush “understands that economic prosperity for agriculture is tied to expansion of trade opportunities abroad,” his campaign says.

    Kerry wants to open new foreign markets for ag and repair damaged relationships. “Trade relationships must be repaired,” he says. “America must assure that the global economy works for America's farm families.”


    If ranchers want health insurance, they often must pay for it out of pocket. But skyrocketing premiums may now be forcing a growing number of them to drop their coverage, which puts the ranch at risk.

“You buy health insurance to protect the rest of your assets,” says Ross Korves, a Chicago private economic policy analyst. “If you have heart surgery or one of those other fancy things that costs a quarter of a million dollars, that can cost you the ranch if you don't have insurance.”

Bush says malpractice liability reform will help hold down health care costs. He also wants to help the self-employed pay for health insurance via a federal tax credit.

Kerry wants to hold down medical costs by cutting waste and inefficiency among health care providers. To cut drug costs, he wants to re-import drugs from Canada. He also favors targeted tax cuts to help more Americans pay insurance premiums. To help pay for all this, Kerry wants to roll back tax breaks for “the rich.”

Doug McInnis is a Casper, WY, journalist specializing in business management and policy topics.

Some other issues

Here's a brief summary of the candidates' stances on other issues.

  • The Kyoto Treaty on Global Warming

    The Bush administration declined to sign the treaty, citing the high cost to the economy and the exemption of some of the world's most polluting economies. John Kerry favors U.S. participation.

  • Country-of-origin labeling

    President George W. Bush supports a voluntary program driven by producers. Kerry favors a mandatory government labeling program.

  • The Endangered Species Act

    Bush wants the act revised. Kerry supports it as is.

  • Restrictions on beef imports from Canada

    Bush wants a resumption of trade based on scientific findings. Kerry supports a ban of imports from Canada.

Source: National Cattlemen's Beef Association

The cost of ignoring the deficit

The last thing any politician wants to do to rein in a budget deficit is raise taxes or cut popular programs. But the cost of doing nothing could be worse.

Big federal deficits can produce a side effect no one wants — higher interest rates. It hasn't happened yet, and it might not. But higher rates and other economic damage from the deficit might strike unexpectedly, much like the collapse of technology and Internet stocks a couple of years ago.

“It's like the bubble. It came out of the blue,” says Ohio State economist Luther Tweeten.

Currently, the deficit is partly financed by foreign buyers of U.S. Treasury Bonds. But if the dollar were to fall further in value, current rates on those bonds wouldn't seem as attractive. Foreigners then would demand higher rates on Treasury Bonds, Tweeten says. That would cause rates to rise elsewhere in the economy, pushing up the cost of ag borrowing, he says.

Social Security and Medicare

The average age of ranchers is rising, and many soon will be eligible for Social Security and Medicare payments, even as they continue to run their ranches.

America may no longer be able to afford these programs when Baby Boomers begin to retire in a few years. It's likely to be an issue for the next president.

Federal Reserve Board Chairman Alan Greenspan recently put the issue front and center when he urged federal policy makers to recalibrate benefits. “If we delay, the adjustments could be abrupt and painful,” Greenspan said.

If these programs are cut or the age of eligibility raised, ranchers who hoped to continue working while drawing benefits would be affected. For instance, some ranchers may hope to drop costly private health insurance at age 65 to rely on Medicare and supplemental health insurance.

“Because we've put off dealing with the cost issue of (Social Security and Medicare), diminished benefits for the Baby Boomers are likely,” says Ross Korves, a private economic policy analyst in Chicago.

Both presidential candidates admit something needs to be done. President George W. Bush wants to allow workers to invest part of their Social Security payroll taxes in private investment accounts in hopes of boosting retirement nest eggs. Bush says his recently passed prescription drug package for seniors has strengthened Medicare and is saving senior citizens money.

John Kerry wants further changes in the prescription drug program, such as requiring the government to negotiate better prices for drugs. He also favors a bipartisan effort to address Social Security's problems.

Four more years

BEEF magazine endorsed George W. Bush in 2000 because, as we said in the October 2000 issue, he offered “this industry and the U.S. the best program of leadership abilities and leadership concepts.” Four years later, we believe those same traits and his performance in one of the most difficult terms ever faced by a chief executive warrants his reelection.

By any objective measure, Bush's stewardship the past four years has been a success. That's true not only from an economic and national security perspective, but a beef industry perspective as well.

Consider the challenges:

  • A recession that began in the last year of the Clinton administration with the wilting of the dotcom bubble came to full bloom in Bush's first year in office. Consumer confidence was further cooled by corporate accounting scandals that year.

  • The terrorism of Sept. 11, 2001, impacted market confidence and continues to affect key industries today. Meanwhile, new security and economic stability concerns necessitated unforeseen spending that has driven up the deficit.

The U.S. beef industry suffered its own shocks as well:

  • In late September 2001, BSE was discovered in Japan, and the biggest U.S. export market for beef dried up.

  • That was followed a couple of weeks later by a Russian ban on U.S. poultry exports. The move forced tons of extra poultry onto the U.S. market each week.

  • In May 2003, BSE was discovered in Canada. Six months later, a single case of BSE was discovered in the U.S.

Now consider the Bush results:

  • The economy continues to strengthen. Across-the-board tax relief has revived the economy. Home ownership is at record levels, and inflation and mortgage rates remain low.

  • No terrorism has occurred within the U.S. since 9/11/01.

  • Saddam Hussein is about to go on trial. Taliban and al Qaeda thugs have been driven from power in Afghanistan. Millions in the Mideast are free of oppressive dictatorships. And Libya, a chief sponsor of international terrorism, has renounced its weapons programs.

Meanwhile, the beef industry has experienced some of its best days ever. Beef demand is surging, and prices for all classes of cattle have reached heights few dared to even contemplate. And, this was realized despite the discovery of BSE in the U.S.

Beef demand, of course, isn't something that can be laid totally at Bush's feet. But the policies and adept handling of the BSE crisis by the National Cattlemen's Beef Association and USDA prevented BSE from decimating the U.S. market.

In addition, Bush's actions in cutting taxes, providing small-business incentives, phasing out the death tax, and giving more consideration to landowner concerns when drafting and interpreting legislation are all big wins for the U.S. ag sector.

Bush's actions over the past four years have been decisive and resolute. To be sure, the surge in the federal deficit during this period is concerning. And many who favor a smaller, constitutionally limited government have been disappointed.

But, faced with tremendously costly challenges in protecting the homeland and shoring up a rattled economy, these can hardly be considered “normal” times. We believe some latitude must be allowed.

Next month, Americans are faced with a sharp contrast between candidates and their stands on issues. Bush has proven his mettle as a chief executive and commander in chief. And he's proven himself a friend to small business and agriculture. He deserves another four years.

(To learn the candidates' positions, visit Click on “Bush vs. Kerry Comparison Chart” from the “What's Moo On the Hill” section in the opening page's center column.)

South Dakota Steps Up

As talk of animal ID and source verification escalates in the beef industry, South Dakota has set its sights on a program of its own. Gov. Mike Rounds unveiled plans late this summer for a source- and process-verified branded beef program called South Dakota Certified Beef (SDCB). The beef would carry a label with a picture of Mount Rushmore and the words, “South Dakota Certified, The World's Best Beef.” (See logo on page 62.)

To qualify for the label, cattle must be born, raised and finished in South Dakota. The state's leadership is hopeful that the program will boost the ag economy by keeping more cattle and corn in the state, along with adding value for producers. Currently, 1.8 million head of feeder cattle are raised annually in South Dakota, but about 1.4 million of them go out of state for finishing.

Rounds says the goal of SDCB is to help South Dakota producers share profits of the finished beef product.

“In South Dakota, we raise some of the world's best cattle. That's pretty evident at calf sales each fall when out-of-state feeders come year after year and pay favorable prices for our calves,” he says.

“This program is being implemented to help producers receive the rewards for a lot of the things they are already doing, with the ultimate goal of offering consumers SDCB in the retail meat case,” Rounds adds.

Verification protocols

In addition to the state born, raised and finished requirement, the program requires cattle be raised according to Beef Quality Assurance/Critical Management Plan (BQA-CMP) standards, be fed corn or distillers grain for a certain period before being slaughtered, and be electronically identified (EID) and tracked from birth through processing. Cattle that have not been given any hormones or antibiotics would also earn a special “natural” designation (see sidebar on page 62).

Administration and tracking of the EID calves is expected to dovetail with federal funds the state recently received to help develop a voluntary premises ID program and, eventually, an individual animal ID system. South Dakota was one of 28 states receiving part of $11.64 million in grants to advance the national animal ID initiative.

Processing protocols for SDCB are yet to be determined, says Jim Hagen, secretary of tourism and state development. “We will work with processors and marketers to establish protocols that will meet the highest safety and wholesomeness goals,” he adds.

Meat products that bear the SDCB seal will indicate that processors met those verifiable goals. Hagen adds, “The South Dakota Certified program creates opportunities for our processors and expands the marketability of our quality beef.”

He says several small-scale processors in the state have shown interest in the program, as has the new 600/head/day processing plant being built in Huron, SD. That plant is being built by Ridgefield Farms, a Connecticut-based company, to supply 40% of the product needed for its branded line called Premium Hereford Beef.

Reportedly, the company's business plan also anticipates 30% of the meat it processes to be SDCB, which isn't breed specific. Groundbreaking for the new plant was in September. Production is slated to begin in 2005.

Calves already enrolled

Jon Farris, director of ag development for the state's department of agriculture, reports interest in SDCB has been high. Some calves are already enrolled.

“We've got calves being tagged right now. So those animals will be ready for processing next summer,” he says.

Dustin Oedekoven, a staff veterinarian with the South Dakota Animal Industry Board, also reports a surge in the number of producers interested in becoming BQA-CMP certified — a protocol for the program.

“Many of the new people are interested because they want to be eligible for SDCB,” says Oedekoven, who oversees the state's BQA-CMP certification. He says 500 South Dakota producers are BQA-CMP certified, with 1,500 trained but needing to complete certification.

Farris calls the project “a work in progress,” and adds: “We're aware there may be things that need to be changed. We're willing to listen to producers, processors and consumers and have an open mind to make it work.

“This is a great opportunity for the state, and it's especially exciting to have the governor's support. SDCB is his initiative,” Farris says.

Just how many South Dakota cattle might go through the program is uncertain. Farris says an eventual target of about 20% of the state's 1.8 million calves has been set, but he adds, “If we saw 5% (70,000 head) enroll the first year or two, that would be a home run.”

For more info, visit

Kindra Gordon is a freelance writer based in Spearfish, SD, and a former managing editor of BEEF magazine.

The certified protocols

To be eligible for the South Dakota Certified Beef program, producers must agree to the following standards established by the state's department of agriculture:

  • Each operation must have an official USDA premise ID number.

  • Cattle must be born, raised and finished in South Dakota.

  • Cattle must be electronically identified prior to weaning, or entering commerce, and electronically tracked through harvest.

  • All participants must be BQA-CMP certified by the state.

  • Cattle can be no older than 30 months of age at harvest.

  • Cattle must be fed a ration of corn and/or distillers grain for 120 days prior to harvest

  • To qualify for the “natural” certified beef, cattle cannot receive synthetic growth promotants, hormones or implants at any time. No antibiotics or ingredients containing antibiotics may be fed.