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Articles from 2006 In February


Would Your Direct Customers Give You A Referral?

In today's changing beef industry, it doesn't really matter whether you sell weaned calves, participate in some sort of value-chain, or retain ownership all the way to the consumer. From the perspective of becoming more customer-driven and focused, there's perhaps no greater indicator of the product and service you provide than to ask yourself if your customer would give you a referral.

I know a feedlot operator isn't going to give you the number of another feedlot that would feed your cattle. But would your seedstock producer recommend you to an order buyer? Would your feedlot customer recommend you to one of his customers as a place to buy replacements? The list goes on.

Do you have a relationship with your customer? Is that customer both satisfied with your product and aware of the extra value you bring to the relationship? Perhaps the first question should be: Are you adding extra value to the relationship? Regardless of the circumstances, would your customers recommend you, and put their reputation on the line in doing so?

If you don't have that type of relationship with your customers, it's time to sit down and create a game plan. The days of selling a commodity product in an undifferentiated marketplace are evaporating. They may never disappear, but the potential to profit from the commodity marketplace is going to get tougher and tougher.

USDA Reports To Japan On Illegal Veal Shipment

Early this morning, USDA Ag Secretary Mike Johanns said his agency submitted to Japan its reports on the Jan. 20 veal shipment from a New York exporter that contained spinal column. The two reports -- one from the Food Safety and Inspection Service (FSIS) and the other from the Office of Inspector General (OIE) -- explain the circumstances surrounding the shipments and detail additional safeguards the U.S. has determined to implement. Johanns says the reports list 11 findings -- five from FSIS and six from OIE. Both reports, though done independently, mirror each other very closely.

"The thoroughness of this report demonstrates just how serious we are about addressing this incident and providing assurance to our trading partners that our system is among the best in the world," Johanns said. "I believe our actions fully address the facts that led to this incident and provide added protections on a broader scale to prevent similar problems in the future."

Johanns said this was the one and only shipment of veal to Japan. There were two plants that were certified to ship veal; Atlantic Veal and Lamb took the order from a Japanese company on Dec. 27, 2005. They were certified for export on Jan. 6, 2006, as was their supplier, Golden Veal. The exported product contained vertebral column, which is considered a specified risk material, and offal product, which is eligible.

But, Johanns said, the amount of offal included was more than what could have come from the 21 animals harvested after export certification. He adds that both the personnel at both plants and the USDA inspector should have known they couldn't ship the products, since they had both been audited before the certification had been approved.

"It was an interesting thing. When you study the documentation, the product was clearly labeled," Johanns said. "This wasn't a situation where someone was trying to get something through by not labeling it. It indicates there wasn't an understanding and they weren't connecting on what couldn't be shipped."

The two plants have now been delisted, and Johanns said he is preparing to begin negotiations with Japan to reopen the border to beef exports.

The response, Johanns said, will be to require all USDA inspectors to undergo additional mandatory training. Plants will also have to maintain a list of products they are certified to ship to any country, instead of a blanket export certification. USDA inspectors in the plants will be notified of changes to a plant's eligibility to export at three separate times in the certification process: when the plant applies for certification, when the plant is audited, and when a plant is certified or delisted. In addition, exports will require a second signature from a USDA inspector before being shipped.

View the report at www.fsis.usda.gov.

These Are Exciting Times For The Beef Industry

Attending the 2006 Cattle Industry Convention underway in Denver this week, there’s no way to escape the optimism on display in the meeting rooms and hallways of the Denver Convention Center. There’s also no ignoring the need for focused effort to deal with the challenges and take advantage of the opportunities ahead.

In the opening general session, economist/policy expert Barry Asmus delivered a motivational keynote address. An individual with that type of background is sure to furrow a few brows, but if you have the opportunity to read his comments or watch his taped remarks, it would be well worth your time.

I say it would be worthwhile because it’s always worthwhile to be reminded why this business is so special – our bedrock values of faith, family and work. It’s worthwhile to be reminded of the importance of working together, and appreciating the role policy can have on the growth, sustainability and profitability of our industry.

It was good to see actor and beef pitchman, Sam Elliot, stand on the opening-session stage, hear him speak, and realize just how recognizable the phase – “Beef, it’s what’s for dinner.” truly is. It’s humbling to hear of the new product innovations, and the toil of the beef checkoff folks in marketing and promoting our product. It’s also moving to hear of all the battles waged by our state cattlemen’s associations, and their local affiliates, at the local, state and regional levels that seemingly fly under most of our radars most of the time.

Whether it’s the upcoming farm bill debate, food safety, or even the environment, there are activists groups mobilizing against us. I’m thankful to those who commit themselves to being involved on behalf of the industry and step up to shoulder the responsibilities of leadership and activism.

On the negative side, fighting the good fight isn’t enough. As an industry must we continue to win the battles of public opinion and protect our interests, and there’s no escaping the realization we’re both outmanned and outgunned by those with interests contrary to our own.

There are always discussions about leveraging our political might more effectively, and increasing memberships in the local, state and national organizations. Yet, at some point, the industry must embrace the fact the dollars to market and grow beef demand are limited. And, as the rural influence in Washington continues to erode with redistricting and shifts in apportionment, we will have to find new allies.

We’ll also, at some point, have to address the issue of adequate funding. The Australians recently went to a $5 checkoff. With the erosion of our own checkoff’s value do to inflation, the question wilol have to be asked: “Can we continue to not pursue opportunities due to a lack of funding?

BSE Breakthrough

Japan researchers believe they've succeeded in artificially triggering the onset of BSE in cattle. The Japan Economic Newswire reported last month several cows inoculated with abnormal prions at the Hokkaido Animal Research Center have exhibited BSE symptoms.

Researchers plan to dissect three of the animals in February to confirm BSE infection. It would be the first successful case of artificially-induced BSE in Japan, a boon to further study of the disease. Japan recorded its 21st case of BSE in December 2005. Its first was confirmed in fall 2001.

Beans Boost Conception

I've been feeding whole soybeans to my cows for the past few years; starting about 45 days before calving begins,” says Jim Brinkley, a Sullivan County, MO, Angus producer. “We've noticed a boost in conception and pregnancy rates from feeding just 3.5 lbs. of raw beans/cow/day.”

Brinkley got the idea of feeding whole beans to brood cows from research by Chris Zumbrunnen, Extension livestock specialist; Monty Kerley, beef nutritionist; and David Patterson, beef reproductive physiologist — all of the University of Missouri.

“A few years back, I read a report in BEEF magazine about research with safflower seeds fed to late-gestating beef cows, with a significant increase in conception rates,” Zumbrunnen says. “Could we increase conception and calving rates in northern Missouri and Iowa by feeding whole soybeans?”

“Yes,” the Missouri researchers learned, but some work on the timing was needed. Most response came from feeding 3.5 lbs. of whole soybeans/head/day from 45 days before the start of calving until the cow calved. The regimen resulted in a 76% conception rate on first service, and a 93% overall pregnancy rate. By comparison, feeding combinations of corn gluten and soybean meal resulted in conception rates of 50-62%.

“Soybeans contain a fairly high level of polyunsaturated fatty acids (such as linoleic acid), used to synthesize prostaglandins, which in turn initiate and maintain the reproductive process,” Zumbrunnen notes. “The study females were spring-calving cows in good condition, with an average body condition score of about six.”

Since Brinkley feeds all his cows soybeans, he doesn't have a control group for comparison, but estimates a 20% improvement in conception rate.

“We synchronize heats and breed all cows by artificial insemination,” he says. “My cows are in good body condition at breeding time.”

Some producers are concerned feeding whole soybeans (fat is the most concentrated source of energy) in late gestation might produce heavier birth weights and, with it, more calving problems.

“We've seen a slight increase in calf birth weight,” Zumbrunnen says, “but no increase in calving difficulty as a result of the increased birth weight.”

Other common producer questions:

Q. Aren't raw soybeans toxic to cattle?

A. Overfeeding soybeans can be toxic, but — at 3-3.5 lbs./cow/day — whole soybeans are as safe as feeding low levels of any grain.

Q. Must soybeans be processed into meal or extruded before feeding?

A. Not for cattle. In swine, however, soybeans must be processed or heated to destroy the trypsin-inhibiting agent.

Q. Aren't soybeans too expensive to feed?

A. Over the past four winters of feeding whole beans to cattle, the cost has ranged from 25¢-29¢/cow/day.

“Soybeans here now are just over $5/bu.,” Brinkley says. “That makes the cost under 9¢/lb.”

Q. Can I feed twice as many beans every other day and get the same result?

A. “Normally, about 5% fat is as high as you want to go in a beef cow's diet,” Zumbrunnen says. “Above that, you risk nutritional scours. Adding 3.5 lbs. of soybeans to a grass or hay diet gives a dietary fat content of about 5%. I'd be concerned about going much higher than that in one day.”

Q. What kind of facilities do I need to feed whole soybeans?

A. “I don't use bunks or troughs,” Brinkley says. “I pour the beans right on the grass, and scatter them out so all the cows can get to them.”

Q. Can I feed lower-quality beans and still get good conception response?

A. You can feed small-seeded “BB” soybeans that would incur a market discount and still get the same response. You might not want to feed badly cracked or moldy beans.

“Although last year, I fed damaged soybeans that had been under flood, and I couldn't see any difference in pregnancy rate,” Brinkley says.

“We've consistently seen a 14-23% boost in first-service conception rate by feeding 3-3.5 lbs. of whole soybeans/cow for 30-45 days before calving,” Zumbrunnen adds. “Raw soybeans are a safe, effective way to economically supplement beef brood cows.”

James D. Ritchie is a freelance writer based in Lebanon, MO.

Wal-Mart's fuel economy goal

Wal-Mart says it intends to double the mpg efficiency of its entire truck fleet within the next decade, and save $52 million/year in the process.

Land Line magazine reports that, beginning with the its 2007 model-year trucks, the retail behemoth will begin introducing trucks with improved aerodynamics, transmission, tires and an auxiliary power unit in every truck in its fleet. By 2015, Wal-Mart expects its entire fleet to reach 13 mpg — about double its current figure, the Associated Press reports.

One of the most visible changes will be wind skirts on the trailers' sides between the axles to reduce wind resistance and airflow around the trailer. Dual tires on the trucks' rear axles will be replaced with extra-wide single tires, and the tractors will be more aerodynamic.

U.S., South Korea reach trade deal

At press time, South Korea and U.S. negotiators had reached an agreement on reopening that Pacific Rim market to limited U.S. beef exports. On Jan. 13, the two countries agreed to resume imports of U.S. beef, but only lean product or product without bones.

U.S. beef imports, shut off since December 2003, are to restart in late March, reports Yonhap News, but only muscle products (no bones) from cattle 30 months of age and younger are eligible for export.

South Korea proved immovable from its position of prohibiting boned cuts, citing human health concerns. In a losing cause, at least for now, the U.S. had argued there should be no limit on bone products such as ribs, which accounted for almost 60% of U.S. beef imports into South Korea before the ban.

The partial reopening of the South Korean market also bans processed beef products such as sausages and beef patties, as well as beef residuals (cattle intestines) and beef diaphragms of U.S. origin.

South Korea imported 199,410 tons of U.S. beef, worth about $847 million in 2003, says the South Korean Agriculture Ministry.

Japanese Sun Rises Slowly

In some ways, speculation about when Japanese beef trade would resume has had more impact on price than when the market actually opened.

“Trade resumption has been supportive to prices, but it hasn't necessarily moved them much higher,” says Mike Miller, Cattle-Fax director of research and education.

For one thing, best-case projections for beef exports to Japan this year are too low to push the market fundamentally.

The U.S. Meat Export Federation (USMEF), for example, projects 2006 exports will be around 100,000 metric tons (220 million lbs.). That's about 27% of the 300,000 metric tons exported pre-BSE in 2003 when beef and variety meat exports to Japan tallied $1.4 billion.

Cattle-Fax is slightly more bullish, projecting 250-300 million lbs. of beef exports to Japan in the coming year.

Even though the impact on demand runs deeper than the carcass equivalent of 300,000 head or so — as only pieces and parts of carcasses head to Japan — it's still a drop in the proverbial pail. The U.S. produced approximately 25.5 billion lbs. of beef in 2005, with 2006 projected to be even larger.

“I think trade resumption will be supportive to us through the year, with the most support coming in the first 60-90 days of 2006… We believe export volume will build throughout the year to the highest levels in late summer and early fall,” Miller says. While still supportive, he explains it won't overcome increasing beef supplies.

Besides, any emotion-based bounce in the market seems to have occurred long ago when periodic reports suggested imminent resolution to the trade dispute. Negotiations were so protracted that many began viewing them as just one more cry of “wolf.” Jim Gill, Texas Cattle Feeders Association marketing director, reports folks in his marketing area just started ignoring the rumors.

“Certainly trade resumption is positive, and it sure doesn't hurt anything, but I haven't seen it make any difference in the cash market,” Gill says.

Likewise, reports from various cattle feeders indicate packer demand for age-eligible cattle — only beef from cattle 20 months of age and younger can be exported — is also limited. Thus far, premium claims hover around $25/head. This is early on, too, when the supply of cattle with the requisite documentation is presumably the thinnest.

On the other hand, trade resumption occurred at a traditionally slow time of the U.S. marketing year. A clearer picture should form as the public emerges from holiday hibernation. If Japanese demand outstrips available supply, age premiums should be easier to come by.

Will consumers buy it?

The big question is will Japanese consumers embrace beef once again in general terms, and rediscover their appetite for U.S. beef specifically?

As of early January, exports were still a trickle, less than some exporters had hoped, Miller says. Reports leading up to trade resumption trumpeted Japanese surveys that indicated the majority of Japanese consumers were wary of U.S. beef.

“In our survey work, most Japanese consumers we visited said they would consider a government announcement to end the ban the ‘all clear,’ and would likely return to eating U.S. beef,” says Lynn Heinze, a USMEF spokesman.

According to Heinze, one of Tokyo's two largest retail chains — 113 stores — was confident its newly-arrived 6 metric tons of U.S. beef would sell out during a USMEF promotion Dec. 26-29.

“The offering so far has been from relatively limited air shipments,” Heinze explains. “Product should arrive over the water by mid-January, and this will provide additional information.”

Incidentally, Miller notes one of the challenges of gauging exports' steam as they pick up is USDA's export numbers, which are released two months after the fact. Ship it today, and it won't show up for at least 60 days in reports the industry uses to measure international demand.

Keep in mind, recapturing Japanese demand for U.S. beef is as much about recovering Japanese demand for beef, period. According to USMEF, per-capita beef consumption in Japan declined 10% in the two years U.S. product was banned. At the same time, Australia captured a larger share of the remaining market.

“We will rebuild consumer confidence using consumer education and by working closely with the Japanese trade,” explains Phil Seng, USMEF president and CEO. “We are committed to assuring Japanese consumers U.S. beef is safe, and they can enjoy it without hesitation.”

Hopefully, the majority of Japanese consumers will have the same attitude as the Japanese shopper who, upon purchasing some of the first U.S. beef available, said: “They are eating [beef] in the U.S., and I have no hesitation eating it, too.”