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Articles from 2004 In April


The “BEEF Top 40” Nomination Form

Beef, Pork And Chicken Demand Is Hot, Hot, Hot

Demand indexes for January-March 2004 show pork demand up 5.8%, beef demand up 6.2% and broiler demand up 5.8% from the same period last year. Note that this is a demand index, not merely a measure of consumption. Consumption (or quantity in economics parlance) is just one of the variables that define demand. The other is price. Demand index includes both.

Meyer says pork and chicken's performance isn't real surprising given both species have higher production, higher per capita domestic availability and much higher prices thus far this year. Beef, however, is a whole different story.

"While beef prices have been higher than a year ago, beef production has been significantly below last year due to the lack of Canadian fed cattle and cows in the U.S. slaughter mix," Meyer says. "However, export suspensions have caused per capita beef availability to be 4% or so higher this year. Higher prices and higher availability (which means higher consumption) means beef demand must be higher as well!"

While Meyer admits three months of data is just a snapshot of the year, he calls such demand performance "remarkable."

"These numbers are huge in demand index terms. Seldom have beef or pork seen more than a 3% shift for an entire year," Meyer says. "Should the current numbers stand for the entire year, it will mark the first time since 1978 that all three species' demand index has increased. It's significant that this last occurred before health, fat and cholesterol issues became huge for consumers in the in the 1980s."

Meyer says stronger pork demand and strong pork exports combined to pull live hog demand up by 11.6% vs. the first quarter of 2003. He contrasts that to live cattle demand, which (despite much stronger domestic beef demand), is down 6.1% from 2003 due to much lower beef exports caused by the trade ramifications of BSE.

Meyer says the curious item in the demand picture is turkey, which is down 4.2% domestically in the first quarter. Turkey was a huge beneficiary of the health situation of the 1980s when the industry developed a number of lower-fat products that mimicked meat products already on the market, he says.

"It appears turkey is suffering from the same kind of underexposure in higher-end foodservice that used to cause pork so many problems," Meyer says. "Whatever it is, the data clearly show the turkey industry hasn't benefited from record strong protein demand in 2004."

Help Us Recognize The “BEEF Top 40”

Help Us Recognize The “BEEF Top 40”

BEEF magazine will celebrate its 40th anniversary with the publication of its September 2004 issue. As part of special coverage intended for that issue, the BEEF editorial staff wants to recognize those who made significant contributions to the U.S. beef industry.

We’ll do that via a special project called the “BEEF Top 40.” Via nominations by readers and final selections by an independent panel of judges, we want to recognize the folks - professional or volunteer - who shepherded the causes, conducted the research, lobbied the halls, built the prototypes, and educated the generations that led to the dynamically evolving industry we have today.

The “BEEF Top 40” will recognize the top 40 contributors to the modern state of the beef business. The candidates will be nominated by readers, with final selection of the BEEF Top 40 made by an independent panel of judges.

Everyone is eligible - producers, be they seedstockers, commercial folks or cattle feeders; marketers; animal scientists; agribusiness folks or other individuals allied to beef cattle. Feel free to nominate as many different individuals as you feel are worthy of this recognition. Just make sure that the folks you believe influential and important in the development and evolution of the U.S. beef industry of the past 40 years are recognized.

Take a few minutes to type answers to the questions listed below in an e-mail to [email protected], or you can drop the nomination in the mail to: The BEEF Top 40 BEEF Magazine 7900 International Dr., Suite 300 Minneapolis, MN 55425

Be sure to provide us with the person’s name, title, important accomplishments, a brief background and why you consider their contributions important to the U.S. beef industry. The documentation needn’t be voluminous but make sure you include enough information that judges can easily grasp the scope and degree of that person’s role and/or contribution to the modern U.S. beef industry.

Also provide us with your name, phone number and/or e-mail address for use in case more information on the nominee is needed.

The deadline for submissions is July 1.

"BEEF Top 40" Nomination Form

Name of Nominee:

Nominee's title or position:

Address:

Industry Contribution – Why should this person be honored as a "BEEF Top 40" honoree:

Brief biographical background on the candidate:

Judge Tosses Out Pickett v. IBP Jury Verdict

"The court finds that plaintiffs failed to present evidence at trial to sustain their burden with respect to both liability and damages," Strom wrote. The Organization for Competitive Markets said in a release today that the ruling will be appealed to the 11th Circuit Court of Appeals.

The case went to jury Feb. 10 in Montgomery, AL. The jury returned a week later finding that the plaintiffs "had established by a preponderance of evidence" that: there is a nationwide market for fed cattle; that IBP's use of captive supply had an anti-competitive effect on the cash market for fed cattle; that IBP lacked a legitimate business reason or competitive justification for using captive supply; that IBP's use of captive supply proximately caused the cash market price to be lower than it otherwise would have been; and that IBP's use of captive supply injured each and every member of the plaintiffs' class. The jury also found that IBP's use of captive supply damaged the calf market price of fed cattle sold to IBP during the class period by $1,281,690,000.

Tyson countered by filing a motion for judgment of law claiming there was no "legally sufficient evidentiary basis for a reasonable jury" to have found in the affirmative on any of the five points, or that there were damages sustained from the alleged violations of the Packers and Stockyards Act (PSA).

In his ruling, Strom pointed out that such "captive supply" marketing arrangements were a practice initiated by producers in the early 1980s, and that the producer had no obligation to deliver the cattle to the packer until such cattle were designated by the producer for delivery.

He also said the captive supply transactions permitted IBP "to achieve a reliable and consistent supply of fed cattle, allowing it to operate its plants in an efficient manner." He said a packer doesn't violate PSA when its conduct is undertaken "in order to have a more reliable and efficient method of obtaining a supply of cattle."

Strom said IBP also produced evidence at trial that justified its acquiring of cattle through captive supply transactions because it needed to do so to "meet the competition." Strom said the plaintiffs didn't offer any evidence at trial suggesting that IBP would be able to compete if its competition were allowed to continue to use captive supply but IBP was forced to discontinue use of such procurement practices.

"The use of marketing agreements, joint ventures and forward contracts is not, per se, violative of the PSA," Strom wrote. "Generally, such conduct only amounts to a violation of the Act if it constitutes an 'unfair practice', involves price manipulation or violates some other specific provision of the Act. There is no evidence that defendant's competitors' use of these supply arrangements violated the Act, nor is there any evidence that the use of such arrangements is per se illegal."

Rodeo Contractor In Hot Water Over Imported Bulls

In May 2003, the U.S. government placed a ban on all shipments of live cattle from Canada after a case of bovine spongiform encephalopathy (BSE) was discovered in Alberta. Canada, in turn, prohibited northbound shipments of live U.S. cattle after a case of the disease was found in the state of Washington in December.

The Kesler bulls have been placed under quarantine in the Helena, MT, area pending further investigation by the Montana Department of Livestock (MDL), USDA and the U.S. Bureau of Customs and Border Protection. The animals currently present no human or animal health risk, assure MDL officials. Greg Kesler also lists Helena as a place of residence.

Marc Bridges, executive secretary for the Montana Board of Livestock, says the bulls apparently entered the U.S. at the remote border crossing at Del Bonita in northwestern Montana. It's believed the bulls were commingled with a load of rodeo horses when presented for entry at the Del Bonita crossing. It's unclear whether the truck was inspected by customs agents at the border. Once the shipment arrived in Pocatello, rodeo cowboys apparently recognized some of the bulls and alerted Idaho brand authorities of their possible Canadian origin.

Idaho Brand Board officials immediately contacted Bridge's department on March 22, and he ordered the bulls returned to Montana for impoundment and further investigation.

Bridges says the state charges against Kesler include transporting livestock into and through Montana without a health certificate or import permit, and crossing county and state lines without proper documentation. More serious are violations of federal customs declaration laws and USDA/Animal and Plant Health Inspection Service temporary rules banning international trade in ruminant livestock.

It's up to USDA and the Canadian Food Inspection Agency to decide disposition of the bulls, which are estimated to be worth about $4,000 each. If refused re-entry into Canada, they will have to be slaughtered and properly disposed of in the U.S. No part of the animals will be allowed to enter the food chain, Bridges says.

Beef Campaign Seeks To Recreate Magic Of Summer 2003

National radio advertising will air prior to the summer's three, big, beef holidays -- Memorial Day, July 4 and Labor Day. Newspaper ads are expected to reach 42 million consumers and are also part of the "Taste of American Summer Grilling Promotion." Of course, the TV and print advertising for the "Beef, It's What's For Dinner." campaign will be continuing.

In addition to the advertising and public relations efforts, the industry will leverage its dollars through foodservice and retailer promotions. Wal-Mart will conduct its now-famous demonstrations on the new "Cheeseburger Fingers" in more than 700 stores. And, A-1 Steak Sauce and Marinades will offer $1-off coupons for beef with the purchase of their sauce. Kraft is funding the coupon program and plans an extensive promotion program in conjunction with it.

Meanwhile, Bush's Best beans and Char-Broil grills will have promotions featuring recipes and tips. In addition, 800,000 bottles of Beringer wines will have bottleneck tags featuring beef recipes and a sweepstakes. And the flat-iron steak, the result of checkoff-funded muscle profiling studies, will benefit from a promotion in more than 220 hotels.

Then, there's McDonald's debut of a salad that features taco- seasoned beef. For a month this spring, all purchasers of the new salad will receive a pedometer.

Sutter Home wines is working in conjunction with the checkoff to reprise its "Build a Better Burger" promotion. And, Borden Cheese will offer a 55¢ instant coupon for the purchase of ground beef with a purchase of its cheese singles. In addition, there will be numerous cross promotions with consumer magazines and expanded use of the Internet. Recipes for youth will also be a focus area.

The Cattlemen's Beef Board, the industry group appointed by USDA to administer the checkoff program, is hoping to duplicate the phenomenal success of last summer's program. The hope is that the increased leveraging of checkoff dollars this year should help surpass the success of last year's summer program.

Always, after sitting through a beef promotion presentation and hearing of the metrics that show significant returns on producers' $1 checkoff investment, I'm saddened by the prospect of losing the checkoff program. While I understand the legal debate is centered on whether the checkoff is government speech or not, it seems the basic premise that some producers don't agree with the message is one totally devoid of logic. It's the equivalent of a car manufacturer saying it doesn't support a program that encourages driving.

Gelbvieh To Debut Feeder-Calf, Buy-Back Program

AGA begins this month selling open-market investment units of $500 each for Gelbvieh Profit Partners (GPP). The goal is to raise $1 million to bankroll the venture's first-year involvement in full or partnership purchases of Gelbvieh-influenced feeder cattle, as well as potentially partnering on some of those cattle all the way to the meat case.

"Through Gelbvieh Profit Partners we will purchase Gelbvieh-influenced calves through special feeder-calf sales or direct purchase," says Wayne Vanderwert, AGA executive director. "AGA wants to take an aggressive posture and be involved in a national scale of feeding Gelbvieh-influenced feeder cattle.

Vanderwert says GPP is a natural next step for AGA, and one that fits with the association's progressive history.

Lori Maude, AGA's director of communications, points out that the association was a seedstock-industry leader in offering such initiatives as commercial cattle marketing, grid marketing programs like the Gelbvieh Alliance in 1995, and crossbreeding programs like the Balancer hybrid program launched in 1998, and the SmartCross program in 2001.

"Now that we have people using our Gelbvieh and Balancer genetics in cross-breeding programs, we need to make sure those commercial producers are getting the extra value they deserve," Vanderwert says.

A mailing to prospective investors -- AGA's current membership, commercial bull buyers and feedlots that have participated in Gelbvieh Alliance and Gelbvieh grid programs -- will be sent this month. The goal is to raise the necessary funds to enable a Sept. 1 startup.

"That would mean having management in place, investment money in hand, and ready to start buying feeder cattle this fall," Vanderwert says.

In setting up the GPP, Vanderwert says AGA opted for a structure in which capitalization is limited to a total of $1 million per 12-month period. The lower structure, he adds, offers the program the most flexibility in acquiring investors. AGA hopes consecutive-year commitments by investors will enable GPP to grow quickly.

"One-million dollars doesn't sound like much, but if you can leverage that money by buying a 50% or a 25% interest in the cattle and partnering for the rest, you can generate some good buying power," Vanderwert says. "We've run the figures and we're comfortable with our ability to purchase cattle, and we feel the program will have an impact even in the first year."

A $500 investment will purchase a single open-market unit in the LLC, Vanderwert points out. There is no marketing obligation connected with the purchase.

"We'll be purchasing these calves through Gelbvieh-influenced, feeder-calf sales, which we'll set up anywhere and anytime we have a group of breeders and a sale barn in an area who want to cooperate," Vanderwert says. "In cases where commercial herds are smaller, we'll work with our breeders in arranging cooperative backgrounding programs in order to build uniform semi-load lots for movement to a feedlot.

"There again, it offers another opportunity for Gelbvieh breeders to help coordinate things in their area. All of this is very service-oriented toward commercial customers," Vanderwert says.

Vanderwert admits cattle feeding can be a risky business. "We hope that through some feed efficiencies we can pick up through Gelbvieh genetics, we can do a better job of feeding cattle. We also will seek to align ourselves with branded-product programs in order to help remove some of the valleys from the market," he adds.

Vanderwert says preliminary industry reception to the concept has been encouraging. Thus far, Rancher's Renaissance, a farm-to-fork beef marketing alliance, and two packing concerns have shown interest, though no public word on the startup had been made prior to this article and a similar one in the April issue of BEEF.

"Working with an outfit like Rancher's Renaissance would offer the program a very good partner, as well as a risk-management opportunity. Another bonus would be the collection of carcass and consumer attribute data that we can, in turn, use for breed improvement," he says.

AGA will hire a CEO and a staff person for the GPP program. Existing AGA staff will also be involved, Vanderwert says.

"Some AGA staff will certainly be involved in helping source cattle for the program. For instance, Dennis Fennewald, our commercial marketing person, will be setting up feeder-calf sales for the program. We'll also work with some reputable order buyers for cattle purchases in sales barns as well as direct off the ranch," he says.

For more information on the AGA and its programs, visit www.gelbvieh.org.

Covering Your Basis

Basis is the difference between a specific cash market price and a futures contract price. Basis is a price. It has movement, it can be volatile and there is risk associated with it.

Basis is calculated by taking a local cash market and subtracting the futures — cash minus futures.

“Everyone in the country has a slightly different basis depending on location, time of the year, quality of cattle and the supply of cattle vs. demand,” says Duane Lenz, Cattle-Fax market analyst, Englewood, CO.

“Basis can be either positive or negative,” Lenz explains. “A positive basis means the cash market is greater than the futures; a negative basis means the cash market is below the futures.”

A positive basis is commonly referred to as “over” or “over the futures.” A negative basis is quoted as “under” or “under the futures.”

Basis And Price Risk

Historically, basis risk is much lower than the price risk of a particular market, adds Lenz, who has worked with Nebraska and Texas feedlots since 1989. “In the past, basis risk has accounted for 25% or less of the total price risk.”

For example: While fed-cattle market prices typically swing in $12-$15/cwt. range annually, basis risk is usually between $3-$4/cwt. It's because of the smaller risk associated with basis, compared to a typical, market-price swing, that basis is frequently used.

“The improved predictability of basis makes hedging and basis contracting possible by reducing the risk associated with price,” Lenz says. “If basis varied more than actual cash or futures prices, successful hedging would not be possible.”

Much time and energy must be dedicated to studying historical basis relationships. Lenz says that by studying historical patterns and current market fundamentals, a trader can better his odds of making improved decisions by:

  • isolating the risk associated with markets,
  • minimizing market price exposure, and
  • eliminating price uncertainty.

Plus, understanding basis is a key ingredient in any successful marketing plan.

Cash and futures usually converge over a period of time. As a futures contract becomes “spot” (the lead contract), cash and futures markets will draw closer together.

Convergence, simply stated, according to Lenz, “is the tendency of the basis to narrow as a contract matures and expires.”

Cash and futures prices won't correlate perfectly because regional supply and demand factors impact local prices. However, he adds, the basic trends that influence prices do affect both cash and futures markets similarly and both will generally move together.

Cattle Vs. Grain Basis

Feeder and slaughter cattle basis are always computed using the nearby (closest to expiration) futures contract, says Jim Mintert, Kansas State University (KSU) economist. “This is because it's generally not possible to store cattle into the expiration period of a subsequent futures contract.”

However, grain basis can be computed using a deferred futures contract price. A deferred futures contract is any futures contract further away from expiration than the nearby futures contract.

For example, Mintert explains, a producer could choose to compute corn basis using the July corn futures contract, which is a deferred contract since the December contract is the nearby contract in the fall.

“It makes sense to do this with grains since they are a storable commodity, unlike cattle,” he says.

Computing grain basis using a deferred futures contract makes it easier to evaluate expected changes in the basis over a long period of time. That can be helpful when evaluating storage profitability.

Basis is much easier to predict than either the cash or futures price. This is because most of the factors that influence a commodity's price affect both cash and futures prices simultaneously.

Usually there's a one-to-one relationship (approximately) between cash and futures prices, says Kevin Dhuyvetter, Mintert's KSU colleague.

“This means cash and futures prices tend to move together. For example, if April live cattle futures prices go up $1/cwt., cash prices during April also tend to go up by about $1/cwt.,” Dhuyvetter says.

Basis Is A Powerful Tool

The mathematical formula used to compute basis is: Basis = Cash Price - Futures Price. It's a powerful tool.

Dhuyvetter says that if we rearrange the equation and solve for the cash price, we discover the following relationship: Cash Price = Basis + Futures Price.

Hedgers can use expected basis for the time frame they expect to deliver (or accept delivery of) the cash commodity to estimate their expected price if they place a hedge at today's futures price level, he explains.

“This works because a hedger effectively locks in the futures price when the futures contract is sold, in the case of a short hedger,” adds Ernie Davis, Texas A&M University (TAMU), “or when the futures contract is purchased, in the case of a long hedger.”

Effectively, this means the difference between a hedger's actual price, at the conclusion of the hedge, and the expected price, at the outset of a hedge, will be attributable to the difference between the actual and expected basis.

“Knowledge of historical basis levels also can be useful when judging the acceptability of a local cash market price,” Davis says.

As the “cash price” equation indicates, a commodity's cash price can be decomposed into its futures price and basis components.

“The basis component can be compared with historical basis levels for that particular time of year, and a judgment made regarding the acceptability of the cash price,” Davis continues. “If the basis differs substantially from historical levels, some additional research would be warranted to determine why the difference exists and whether it is likely to persist.”

Cash Price Forecasting

Finally, you can generate a forecast of the cash price by replacing basis with expected basis. In this case, the formula becomes: Expected Cash Price = Expected Basis + Futures Price.

“This means you can use a basis forecast, in conjunction with the futures price, as a cash price forecasting tool,” Davis says. “The technique is straightforward.”

Simply add today's futures price — choosing the futures contract that will be the nearby contract during the forecast period — and a forecast of the basis during the forecast period to obtain a cash price forecast, Davis explains.

To clarify this use of basis as a forecasting tool, TAMU's Stan Bevers explains, “Assume you need a western Kansas, fed-steer cash price forecast for mid-November. Take today's December live cattle futures price and add a forecast of the mid-November, western Kansas, slaughter-steer basis to the futures price.”

The result will be an expected mid-November cash price based upon today's futures market price and your basis forecast.

“This futures-based price forecast can then be compared to a producer's breakeven price or to forecasts from alternative sources,” Bevers says.

Three Cardinal Rules

Cattle-Fax's Duane Lenz says three factors have proven to be useful in planning market strategies, market aggressiveness, and forecasting price trends and patterns:

  • Are the fed cattle currently moving out of feedlots selling at a profit or loss?

  • Will cattle being purchased and placed on feed breakeven at or below the price that fed cattle are currently selling for on the open market?

  • Is the relationship between cash and futures normal? Or, is the futures market premium to the cash market or higher relative to cash than normal?

It's not uncommon that one, and sometimes even two, of these factors are negative (compared to normal).

“This suggests we must monitor the situation very closely, as it could lead to a major currentness and carryover problem,” Lenz explains.

During the past 25 years, in each instance when all three of these factors were negative (sending the wrong message to producers), the end result in the market was the same.

  • Large, front-end number.
  • Major feeding losses in dollar terms.
  • Increasing fed-cattle weights.
  • Increased days on feed.
  • Large carryover problems.

Lenz says this occurred in 1974, 1985, 1991, 1994, 1998 and 2001. In other years when at least two of these factors occurred, the result was similar but the time period affected was shortened significantly.

Watching The Markets

Much can be gleaned from watching the major market factors. They can give an excellent read on the overall market psychology. They can also help determine how aggressive one wants to be in a cash market when buying feeders or selling feds.

“Just as important, if all these factors are negative, it suggests extreme caution in planning cash market purchases and an aggressive posture to risk-management programs,” Lenz says.

If you're selling feeder cattle or calves, these same principles apply.

For example, September 1993 through April 1994 was a great time period to aggressively sell cash inventory. That's because all these factors told us what was inevitable for the summer of 1994.

“If you're a professional cattle feeder building a disciplined approach to managing risk, these principles could be applied,” Lenz concludes. “There will be times when you miss purchasing cattle for a profitable turn in the feedlot, because two out of three of the factors were negative.”

However, if you use an approach like this when all three factors are negative, you won't be burned in years when major feeding losses are suffered, like 1994 and 1998.

Estimating Actual And Expected Sale Prices

The difference between a hedger's actual price, at the conclusion of the hedge, and the expected price, at the outset of a hedge, will be attributable to the difference between the actual and expected basis,” says Kansas State University economist Jim Mintert.

He gives the following example:

It's April and you will have slaughter cattle ready for market in September. Assume the October live cattle contract is currently trading at $78/cwt. What does that mean to you when feeding and selling finished steers in Hereford, TX?

To more accurately estimate your expected sale price (net of any gain or loss in the futures market) if you decide to sell October live cattle futures at $78, you need a basis estimate for fed steers at Hereford during September.

Suppose, historically, the September fed-steer basis at Hereford averaged negative $2. Given a $78 October futures price, your expected sale price would be $76/cwt.: [Futures Price ($78) + Basis (negative $2) = Expected Sale Price ($76)].

This expected sale price is what you can expect to receive for the cattle if you sell October Live Cattle futures at $78 and the actual basis when you sell the cattle in September matches your basis forecast of negative $2/cwt.

If the actual basis doesn't match the basis forecast, the actual sale price won't equal the expected sale price. For example, if the actual basis in September turns out more positive than your forecast, the actual sale price will exceed your expected sale price.

Conversely, if the actual basis in September is more negative than your forecast, your actual sale price will be lower than your expected sale price.

Natural Strategy

In 1994, Robert Meyer set out to carve his own niche in the beef business. Today, Meyer Natural Angus Beef is becoming one of the nation's fastest growing suppliers of “all natural” beef products.

Meyer's strategy is simple and straightforward: To produce and deliver the No. 1 tasting, natural beef protein products for both domestic and international markets.

Meyer beef is naturally raised, certified humanely treated, and processed to a set of strict specifications. Based in Lincoln, NE, the company never markets beef treated with growth promotants or antibiotics. The Meyer concept is that quality and flavor go hand in hand. In fact, Meyer beef was good enough to win the 2001 Gold Medal and Best of Show award from the American Tasting Institute*.

Meyer's taste factors were also instrumental in landing a high-profile supply contract in 2001 with T.G.I. Friday's, a national restaurant chain.

“We subscribe to the belief that the more natural the beef, the better the taste,” says Eric Silvius, Meyer's chief operations officer. “We think that's what sells our beef the most — the quality and flavor — and the consistency of those factors.”

Silvius adds that Meyer's animal care standards have earned it the Humane Farm Animal Care's “Certified Humane” designation (see “Certified Humane,” page 39).

Growth And Challenges

Meyer standards are high enough to surpass not only USDA requirements, but all previous definitions of “natural.” “This enables us to market to consumers, beef in its purest form — just as nature intended it to be,” Silvius says.

The proof of Meyer's success is in the numbers. In 2003, the company's sales grew a phenomenal 40% — and the prospects for 2004 are following the growth curve set over the past couple of years.

“The marketplace for natural beef isn't static,” explains Silvius. “We just don't know where the limits may be.”

Currently, Meyer sells fresh and frozen beef products to a growing list of retail and food service customers. But, Silvius leaves the door open to the idea of cooked or prepared beef products coming out of the business one day.

Meyer can provide customers with custom cuts and products, including a selection of dry-aged premium steaks.

The biggest challenge faced by Meyer following the bovine spongiform encephalopathy (BSE) cases discovered in Canada and the U.S. last year, is the loss of export outlets.

“Those export markets are the outlets for cuts that aren't in high demand in the U.S.,” he says. “Right now, the market for those traditional export cuts has gotten tough.”

Cattle Procurement

Issues such as BSE highlight the unsettled nature of the industry today. Markets notwithstanding, the key to the Meyer quality is in sourcing cattle.

“We're always looking for quality cattle that meet the requirements of our production system,” says Mike Phillips, Meyer Natural Angus program director. “We'll look at nearly any class of cattle — feeders, yearlings or feds — that meet our requirements.”

The first step to fitting into Meyer's system is to provide cattle that are no less than 50% Red or Black Angus.

Since its inception, Meyer Natural Angus cattle have been sourced verified. Producers certify the cattle are born, raised, and fed in the U.S. and adhere to Meyer's standards (see sidebar on page 40). Affidavits trace the movement of cattle from the original seller, other owners, shippers, feeders and truckers. The affidavits must also be signed by a Meyer representative.

“Our primary focus is to acquire beef that grades Choice or better and carcasses with yield grades of 1, 2 and 3,” Phillips adds. He says there are several options available for ranchers and feeders to participate in the Meyer program that allow them to receive competitive pricing and premiums:

  • Sell direct as fed cattle, feeders or yearlings.

  • Sell via a local livestock auction barn and/or video sales firm. It's advised that producers inform a Meyer representative well in advance as to when and where cattle will be offered.

  • Contract fed cattle to Meyer using forward pricing and grid pricing.

  • Market feeders and yearlings direct via Meyer's contract options or through designated livestock auctions.

  • Retain ownership through the “rail.” Meyer can locate your cattle to feedyards specializing in “natural” cattle production that optimize their performance.

The “Natural” Argument

Eyebrows are invariably raised when the term “natural” surfaces in conversations with cattlemen. Some producers who produce cattle under conventional systems feel the term implies the use of growth promotants and antibiotics results in product that is less safe or not as wholesome.

Phillips likes to clarify the point.

“We're not saying other beef is not wholesome. We're just saying our beef comes from cattle that have never received a specified set of treatments or have been provided certain products,” he says. “Our beef is breed-specific and we're serving a market that wants an all-natural product and has a specific set of ‘wants.’”

The key, adds Phillips, is for our consumers to understand what the term “natural” means within Meyer's product. He says this segment isn't for everybody. “It's a niche — not everyone has the same tastes and desires.”

He says Meyer's retailers are careful to educate their customers that beef products are healthy.

“Then they let the customer make the decision on what kind of beef they want to buy,” Phillips explains. “But, customers say that this beef tastes great — and no matter how wholesome, safe or nutritious any product may be, if it doesn't taste great they aren't going to keep coming back.”

*Formerly known as the American Tasting Institute, American Culinary Institute and Quality Institute International — the American Culinary Institute (ACI) has completed a restructuring under a single corporate brand and new corporate identity. ACI is an independent chef-based organization dedicated to recognizing and honoring the best food and food related products.

Certified Humane

The “Certified Humane Raised and Handled” label assures consumers that a meat, poultry, egg or dairy product has been produced according to Humane Farm Animal Care (HFAC) standards for animal treatment.

Based in Herndon, VA, HFAC offers a voluntary, user fee-based service available to producers, processors and haulers of animals raised for food. Certification of Meyer Natural Angus followed rigorous on-site inspections by HFAC professionals, says HFAC's Michele Wells.

To receive HFAC certification, producers must offer animals a diet without antibiotics or hormones and must be raised with shelter, resting areas and space sufficient to support natural behavior. Producers certified under the Certified Humane Certificate Program can use the “Certified Humane Raised & Handled” logo on their packaging.

For more information, visit HFAC's Web site at www.certifiedhumane.com.

Meyer Natural Requirements

To meet Meyer Natural Angus standards, producers must follow these requirements:

  • Minimum 50% Red or Black Angus genetics.

  • No added growth promotants, hormones or implants in the animal's lifetime.

  • No antibiotics or ionophores administered in the animal's lifetime.

  • No animal by-products in feed.

  • Born and raised in the U.S.

  • Producers are encouraged to assemble loads of a minimum of 50,000 lbs.

  • Weaned at least 45 days before leaving the ranch.

  • Labeled use of vaccines is allowed.

  • Raised under Human Farm Animal Care guidelines.

  • Allow visits by Meyer personnel to certify all standards are being met.

  • At time of delivery, cattle are sound, in a merchantable condition and free of disease and lameness.

  • Complete, accurate records must be kept.

  • All vaccinations given subcutaneous or in the neck area with no more than 5 cc/site.

  • Any animal treated with an antibiotic, or disqualified for any above reason, must be marked for removal from the natural program.

For more information, contact Mike Phillips, program director, at 402/430-1352 or [email protected].