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Beef Demand Remains Surprisingly Strong Despite High Retail Prices

consumers flinch with high beef prices
<p> beef checkoff photo</p>

“Overall, I would consider beef demand to be stronger than many analysts have expected, but to still have significant room for further enhancement,” says Glynn Tonsor, a Kansas State University agricultural economist.

In fact, contrary to gut instinct this spring, domestic consumer beef demand has actually grown. Compared to 2011, the All Fresh Beef Demand Index (AFBDI) was 5.67% higher in 2012. The Choice Beef Demand Index (CBDI) was 4.05% higher, says Tonsor. He maintains these indices for the industry.

Although the CBDI was 0.14% lower in the first quarter of 2013 compared to the first quarter last year, the AFBDI was 1.57% higher.

This reality can be difficult to comprehend when considering the declining cattle prices since the first of the year, the dearth of boxed-beef trade, and struggles to glimpse profitability in any industry sector. But squaring the truth of stronger demand with such anemic prices requires understanding the difference between demand and quantity demanded.

Tonsor explains beef demand represents a schedule of quantities that consumers would purchase over a range of prices. Quantity demanded, on the other hand, represents the quantity consumers will purchase at a given price — it’s a single point along the demand curve.

Consequently, the quantity demanded can decrease, while the demand curve can remain constant or grow as the recent example of beef demand.

Incidentally, you can find fact sheets and informative videos offering more insight into the subtle complexities of beef demand at www.agmanager.info.

Though current beef demand has proven amazingly resilient, Tonsor says, “One of the current concerns is the relative price of beef as beef-to-substitute meat-price ratios continue to increase.”

Increasing value for any product or service means decreasing the cost relative to the benefit or vice versa.

Beef lost the price race about the time Noah figured out that beef tastes a lot better than whatever chicken happens to be slathered in. As retail prices grow with decreasing supplies, consumers receive less value for their beef purchase unless benefits continue to increase.

Last year’s checkoff-funded, semiannual Consumer Beef Index was atypically stronger in the spring than midsummer.

“Our hypothesis for this decline is that when consumers pay a lot for beef, frugality becomes a watchword,” says John Lundeen, senior executive director of market research at the National Cattlemen’s Beef Association, a contractor to the beef checkoff. In the fall 2012 Beef Issues Quarterly, Lundeen explains: “But beyond that, expectations become heightened — since the consumer has paid more, they want taste to be awesome, quality to be high, safety to be iron-clad, and the family to walk away from the table satisfied.”

In last summer’s survey, Lundeen says the percentage of consumers with very positive attitudes about beef was down significantly from the summer of 2011.

That should be chilling news for anyone banking on the future of beef.

 

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A separate checkoff-funded study last May underscored that price and nutrition concerns continue to be the key limiters to beef consumption. But, consumers can be persuaded to increase beef usage with more value.

In the study, smaller portion size appeared to be a motivator for increased beef usage. Consider that U.S. households of 1-2 persons now comprise 62% of all households.

More than 20% said they limit beef consumption because of concerns about factory farming. You can add to that the short list of other challenges and opportunities the beef industry faces, such as convenience, ethnic variety, preparation education and dependability.

As it is, for the first time in 50 years, pork production is expected to eclipse beef production in the fourth quarter of this year, according to the U.S. Baseline Briefing Book from the Food and Agricultural Policy Institute at the University of Missouri. Per-capita beef consumption, estimated at 55 lbs. this year, is projected to decline steadily to 52.2 lbs. in 2022.

Promo picture courtesy of Beef Checkoff.

 

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Beef Producers Not So Optimistic In 2013

beef industry state of industry survey

Sometimes, picking up a magnifying glass and peering into the future is a good thing. Take the last few years, for instance.

Back in 2010, cattle producers’ short-term optimism, as measured by the annual BEEF Reader Optimism Index (ROI), took a rocket ride from its inaugural 2008 levels. The ROI more than doubled as the picture magnified through the looking glass was one of higher prices and better times. Long-term optimism jumped as well, with factors in the cattle market signaling a long and profitable run — certainly for cow-calf producers and likely for other segments as well.

While the BEEF ROI slipped slightly in 2011 and 2012, it remained well above the magic 100 line, indicating that producers remained very optimistic about both their short- and long-term futures.

Then along comes 2013. According to BEEF magazine’s annual state-of-the-industry survey, the image that readers see this year is a less-than-positive reflection. Long-term optimism dipped to just above 100, and the short-term outlook dipped slightly below the baseline into negative territory.

beef reader optimism survey

Just short of 1,000 reader responses (5.3% response rate) were received to the email survey over the April 15-26, 2013, period. In terms of hard numbers, here’s what the survey says: 53% of respondents say, compared with last year, their level of short-term optimism is about the same for the next two years; 25% are less optimistic in the short term; and 21% are more optimistic.

The numbers didn’t change much when respondents were asked about their long-term outlook — five years and beyond — for the U.S. beef industry, although BEEF readers are slightly more optimistic long-term. Overall, 54% say their outlook is about the same as last year, 25% are more optimistic and 21% are less optimistic.

So, while the majority of respondents are even-minded about the future, there are enough cattle producers who are looking through the magnifying glass darkly to cause a dip in the BEEF ROI this year.

Why the sour pickles?

The factors contributing to the downward tilt in the outlook are varied. However, 82% list increased input costs as their top concern in the short term (Figure 1). They’re also concerned about consumer demand (66%). What’s more, 64% are concerned about government regulations and oversight, and 53% are worried about availability of feed and forage.

Long-term concerns (five years and beyond) were similar, with increased input costs cited by 81% of respondents. However, government intrusion into the cattle business rose to second place in the long-term outlook, with 71% of respondents noting that concern. Consumer demand at 55% and availability of feed and forage at 48% were also major long-term concerns (Figure 2).

Not surprisingly, 87% of respondents say they’re making changes in their management and procurement strategies in an attempt to reduce input costs. Only 13% say they’ll stay with the status quo when it comes to their procurement strategies.

short term beef industry concerns

beef industry concerns short term

However, if the beef industry is anything, it’s a business comprised of optimists. Of those who are more optimistic in the short term, 88% say they like the supply-demand fundamentals that have been at work in the cattle market the past few years. Looking beyond the borders of the U.S., 53% say increasing international demand gives them cause to be optimistic, while 37% listed available feed and forage (Figure 3).

beef industry positives long term

beef industry concern long term

Looking long-term, 84% of respondents think supply-and-demand fundamentals will continue to be major positive factors in the cattle market, followed by increased international demand at 66%, and available feed and forage at 37% (Figure 4).

Management strategies

With increased input costs and availability of feed and forage being top of mind for many respondents, BEEF asked readers their strategies for decreasing feed costs. Altering forage management was first (59%), while 39% have reduced cattle numbers. Another 29% hope to gain a better return by putting more pounds on their cattle before sale (Figure 5).

cattle feed management strategies

marketing 2012 calvesWhether those tactics are reflected in the timing of when calves come to market this year remains to be seen, however. While 41% say they will market calves in the same time frame as last year, 35% hadn’t made that decision as of April. With drought still keeping much of cattle country in its crackly grip, 15% plan to take calves to town sooner this year, while 9.5% plan to delay marketing (Figure 6).

Despite the drought, or because of it, the supply-demand factors noted above seem to be at play as producers try to match herd size with the hand Mother Nature deals them. Just over 39% of respondents plan to maintain their herd size, while 25% look to expand by 1% to 10% this marketing year. An optimistic 8% of respondents plan to grow their herds by more than 10% (Figure 7).

cattle risk management tools

However, drought is still the X factor this year, particularly in the West North Central (IA, KS, MN, MO, ND, NE and SD) and Mountain (AZ, CO, ID, MT, NM, NV, UT and WY) regions of the country. Overall, 16% of respondents plan to reduce herd size by 1% to 10%, while 12% expect to cut numbers by more than 10%. If that trend holds true for the second half of the year, 2013 could be another liquidation year.

 

Risk management is important

If liquidation is the case, the tighter numbers will only exacerbate the volatility and velocity of market moves this year and beyond. To deal with that uncertainty, some producers are looking at various risk management alternatives.

“Some,” however, is the operative word. Almost 59% of respondents didn’t use any of the risk management tools last year that were listed in the survey. Of those who did, 23% forwarded-contracted their calves, 16% used the futures market, 16% forward-contracted their inputs and 12% used options (Figure 8).

That trend held true when readers were asked what risk management practices were under consideration for this year, though the numbers ticked up very slightly. Overall, 52.5% say they won’t use any of the listed risk management tools this year. For those who will, 25% say they’ll forward-contract their calves, 21% will offset risk by forward-contracting inputs, 19% plan to use futures and 15% will try options (Figure 9).

risk management tools

cowherd size plans

Current issues

In addition to asking readers about operational plans, BEEF asked their opinions on several current industry issues.

  • Overall, 43% of respondents say drought is an immediate issue and is affecting their short-term outlook and management. Looking at a regional breakdown of respondents, 67% of those from the West South Central (AR, LA, OK and TX) region of the U.S., 54% of those from the Mountain States, and 45% of those from the West North Central states say drought is a major factor in their management plans. What’s more, 37% of all respondents say drought is a factor, but they have some latitude, in that it’s not having a significant effect on their short- or long-term outlook. And 20% say drought isn’t a factor this year on their operations.
     
  • Earlier this year, USDA released its revised animal disease traceability program. According to BEEF readers, 47% aren’t thrilled with the program, but say it’s better than nothing. Ten percent hate it, 6% love it and 38% say they don’t know much about the program (Figure 10).
     
  • Industry consolidation and concentration has long been a concern to many. When asked to rank their level of concern on a scale of 1 to 5, 43% came in at a 3, indicating they are somewhat concerned; 10% checked a 2; and 12% checked a 1, indicating they are not concerned. However, 15% notched a 4, and 19% marked a 5, which indicates it’s a major concern to them.
     

beef industry issues

  • BEEF asked readers how concerned they are about feedlots and packers exiting the business and reducing marketing opportunities for their cattle. Overall, 39% were somewhat concerned, clicking on No. 3, while 24% notched No. 4, and 31% hit No. 5, indicating major concern. Only 3.2% indicated a 1, which is not concerned at all, and 2.4% hit No. 2.
     
  • With social and political activism seemingly on the upswing, 39% of respondents reported being more concerned about domestic terrorism and animal rights terrorists than they were last year. However, 58% said their level of concern is similar to last year, and 3% said they are less concerned.
     
  • On the other side of that equation is the need for individual producers to speak up and let their elected officials know their thoughts and concerns. A slight majority of respondents, at 54%, say they have made contact with state or federal elected officials last year. On the other hand, 46% indicate they didn’t share their concerns directly with their elected officials.

Perhaps that’s a reflection of producers’ general outlook on larger social and political trends in the U.S. A strong majority (64%) answered “no” when asked if they felt the U.S. is headed in the right direction. Another 19% don’t know, and 17% said “yes” (Figure 11).

Is the dip in the BEEF ROI just a one-year anomaly as producers react to ongoing drought and an uncertain market? Only time and Mother Nature can answer that question. But, this year’s dip in optimism aside, beef producers are a resilient lot. BEEF readers have weathered drought and crazy markets before, and they’ll no doubt emerge from this round battered and bruised, but standing tall. 

 

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As I Get Older, I Relate Better To My Old Cows

relating to the old cow in the herd

Every year, I decide to keep a certain cow for just another year. Despite the fact that she might be more than 12 years old, I reason that she has a great production record, she bred early and she still looks good.

It turns out to be a good decision about half the time. But there’s also the other half in which the cow goes rapidly downhill and weans a dink, or occasionally doesn’t even end up weaning a calf. I guess it all boils down to the inevitability that comes with age. 

As humans, our timeline is a little different, and the experts continue to work diligently to find ways to cheat Father Time. Still, I hit a hole with the four-wheeler the other day (I never would have hit the hole if I was horseback), and I woke up with a kink in my neck that provided me with a fairly constant reminder for a few days that I’m getting old.

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Both my dad and my father-in-law had surgeries this week – one had work done on his knee, the other his hip. As tough and active as they are, time appears to be catching up to them as well.

I never believed my grandmother when she told me as a child to just wait, and I would see what it was like to get older. Turns out she was right.

I’m about at the point where I want to wage war on getting older, because I’m not necessarily seeing the benefits that are supposed to come with old age. What happened to the wisdom, financial independence, and other benefits that are supposed to come with all this life experience? I sure don’t seem to be accumulating them at a commensurate rate that age is taking from me. 

I’ll admit that I sometimes fantasize about having the capability to hit a restart button and to go back in time. But since it doesn’t seem to be a viable option, I’m officially going on offense against getting older. I want to be riding with my grandkids when I’m 80, or will that be my great grandkids by then? I want to be dancing with my wife, and I want to be as excited about changing the world and making a difference then as I am right now. I have to admit, however, that I haven’t been dancing in quite awhile, and I tend to think I don’t have time to ride a lot of days. Perhaps what’s most discouraging is that I lack the passion that I used to have for some of these things.

I’m still young, but it is probably good that I am also realizing that I’ve probably hit, or maybe even went past, that magical halfway point in life. But I take solace in the fact that most of the world’s greatest achievements outside of the athletic realm have occurred at the age of 50 plus.

It recently dawned on me that our lives are not much different from that of a cow. We typically get a little more longevity than the bovine, but cow birth to yearling is like our development years (school). It begins with proper development and management (parenting and education). Then we go into production,and those first couple of decades are like years 2-4 with a cow. They require a little more care and there is a little higher risk of failure.

 

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Then there are years 5-9, which are like our middle years (40-65). It’s where all the investment pays off, production is at its peak, and the fallout or failure rate goes to almost zero – if shortcuts have not been taken earlier.

Then there are the 10- to 15-year-old cows, which is the equivalent of our retirement years. This is a period that can be highly productive, but things also can deteriorate quickly. Thinking ahead, I believe I aspire to be one of those 17-year-old cows that go to the mountain in the summer looking fat and healthy, but simply doesn’t make the trip back down in the fall.

 

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We Need To Be Customer-Focused, But Competitor-Oriented

We Need To Be Customer-Focused, But Competitor-Oriented

I was taught from an early age that one shouldn’t be narrow-minded, and I understand the logic there. We’ve all probably missed untold opportunities due to narrow thinking.

For instance, business gurus often point out that the railroad industry lost ground because they saw themselves as being in the freight business instead of the broader transportation business, conceding the latter to the automobile and airplane industries.

Many of us are also taught as children to diversify. Don’t put all your eggs in one basket, they say. And I’ve always been amazed by great men like Thomas Jefferson and Benjamin Franklin. They were true renaissance men who had many interests, and demonstrated tremendous creativity and expertise in so many of them.

However, by personal experience, I can attest to the fact that a huge percentage of our management-related problems and lack of performance comes from spreading our efforts too thinly and/or insufficient focus. Certainly, the sayings about having too many irons in the fire, or burning a candle at both ends, have an element of truth in them; firms like FedEx lend credence to them. After all, FedEx was unsuccessful with its initial business approach of being all things to all people. It was only when FedEx began to focus exclusively on overnight delivery that it truly began to succeed. 

Our military also believes in a narrow-minded focus. When an army assaults a position, it typically doesn’t attack the entire front, but concentrates its force to bring superior numbers and firepower in a given area in hopes of overrunning the opponent. We do something similar in sports, when we work to learn the weaknesses of our opponent and then strive to exploit them to our advantage. 

 

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It is funny then that, in the face of these commonsense approaches, we in agriculture nonetheless tend to love generalists. Specialization in our business is associated with increased risk. Agriculture is unique in so many ways – the values its practitioners hold, the hours and work ethic they possess, the uncertainty that comes from relying on Mother Nature. Still, I think that what really sets production agriculture apart is that we, as commodity producers, tend to not regard our fellow producers as competition.

Many other industries don’t work that way. They tend to view their business more like a war, in that you must take advantage of your strengths and exploit your opponents’ weaknesses. Yes, our competitors are pork, poultry and foreign producers, but they’re also our neighbors and friends. So we tend to view our success as dependent on identifying and doing something far more efficiently than they can do it. I think we need to be customer-focused, but competitor-oriented.

 

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Eastern Livestock Saga Coming To A Sad End

Tom Gibson, the CEO and founder of Eastern Livestock, already had been sentenced to 10 years in prison for conviction on fraud. This week, however, he received an additional six years in federal prison for mail fraud. It relates to the check-kiting scheme his firm implemented as his business unraveled, and eventually leaving people holding bad checks for over $30 million.

Eastern Livestock was a major player and a long-time institution that had operated successfully for many years. Most people in the industry were caught by surprise when the financial difficulties and fraud occurred. They were surprised because it occurred in an up-trending feeder cattle market, and involved a long-established company that had operated successfully for years, and in tougher business environments

Through all the court cases and the like, there hasn’t been a real clear picture assembled to really explain how this all came to pass.  We may never know all the particulars, but there is no shortage of unanswered questions.

 

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Rural Economy Healthy, But Farmland Price Growth Slows

rural economy booms land prices slow

For some time now, indicators of the general health of the overall U.S. economy have consistently thrown up caution flags – for good reason. Jobless rates remain high and the threat of the eventual downside of sequestration has put a pall on optimism.

Perhaps some of those Wall Street economists need to stroll down the main streets of America’s rural communities. They might come away with a slightly different perception.

While the general economy sputters along, the rural economy is, for the most part, doing just fine. That message has been a consistent theme in the Creighton University monthly Rural Mainstreet Index (RMI) recently.

In fact, growth strengthened for the rural mainstreet economy over the past month, according to the May survey of bank CEOs in a 10-state area. The RMI, which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 58.8. That’s its highest level since December 2012, and up from April’s healthy 58.3.

However, with all eyes on planting progress for the year, some sectors of the rural economy could see some changes ahead. Bankers were asked their thoughts on the most significant risks to the rural economy, and almost 60% say low commodity prices are the greatest threat to the farm-based economy for 2013. Another 16.7% believe drought is the number-one threat, while 15.2 % cite the possible bursting of the farmland price bubble

On a positive note, Charles Helscher, president of Farmers Savings Bank in Keota, IA, reports, “The drought appears to be over in southeast Iowa, at least temporarily.” However, he indicated that excessive rain has delayed planting and some bottom ground may not be planted due to flooding.

Farming: The farmland price index (FPI) dipped to a still strong 62.1 from 66.9 in April. FPI has been above growth neutral for more than three years, but has now declined for the fifth time in the past six months. The farm-equipment-sales index declined to 52.4 from 57.3 in April.

“Since the beginning of the year, the U.S. dollar has climbed in value by 5%,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University. “This has been a factor pushing farm commodity prices downward. For example, corn prices have slumped by almost 10% since December of last year. This trend, which I expect to continue in the months ahead, has taken a bit of the air out of farmland price growth and farm-implement-sales growth.”

Banking: The loan-volume index rose to 72.1 from 66.0 in April. The checking-deposit index declined to 54.5 from April’s 63.0, while the index for certificates of deposit and other savings instruments advanced to a weak 42.6 from last month’s 40.4.

“We are recording more and more reports of negative economic fallout from Dodd-Frank,” Goss says. 

Larry Rogers, president of the First Bank of Utica, Utica, NE, says, “Dodd-Frank and new regulations from the Consumer Financial Protection Board are strangling us. New regulations are going to cause us to quit making residential real estate loans, hurting the people these regulations are supposed to be helping.”

Hiring: May’s new hiring index (NHI) expanded to 59.8 from April’s 57.5. “Despite solid job creation across rural mainstreet beginning in January 2011, rural areas are still not back to pre-recession employment levels. Government data show that regional employment is off more than 1.2%,” Goss says.

Bankers pointed to federal policy’s negative impact on job creation. Michael Flahaven, president of Wenona State Bank in Wenona, IL, says, “The Healthcare Reform Act will likely affect employment in this area in the months ahead. The Dodd-Frank regulations will adversely affect community banks.”

Confidence: The confidence index, which reflects expectations for the economy six months out, dipped to 54.5 from 56.3 in April. “Over the past three months, we asked bankers how the federal spending sequestration was affecting their area economy,” Goss says. “Each month, approximately three-fourths of the bank CEOs reported no impact from sequestration. Only 1.5% reported significant impacts with the remaining 20.6% indicating only modest impacts.”

Home and retail sales: For a fourth straight month, the home-sales index (HSI) took a large, positive jump. May HSI advanced to a record 73.9 from April’s 70.8, while the retail-sales index rose to 52.3 from April’s 51.4.

“Despite the growth in home sales, bankers reported a modest 4% growth in housing prices for rural mainstreet over the past year.  However, one in 10 bankers says housing prices in their area have expanded by more than 10% over the past year,” Goss says.

State-by-state outlook

Each month, community bank presidents and CEOs in nonurban, ag- and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This survey represents an early snapshot of the economy of rural, ag- and energy-dependent portions of the nation. RMI is a unique index covering 10 regional states, focusing on 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy.

Colorado: Colorado’s RMI remained above 50.0 for the eighth straight month, though it declined to a still healthy 59.2 from April’s 73.1. The FPI and ranchland price index (RPI) sank to a strong 80.8 from April’s 83.0. Colorado’s NHI for May expanded to 72.5 from April’s 68.8.

Illinois: RMI declined in May but remained above growth neutral for the eighth consecutive month. The index declined to 55.9 from April’s 56.7. FPI sank to 52.1 from April’s much stronger 63.0, while the state’s NHI decreased to 53.4 from 55.5 in April.

Iowa: RMI dipped to 58.1 from April’s 62.3, while FPI sank to 60.7 from 70.0 in April. NHI for May weakened slightly to 59.1 from 60.2 in March.

Kansas: RMI for May decreased to 61.5 from 61.8 in April, and FPI plummeted to 53.6 from April’s much stronger 65.5. NHI declined to 54.4 from 56.6 in April. However, bankers are concerned about recent strong growth. Dale Bradley, CEO of The Citizens State Bank in Miltonvale, says, “The economy is still not stable, and the ups and downs will affect farmers as well.”

Minnesota: RMI advanced to 67.2 from 66.7 in April, while FPI sank to 65.7 from April’s 67.1, and NHI advanced to 62.5 from 61.5 in April. 

Missouri: RMI climbed to 77.0 from April’s 71.7, while FPI expanded to 72.1 from 70.8 in April. NHI rose to 66.7 from April’s 60.7.

Nebraska: After moving below growth neutral for January, RMI has now moved above growth neutral for four straight months. May RMI expanded slightly to 57.7 from 57.3 in April, and FPI sank to 53.9 from April’s 65.4.

North Dakota: RMI advanced to a regional high of 83.7 from 78.8 in April, while FPI climbed to 85.3 from April’s 75.6, and NHI increased to 83.6 from 61.2 in April.  

South Dakota: RMI increased to 60.3 from 57.2 in April, and FPI slumped to 56.6 from April’s 67.4. NHI expanded to 56.3 in May from April’s 55.4.

Wyoming: RMI dipped to 54.4 from 55.1 in April. FPI and RPI fell to 46.2 from April’s 58.0, while NHI sank to 49.4 from 53.2 in April.    

 

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Industry At A Glance: The Live-To-Cutout Spread

annual live to cutout spread

The live-to-cutout beef spread provides some insight into packer gross margins over time. This spread is calculated as revenue from wholesale beef and by-product sales, less the cost of a live steer/heifer. Remember that gross margin does NOT equal profit; it doesn’t account for costs associated with maintaining and operating a beef plant such as labor, overhead, cost of capital, etc.

Most important to this discussion, the live-to-cutout beef spread is often used as an indicator of relative leverage within the industry. That is, some argue that spread differences over time reflect relative leverage in the marketplace. That argument was especially pronounced when the spread peaked in 2003; packers were unduly taking advantage of weekly negotiations.

However, since that time, the spread has chopped lower as the fed supply has become increasingly tight. The 2012 average was a negative $144/head, the lowest since 1998.

live to cutout spread cattle prices

Nonetheless, some of that same discussion has flourished in recent months, given the market’s recent disappointing performance. Simultaneously, the level of alternative marketing arrangements continues to rise in the industry. As such, the discussion about alternative marketing arrangements (captive supplies) have seemingly resurfaced. The argument is that the cash market has become increasingly thin, thereby providing beef packers with undue opportunity to manipulate weekly pricing of the fed cattle market.

Where do you ultimately see those discussions headed? Accordingly, how do perceive the overall condition of the cash market at the current time, and its relationship to the economic health of both the packer and feeder? Leave your thoughts below.

 

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Minnesota Girl Delivers A Poignant Food Safety Message

martha and mary moenning
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One day while driving home from school, I asked my mom, “What is my purpose in life?” Before she could address my question, my little sister Martha spoke up and said, “I know what my purpose in life is – to not eat a bug.” That may sound like a funny comment coming from a five-year old, but this comment has a dark and near deadly story behind it.

The bug Martha was referring to is E. coli O157:H7, a deadly strain of bacteria that was identified in the 1980s. According to the U.S. Food and Drug Administration’s “Bad Bug Book,” E. coli O157:H7 is a rare variety of E. coli that produces large quantities of potent toxins. The infection can progress into the dangerous hemolytic uremic syndrome (HUS), which destroys red blood cells and can lead to kidney failure and even death.

Today, I’m going to share Martha’s bug story with you; provide an update on both government and industry initiatives to address E. coli O157:H7;and, finally, explain what we as consumers can do to protect ourselves.

In August 2002, my little sister Martha was fighting for her life against this dangerous, often lethal strain of bacteria. Initially, my parents thought that Martha’s diarrhea was normal for a child teething. But at night she was more than crabby, she screamed. At only 16 months of age, Martha couldn’t tell us what was wrong. After 10 days of painful symptoms and several visits to the clinic, test results finally revealed Martha was suffering from E. coli O157:H7.

Martha was rushed to the Mayo Children’s Hospital in nearby Rochester, MN. She was hooked up to an IV to avoid dehydration and overworking her kidneys. Martha progressively got worse in the hospital. She lost 5 lbs. – a significant amount of weight for a 16-month old that only weighed 24 lbs. to begin with prior to getting sick.

The second night in the hospital, Martha’s blood hemoglobin dropped to dangerous levels as her body entered the dreaded state of HUS. Doctors hurried to give her a blood transfusion to help her body fight the infection.

Thankfully, within 24 hours of the transfusion, our prayers were answered. Her blood tests showed some encouraging numbers. Unlike many E. coli patients, Martha did not need kidney dialysis or a second transfusion. Remarkably, she was released from the hospital after five days, returning for follow-up blood tests. But it wasn’t over yet. It wasn’t until Martha celebrated her second birthday in April 2003 – eight months after the ordeal – that the toxins were completely out of her body and she finally gained back the 5 lbs. she had lost through the sickness.

Where and how did Martha pick-up this devastating bacteria? As farmers and livestock producers, the source shouldn’t surprise us. The possibilities and risks are very real.

While E. coli O157:H7 is often associated with eating undercooked ground beef, it is first found in the stomach of cattle – healthy cattle – and released in manure. E.coli O157:H7 can be found on all dairy and beef farms. While Martha was too young to be eating hamburgers, she was a thumb sucker and could easily have picked up the bacteria somewhere on our farm or at a county fair we had just visited. The exact source of Martha’s infection will never be known. 

The good news is that today Martha is a healthy and happy 12-year old. For that, our family is very thankful. The other good news is that the Center for Disease Control (CDC) reports that progress has been made in reducing several food-borne infections.Their 2010 “FoodNet Report Card” shows infection caused by E. coli O157:H7 declined by 44%. Itwas the only one of the nine infections tracked to reach the 2010 national health objective target. Furthermore, E. coli O157:H7 in fresh ground beef declined 72% between 2000 and 2010.

Overall, the CDC credits this downward trend in food-borne infections in part to three reasons:

  • Enhanced knowledge about preventing contamination;
  • Cleaner slaughter methods and better inspections in ground beef processing plants and;
  • Increased awareness of the risk of consuming undercooked ground beef and other produce that can carry the bacteria at restaurants and at home.

The Food and Drug Administration’s (FDA) Food Safety Modernization Act assures these downward trends will continue. Speaking at a 2011 Food Safety Conference, Michael Taylor, FDA deputy commissioner for foods, called the changes historic and profound.

“Prevention of food-borne illness, not reaction to problems, is now the guiding principle of our food safety law – and the primary responsibility for prevention resting squarely on the shoulders of food producers and processors,” he said.

What efforts are producers and processors taking to deliver on their responsibility? The National Cattlemen’s Beef Association reports on its website that safety measures integrated throughout the production process creates a robust food safety system.

The most promising areas have been research in the early stages of production. For example, vaccines and different feed supplements have been effective in reducing and eliminating E.coli in cattle. Packing plants have also taken charge by using steam pasteurization; hot water and organic acid washes; and Hazard Analysis Critical Control Point (HACCP) programs, which help identify and solve problems before they happen.

Beef is just one of several food industries affected by E. coli O157:H7. Spinach, lettuce and sprouts were the most recent sources of outbreaks in 2012. Raw milk, apple juice and well water have also been sources of E. coli O157:H7 infections.

A major E. coli outbreak in 2006 linked to spinach left 205 people sick and resulted in three deaths. Since then, farmers, shippers and processors in California have taken voluntary measures to improve food safety through the California Leafy Greens Handler Marketing Agreement.

As consumers, all of us have a responsibility toward this food safety issue as well. The CDC recommends that:

  • All ground beef be cooked thoroughly to 160° F.
  • Don’t spread bacteria in your kitchen through cross-contamination.
  • Drink only pasteurized milk, juice, or cider.
  • Drink water from safe sources – don’t swallow lake or pool water while you’re swimming.
  • Wash your hands with hot soapy water. This is especially important for family and friends who might be visiting a farm, or have been around livestock at a county fair.

All experiences – good or bad – happen for a reason. Through FFA, I have discovered my purpose and passion – and that is to raise beef cattle just like my father. The experience my family went through with Martha underscores the significant responsibility we have as beef producers to provide others with safe, wholesome food. Martha’s Bug Story” is now part of my foundation for my future as a beef producer, and it is one responsibility I am committed to delivering.

I share “Martha’s Bug Story” in the hope that other farm families, especially those with small children, won’t experience what Martha did. According to Martha, this devastating event gave her life a purpose – to never eat a bug.

Editor's Note: Mary Moenning, a member of the Hayfield, MN, FFA chapter, details her little sister Martha’s near-fatal experience as an infant with E. coli O157:H7 in underscoring the importance of beef safety. This presentation won Mary a second-place finish in the Minnesota State FFA Convention speaking competition this spring.

 

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Cow-Calf Efficiency Symposium Agenda Is Finalized

cowcalf efficiency research

“Alternative methods of improving cow-efficiency in times of stress” is the theme of the first annual Dr. Kenneth and Caroline McDonald Eng Foundation Research Symposium this fall. Set for noon to noon, Sept. 12-13, at the Johnny Carson Center on the University of Nebraska-Lincoln (UNL) campus, the program includes updates on cow-calf efficiency research performed in the past year at the UNL, Texas A&M University (TAMU) and Oklahoma State University (OSU).

The research is underwritten by a $2-million endowment by the Eng Foundation to the three universities, with the stipulation that updates be provided to the public in an annual symposium. Eng says the foundation’s goal is to improve the long-term economic sustainability of the cow-calf sector of the U.S. beef industry through development and adoption of technologies to reduce costs of feed inputs by 25%, while maintaining productivity and beef product quality.

"I’m doing this to remember Caroline and our mutual love for the land and cattle, and the people who work in it," Eng says. Prior to her accidental death in June 2010, Caroline served as chief financial officer of Eng Ranches, the Engs’ land, cattle, research and consulting operations.

Pre-registration for the meeting is $100, or $125 at the door. You can learn more by contacting the Dr. Kenneth & Caroline McDonald Eng Foundation at 210-865-8376 (Kenneth Eng), or 575-743-6331 (Annie Powell), or email [email protected]. Send registration fees to: Dr. Kenneth & Caroline McDonald Eng Foundation, P.O. Box 272, Winston, NM 87943

Sept. 12

1-1:15 p.m. – Introduction by Larry L. Berger (UNL), H. Russell Cross (TAMU), Clint Rusk (OSU) and Kenneth Eng.

1:15-1:45 p.m. – 15 years of hands-on experience with confined cow production – Kenneth Eng

UNL Segment – Larry Berger, moderator

1:45-2:15 p.m. – Nutrition of confined cows – Karla Jenkins

2:15-2:45 p.m. – Reproduction and early weaning of confined cows – Rick Rasby

2:45-3:15 p.m. – Break

3:15-3:45 p.m. – Health and management of confined cows and calves – David Smith

3:45-4:15 p.m. – Economics of confining cows and calves – Terry Klopfenstein

4:15 p.m. – Questions and answers – Larry Berger

5-7 p.m. – Open house

Sept. 13

TAMU segment – Russell Cross, moderator

8-8:45 a.m. – Defining value and requirements in cow rations: What is a calorie worth – Jason Sawyer

8:45- 9:30 a.m. – Variation in RFI and feed efficiency of growing heifers and cows and implications for intensified cow-calf production – Gordon Carstens

9:30-10 a.m. – Break

OSU segment – Clint Rusk, moderator

10-11 a.m. – Feeder design for minimizing roughage loss, ammoniation to improve roughage value, and ionophores for confined cow production

11-11:40 a.m. – The nutritionist and veterinarian role – Bill Dicke, Dave McClellan and Dee Griffin

11:40 a.m.-noon – Questions & answers, and wrap up – Kenneth Eng

 

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Al Roker Visits Family Farm On “Today Show”

Al Roker visits the farm

Working from home, I usually have the TV on during the day, so I can keep up on the news and look for future blog topics. I’m pretty loyal to NBC’s "Today Show," featuring Al Roker, Matt Lauer, Savannah Guthrie, Natalie Morales, Kathie Lee Gifford and Hoda Kotb.

In December, I was in New York City to be recognized for making min online (Media Industry News) 2012 Top 15 Under 30 People To Watch for my work with BEEF Daily, and one of the highlights of my trip was going to the “Today Show” set and being in the background while Al Roker gave the weather report.

When I was a kid, I wanted to be a broadcast journalist, so it was pretty cool to see these national TV anchors up close and in person. Like the cheesy tourists that we were, my mom and I grinned and waved to the TV cameras and called our family back home to watch for us on the news.

It seems I have a new reason to like the “Today Show.” The station has created a new segment called, “Wake Up With Al,” where Roker travels the country and learns about the different lives of “Today Show” viewers.

His first stop was to College Grove, TN, to a dairy farm, where he helped feed cattle, give milk to bottle calves and drive the tractor. Although it got a little hokey at times, the segment was a warm invitation from the Hatcher family into their farm yard. They taught Roker how to bottle feed a calf, invited him in for a home-cooked meal, and even had him shear a sheep or two. Overall, this was a positive exposure of who livestock producers are, and millions of viewers tuned in to see it. Watch the segment below and let me know what you think about it.

If Roker and the “Today Show” were to come knocking on your door, what farm adventures or ranch chores would you want to show on national television? What are some of your favorite parts of the day on the ranch? Share your best stories in the comments section below.

 

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