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Articles from 2000 In August

Alliance 2000 - The Yellow Pages

Alliances and incentive-based targets are breaking more producers and cattle free of the averages.

Finally. After more than two decades, value-added, coordinated production and marketing systems - or more simply, alliances - are sneaking up on the industry.

"Particularly in the last 12 months, we're seeing the culmination of years of hard work, and it's happening quickly. If you're a producer and your cattle don't meet certain specifications, you may be very limited in your marketing options in the future," says Jenny Bloomquist.

Bloomquist is special services coordinator for the Montana Stock Growers Association (MSGA). The MSGA launched the Montana Beef Network 18 months ago to help producers add value to their calves through certified preconditioning, then track them through the system.

Ken Conway, president of Angus GeneNet, concurs. "I don't think there is any question that we will have value-added cattle tied to branded beef programs and commodity cattle...I don't think anyone would argue with the fact that we're moving toward value-added markets, with all of the packers currently offering their own grids. We're seeing some cattle today that packers won't even price."

Angus GeneNet helps producers market their calves to feedlots that will return carcass data to them, while helping cattle feeders earn more money for cattle that hit the targets of the company's pricing grid.

Certainly, the numbers indicate relatively sudden and substantial value-added growth. Just the systems listed in this "Alliance Yellow Pages" account for upwards of 3.5 million head of cattle. That's about 14.8% of the 23.5 million fed cattle harvested in 1999. Moreover, according to USDA, the number of cattle trading away from the cash market jumped from 25% in 1997 to about 35% last year.

For one thing, producers are finding extra incentive to build cattle that fit specific value-added systems. As an example, last year U.S. Premium Beef (USPB), a closed cooperative, paid its members an average $15 premium/head more than the live Choice market on 600,000 head of cattle; the top 50% are commanding premiums of $30-$40. That's on top of $12 million in company earnings divvied up among members, along with a 60% increase in the value of member shares.

By way of comparison, cattle in Angus GeneNet have averaged $17/head premium on 75,000 head; $38 for the top 50%.

Besides the up-front financial incentives, the cornerstone of most current industry alliances is helping producers discover how their cattle perform beyond the ranch gate.

Steve Hunt, USPB's chief executive officer explains, "Knowledge is power, and our producers, now that they're tied directly into a larger part of the industry, can make better decisions."

Indeed, diving into pricing systems that reward cattle for their carcass merit can be a fateful leap for producers who don't have some inkling of how their cattle fit the industry.

"We encourage our producers to take this step first, finding out how their cattle perform, then choosing a system to align more tightly with," says Bloomquist.

Really, coordinated systems and alliances today revolve around the age-old notion that there's power in numbers. Multiple producers aiming at the same target, along with partnerships forged between segments, can do what producers can't do by themselves.

"I think people are realizing they need to be part of a bigger system and that we can all make more money working together," says Conway. "I think this is evolving the way a lot of us thought it would. The thing that is exciting to me is that we have been able to get better pricing formulas and return more money to the producer."

But, it's a dynamic process. In addition to the rising bar of carcass acceptability as more cattle hit predefined targets, these systems are reaching further back into the system for more precision.

"I think it's (value-added) growing, and it's going toward more source verification, knowing the genetics and the health program," says Gerry Smith. He's special services coordinator for Friona Industries and its Hi Pro Producer's Edge Program, which currently aims to help producers earn more dollars for reduced health risk in their calves.

For instance, USPB's Hunt explains, "As time goes on, we have been moving toward focusing not only on management but also on the source and the genetics that will hit our targets."

Of course, building the relationships that make value-added opportunities possible takes lots of time, explains Don Knore, vice president of cattle procurement for Laura's Lean Beef, a value-added program that pays premiums for cattle that hit its targets, along with an added bonus to cow/calf producers.

"I think this will continue to grow, and I think the consumer will dictate how many niche markets evolve...There is more competition entering the playing field and that makes you sharper," Knore says.

Increasing competition for specification cattle will likely sharpen the razor's edge of market access, too.

"As the industry as a whole continues to consolidate, and as producers align themselves and try to reach through to the consumer, you will see a larger percentage of capacity tied up by specific plants and processors," says Hunt. "In addition, companies are owning and controlling more cattle and the ability of the independent producer to find market access will lessen."

Stocker alternatives

Even the folks who believe that cash always runs out before the supply of cattle are taking extra laps with their sharpest pencil to find stocker profit opportunities this fall.

"Two assumptions can be made," says Dale Blasi, Kansas State University (KSU) Extension beef specialist in forage and nutrition. "While we may be getting some rain in stocker country, we're behind the eight-ball on forage growth; and it's a fair bet that calf prices will likely be hotter than a firecracker this fall."

Indeed, when it comes to forage, USDA's weekly Crop Progress (early summer) report indicated 10 southern states, along with Montana, Iowa and Nebraska were running at least 20% below last year on pasture and range reported to be in excellent or fair condition. In all, 27 states reported pasture and range production below 1999.

Moreover, calf and feeder prices are steamier than a July rain in New Orleans. According to USDA data compiled by Cattle-Fax, since the first of the year and heading into summer, cash prices for #1 Medium 600- to 650-lb. steers were running 20% ahead of last year in Oklahoma City.

Consequently, Blasi believes stockers who want to hedge their bets should study their feed alternatives, plan early and do more measuring than guessing.

Look At By-products First, Blasi points out there are lots of ways to skin a cat. In this case, by-products such as wheat midds, soybean hulls and corn gluten feed can offer economic forage extenders or alternatives. (See also, "Research Roundup," page 38).

Blasi has done lots of work with wheat midds the past few years. Producers often see a negative impact on fiber digestibility and a subsequent decline in forage intake when they supplement forage with cereal grain. But, Blasi says wheat midds contain quality amounts of protein and are "fiber-friendly." He explains that midds average 17-18% crude protein and 70% total digestive nutrients (TDN).

In a recent cattle growing trial, Blasi reports wheat midds had a feed value almost equal to corn and soybeans in full-fed sorghum silage-based rations, and about 83% the value of those pricier ingredients in limit-fed rations. Far-sighted stockers could have picked up wheat midds in June (basis KS) for $65/ton.

"It's important to look down the road," says Cathy Bandyk, a ruminant nutritionist who owns Trail's End Consulting and Software at Wamego, KS.

"If this is the year you feel you need to take better care of forage and pasture heading into fall, look at supplement options now, including the cost of delivery, rather than wait to do so in an emergency response situation," she says.

Blasi concurs: "If you know what your costs of production are, you can lock them in and know what you're doing as a manager."

When it comes to supplementing forage, Blasi emphasizes costs have to include the price of hauling the groceries. And, when it comes to anything wearing paint and sucking gas, those costs can be surprising. "Depending on that cost, you can quickly jeopardize the benefit of additional supplementation," says Blasi.

Incidentally, Bandyk worked with Blasi and KSU's Kevin Dhuyvetter to develop a Windows-based supplement cost program (SUPPCOST). It allows a producer to compare up to four supplement strategies on up to three different sets of cattle, including the cost of delivery (For more information, e-mail [email protected] or call 785/636-5403).

"It doesn't do anything you couldn't do with a tablet and a pencil, but it does it quickly so you can evaluate options. There is no way to just guess whether one option is better than another," says Bandyk.

Likewise, when it comes to fine-tuning stocker options, Blasi says. "Bringing cattle in and having a scale under the chute is important so you know not only the size of the cattle but the variation in them," he adds.

In other words, that set of cattle that averages 450 lbs. can easily range from 300-600 lbs. There is no way to develop a nutrition or health management strategy for the group that doesn't, on average, over-power some while leaving others begging.

Think Down The Road With variation in mind, Blasi says this may be a stage in the cycle when shopping for pre-conditioned calves could reap added returns.

"One of the added values of pre-conditioned calves is that they offer you flexibility," Blasi says. "As an example, if you know the history of the cattle that have been previously treated, you may have the opportunity to leap-frog the receiving pen if they've been preconditioned."

At least that's what a handful of Kansas stockers apparently did while driving down their average health costs. In a recent one-of-a-kind stocker industry survey, KSU found fewer than 5% of the responding stocker operators turned their cattle out directly to pasture upon arrival, yet their morbidity and death loss was 5.7% and 0.77%, respectively.

Conversely, folks who stuck calves in the receiving pen for any length of time saw an average morbidity rate of 9.3% and average death loss of 1.2%. That's not an endorsement for stop-and-pop receiving. It merely suggests the folks who knew where their cattle came from and how they'd been treated could bypass one step in the process and enjoy healthier stock besides.

Along the same lines, Blasi encourages producers to consider marketing just as much as price in their buying decisions.

"This fall, I think producers need to be more concerned about the type of cattle they buy because so many feedlots are selling on grids now," he says. "With these tighter calf supplies, stocker operators might think of looking for bargains, but they need to be thinking about where they're going to go with those cattle when they're done with them."

Feds lower: feeders may dip slightly

Amarillo-fed Choice slaughter steers remained steadily in the $69-70 area in June. That represents a loss of about $1.75 from the previous month. In contrast, feeder cattle and calves improved slightly in the same period and averaged about $1 higher.

U.S. cattle and calves on feed for slaughter in feedlots with capacities of 1,000 head or more rose to 10.93 million head on June 1. This inventory was 9% above 1999 and the highest June level ever recorded since the new cattle feeding statistics series began in 1995.

Marketings of fed cattle in May reached 2.17 million head, 9% above May of last year and 11% higher than the 1998 level. These marketings also represented the largest May figure in the historical seven cattle feeding states during the last six years.

Feedlot placements in May increased to 2.3 million head, 12% greater than 1999 and the largest June figure in six years in the seven major feeding states.

The most substantial gain in placements of cattle and calves were those less than 600 lbs. Their total (382,000 head) represented an increase of 31%. The 600- to 699-lb. feeders totaled 470,000 head; the 700-799 lbs. totaled 794,000 head; and those 800 lbs. and greater totaled 658,000 head. Each of these weight groupings gained 8-10%.

What's Ahead? It may be difficult for fed cattle prices to show much improvement later this year. The reason is simple - we may have too many fed cattle marketings.

We did quite well in March and April when feedlot placements dropped below year-ago levels. May's 12% increase, however, could cause real problems as we move into the fall and early winter months.

Feeder cattle and calves will likely continue to demand good prices. Some summer weakness is expected but not much. Feeding costs are still cheap and supplies of available feeders will not increase for at least a year. The only problem continues to be the persistent drought affecting a large part of the cattle producing regions.

Playing It Cool

Handling cattle with patience and finesse offers plenty of rewards.

Whoever believes nice guys always finish last never studied the economic advantages of feeding cattle that are managed with stress reduction in mind.

"We feel like any time we can reduce stress of any kind on the animal we will increase our efficiency, so it makes sense to design facilities that reduce stress," says Jack Lawless, manager of Imperial Beef, Imperial, NE. "Our pens are designed for cattle to flow out of them. We try not to hurry the cattle. They're also designed for as few people as possible to do the job."

In fact, Imperial Beef was built from the ground up with a keen eye leveled at reducing stress. Moreover, since this yard - 23,000 one-time capacity - opened its gate in 1998, they continue to fine-tune their designs.

As an example, Lawless points to the load-out box for fed cattle. In a nutshell, the flow through Imperial's load-out facility was less than they desired. So, they revamped it so cattle first enter a half-snake. At the end of the curve, thinkingthey've found an escape hatch, they turn and go right on the truck.

"It's worked better than we ever anticipated," says Lawless. "With what we're doing now we have almost completely reduced dark cutters." They've also reduced bruising.

For perspective, Temple Grandin, an animal science professor at Colorado State University and one of this nation's most respected livestock facility designers, took a look at the impact feedlot cattle handling has on bruising. In one study, she found that cattle from feedlots classified as rough handling ended up with 15.5% discountable bruises, versus the 8.35% discountable bruises that came from feedlots classified as quiet handlers.

Incidentally, in that same study, cattle sold on a live basis endured a discountable bruise rate of 14%, while those sold in the beef came in at 8%.

Black And White Basics "There are two ways to handle livestock," says Lee Reeve, owner and manager of Reeve Cattle Co., Garden City, KS. "One is the ram and jam method. The other is the quiet way where you let cattle find their way. We've found that when you handle cattle more gently, they perform better, no matter what you are doing," he says.

Reeve didn't just wake up one day and decide to handle cattle one way instead of another. His family started out believing quiet handling was its own reward and has evolved in that direction ever since.

"We try to think about what we're doing," says Reeve. "For us it's just a continual evolution and trying to get where we want to be. We're better today than we were five years ago, and we were better five years ago than we were 10 years ago."

He admits it is tough to ferret out specific gains garnered in a feedlot, given all the variables that impact performance. But, Reeve adds, "Starting out, we know we'll have fewer bullers and better performance handling them this way."

Lawless concurs: "The only way we can monitor all of this is with gain and performance, and we're monitoring that from day to day... If a pen isn't handling well one day, even in the best facility, it shows up immediately in the feed bunk."

In fact, when Grandin compared feeding performance of cattle, based on their temperament score - another way of looking at stress - she found the calmest cattle gained 0.42 lb./day more than the flightiest ones (Table 1).

"When you own all of the cattle in the yard like we do, you reap the rewards from any efficiency you can develop. That's why we do this, it makes us money," says Reeve.

Of course, the same is true in custom yards. Lawless explains, "We try to get everybody here to understand that the goals and the importance of how the cattle perform affect our bottom line. We try to make them understand how important their job is to that bottom line."

Plus, Grandin points out, "Handling cattle right doesn't cost anything."

Searching For Opportunity When it comes to figuring out whether current facilities and handling practices are leaving dollars on the table, Reeve says, "I would recommend for anyone to have a Temple Grandin come in and look at their facilities and procedures."

After all, when you stare at the same forest every day, it can be tough to see some of the trees that might be limiting opportunity. "These people that see lots of cattle and lots of ways that cattle are handled can be valuable," says Lawless.

For instance, Grandin says, "I went into a feed yard recently and they were ready to tear up their processing facility because they said they couldn't get cattle to flow through it smoothly enough. The only problem was that it was too dark."

She asked the crew to pry open an overhead door that looked as if it hadn't budged since Noah dried his whiskers. The extra light solved the problem.

"Light is so important to cattle movement," emphasizes Grandin, explaining that it is often at the root of problems in the processing barn.

She's advised more than one manager to rip off some of their tin and replace it with translucent plastic skylights, which provide light without shadows. Finding and tying up bits of dangling chain - another common impediment - can often also yield dramatic results.

"I've been amazed at some of the places I've visited, wondering how they could do something the way they are doing it," Grandin says. "But, bad becomes normal when you have nothing to compare it to."

At another stop, the feedlot manager wanted her to help figure out what kind of new or redesigned squeeze chute he needed. He couldn't get cattle pushed through the one he had. Grandin took a look and moseyed out back.

She took the hotshots away from the folks bringing the cattle, filled the crowd pen half-full, then only brought small bunches at a time. "It was amazing how that squeeze chute started to fix itself," says Grandin.

Across the board, Grandin believes electric prods are a major impediment to cattle flow and handling efficiency. She suggests replacing them with paddles or flags for driving tools. She favors keeping only one hotshot - on the vaccine table and only to be used as a last resort.

Moreover, Grandin says, "One thing I'm concerned about are these head extension devices on squeeze chutes." She suggests shortening the extension bars and then backing the cattle up a step once they're in the chute (see July BEEF, page 22). That's what Reeve does. When cattle go in calm, they stay calm.

Even without inviting folks in from the outside, feedlots can audit their own handling practices. "I think first a feedlot can go in and just do some scoring," says Grandin. She says there are many measurable stress indicators.

For instance, she says, a good goal just starting out is to strive for 98-99% of the cattle through the processing chute without using an electric prod. In 80% of the yards she has worked with, she says she quickly achieves that goal without any facility modification. The other 20% of the time, either facility design, but most frequently, poor lighting, must be corrected to achieve the goal.

Polishing Both Sides Of The Equation "There are two parts to all of this. One is the design and flow of the facility, and the other is the implementation by those at the facility," explains Reeve. "You can have the best people in the world, but if you don't have a facility that cattle flow well through, it won't work; and vice versa."

Actually the buck always starts and stops with people. "A lot of it is that managers have to change their paradigm. They have to decide this is something that they feel is important to do," says Reeve, explaining the commitment must come from the top down.

When that happens, folks start seeing the world differently. "I think the whole industry is more geared to looking at the quality of the end product and putting the right product out there for the consumer. I know we are," says Lawless.

"There is more focus on handling in the cattle feeding industry today, and I think part of that is because it is so competitive. Anything you can do to improve the bottom line is worth looking at," he adds.

A Time For Opportunity

A combination of business acumen and lifting of government programs spurred the Canadian cattle feeding business into high gear - but what now?

If, as they say, timing is everything, then the timing has been good for the Canadian cattle feeding industry. Seldom in the course of any industry's progression do so many pieces fall into place so nicely as they did over the past 10-15 years for Canadian feeders.

More often, the government gets in the way, and progress takes a backseat to bureaucracy. Investors, if they can be found, get cold feet and nothing happens.

This was not the case in Alberta where cattle feeders have become a force on the North American beef scene. Last year, nearly 2.5 million cattle (69% of Canada's fed beef) were fed in this Western province situated just above Montana. Fed cattle production in Alberta has doubled in 15 years, pulling a 70% growth in the country's fed cattle production over the period.

A Look At The Pieces To know where the Canadian industry is headed, it's important to understand where the industry has come from.

Nearly everyone points to the lifting of the "Crow Rate" rail transportation subsidy as a turning point in Canadian cattle feeding. Using this subsidy, prairie province farmers once joked they could send a bushel of barley to Vancouver cheaper and faster than they could mail a letter to the coast. But the Crow Rate, along with the long-gone Tri-Partite livestock subsidy, were federal support programs that ironically worked to restrict development of the cattle industry.

"The Crow Rate was artificially encouraging the export of barley and wheat out of the province," says Nithi Govindasamy, Edmonton, AB, head of trade policy for Alberta Agriculture. "The elimination of the Crow Rate in 1995 was a tremendous boost for value-added opportunities."

The Alberta cattle industry was the first sector to see a change coming, explains Govindasamy.

"Government involvement in the form of direct subsidies constrained the industry, discouraging entrepreneurship and innovation. And, more importantly, the subsidies exposed a growing industry to trade challenges."

Enter some producers who recognized and invested in the comparative advantage they had in their feedgrain resources. "There was a clear recognition that the cattle and beef industries could be competitive on an international basis - but they knew they had to rely on themselves," adds Govindasamy.

While all this was going on, a monumental change in world trade climate was beginning. The Canada/U.S. Free Trade Agreement initiated a shift in the inefficient east-west flow of agricultural products to a more practical, albeit controversial, north-south flow.

"Even before the free trade agreements, though, cattlemen in southern Alberta had a very broad vision about where the industry was headed," says Tennis Marx, Camrose, AB, a beef feedlot specialist with Alberta Agriculture. "This beef production potential was also recognized by major beef packers very early on, a component that was badly needed."

Cargill opened its first beef plant outside the U.S. in 1989 at High River. IBP got into the act in 1994 by acquiring Lakeside Farm Industries. IBP's operations included a feedyard, but the primary reason IBP bought the company was its carcass beef plant at Brooks.

So, an infrastructure fell into place to support a long-standing cow/calf industry that today supports 3.5 million breeding cattle stretching from Manitoba to British Columbia and accounting for 94% of Canada's cows.

The Future Is In Cattle Meanwhile, the province of Saskatchewan is learning a lesson from its western counterpart - that there's more than wheat and barley to be raised on the prairie. With its economy so closely tied to grain exports, Saskatchewan lost the most with the elimination of the Crow Rate, Marx says.

Saskatchewan ranks second nationally in cow numbers, but its fed cattle production has steadily declined since 1985. Marx says recent growth in Saskatchewan's cow/calf industry might very well spur growth in feeding.

"Saskatchewan is beginning to recognize that the Crow is gone forever and the future of their agricultural industry is in diversification - and cows," says Govindasamy.

Brad Wildeman of Pound-Maker Agventures Ltd., Lanigan, manages one of Saskatchewan's largest feedyards. As cow numbers increase, Wildeman sees tremendous feeding potential in the province. With about 1 million cows today, Saskatchewan can easily expand to 1.5 million cows, with 2 million head someday becoming a reality, he believes.

"We have tremendous forage potential, and there's a lot of marginal grain land being converted to pasture," says Wildeman. "We're starting to see more networks established between our smaller backgrounders and finishing lots located both here and in Alberta."

Of course, Wildeman wants to compete with his neighbors to the west. "Every time we sell out of province, we're putting a nail on Saskatchewan's road to a larger, more dynamic beef industry," he says.

Nonetheless, Govindasamy says the majority of Canada's prairie and foothill cattle will continue to be fed and processed in Alberta. "I don't think that's going to change all that much in the foreseeable future because of the investment we have in our feeding and packing industries."

Dennis Laycraft, Calgary, AB, executive vice president of the Canadian Cattlemen's Association, is amazed that Alberta's cattle-on-feed numbers continue to set records.

"We wonder where all the cattle are coming from," he says. "At some point in time, the numbers have to turn around - but we've been saying that for quite some time."

And, with the packing plants at both High River and Brooks "double-shifting" and adding Saturday shifts, beef demand is apparently not a problem.

To keep up, many of the larger feedyards are adding bunk space. And, according to Laycraft, many smaller feeders are now specializing in backgrounding - funneling heavier feeders into the larger yards. All this downstream demand makes for keen competition between feedyard operators in both provinces.

Laycraft agrees Saskatchewan is to be watched and believes the province's new cow/calf producers are likely to be in the cattle business for the long-term. "This is different from the past when numbers fluctuated with the economics of grain farming," he explains. "Now, it's not much of a question what to do."

Laycraft doesn't see a huge increase in cow numbers nationally, however. "We'll continue to pull feeders in from the northern U.S. when possible. But we'll have to outbid cattle feeders in states like Nebraska, Kansas, Colorado and Washington," he adds. "There's going to be a lot of competition for cattle. It looks like we might have some trade issues behind us. That should help everyone."

There are some trade issues that are still of concern to some U.S. feeders. Craig Uden, manager of Darr Feedlot Inc., Cozad, NE, has to compete against Canadian buyers for Northern Plains feeder calves. While Uden doesn't relish the idea of more competition, he's willing to go head-to-head with Canadian feeders when it comes to buying calves. It's on the marketing end of the equation, however, where Uden has some suggestions that might help even things up with Canadian feeders.

"What hurts us more than anything is that we have very little information on what's coming down across the border," says Uden. "They send a lot of fed cattle into our packing plants, and we never know it - they just show up. That's what kills us at times."

Uden says accurate, "real time" reports of on-feed numbers, placements, captive supplies and other information - on fed cattle and beef production - would improve trade and market transparency. With today's technology and the relatively small number of cattle feeders in Canada, such information should be possible, he believes.

"It all comes down to having better information, whether on domestic supplies or on imports. The beef is going to be produced somewhere, and I don't see anything slowing the Canadians down. So if we are going to compete, we need better information on what they are exporting," Uden says.

The events of the past 15-20 years in Canada certainly have put a long-term infrastructure in place. Even more important, however, is Canada's "can do" mentality. The rapid growth of the past is unlikely, however.

"There's room for growth, and there will be further integration and certainly more specialization," says Govindasamy. "But if I can offer a suggestion, it would be to get out there and look for your own opportunity because opportunities are still there - on both sides of the border."

Bids & Bytes

Advances in technology offer new avenues to market cattle. Here's a guide to what's available in satellite and videomarketing.

Time to market your cattle? Maybe you should just stay home... with the cattle. Whether by satellite or on the Internet, remote cattle sales are surging. It likely won't replace the auction yard, but remote selling can be a great marketing tool that gives buyers and sellers more options.

Unlike conventional marketing methods, remote cattle sales give buyers and sellers national exposure. Buyers can view cattle and bid at several locations without leaving the office. Meanwhile, buying fresh, country cattle means less death loss, labor, medicine and healthier, better doing cattle.

Sellers often have their cattle exposed to 30 or 40 active bidders, and they usually realize a lower cost/head to consign their cattle. Rather than being at the mercy of the day's price, remote selling also offers sellers an option to no-sale cattle in a depressed market. Shrink is less of a problem, too.

Currently, five major companies offer various forms of remote cattle sale opportunities, and other companies aren't far behind. All have representatives who describe the cattle in the field and either photograph or videotape offerings.

Buyers and sellers must register, and sellers pay either a consignment fee or up to 2% of gross sales. Representatives assist in bringing buyers and sellers together and follow up with traders to ensure the sale contract is followed.

While video satellite auctions have been around about 15 years and still dominate the remote selling world, satellite costs continue to escalate as companies are forced to compete with the networks and cable stations for time. Satellite auctions also require expensive production equipment and a printed catalog.

By comparison, an Internet auction can be put together on short notice with an inexpensive online catalog. The savings are passed on to customers, who can expect to pay less/head to market their cattle on the Internet than through a satellite auction and will usually pay less than running their cattle through a traditional sale barn auction.

One limitation to Internet auctions is that real-time video isn't yet available. On the Internet, video appears as if it's being played in slow motion and isn't as clear as a photograph.

Real-time bidding is possible on the Internet, but only one company is currently offering regularly scheduled, active-bid auctions on line. Most other companies market cattle on the Internet with bid-ask auctions and say they will offer real-time Internet auctions within the next couple of years when real-time video technology is available.

Suzanne Wright is an agricultural freelance writer based in Grass Range, MT.

CattleinfoNet Interactive MarketPlace, formerly CyberStockyard, is an online brokerage and auction service that reportedly moves 200,000 head of cattle/month. The service is a product of eMerge Interactive, a publicly held company that has brought together beef industry professionals and information system technology to develop profit-enhancing solutions for the cattle market.

"We call it value chain integration," says Scott Sanders, vice president of cattle sales for eMerge. "We want to lower cost and increase the value of the marketing system."

Sanders created CyberStockyard in 1997, sold the company to eMerge Interactive in 1998, and went to work for eMerge in 1999.

The company's goal is to integrate the whole cattle industry, says Sanders. To do that, Interactive MarketPlace provides interactive management tools to more than 150 feedyards across the West via high-speed Internet connections.

Since most cattle are sold through auction yards, the company's vision is a network of company-owned facilities, where cattle are tagged with electronic ID tags, are on a specified health program and are sorted into load lots - all to drive a better price.

"We're not just an Internet company," says Sanders, "we're all about creating a better product."

The company offers two different options to buyers and sellers. Feeder cattle and stockers are brokered, either by traditional means or on the Internet, and cattle are sold on Internet auctions. Brokering is available all the time, and Sanders says the company plans to hold biweekly Internet auctions this fall.

"The Internet is enhancing the current system, not replacing it," he says. "We're here to make the producer and feeder more efficient and to make them more money."

Headquarters: Sebastian, FL

Number of years: 3

Services: brokering, Internet auctions, interactive management services, news, market and weather reports

Type of cattle: mostly feeder and stocker cattle, some breeding stock

Description: number of head, sex, average weight, weight variability, implanted (yes or no), vaccinated (yes or no), preconditioned (yes or no), source, originating state, flesh, slide, frame score, delivery dates, type of feed, quality breakdown, color breakdown, Brahman breakdown, weighing conditions, representative, comments

Cost to the seller: Internet auction - 2% of gross; brokering - $8/head

Area represented: nationwide

Web site:

E-mail: [email protected] com

Phone: 877/578-BEEF (2333), which offers cattle for sale Monday through Friday on its Web site, is more of a bid-ask format than a true auction. Just two years ago, was a part-time venture for Oregon feedlot operator John Freeman. But in 1998, Freeman moved the company to Boise, ID, to take advantage of the high-tech services there.

The bid-ask format on the site's Country Page allows buyers access to feeder cattle, breeding stock and dairy cattle five days a week from 9 a.m. to 2 p.m. The company has moved more than 80,000 head this way since August 1999, nearly doubling its volume every quarter.

"We have held auctions, but our Country Page is more popular," says Michelle Packard, director of marketing. "We will hold auctions more often if requested by the sellers."

Buyers can keep their bid active for as many as five days, but all bids are purged on Fridays. The cattle can stay listed until a buyer meets the asking price, or the seller accepts a buyer's bid. At any time, a buyer can withdraw an unaccepted bid; and at any time, a seller can pull the listing without penalty or paying a consignment fee. sends its representatives to the sellers with digital cameras and description forms. "The cattle can be consigned, posted and up for sale on our Web site the same day," says Packard.

Besides listing the cattle, Packard says representatives also actively contact buyers and sellers and follow through on transactions.

Headquarters: Boise, ID

Number of years: 2

Services: continuous Internet bid-ask auctions, news and market information Type of cattle: mostly feeder and stocker cattle, some breeding stock, some dairy

Description: number of head, sex, average weight, weight variability, implant information, vaccination history, bangs, source, origin, breed, flesh, slide, frame, muscle, condition, delivery dates, type of feed, quality breakdown, color breakdown, weighing conditions, representative, comments

Cost to the seller: 1.5% for stocker and feeder cattle, 2% for breeding stock and 3% on dairy cattle; no consignment fee if seller withdraws offering

Area represented: West and Midwest

Web site:

E-mail: [email protected]

Phone: 800/248-2101

Superior Livestock Auction is the originator and industry giant of satellite video marketing. The company has offered video satellite sales since 1987 and markets 1.3 million head annually.

Superior's first satellite auctions were shown closed circuit in a meeting room. It now broadcasts auctions via satellite so buyers can view the auctions from anywhere there is satellite access.

Superior markets load lots of cattle using competitive bidding. Says business manager Paul Branch: "Time after time competitive bidding will bring more money for the seller than private treaty."

Until mid-July when Superior added its Internet component, the firm had conducted all sales as weekly video satellite sales. Initially, Internet sales will be conducted periodically to accommodate sellers needing a quick sale until real-time video is available.

Efficiency is the reason Superior prefers video satellite sales to the Internet. In a recent four-day satellite auction, Superior sold 140,000 head - 1,100 lots at a rate of 44 lots/hour.

In comparison, real-time Internet auctions are currently only able to process about 6-8 lots/hour. As soon as the Internet will support real-time video, Superior will hold Internet auctions simultaneously with its regular satellite auctions.

Headquarters: Brush, CO, and Fort Worth, TX

Number of years: 13

Services: weekly satellite video auctions, Internet video auctions, Value-Added Health vaccination program

Type of cattle: feeder and stocker cattle, some bred stock

Description: number of head, sex, base weight, weight variability, implant information, vaccination information, source, origin, current location, flesh, slide, frame score small, medium or large, delivery dates, type of feed, horns, weighing conditions, vaccination program, representative, comments

Cost to seller: $2/head non-refundable consignment fee, credited toward the 2% commission on gross sales when the cattle sell

Area represented: nationwide

Web site: www.superiorlivestock. com

E-mail: [email protected] Com

Phone: 800/422-2117

California's Western Video Market, a confederation of auction yards, recently launched an Internet company,, that works in conjunction with its video sales.

Sellers can consign cattle on the Internet site for one week prior to regularly scheduled video auctions to give the cattle extra exposure. On the Internet, it's a bid-ask system. If the cattle don't sell in that first week, they roll into the upcoming satellite auction.

"Adding the Internet makes us full-service cattle marketers with all the mass marketing potential available," says Western Video's Kevin Devine. Last year, the company sold 350,000 head via video satellite sales. They expect to top that number this year.

Headquarters: Cottonwood, CA

Number of years: 11

Services: monthly video satellite auctions, Internet bid-ask auctions, news, market and weather reports, links, advertising

Type of cattle: mostly feeder and stocker cattle, some breeding stock

Description: number of head, sex, base weight, implants (yes or no), vaccinations, source, origin, current location, flesh, slide, frame, delivery dates, type of feed, weighing conditions, representative, comments

Cost to the seller: Satellite - about 2% of gross; Internet - 1% of gross

Area covered: 14 Western states

Web site:

E-mail: [email protected]

Phone: 530/347-3793

Producers Video Auction (PVA) is the only company offering regularly scheduled real-time Internet cattle auctions. With $33 million in gross sales last year, the company is the only proven business model for real-time Internet livestock auctions. Sales have steadily increased, and the company sells between 5,000 and 10,000 head/month on the Internet.

The company uses real-time bidding technology, but doesn't use videos of the cattle. During the Internet auction, there's no sound except a bell to signal bid changes and last calls. The buyer, however, can view still photos and descriptions of upcoming lots, as well as the current lot. In the near future, bidders will likely hear the auctioneer's voice in real-time and will be able to view videos of the cattle.

PVA started with video satellite auctions, which it still provides, then transitioned to include Internet auctions. Originally owned by the Texas Livestock Marketing Association, PVA was bought in the mid-1990s by a group of the association's representatives.

Stockholder Pete Clemens is owner and operator of the Okeechobee Livestock Market, the largest auction market in the state of Florida. Stockholder and CEO John Cargile owns Producers Livestock Auction, the largest cattle market in Texas, and the largest sheep/goat market in the U.S.

"The professionalism and integrity of our people is extremely important," says Cargile. "Consigners turn their cattle over to us to sell, and people buying cattle are trusting us to deliver cattle as they've been represented."

In a virtual market, direct examination of the cattle and a reliable description are crucial, he adds.

Headquarters: Fort Worth, TX

Number of years: 6

Services: monthly satellite auctions, biweekly Internet auctions, market information, Value Added Calf (VAC) vaccination program

Type of cattle: mostly feeder and stocker cattle and calves

Description: number of head, sex, average weight, health program, source, origin, flesh condition, slide, frame size, delivery dates, feeding program, quality breakdown, Brahman blend, weighing conditions, representative, comments

Cost to the seller: Internet auctions - $8/head; satellite auctions - 2% of the gross.

Area represented: nationwide

Web site: www.producersvideo

E-mail: [email protected]

Phone: 817/625-9606

Hay, elk and a foal

Our son began swathing hay the first week in June. He's been cutting steadily ever since, doing custom haying around the valley. Lynn started cutting ours the first week in July.

We'd hoped to get the hay off and get the fields watered again, to get some regrowth for fall pasture (for the calves after we bring them home off the range to wean). Our creek, however, has dropped so rapidly in this hot, dry weather that we don't know if there will be enough for irrigation. We're in a severe drought situation with range fires starting earlier than usual around the West.

Some of those fires could have been avoided if more grazing had been allowed in those areas. It would have lessened the buildup of dry grass. One of the worst fires was near the government's nuclear reservation (Hanford, WA), where no grazing is allowed.

We have just the opposite problem on our range - overgrazing by elk. When our daughter Andrea rode the high pasture recently to check gates, she ran into a herd of 67 elk.

That's a lot of elk for our small range area. Large numbers of elk defeat our efforts at grazing management and pasture rotations. They utilized our middle pasture heavily just as it was starting to grow, while the snow was still covering the high pasture. Now, they are eating our high pasture before we go into it.

We use a deferred rotation system on our varied elevation pastures, using the low one first to let the higher ones start growing. We move the cattle into the higher pasture as the grass makes its growth, and we allow part of it to go to seed. But the elk don't wait.

June was a busy month. My 5-year-old thoroughbred mare (bred to an Arab stallion) was due to foal in early July but did it three weeks early. She started waxing a few days before she foaled, and I put her in the backyard at nights (under the yardlight) where I could see her from the window.

She went into early labor at 9 p.m., June 19, and paced around the yard all night but did nothing. She rested the next day and then started in again that evening. By midnight, she quit pacing and lay down to strain, but only one foot appeared; it was soon obvious there was a leg back.

Lynn was able to reach in and get the missing leg - it was back along the foal's head - and pull it out. I was glad I had kept an eye on her, or we would have lost the foal.

Editor's Note: Heather Smith Thomas' daughter Andrea Daine was severely burned while trying to help control a range fire in early July. She was flown to the Burn Trauma Intensive Care Unit at the University of Utah Hospital in Salt Lake City (the Intermountain Burn Center). At press time, she is in critical but stable condition with second- and third-degree burns over 51% of her body. Please include her in your prayers.

Heather Smith Thomas and husband Lynn own and operate the Sky Range Ranch in Salmon, ID.

Processing - efficiency or effectiveness?

The last time you bragged to a colleague about a cattle branding or processing, did you talk about how good a job you did or how many you worked per hour? We suspect it was the latter.

We're as guilty as any of you when it comes to bragging about how many head per hour we can get done. But at what cost does that speed come?

Let's look at implants. Survey data indicates that if you're not training and monitoring implanting quality, your defect rate is likely 10-30%. Meanwhile, estimates of the lost value from improper implanting range up to $50, depending on the defect.

Let's use the low end of the range - $10/defect. If by slowing down a three-person, $10/hour crew from processing 200 head/hour to 100 head, you decrease the implant defect rate from 10% (a low estimate) to 3%, you net $700/1,000 head processed. If you're at a high defect rate - 30%, reducing it to 3% nets $2,700/1,000 head processed.

Head per hour is easy to measure. It's much tougher to measure implant defects, injection site reactions or lameness and injuries. And, if there were means to evaluate other processing events, such as administration of parasite control products and vaccines, the findings might be as shocking as the first implanting reports. Edward's 1987 report, for instance, reported 25% abscessed implant rate in dipped cattle; Hollis' 1989 report showed 33% total problem implants.

The bottom line is don't trip over a dollar picking up a nickel. Make sure you're focusing management where there is value, not where it's easy to measure. Do it right, then think about doing it fast - effectiveness, not efficiency.

One of the success stories at the processing chute has been injection site blemishes. A 1991 audit of top butts (the hip area between the hooks and pins) showed a 34% prevalence of injection scars - 12% of these were fluid-filled lesions. In March 2000, the audit revealed 3% scars with none fluid-filled.

It took vision to recognize this problem and courage to implement what were, at the time, controversial injection recommendations. It also took a huge educational effort to achieve this success.

However, the injection site reaction rate still is not zero. Thus, we need to continue these efforts. Everyone who makes an injection needs to be aware of where and how you administer that injection and of the long-term effects it might have on our ultimate product - high-quality, wholesome beef.

When was the last time you were at a processing and you saw an intramuscular injection made in the rear end of a calf? If you kept silent, you missed an opportunity to improve the cattle industry.

Cattle handling is a critical but sometimes neglected area of processing. For some, the cattle behavioral principles that make for smooth cattle movement and handling are intuitive. For others, there are useful training aids available, such as the cattle handling videotape from the Livestock Conservation Institute (

Understanding and being able to explain concepts such as flight zones, cattle vision and cattle hearing are important not only for new hires, but also for those in training or supervisory roles.

In recent years, a number of processing barns have been constructed that take advantage of cattle behavior principles to achieve less stressful, more efficient processing. Many of us, however, have to work in existing facilities that are not optimally designed. While some of these can only be remedied by proper application of a bulldozer, some represent great opportunities for innovation.

Every time you pick up a cattle prod, ask yourself "what's wrong with this facility and how can I fix it?" Simple lighting changes or moving a gate might result in less stress on the cattle and you. (See "A Matter Of Atmosphere," January BEEF, page 48.)

Researchers at West Texas A&M University recently published results of a survey of pressures exerted by cattle hydraulic chutes. One of the thought-provoking results was the amount of variability in pressures exerted on cattle by different chutes. Pressures at the level where the head gate strikes the neck of the calf ranged from 200 to 1,700 lbs.

What is the optimum pressure? No one has yet done that research, but clearly some handlers are able to get the job done using much less pressure than others. (Also,see "Caught In The Middle," July BEEF, page 22.)

The rest of the survey results showing the pressures exerted by the sides and tailgate can be found in the January issue of Bovine Practitioner. Or, view the abstract at

Louis Perino, DVM, PhD, is a professor of immunology, health and management at West Texas A&M University in Canyon. Gerald Stokka, DVM, MS, is an associate professor and Extension beef veterinarian at Kansas State University in Manhattan.

Hanging Tough

Beset by drought and hard economic times, Mexican cattlemen battle to compete.

Today's Mexican cattle industry can be characterized by two factors - persistent drought and a strangling domestic economy. These conditions play heavily on the ability of Mexican ranchers to produce beef - not only for domestic markets, but also for international ones.

Yet last year, Mexican ranchers exported nearly a million cattle - mostly lightweight feeder steers - to the U.S. In addition, Mexican meat packers exported 4,788 metric tons of beef products to the U.S. While exports to this country have been steadily increasing over the past several years, Mexico remains in a $202 million (1999) beef/cattle trade deficit with the U.S. (See table.)

Drought most affects the day-to-day ranching business in Mexico. Most rangelands in Northern Mexico are denuded of grazeable vegetation. More widespread and long-term though, are the effects of the 1994 devaluation of the peso. When money is available, Mexicans pay up to 30% to borrow money.

Meanwhile, soaring energy prices hit every phase of production. And, as the population moves to the cities, cheap rural labor is becoming a thing of the past.

Because Mexicans are finding it nearly impossible to obtain financing, the cattle industry as a whole can't modernize and is losing ground every day to the U.S., according to Antonio Proto, Jr., Hermosillo, Sonora, who works for the State of Arizona as a policy and trade attache. "That's the reason the meat packing companies, for example, have not been able to re-tool or expand to compete against the U.S."

Last winter, some sectors of the Mexican beef industry began claiming unfair beef trading practices and filed an anti-dumping lawsuit against U.S. meat packers. Late in April, SECOFI - the Mexican trade agency - ruled U.S. beef imports are "injuring" Mexican producers and announced a complicated structure of punitive duties on most U.S. carcasses and cuts. (See sidebar.)

Some See Optimism Many Mexican cattlemen are enthused about the future and are nervous about the dust being raised during this trade skirmish. And, even in the face of tough times, the mood among rank-and-file producers appears to be more of cooperation than confrontation.

Roberto Zambrano is one Mexican cattleman who has not only expanded his cattle feeding business, but also integrated his operation into a successful branded beef program. He's grown from feeding 300 head in 1991 to 8,500 head today and wants to be Mexico's leading beef producer by 2004. With his "Rancho 17" label, Zambrano is marketing about 70 head/day through supermarkets, meat shops and restaurants centered around Hermosillo.

"We want people to buy one beef brand, not a generic product - our competitive advantage is in the quality of our beef," explains Zambrano. "When you sell a quality branded product, price is not as much a marketing factor."

Zambrano views trade with the U.S. from two angles that affect his business.

* Imported beef, especially high-end products that compete directly with the Rancho 17 label, are a burden.

* Also, Mexican ranchers tend to export their best feeder animals, making it harder for feeders like Zambrano to obtain a steady, year-round supply of cattle. Ironically though, this forces him at times to import fed cattle from the U.S. to fill the gaps in his own supply pipeline.

Another example is the Hurtado brothers - Carlos, Sergio and Francisco. The trio can't remember the last soaking rain that fell on their farming and ranching operation located west of Hermosillo. Still, they're optimistic about their future.

They've installed a high-tech irrigation system that saves on precious groundwater supplies. And, by producing several commodities, they're able to bridge many of the market cycles. Along with a herd of 400 cows, the Hurtados grow grapes, chickpeas, pecans, wheat, oranges, peaches and sorghum.The Hurtados know that quality products are the keys to their success - espe cially when competing in export markets.

"We want to improve the quality of our cows so we can do a better job of marketing," says Francisco. "But, it takes time and money to do that. We have to be very selective in building our breeding herd."

Recently, the Hurtados purchased more than a dozen Red Angus bulls from breeders in the U.S. They're so pleased, they're looking for more.

Cross-Border Opportunity The Hurtados may be looking to purebred breeders like Leonard and Mary Rice. The Hobbs, NM, couple was encouraged with what they saw in Mexico on a recent visit to Sonoran ranches, including the Hurtados' operation. They're considering exporting Red Angus seedstock, which they feel would open the door to more business with Mexican cattlemen - on both the buying and selling ends.

"We can definitely benefit by selling them bulls and heifers; but we can also work at building relationships so we can buy their feeder cattle," says Leonard. He envisions buying calves back from Mexican ranchers who use their breeding stock.

"That way we will know the genetics and the growth potential of the calves we import," he says. "Things will turn around for Mexican ranchers, and we want to be in position to do business with them when that happens."

Building relationships is what it's all about according to Raul Tellez, a marketing specialist for the New Mexico Department of Agriculture. Tellez has helped U.S. and Mexican ranchers put together deals for more than 20 years.

"The important thing is to get to know these people," says Tellez when speaking of Mexican ranchers. "Conditions may be tough for them now, but they will survive and provide great opportunity for business with U.S. cattle producers."

On April 28, the Mexican government issued its final decision on an antidumping case against exporters of U.S. beef and beef variety meats. They imposed punitive duties that vary depending on exporter, product and grade. The duties, which began May 29, are as high as 36 cents/lb.

For certain beef products to receive lower tariffs, they must go through a complex certification process. The duty rates are biased against ungraded U.S. beef and beef from animals slaughtered more than 30 days after the export certificate is issued. Product graded Prime and Certified Angus Beef is exempt from duties.

"The problem is that a lot of beef is coming into Mexico from the U.S., and the cattlemen are already having a hard time," says Antonio Proto, a U.S./Mexico trade attache. The trade official says the size and economics of ranching in the U.S. clearly favor cattlemen north of the border.

"Grain is cheaper in the U.S., they can produce more efficiently and there is better financing in the U.S.," Proto points out. "Mexican cattlemen are trying everything they can to protect their industry."

But, Dana Hauck, chairman of the National Cattlemen's Beef Association's (NCBA) international markets committee, says increased beef exports to Mexico are due to increased demand - demand that's outstripped Mexican production capacity.

"U.S. cattle breeders have helped Mexican producers restock their herds after devastating droughts and poor economic conditions," says Hauck, a cattle producer from Delphos, KS. "Measures such as this will go much further to help the Mexican cattle industry than will restrictive tariffs, which could drive up costs in Mexico for both domestic and imported beef products."

The NCBA says that if allowed to stand, these actions by Mexico establish a dangerous trade and protectionist precedence. The organization is appealing for intervention by U.S. agriculture and trade officials.

"Mexico has been our fastest growing beef market," concludes Hauck. "Trade is being affected and we need immediate action."

The duties on U.S. beef are to remain in place for five years with provisions for annual appeal.

The antidumping decision may be more political than economic as some observers have hinted that once this year's Mexican presidential elections are settled, the mood against the U.S. beef industry could soften and sanctions may be reviewed. Others say the suit was brought in retaliation against U.S. ranchers who brought antidumping charges against Mexican live cattle imports last year.