BEEF talk

Jul 24, 2009

BEEF talk

Capturing value is the name of the beef game

How does one capture value? That is not an easy question to answer. As a boy, I remember visits to the farm by some “big city cousins” who did not have the advantage of growing up on the farm. They wanted to help, and one particular point that stands out was the feeding exercise.

I would hand them a 5-gallon bucket of feed to put in the troughs. Without fail, they would dump the entire bucket in one place.

I would explain that there were 300 sheep on the other side of the gate, so when we open the gate, they will run to the troughs and look for their daily grain. With the feed in one pile, a ruckus would result.

A few sheep would get their mouths full. The rest either would be trampled in the mayhem or simply pushed aside and go without. Ironically, those few sheep that would feed at the grain pile would run a high risk of grain overload. Their contentment could result in bloating or developing acidosis later on, which means the sheep could end the hot summer day with four feet up. What does feeding sheep have to do with capturing value from beef? Actually, a lot, because the bucket is like the value of beef as eyed by many. Just like the 300 sheep on the other side of the gate, there are many producers who want the bucket. If truth be told, they want as much of the bucket as they can get. Many of our efforts can be compared with stampeding cattle. Words, such as ruckus, mayhem, bloat and acidosis, may be suitable.

While that may sound harsh, the beef industry moves forward without the harmony of a choir led by a good conductor. Instead of working together, fragmentation occurs.

The value question remains unresolved, but we hope some order could surface. We know the crowd on the other side of the gate is diverse.

There needs to be planning for when the gate is opened. There needs to be a gathering of some who know cows, calves, feed yards, harvesting, processing, data and the food service business. The beef industry can do better. We need to see the industry as one and treat the industry with respect.

We also need to visit among us to see this industry as a food business. As a business, we can produce high-quality nutrition for the world.

However, we need value that needs to be returned equitably throughout the industry in a real way, in a real place, and at a real time. Opportunity exists, and we know that as producers, we can do better. We need to try to narrow our efforts to outcomes that bring value.

It is time to remind ourselves about the spread in value of the 119 cow/calf producers involved in the 2008 North Dakota Farm and Ranch Business Management Education Program (FBM). The spread between the lower 20 percent and the upper 20 percent was $110.96. There was an additional $15.95 spread on market cow and bull sales. This brings the totalspread to $126.91. That means opportunity exists and some are seeing the value returned.

What is even more interesting, the Dickinson Research Extension Center feeds cattle and monitors their value on the rail. The total dollar value difference (top 20 percent versus the lower 20 percent within each lot of steers) for the last five lots fed was more than $165. Imagine that. The center’s spread in carcass value was greater than the total spread in beef value for those producers in the FBM program. This was opportunity realized, but it begs another question.

Could those low-value calves leaving a producer’s operation only become increasingly lower in value as time goes on? The answer would be interesting. — Kris Ringwall

(Kris Ringwall is a North Dakota State University Extension Beef Specialist, Director of the NDSU Dickinson Research Center and Executive Director of the North Dakota Beef Cattle Improvement Association. He can be contacted at 701/483-2045.)