News Update

News Update
June 5, 2007

Natural Incentives

Cattlemen with top-quality Angus herds have a new option for feeding their natural calves.

The Beef Marketing Group (BMG), headquartered at Great Bend, Kan., announced its Customer Ownership Program in May. BMG will pay a $100-per-head premium for all cattle harvested as natural.

“We want to get closer to producers and build relationships,” said Kenny Wiens, BMG director of procurement. “By doing so, we should get higher-quality cattle and more opportunities for profit at every stage of beef production.”

BMG is a marketing cooperative of 14 feedyards in Kansas and Nebraska. Five of those are currently dedicated to the production of natural beef as part of an agreement with Tyson Fresh Meats, the top volume Certified Angus Beef LLC (CAB) licensed packer. To qualify for Certified Angus Beef® (CAB®) brand Natural, cattle must be individually identified and never received antibiotics, hormonal implants, ionophores or animal byproducts.

“We need all the documentation, including natural affidavits,” Wiens said. BMG prefers, but does not require preconditioned weaned calves. “Through producer participation in ownership, we hope they will take the right steps to add value by making cattle healthier and preventing fall-outs.”

Ranchers can retain full ownership or partner with BMG to own a percentage of their calves, which are procured in load lots only. Mixed groups of steers and heifers are accepted, too.

“Our biggest driver is the number of CAB carcasses we can get,” Wiens said. “If we don’t have a lot of that product at the end, then we aren’t doing our job.”

BMG’s initial target for CAB acceptance was 30%, but the company has lifted its sights to 40% CAB on natural cattle. It could increase that goal again in the future.

“The CAB product is in such high demand that we just don’t have enough supply to fill it,” Wiens said. “It looks like there’s almost an unlimited demand for CAB Natural.”

Finished cattle are priced off the Chicago Mercantile Exchange (CME) Live Cattle close the Friday prior to harvest, with available bonuses for source- and age-verified cattle. From there, producers may opt for more direct premiums and discounts, if they chose to participate in BMG’s proprietary grid with Tyson. “The best way for producers to get full value for their cattle is to merchandise them at the packer level,” Weins said.

All the yards sort cattle in an effort to market them at their optimal endpoint.

“It really does take a lot of time, but we have seen the results. We know it’s necessary,” Wiens said. “The days of bringing 150 head into a pen and then selling 150 head out of that pen at one time are long gone if you’re selling on a grid.”

Cattle treated for disease, or fall-out cattle, are sold as incidents arise, and forfeit the $100 natural premium.

For more information on BMG, visit www.beefmarketinggroup.com or contact Wiens at 620-792-5886. Details about CAB brand Natural can be found at www.cabpartners.com.

— Release provided by CAB.