News Update

News Update
Sept. 25, 2007

2008 Beef Checkoff Initiatives Outlined

The Beef Promotion Operating Committee this week funded a total of 42 program proposals with beef checkoff dollars for fiscal year (FY) 2008. At the same time, however, a tight budget forced the committee to reject more than $1.8 million in proposals to stay within the Cattlemen’s Beef Board’s (CBB’s) $46.8 million national program budget for the coming year.

The plan of work funds promotion, research and information programs and is designed to build demand for beef using the checkoff funds remitted to the CBB. The plan still must be approved by the U.S. Department of Agriculture (USDA) before any funds can be expended.

The approved checkoff plan of work for CBB during fiscal 2008 includes:

• More than $22.8 million for promotion. Promotion efforts include new consumer advertising, retail marketing, foodservice marketing, new product and culinary initiatives, the National Beef Cook-Off, a Northeast beef promotion initiative, and veal promotion.

• About $7.4 million for research projects focused on a variety of issues, including beef safety research, product enhancement research, nutrition research and market research.

• A total of $6.3 million for consumer information programs, including a Northeast public relations initiative, national public relations, nutrition influencers support, and a youth education and information program.

• More than $2.4 million for industry information projects, including beef, veal and dairy-beef quality assurance programs, the National Beef Ambassador program, and dissemination of accurate information about the beef industry to counter misinformation from anti-beef groups.

• About $5.25 million for foreign marketing efforts managed by the U.S. Meat Export Federation, including education programs and marketing of U.S. beef in Taiwan, the ASEAN, the Caribbean, Central/South America, Dominican Republic, Europe, Greater China, Japan, South Korea, Mexico, Middle East, and Russia.

• More than $2.3 million for producer communications, which includes Producer Outreach using Beefmobiles, paid media, beef and dairy earned media, CBB Communications and semi-annual producer attitude surveys.

• A separate $10.66 million in allocations from the Federation of State Beef Councils will further increase checkoff funding of national promotion programs by $4.9 million; research by $1.76 million; consumer information by $1.3 million; industry information by $560,000; and foreign marketing efforts by $2.1 million.

Of the $1.8 million denied, producers on the Operating Committee turned down nearly $1.5 million in proposals from the National Cattlemen’s Beef Association (NCBA), $33,500 from the American National CattleWomen (ANCW); and $305,000 from the National Livestock Producers’ Association.

Programs authorized by the Operating Committee must be approved by USDA before any money can be spent. Each contractor of the Beef Checkoff Program works on a cost-recovery basis and, by law, cannot profit from work they do on behalf of the Beef Board and state beef councils. Each contractor is subject to audits by CBB and USDA on an ongoing basis.

— Release provided by CBB.

Effect of rate change possibly mixed for agriculture

While the recent dropping of a key interest rate is generally seen as good for the general economy, it will take a while to tell what its ultimate effect will be for farmers and ranchers, said Larry Sanders, agricultural policy specialist with the Oklahoma Cooperative Extension Service.

“Reaction to the rate drop helped stock markets around the world, lessened recession fears a bit and also helped relieve concerns about the current mortgage troubles, at least for now,” Sanders said.

For the agriculture sector, Sanders said producers wanting to borrow money or extend loans may want to wait; farmers and ranchers should be wary of over-extending themselves on loans; producers should watch for inflation in input costs, including equipment; and a resulting weakened dollar should help sell more U.S. agricultural products overseas.

“The recent move to drop the federal funds interest rate one-half percent by the Federal Open Market Committee (FOMC) gives some a signal that there’s not much chance of them increasing rates the rest of this year. In fact, there’s some talk that they may drop it again,” Sanders said. “With little risk of increased costs of borrowing, producers who don’t need money immediately may want to hold off and see if they might get a better rate.”

The FOMC is comprised of the board of governors of the Federal Reserve System and 5 of 11 Reserve Bank presidents. Its decisions determine the purchases and sales of U.S. Treasury and federal agency securities.

As for farm exports, Sanders said there has already been a weakening of the dollar since the rate drop, and that gives producers an opportunity to sell more products overseas.

A weaker U.S. dollar means that products are relatively cheaper on the world market, and competitors’ products are relatively more expensive.

“We’ll be more competitive in the world market, at least in the short run,” Sanders said. “I say short run because other governments aren’t just going to sit still and let us increase our market shares. They’ll react somehow to try and make themselves more competitive, but that will take time.”

Sanders warned there is also a potential downside for producers.

“With the dollar weaker, imported inputs such as fuel, fertilizer and some equipment will increase in cost,” he said. “Depending how high that cost is, it could wipe out any advantages we get from the weaker dollar, or it could be relatively neutral and just let us keep pace with expenses. We’ll simply have to wait and see how that plays out.”

With fertilizer costs, it will not be just imported products that will go up in price.

“Even domestically produced fertilizer will cost more due to the increase in fossil fuel prices used to make it,” Sanders said. “And there’s very little optimism for fossil fuel prices. They’re expected to keep going higher, and ethanol is still too small of an industry to make a significant difference for decreasing or stabilizing fuel prices.”

With cheaper credit, many producers may be tempted to borrow money for improvements and expansion.

“I’d really caution folks not to buy new land or big-ticket equipment based on the thinking that it’s cheaper to do so,” Sanders said. “Overextending in this market is risky. It’s going to be a volatile situation. There will be some opportunities for good gains but also for losses, so it’s not a good idea to become overextended.”

Inflation is another important factor for farmers to keep an eye on.

“If cost pressures wind up, costing agriculture more than it gains from better export sales from the weakened dollar, we could see inflation take off,” Sanders said.

One area where that can take place is in wages, especially for seasonal labor.

“For that reason, I can’t stress enough the importance for producers to have a risk management program in place,” he said. “Crop insurance, market options, whatever producers can do to help lower financial risk is essential, especially when there is so much room for volatility in the next few months.”

— Release provided by Oklahoma State University Extension Service.

Colorado’s 4-H Policy Works to Enhance Livestock Traceability

Traceability has emerged as a key component in protecting markets from the potential fallout of animal disease — enabling diseases to be quickly found, controlled and eradicated before paralyzing markets.

With these considerations in mind and with urging from various allied animal industry groups, the Colorado 4-H Youth Programs and FFA programs had planned to make premises registration with the National Animal Identification System (NAIS) required for all 4-H and FFA members as of Oct. 1. However, a year after the announcement of the initial policy, and after listening carefully to many residents around the state, the Colorado State 4-H office has announced a policy adjustment related to premises registration. The policy as of Oct. 1 will read:

“All 4-H members with livestock and horse projects will be required to have a completed, signed, and approved ‘Animal Care and Housing Form for Colorado 4-H Livestock Projects’ on file at their county Extension office at time of enrollment. It is highly recommended that Colorado 4-H livestock project animals (beef and dairy cattle, sheep, swine, goat, poultry, llama and horse) have a premises registration with the National Animal Identification System.”

— Information provided by Colorado State University.

Illinois Beef Cattle Coproducts Conference Approaches

With hay in short supply and high-priced grain, beef cattle producers are evaluating their feeding operation and looking at coproducts to fill the void for their cow-calf and feeding operations. To answer some of their questions, a Beef Cattle Coproducts Conference is set for Wednesday, Nov. 28th in Springfield, Ill., at the University of Illinois (U of I) Extension building on the Illinois State Fairgrounds.

Featured conference topics will include storage and handling issues, timely buying of coproducts, coproducts in growing and backgrounding diets, cow and heifer rations, and ruminant digestion and metabolism with emphasis on coproducts. Other topics will include mineral concerns, standing corn and coproducts for wintering cattle, utilizing coproducts in finishing diets, early weaning, and new coproducts.

Co-sponsors of the conference include the U of I Extension, Illinois Corn Marketing Board, Illinois Beef Association and the Sen. Simon E. Lantz Memorial Lecture fund. The conference will begin with registration at 8:45 a.m. and conclude at 4:45 p.m.

Registration for the seminar is $18, which covers the meal along with a bound copy of the proceedings. Late and at-door registration will be $25. The deadline for reservations is Nov. 21. Make reservations through the East Peoria Extension Center at 309-694-7501, ext. 224. Producers unable to attend the conference but wanting a copy of the proceedings can secure one for $10 following the conference.

For additional information on the program or to be mailed a copy of the program, contact Dave Seibert, animal systems educator at the East Peoria Extension Center, 727 Sabrina Dr., E. Peoria, IL 61611 (309-694-7501, ext. 224). Questions regarding the conference can also be sent to Dave Seibert at dseibert@uiuc.edu.