News Update
August 31, 2010

Branded Beef Company Urges GIPSA Caution

Stakeholders in the U.S. livestock industry gathered on the last Friday of August in Fort Collins, Colo., to debate market access at a U.S. Department of Agriculture (USDA)/Department of Justice (DOJ) workshop on competition. Afterward, as many questions as answers remained.

Was anything settled? Do all problems boil down to people leaving rural America because of corporate concentration? Does the Obama Administration have a mandate to “fix that problem” through government intervention?

A crowd of more than 1,500 seemed divided about whether new rules from the USDA Grain Inspection, Packers & Stockyards Administration (GIPSA) should be put in place — rules which aim to “enhance fairness” and may affect value-based marketing of cattle.

Certified Angus Beef LLC (CAB) President John Stika testified because the nonprofit subsidiary of the American Angus Association has in interest in seeing that markets reward producers for quality as defined by consumers. Contracts paid on carcass merit are called “alternative marketing agreements” (AMAs) because they are outside of the cash market for commodity cattle. Such contracts were criticized by some as unfair, but they simply pay premiums and discounts for actual beef value rather than estimates from live appearances.

The market has been moving in that direction since the Certified Angus Beef ® (CAB®) brand was born in 1978, and an estimated half of all finished cattle now sell on AMAs. In support of that evolution, Stika suggested the Administration continue oversight to “see that any persons who have been excluded from value-based marketing opportunities may soon take advantage of that ability to be paid for cattle according to consumer desires.”

However, he warned that the good intentions in seeking greater fairness can backfire.

“We urge that great care be given to ensure that no one who has worked to add value to their herd in an effort to meet consumer demands find fewer marketing opportunities — even if that development is unintended,” Stika said.

Pull-through demand from consumers has functioned successfully because of increasingly available value-based marketing opportunities, he said, noting Cattle-Fax research that quantifies current consumer support of premium brands at $500 million per year. Angus producers “planned ahead for the value-based future we have today, by investing in genetic evaluation and establishing this brand more than 30 years ago,” Stika said.

Since then, value-based opportunities have only expanded, and CAB licensees will sell more than three-quarter of a billion pounds of branded product this year worldwide, returning at least $25 million to cattlemen through AMAs such as grids. “We recognize a stated intent in the proposed [GIPSA] rules to level the playing field,” Stika said. “We urge that any low spots be raised to enhance access to consumer-focused marketing, rather than knock down the high spots of opportunity currently available to any enterprising beef producer.”

Granting that the new rules would not dictate a reduction in value-based marketing, Stika said that still could be the end result. 

“Unintended consequences of rule changes could actually harm the interest of fairness in the beef market,” he said. “If a proliferation of newly required paperwork makes it less profitable for packers to offer AMAs, then producers will not be paid premiums based on true value. Anything that diminishes today’s value edge for quality could diminish what Angus and other quality-focused producers have accomplished, and reduce the value-added edge their cattle have earned in the marketplace.”

Cautioning that “it does little good to enhance fairness on one hand while potentially restricting it on the other,” Stika called for “greater consensus on both the direct effects and potential side-effects resulting from efforts to comply with any change.”

— Release by CAB.

Beef Mantra: Give Consumers What They Want

Consumers are always in the driver’s seat when it comes to selling products, beef included. That’s why success in the beef industry during the coming decade will depend so heavily on the industry’s ability to give consumers what they want — no matter how often they change their minds.

That was the message from Gary Smith, distinguished agricultural professor at Colorado State University, during the beef checkoff’s 2010 Innovative Beef Symposium in Denver last week.

“If you do what you’ve always done, you’ll get what you’ve always gotten,” Smith told the 80-plus processors, manufacturers and retailers who participated in the two-day event. “Innovation matters,” he said, if you want to have any chance of attracting new customers and entering new markets.

Innovation can come in various forms — including a company acting spontaneously, investing in a breakthrough and branding it, designing success into new products, or through in-depth research and “homework.”

To date, Smith said, the Beef Checkoff Program has done extremely well with innovation through research that leads to development of new beef products that meet consumers’ changing demands. At the heart of that innovation is muscle profiling, which has developed new cuts from the shoulder clod, the chuck roll and, most recently, the round.

“I think the Beef Checkoff Program … has done a tremendous job of looking down the road,” Smith said, “plucking steaks out of the chuck and round and making something between ground beef and traditional steaks.” Beef Value Cuts created through muscle profiling have truly maximized the value of the chuck and the round — turning previously ground product into profitable steaks.

Looking forward, Smith said, it is important to remember that businesses and industries fail for two reasons — their inability to escape the past and/or their inability to invent the future.

During the next five years, Smith said, the beef industry will experience decreased demand domestically and increased demand on international fronts, and stakeholders will have to become more “consumer-centric and export-minded” if they are to succeed.

“We will differentiate to drive demand, with more product branding and increased innovation,” he said. “Give the consumers what they want — give them product diversity!”

For more information about your beef checkoff investment, visit www.MyBeefCheckoff.com.  

— Release by the Beef Checkoff Program.

NMSU Collaboration Focuses on Genetics of Hypertension in Cattle at Valles Caldera

The nation’s highest-altitude beef cattle research facility managed by New Mexico State University at the Valles Caldera National Preserve in northern New Mexico is determining if there are DNA markers that will identify if cattle are genetically predisposed to develop hypertension while at high elevations.

Cattle, like humans, can be genetically predisposed for hypertension at higher altitudes, known as bovine high-altitude disease (HAD), or brisket disease, when they graze above 7,000-feet elevation for extended periods. The inability to process oxygen efficiently is a key health issue that hampers beef cattle operations in the Rocky Mountain region.

“Grazing cattle at high elevations comes with inherent risk due to their susceptibility of developing hypertension,” said Manny Encinias, a beef cattle specialist with NMSU’s Cooperative Extension Service and director of operations for the high-altitude research facility.

Most cattle producers don’t know if individual cattle will have problems grazing at high elevations until the animal shows clinical symptoms. Unfortunately, in most situations, the discovery and disease confirmation is only after the death of the animal. Death and performance losses associated with HAD annually add up to more than $60 million for the beef cattle industry in the Rocky Mountain region.

“Our long-term goal at this facility is to develop indicators and tools that beef producers can use to select cattle that will thrive at high elevations,” said Encinias, “We believe high-altitude disease is a condition impacted by multiple factors and teaming up with multidiscipline experts, universities and progressive beef cattle producers is a key to making rapid progress on managing this disease.”

On Saturday, Sept. 11, the Top of the Valle will host its second annual high-altitude bull and female sale. This year 35 registered, yearling and 2-year-old bulls and 70 registered bred heifers that have been PAP and performance-tested on 100% grass for 84 days, qualified for the annual sale at the Valles Caldera National Preserve. The silent auction will be from 10 a.m. to 2 p.m. and a live animal bid off will begin at 2 p.m. More information on the program and sale is available on the program’s website at http://highcountrybeef.nmsu.edu.
To read the full article, click here.

— Adapted from an NMSU release.

Japan FMD Outbreak Declared Over

The governor of a Japanese prefecture hit with a foot-and-mouth disease (FMD) epidemic has declared an official end to the outbreak, the Mainichi Daily News reported Friday.

Earlier last week, the government of Miyazaki prefecture announced that the 1,250 affected farms had all detoxified andproperly disposed of animal waste to fully rid themselves of the virus. Japan had already ended a state of emergency and bans on moving animals.

Some 289,000 pigs and cattle have been culled since the outbreak began in late April. The illness also led to the cancellation of almost 300 public events, including sports, as officials urged residents of the affected areas to only go out when it was absolutely necessary, the Mainichi Daily News reported.

— Release by Meatingplace.com

August Farm Prices Received Index Up 3 Points

The preliminary All Farm Products Index of Prices Received by Farmers in August, at 145%, based on 1990-1992=100, increased 3 points (2.1%) from July. The Crop Index is up 5 points (3.3%) and the Livestock Index increased 1 point (0.8%). Producers received higher prices for wheat, corn, milk and cattle and lower prices for broilers, lettuce, onions and cantaloups.

In addition to prices, the overall index is also affected by the seasonal change based on a three-year average mix of commodities producers sell. Increased monthly marketings of cattle, grapes, sweet corn and potatoes offset decreased marketings of wheat, hay, strawberries and milk.

The preliminary All Farm Products Index is up 19 points (15%) from August 2009. The Food Commodities Index, at 145, increased 3 points (2.1%) from last month and increased 21 points (17%) from August 2009.

The August Index of Prices Paid for Commodities and Services, Interest, Taxes, and Farm Wage Rates (PPITW) is 182% of the 1990-1992 average. The index is unchanged from July, but 5 points (2.8%) above August 2009. Lower prices in August for nitrogen, feeder pigs, feeder cattle, and hay and forages offset higher prices for concentrates, diesel, feedgrains, and LP gas.

— Released by USDA’s National Agricultural Statistics Service, Agricultural Statistics Board.

— Compiled by Mathew Elliott, assistant editor, Angus Productions Inc.