Betty Jo Gigot, Publisher

The venue was warm, the speakers informative and the attendees attentive at the Benchmark Advantage Forum held at the Pointe South Mountain Resort on the edge of Phoenix, Ariz. Cattle feeders had an opportunity to share information and bone-up on the ever-evolving cattle feeding industry in style. Vetlife and Elanco teamed up to provide a memorable experience.

“Why did we create Benchmark nine years ago?” Anderson asked. “We had no customers, no sales and no product advantages. The industry was mostly satisfied with competitive products, but Vetlife saw an opportunity to deliver value and create customers. Other species and industries were benchmarking and Vetlife perceived an industry need.

According to Anderson, today, the Benchmark database encompasses 250 feedyards, 40 percent of the cattle on feed, 54 million cattle, over 20 million carcasses, over one billion daily feed records and over one billion animal health records. The Benchmark Program provides tools with potential for use in all phases of a business and has something for every member of the feedyard team. The focus is on economic results and continuous improvement.

The price of entry
Polly Ruhland, NCBA executive director of federation relations and communication, presented an update on food safety issues. Ruhland explained consumer research shows that beef is not a top-of-mind safety concern for consumers. Fish and seafood, chicken and deli foods show higher percentages of concern. “Consumers generally trust there is a system in place to assure that the beef they consume is safe,” Ruhland said. The greatest concern for beef and a top media focus is “Mad Cow” disease, Ruhland noted, because media coverage largely dictates how consumers think about beef issues. The good news, according to Ruhland, is unwavering consumer confidence, but we cannot be sure that the consumer is invested long term.

“Consumer trust erosion results in regulations,” Ruhland said. She urges producers to help communicate the good news about the industry by participating in collaborative groups and supporting agriculture trade groups while developing a crisis response plan to prepare for media events. Safety issues are event driven, so it is important to keep informed about current safety issues and the related science/consumer research to understand what’s down the road for the industry and your business with respect to safety.

Ruhland went on to discuss bioterrorism. “Recent food safety issues highlight a weak infrastructure, while growing concerns over the possibility of an agro-terrorism event have made finding solutions even more arduous.”

According to the government, Ruhland explained, terrorist networks have studied the U.S. agriculture industry. Even domestic groups like PETA consider agriculture a viable target.

The agriculture industry is built in the “sunshine,” according to military officials. Many of the industry’s strengths (e.g. extensive facilities) would be weaknesses in the case of an attack. The distant and rapid dissemination of product from farm to market and the integrated North American trading system would exacerbate the spread of a foreign animal disease like foot-and-mouth.

Ruhland said that feedlot operators may have to become biosecurity experts who evaluate measures in place; guarantee security and public safety; educate producers about protecting their property and quickly identifying/reporting disease; have fully developed, executable crises management and communications plans in place; and be aware of security alerts from your local law enforcement, department of agriculture and industry trade groups.

Where are we and how did we get here?
Bill Mies, eMerge Interactive, probably put it best in his presentation on the history and future of the industry.

“We began as a business devoted to feeding all the junk [by-products] that someone couldn’t bury,” Mies said. The industry started by feeding sugar-beet pulp, milo, vegetable crops residue and potato waste.

“As soon as we could afford it, we quit feeding the junk and went to corn, alfalfa, cottonseed meal, supplements and molasses,” Mies continued. “We made money feeding junk, so we invested in infrastructure that would process grains and mix diets at high speed.” Mies noted that we built yards based on truck size – three loads of feeders in and five loads of fats going out, with pens averaging 200 head.

“In those days, labor was cheap and plentiful. There was an endless supply of cowboys and foreign graduate students.” Mies joked he was always amazed that a feed truck cost as much as a Jaguar, but managers would put a guy who just arrived from another country behind the feed truck wheel and be surprised when he hit the bunk.

Today, according to Mies, we have remodeled our mills to cut down on jobs and demanded preconditioned calves to cut down the number of cowboys. “We have also bought bigger feed trucks to reduce the number of drivers, and employed more computerization to cut down on office labor. We still have the same 200-head pens, we still buy, handle and sell cattle based on averages of 200-head groups, we may sell on the grid, but we sell all 200 on the same grid, and we are still margin operators and a ‘good one’ is one that makes us money.”

Mies believes that tomorrow, branded beef will dominate the retail marketing landscap e. He observed that we have sold Angus about every way we can and that the proliferation of new brands will be about stories that describe production practices, genetics, place of birth, etc.

“The anonymous member of a 200-head pen won’t qualify,” Mies stated.

He believes that data will drive marketing of both feeder and fed cattle and that data will be important in order to document what was or was not done to a calf in his lifetime. Data on productivity will help establish value.

“Tomorrow, a feedyard manager’s day will be different than it is today. More attention will be paid to qualifying cattle for various branded programs run by each of the packers. Less attention will be paid to haggling over price. Procurement will be orchestrated to deliver consistent headcounts of cattle within branded programs.”

Mies noted that the three most important words for a branded product are volume, volume, volume. The product has to be there every single day.

Mies sees multiple health and implant programs based in the brands being served and thinks that cash cattle sales will no longer be the standard.

“We wi ll still have margin cattle in the feedyard, but they will be in a separate section and sell for a different price,” he said.

“Feedyard managers will truly become CEOs of their operations,” Mies continued. “They will spend their time involved in the supply chain, both coming in and going out of the yard. Feedyard CEOs will manage people, money and data. The CEO will create a management team of nutritionists, veterinarians, human resource manager and data managers and interpreters. Managers will have to find and attract more highly skilled people to operate the increased computerization of the feedyard, and training programs for employees willing to work but lacking in basic agricultural skills will become more important.

“Feedyard CEOs may also need an environmental consultant to help plan land use issues for manure disposal, dead stock burial, as well as the ongoing issues of complying with government confinement animal feeding operation regulations.

Mies believes feedyard management will not be as exciting on a day-to-day basis but will be more demanding and, with tighter margins, branded programs can help decrease risk of ownership. “Change is not optional; only success is optional,” Mies concluded.