Betty Jo Gigot, Editor and Publisher

Bill Rhea
Rhea Cattle Company, Arlington, Nebraska

Correctly anticipating what 2007 will bring is about as easy as anticipating Nebraska weather. However, the stage has been set by our previous year. We are facing a tremendously exciting time in agriculture. Ethanol plants have the potential to change cattle feeding at its core; in Nebraska, Initiative 300 may open doors to new methods of farm ownership (pending Supreme Court ruling); branded meats are flooding consumer shelves; political positioning in our global market directly involves the export of our beef; and at home, immigration issues impact our workforces.

Ethanol’s influence
The emergence of the ethanol plant boom will likely spur the biggest change we’ll see in our lifetime in rural America. In Nebraska alone 11 plants are currently operating; that number is set to grow quickly to 34. The placement of these plants will likely initiate a tremendous economic revival as those communities increase housing, city services and infrastructure.

The complexities of ethanol’s impact on cattle feeding will likely change the way we go about our business, from cow-calf to finishing. Ethanol’s byproducts could become the primary feed ingredient because corn will be too valuable to feed. Wet distiller’s grains with stalks may comprise rations in the new ethanol era of cattle feeding. We may add a level of complexity as we move from freely available and easily storable corn to a more sensitive ingredient. Corn storage is easy, on site, and offers consistency of supply. Cattle feeders could be at the mercy of the highs and lows of ethanol plant’s production, which is affected by holidays, breaks in production and the like. In addition, ethanol byproducts are more tenuous, with a limited shelf life.

How do we anticipate and provide for these events? Contracts for ethanol byproducts will most likely dictate a consistent amount over the course of time. This will mean that feedlot numbers will need to be more stable throughout the year, thus impacting cow-calf cycles. The use of “hoop” buildings and roughage bedding could assist northern operations to accommodate year-round feeding, while diminishing the environmental and weather impact.

Branded beef
Name branding has become vogue in our industry and perhaps is a necessity to maximize the significance of a superior product. It still has to mean something. The poultry industry has been branded for some time but often consumers feel that there is no defining difference among those brands. When not supplied with information about what the brand guarantees and implies, consumers choose based on price. In a high priced beef market, it is unclear if people will pay for higher prices of branded beef.

If we produce high quality meat, we need to cultivate a consumer culture to pay for it. Consumers want to embrace something of value, something with an identity. Having a brand name may be required to play ball in the market, but a brand itself is not enough anymore.

Political positioning
Corporate farming laws in Nebraska could have an effect on Iowa and South Dakota. Pending ruling, Nebraska’s law may open the doors for out-of-state investors in the cattle industry, thus changing the face of ownership. We will know if it will be heard by the Supreme Court by this spring. Alternatively, it may go in front of a full panel of the 8 th Circuit Court instead of a three-judge panel.

In the world market today, agriculture is a political toy rather than a means of feeding people. South Korea and Japan have agreed to our beef exports, stipulating a zero-tolerance policy on bone fragments. This may prove impossible but these are the hoops we will have to jump through. With South Korea, beef exports could become a bargaining chip while our peace keepers continue to serve there. Russian trade was not as much about BSE as it was a political and governmental issue, but issues like this affect us at the feedlot as producers.

Politically, we had better get our act together because we’ve got competition, especially from the Brazilians once they resolve their infrastructure issues. They’ve got the climate, the land and the grain production to create a value-added product. European demand is on the rise but it is doubtful the EU will tolerate hormone-treated beef. We need to press our case forward, but eventually may need to produce a product they want. Ultimately we need the 10-percent market share that our exports provide to take the pressure off our own market. Mexico is back on board; now hopefully we’ll get the others.

Immigration
Our national policy on immigration is backwards. We have defined programs to provide uncomplicated immigration for highly skilled jobs while there is no program for unskilled workers. As a nation, we cannot provide our own unskilled workers to drive our economy. Legislation could be implemented that could consider timely accessibility to an adequate labor force while keeping in mind the safety of America. What we need is unskilled workers we can assimilate into our society and teach agriculture skills. We need to figure out how we can make this happen.

Attracting a new generation
The biggest problem that lies in front of us is attracting a new generation to agriculture. While the aforementioned economic revival could have an impact on agriculture, it may entice young people to remain and return to agriculture.

Andrew Murphy
Innovative Livestock Services, Great Bend, Kansas

Our business landscape is continuously changing and more rapidly then at any point in the history of mankind. This is not any kind of epiphany but a fact our times. In the past, I have spoken of opportunities within our business. I have spoken of challenges we must face and be prepared to overcome. I have mentioned things like environmental concerns, labor issues, animal identification, information and technology, foreign markets, value-added products, food safety and probably a few other things I am forgetting. All of these are still reality and are still opportunity, but that is not what I want to talk about for 2007.

The truth of the matter is that I am both excited and concerned about what is going to happen next. When I look at these issues of the past, present and future, I wonder what I have done personally to take advantage of opportunities, or have I just discussed them at length without creating any solutions. This brings me to the outlook portion of this piece.

Personal improvement
Agriculture as a whole represents less than 2 percent of the U.S. population. The beef industry is just one piece of that 2 percent. We are all role players within that group. Whether we are cow-calf producers, stockers operators, purebred producers, feedyards, packers, hedgers, scientists or a combination of some or all, we play a major role in the chain that makes up our business. It is time that we look at where we are and where we are going to be.

What are our individual strengths and weaknesses that we must overcome to be successful in 2007 and beyond? It is time to become smarter – as individuals or collectively – than we have been. Evaluate yourself to make the move forward. Become a student of the business.

Information overflow
The gloves are off in the technology department. We are completely inundated with information. Financial, animal performance, identification, animal health and many other records are staring us in the face. We have wireless phones and Internet to deliver us all of the world’s information at any time from any location. What do we do with it all? That becomes a very personal question.

The dashboard concept is not a new one outside our business, but is somewhat new within it. Find out what makes up your dashboard – the information you need to see on a timely basis that determines whether your business is succeeding or if there is improvement that needs to be made. You cannot take the first step until you know your starting point.

Victims of our own success
I think it is safe to say that consolidation is well rooted in the beef industry. This is both a blessing and a curse. Consolidation has narrowed the playing field, but it has also placed a large burden on the independent producer.

Large groups have an easier time making arrangements and purchases because of their economies of scale. They are more efficient in a lot of areas. What they don’t have is the ability to shift gears on the fly; they lack agility. Smaller groups will be able to make changes more quickly and be ahead of the curve in many ways. It reminds me of the commercial with the three advertising firms – small, medium and large – each looking at the other, admiring in the others what they don’t have. Worrying about what you are missing out on is a waste of time. Each size organization has marvelous strengths and the ones, big or small, that seize their opportunities will live to see another day. We must stop fighting within ourselves and focus on what we have, not what the other guy has.

Big business vs. beef business
More and more, outside money and business influencers are looking at, playing in and messing with our beef business every day. One example is in our commodity markets. The volatility within each of our commodities – corn, cattle, soybeans, wheat – has seen an increase in outside-our-industry money over the past several years. The speed of the rest of the world has just been cast into our own and it is a very difficult adjustment.

Alongside that new twist is the entertainment money that’s purchasing land for recreational uses. It is hard to expand your business when competing against that type of resource. Creativity and innovation will be a badge only the survivors will wear.

In conclusion, looking inward is something we need to do often. Looking back is beneficial only when trying to learn a lesson from the past. Looking ahead is a given in the highflying world we currently live in. Opportunities surround us in many different ways.

As we each figure out our place in history, we can feel confident that the world will always need to eat. What we need to focus on is how we can continue to be the best in the world and how we can build on top of what we have accomplished.