Purebred-cattle breeders should be concerned with their industry’s direction. Southern Missouri supported many swine producers when I graduated from the University of Missouri in 1977. Unbeknownst to me, the swine industry would soon be destroyed by vertical integration. One purebred-Duroc breeder said, “Doc, don’t worry, those corporate guys won’t come out here in the middle of the night to farrow a sow, and they don’t want to straw-bed, castrate or vaccinate hogs. There will always be a place for us purebred breeders, and you will always have a job servicing this segment of the hog industry.”
He was wrong. By 1985 he exited the purebred Duroc business, I exited the swine veterinary business, my swine clients ceased business, and the once numerous feeder-pig auctions were gone from my part of the state.
What destroyed our swine industry in eight years? Simple. The government allowed corporations to capture the hog industry. Executives did not want to castrate, vaccinate or farrow sows, but they found willing sharecroppers to do their labor.
Some producers contracted with these corporations; built state-of-the-art confinement facilities; accepted the corporations’ pigs, feed, medicine and vaccines; and fed the pigs — not for themselves but for the corporation.
The corporations developed their own lines of breeding stock and demanded that producers feed only hogs with their corporate genetics, thus developing another corporate profit center — composite breeds. Specific genetic traits like back fat, loin eye, yield and cutability were licensed to specific composite breeds. Purebred breeders were left with no customers. Corporations further captured the hog market by limiting access to their packing plants, making it difficult to market hogs independently.
When the producers’ facilities became outdated, they were offered new contracts only if their facilities were retrofitted with new equipment. This required new loans and another seven to eight years of connection to the corporation. If efficiencies declined, the contract could be canceled.
With no independent market, hog market reports ceased, and the concept of supply and demand ended. Corporations were uninterested in the price-per-pound of market-ready hogs. They marketed the end product — pork — directly to supermarkets.
Could this happen to registered purebred-cattle breeders? You bet.
Corporations do not want to own land, put up hay, castrate, breed, calve-out heifers or feed cattle at 0° F. They want control over the end product and the market. In 2007, USDA’s Market Reporting Service announced that meatpackers acquired more fed cattle under captive supply arrangements than were purchased by bid or negotiation. This trend continues and fewer fed cattle are sold in a competitive market, which gives corporations control over the cattle market, just as they achieved in the hog market.
As this trend continues, purebred-cattle breeders will be the first to go out of business.
Cattle genetics are being decoded. Just as with the hog industry, corporations will demand specific genetic cattle traits. Genetic diversity is not the goal. Genetic predisposition for tenderness, loin eye, back fat, yield and quality will be required. Composite breeds with these genetics will be developed. Corporations will start by enticing top producers to use their composite breeds.
Corporations will coerce the cattle industry into this genetic trap by discounting prices for cattle that do not conform. Animal identification and source, age and process verification will be required to access export markets. Export markets will be promoted as the salvation for this newly consolidated industry. Cattle producers will have no choice but to comply.
The market will be about yield and tenderness, not quality. Recently, prices for Choice and Select carcasses were identical. Although it costs more to achieve Choice, producer efforts to improve the percentage of Choice carcasses will be for naught.
Corporations will force restaurants to offer “Select beef only” menus and retailers to promote Select beef as superior in nutrition and tenderness. Less fat, more protein, fewer calories and better health will be promoted. All of these ideals can be achieved through the corporations’ composite genetics.
The trend has started. If I were a purebred-cattle breeder I would be afraid, very afraid.
Max Thornsberry, DVM, MBA, is R-CALF USA president/Region VI director.