Two years ago Wal-Mart told its top 100 suppliers their products must be RFID (radio frequency identification) compatible by the beginning of this year. In other words, all suppliers’ cases and pallets must be RFID tagged. Wal-Mart spokesperson Christi Gallagher said last month, “Our RFID initiative is right on track.”
Wal-Mart’s leverage over its suppliers is tremendous, and the trickle-down impact will have an effect on your business. As the world’s largest retailer, Wal-Mart’s demands often become industry standards, and as the largest beef retailer, the company’s expectations will influence the value of your calves from the day they are born.
Beef’s growing popularity the past few years is the driving force behind some dramatic changes in our industry. Several factors, such as improved quality, branded and convenience products, have contributed to beef’s resurgence — an increase in the Beef Demand Index of more than 25 percent since 1998. Such growing demand is good for your pocketbook and good for those selling beef up the chain. But it also encourages retailers and foodservice operators to take extra steps to protect the value they receive from beef’s popularity.
For instance, RFID can provide a lot of benefits for a company such as Wal-Mart. Products can be processed faster and inventories monitored instantly through an RFID system. It also reduces the need for human labor, and hence, reduces the possibility of human error. But maybe more important, RFID is another tool to ensure food safety and consumer satisfaction.
RFID technology remains in the early stages, but the potential exists to generate data that can be used universally in the meat-supply chain. Important trace-ability information, such as an animal’s ranch-of-origin, harvest date, shipment date and time-in-transit, may soon be possible. Such technology would allow for the tracking of ribeyes back to the ranch.
While retailers work on an RFID system to track beef products back through the chain, many producers are working to develop systems that ensure quality forward through the chain. Many of those systems include source verification, which is rapidly becoming an indicator of beef’s quality as valuable as genetics and time on feed. Many producers are already earning premiums for source verification.
Coupled with the U.S. Animal Identification Plan, which is designed to respond to animal-disease outbreaks, source verification and other production requirements are helping producers sell beef in a variety of new markets. Specialty markets such as high-quality, organic, natural, etc., are just a few of the marketing opportunities available to producers willing to make changes in their production practices.
So convinced of the value of cattle identification and traceability were the 200 industry leaders at the recent International Livestock Congress that they reached a general agreement of support for such systems. In fact, the group (consisting of cattlemen, academics, trade associations, government representatives and international guests) agreed that U.S. cattle identification and traceability systems should be mandatory. They also agreed the system should be electronic with limited and controlled access to data by governments, and it should begin with the birth of calves and extend to packing plants.
The following pages contain features about the evolving marketing strategies for beef producers and profiles of successful producers who are utilizing new management and marketing practices to earn premiums and increase profitability.