Every workday millions of Americans hop in their cars for an average commute to work of 25.5 minutes. And for those who live inside one of the 49 metropolitan cities of more than a million people, the commute to work is even longer.
Given the chaotic life typical of urban
A revolution of change
Your business has changed rapidly these past few years because your customer has changed. That has forced an organizational revolution within the beef industry. It’s no longer enough to produce a safe, wholesome product. Today’s consumer — the one with the 25-minute commute to and from work — demands safety, quality, taste and convenience. To satisfy those needs, packers and retailers have overhauled their production and marketing systems to offer a variety of products that were never imagined when your grandfather was ranching.
“Structured changes are transforming the industry from commodity-oriented to consumer-driven production systems,” says
Today’s beef value chain encourages producers to work together and with other segments in the chain to improve quality and add value to their production.
“Ranchers need to ask themselves, ‘How can I participate further down the chain and capture more value?’ They need to think beyond the ranch gate and interact with other segments,” Tatum says.
Interacting with other segments means communicating with your customers — feedyards, packers, even retailers. That’s beef’s organizational revolution in a nutshell. Many producers today are capturing premiums for their calves by producing specific genetics, by preconditioning their calves or by managing calves under specific guidelines such as “natural” or “organic.” In short, they’re communicating with their customers to identify ways to add value to their calves.
“Vertically aligned chains emerge because they are responsive to consumer needs, involve coordination of management practices that add value and create efficiency, and they allow quality and safety to be monitored and maintained,” Tatum says.
Planning for the future
The past few years have been good for most cow-calf operations. Calf prices set new all-time highs, and turning a profit has been relatively easy. But the cycle peak is past, and most analysts expect prices to drift lower in 2006 and 2007. Now is the time to plan for your future and the future of your children.
“Producers will need to do three things to be successful in the coming years,” says Tom Field, another
Identifying your calves is much more than just complying with a proposed National Animal Identification System. It’s about gleaning a wealth of information from individual records and helping your customers — feedyards and packers — satisfy the demands of their customers. For instance, age verification is a requirement for cattle to be eligible for export to
“To take advantage of the Japanese market, we’re going to be required to provide birth-date information that is verified by a third party,” says Mark Armentrout, chief operating officer of AgInfoLink, a leading global information-solutions provider. “The Japanese will go out of their way to make sure we have an auditable program for those birth dates.”
The importance of verifiable birth records can be found in the value of the offal.
“With accurate birth records, a feedyard can identify cattle that can be harvested at 20 months or younger. Those carcasses can be segregated so that the offal can be sold to
Individual-animal ID also provides you with the opportunity to gather performance and health information about your calves, whether you retain ownership or sell them as feeder cattle. That will be important in the future because, as Field says, feedyards and packing plants today know more about producers’ genetics and the performance of their customers’ cattle than they do.
Cooperation, or aligning your operation with other segments, therefore, can work to everyone’s advantage. The example most experts point to is the value of preconditioned calves. Calves that have been vaccinated, weaned and bunk broke at the ranch are worth $8 to $10 per hundredweight more than “ranch fresh” calves. In this example, ranchers earn premiums for their calves and their management, feedyards find improved performance, and packers harvest cattle that grade higher with fewer defects.
Crossbreeding for profit
Producing healthy calves, however, is just part of the equation for adding value. Carcass targets are also important, especially if you’re retaining ownership of your calves. And it’s not enough just to change the color of the bull you turn out with your cows.
Successful producers of the future will learn how to optimize the carcass traits of their cattle while hanging on to economically important traits such as cow fertility and calving ease.
University of Nebraska-Lincoln beef cattle specialist Jim Gosey says crossbreeding will be a critical component to the success of commercial operations in the future.
“Crossbred cows have 25 percent greater lifetime productivity than do their straightbred counterparts,” Gosey told attendees at the National Angus Conference in
Field agrees, saying, “We really need to think through the whole system. When we are dealing with tougher markets and tougher environments, the only way our cow herds can compete is with some heterosis in them.” He acknowledges that crossbreeding systems will require a lot more planning and effort on the part of commercial cattle producers, but the rewards can be significant.
Strategic thinking
Producers who are still in the cattle business, Field says, must be doing some things really well. “If they weren’t, the last cycle would have taken them out.”
But that doesn’t mean you can continue through the next cycle without changing or adjusting your operation. Field challenges producers to think strategically and learn from businesses outside our own industry.
“If you look at your reading file and most of it is about beef, or cattle or ranching, you’re probably not reading broadly enough. We need to learn from businesses outside our industry.” (See Field’s list of recommended reading.)
It’s easy, he says, to react to what’s happening today. The challenge is to become more strategy-driven and more goals-driven.
“It’s OK to look at ranching as a business and a way of life,” Field says. “You can do some great things by combining those philosophies.”
Reading list:
Colorado State University animal science professor Tom Field suggests the following books for cattle producers who want to broaden their business thinking:
Good to great: Why some companies make the leap ... and others don't. By Jim Collins
Lovemarks: The future beyond brands. By Kevin Roberts
Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and the opening of the American West (Lewis & Clark Expedition). By Stephen E. Ambrose
The purpose driven life: What on Earth am I here for? By Rick Warren
Leadership and Re-Imagine. By Tom Peters
American Sphinx: The character of Thomas Jefferson. By Joseph J. Ellis
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