I really admire breed associations and believe strongly in what they’ve done for our industry in genetic improvement. Breed associations employ some of the brightest, most passionate people in our industry and they’ve prospered over time because they’ve been very successful in creating value.
With bull prices at historically high levels and the value of superior genetics growing exponentially the last half-dozen years or so, many would argue that this is a great time to be in the seedstock business. But, as is often the case, good times invite new competition and innovation, and there are those looking to challenge the current structure of our business. Much like Blockbuster Video, which failed to recognize and adapt to changing marketplace realities, breed associations are finding they have to re-create themselves in order to survive.
The pork industry is a great case study in how breed associations and the traditional seedstock business model were rendered largely irrelevant by creeping change. We’re seeing similar changes occurring on the beef side, as various entities begin to challenge the traditional model by not utilizing the existing genetic evaluations or by looking at new ways of sourcing seedstock.
Of course, genomic-assisted selection has the potential to radically alter how we evaluate genetic merit. Then there’s the advent of sophisticated supply-chain systems that allow the assimilation of lots of real-world data merged with real-world economic factors, coupled with the capability to conduct herd genetic evaluations.
Throw in the fact that the industry is now making a shift from grid marketing to more program cattle, and the egalitarian view of access to information becomes more questionable. Every seedstock producer in the country, from largest to smallest, has enjoyed equal access to the results of national genetic evaluations and the industry’s elite genetics. That, however, is looking increasingly less likely as we move forward.
It’s similar to the realignment occurring among major college football conferences, where some folks predict that television revenue distribution deals will lead eventually to four super conferences. Similarly, the need to be part of a bigger group will be crucial for survival in the beef industry. The questions then become those of what those groups will look like, and what role will the breed associations play in supporting them?
I’m not opposed to change; in fact, I believe change is usually either good or necessary. But I still hold dear the concept of individual producers controlling their own destiny, with seedstock purchases being based on genetic merit and personal relationships. From a personal standpoint, I don’t believe the pork industry model is in the best interest of the beef industry, and certainly not in the best interest of beef producers. So how do we ensure that we don’t end up going the same route?
Many would argue that there are two major factors that preclude the cattle industry becoming like the pork industry:
- The first is that the cattle industry is too capital-intensive, and too extensive in its nature. The argument is that there are far too many production schemes, environments and marketing programs inherent in the U.S. beef business to allow the definition or propagation of absolutely superior genetics.
- Second, it can be argued that the work of breeders and breed associations makes it extremely difficult for some entity to come in and develop genetics that are vastly superior to what’s already being produced.
There are other factors at play as well, things like generation interval and the like, but the bottom line is that we are looking at a highly competitive and ever-changing structure for the industry.
Personally, I’m betting individual producers and breed associations will adapt, remain relevant, and strengthen their relationships and genetic-selection capabilities. Admittedly, there are some betting that they can replace the existing models with something better. But, the new shape of the seedstock industry will be determined by how much genetic improvement and selection pressure the various models can apply, and how well those systems help their customers capture and leverage the value of the superior genetics and management that producers are putting into their cattle.
I certainly lean to the collective expertise that breed associations and seedstock producers currently have, but believe that both will dramatically rethink the way they conduct their businesses. It’s true that the pork and poultry industries went down the paths they went because someone employed better models; and many of those economic drivers exist in the cattle industry as well. The question is whether we can create systems to take advantage of those drivers without sacrificing the independence of individual producers.
I believe we can and will avoid those pitfalls. Leading breeders have produced genetics that add value to their customers and have backed those genetics with excellent customer service. Breed associations have provided their breeders with the tools to make rapid genetic improvement and to help their customers succeed. More, however, will be required and just how those attributes are defined is being rewritten.
Breeders are human and the tendency is to stay with what has worked, even after times have called for change. Similarly, breed associations have tended to develop a silo mentality, with the mistaken belief that they can defy economic drivers through policy. Those tactics may work for awhile, but long-term success will be gained by those who adapt the most quickly to the realities of the marketplace.