Value-based marketing alliances appear to be becoming more alike than different.
More alliances are marketing more cattle for similar premiums, but reported requirements are loosening, and more are reaching back to the cow-calf producer to source the cattle their customers want.
Taking a read on the evolution of beef alliances is akin to charting the stars with a rubber band and thumbtack. Distance, dynamics and proprietary information mean you can't ever be sure about what you're seeing, yet the process can confirm previous conjecture and uncover new ideas.
There is nothing scientific about the alliance information presented in these annual BEEF Alliance Yellow Pages. The various programs participate if they want and provide the information they choose. Considering the information compared to the past, however, does serve up some observation and speculation worth tracking.
Based on the information reported by 34 consumer-based alliances this year compared to that reported by 36 organizations last year, here's what we're seeing: (BEEF's observations are in italics):
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A total of 4.7 million head of cattle were marketed through alliances in 2001, a 20% jump over 2000. This number includes 2 million head reported by Certified Angus Beef.
That's certainly in keeping with the increased volume of cattle trading away from the spot cash markets, as well as the growth of branded beef products.
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Twice as many alliances (10) marketed 100,000 head or more.
As major retailers begin establishing partnerships with supply chains, volume becomes its own reward.
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A total of 38% of the alliances participating in this year's BEEF Alliance Yellow Pages report offering some sort of post-harvest premium to cow-calf producers who raise the cattle that ring the performance bell. This is regardless of whether or not those same producers retain ownership in their cattle through the feedlot.
A couple of years ago, only a couple of programs offered economic incentives ahead of the feedlot. The growing use of this tool underscores how much added value the right kind of cattle in the right situation bring to the equation.
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The premiums cited this year represent a dramatic widening in the range of value. The top premium cited this year is $270/head, compared to $60/head last year. Take a couple of these stratospheric premiums out of the mix, however, and the premiums are virtually the same, ranging from about $10/head to $60/head.
On the extreme end, it makes sense that cattle that must fit a tighter window should be worth more. A similar range across years might underscore the fact that there's a point at which cattle aren't worth any more, no matter what you do to them.
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A total of 44% of the alliances this year cite a minimum number of cattle as a requirement, compared to 53% last year.
Rather than moving away from the efficiencies of moving loads of cattle, this might indicate more pooling and commingling of calves so that operations of all sizes have more opportunity to participate.
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Of this year's programs, 56% cite some type of management or identification requirement, compared to 65% last year. Of those, 37% require that cattle be managed to meet natural beef specifications.
While the numbers are similar, possibly some requirements once deemed as an added-value luxury, such as health management, are becoming a standard of admission.
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A total of 82% report offering pricing grids — either yield-based, quality-based or both — compared to 94% last year.
Certainly, there seem to be more systems transcending pricing models based in the commodity market and moving closer to the consumer; typically working more closely with the packer and retailer to determine value.
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Choice Yield Grade 3 is cited by 63% of the programs as the par point in their pricing system, compared to 56% last year.
True to the past, this continues to be the middle ground of value for the majority.
| Alliance Web Address | Contact | Year estab. | Cattle in alliance in 2001 | Average premium paid/head | Cost | Minimum head | Grids geared to QG, YG or both (see key) | Par point on grid |
|---|---|---|---|---|---|---|---|---|
| Consumer-Based Programs | ||||||||
| Angus America www.angusamerica.com | Mark Nelson 402/462-2057 mark@angusamerica.com | 1996 | 120,000 | $13/hd | $1-6/hd | 35 | QG | Choice YG3 |
| Angus Gene Net www.genenetbeef.com | Ken Conway 785/628-3004 genenet@ruraltel.net | 1998 | 100,000 | $19.64/hd | $3/hd | 20 | both | Choice YG3 |
| B3R Country Meats www.b3r.com | James Henderson 940/937-3668 b3r@childress.tx.com | 1986 | 30,000 | $60/hd | none | 40 | both | Choice YG2 |
| Beef Advantage Project www.beefadvantage.com | James E. Herring 806/374-1811 | 1996 | confidential | confidential | none | one load | both | confidential |
| Brangus Gene Net www.genetbeef.com | Ken Conway 785/628-3004 genenet@ruraltel.net | 1999 | 100,000 | $19.64/hd | $3/hd | 20 | both | Choice YG3 |
| Caprock Industries Sharing Total Added Value | Ben Brophy 806/371-3711 ben-brophy@cargill.com | 2000 | 40,000 | $23/hd | none | 120 hd, one sex | both | Choice YG3 |
| Certified Angus Beef LLC www.cabfeedlots.com | Steve Suther 785/889-4162 ssuther@certifiedangusbeef.com | 1978 | 2 million | Ch/Se + $3/cwt. | none | 1 | both | vary with packer |
| Certified Hereford Beef www.herefordbeef.org | Rob Ames 816/842-3757 rames@hereford.org | 1995 | 93,821 | N/A | none | 1 | both | YG 3 or less Select or better |
| Charolais Gene Net www.genenetbeef.com | Ken Conway 785/628-3004 genenet@ruraltel.com | 2002 | 100,000 | $19.64/hd | $3/hd | 20 | both | base-Choice YG3 |
| Coleman Natural Products Inc. www.colemannatural.com | Jim or Scott Coakley 303/297-9393 jim@colemannatural.com scott@colemannatural.com | 1979 | 60,000+ | N/A | none | 1 | QG | Choice YG2 & 3 |
| ConAgra Better Beef LLC www.conagra.com | Al Perez 970/506-7798 aperez@conagrabeef.com | 1995 | 250,000 | N/A | no cost group data $1-3 individual data | load lots | both | Choice YG3 |
| Country Natural Beef www.countrynaturalbeef.com | Doc & Connie Hatfield 541/576-2455 marketing@countrynaturalbeef.com | 1986 | 33,000 | cost of production/return on investment | member of co-op | NA | both | high Select, low Choice YG1 & 2 |
| Decatur Beef Alliance www.krvn.com/decaturfeedyard | Warren Weibert 785/475-2212 warren@decaturfeedyard.com | 1994 | 40,000 | Confidential | $12/hd | load lot of same sex | both | N/A |
| Farmland Supreme Beef www.agribeef.com | Dusty Turner/John Parker 620/624-6296 | 1995 | 40,000 | $18.01/hd | $2.50-4/hd | one load or 70 hd | both | Select YG3 |
| Five-State Beef Initiative www.5statebeef.org | Ron Lemenager 765/494-4817 rpl@purdue.edu | 1998 | 8,000 | N/A | None | 1 | both | N/A |
| Future Beef Operations LLC | Ronnie Green 303/209-1866 rgreen@futurebeef.com | 1998 | 420,000 | N/A | none | one load of either sex | both | depends on which grid; Angus grid/muscle grid |
| Gelbvieh Alliance www.gelbvieh.org | Dennis Fennewald 303/465-2333 | 1995 | 44,000 | $9.69/hd | $1/hd | 1 | both | regional averages |
| Glacier Beef Inc. www.glacierbeef.com | Bill Nice 815/772-4386 aimnub@essexl.com | 1999 | 14,000 | $20/hd | $10/hd | 500 - all steers | both | Select YG3 |
| Iowa Quality Beef Supply Network | Phil Core 515/296-2266 phil@isabbe.com | 1999 | 125,000 | $23/hd | up to $5/hd | 30 | Both | Choice YG3A |
| Lean Limousin Beef Co. | Carlton Noyes 308/234-9787 | 1988 | 6,000-7,000 | $3/cwt. | none | 1 | YG | N/A |
| Maverick Ranch Natural Lite Beef www.maverickranch.com | Bob Rolston 303/294-0146 bobrolston@maverickranch.com | 1985 | 35,000 | N/A | none | load lots | both | Select YG1 |
| Nebraska Corn-Fed Beef www.necornfedbeef.com | Jo McElwain 402/475-2333 jo@necornfedbeef.com | 1997 | 25,000 | $12/hd | $4/hd | 1 | both | Choice YG3 |
| Nolan Ryan's Tender Aged Beef www.nolanryanbeef.com | Charlie Bradbury 936/436-1622 cbradbury@nolanryanbeef.com | 2000 | 60,000 | N/A | none | 1 | N/A | N/A |
| Painted Hills Natural Beef www.paintedhillsnatural-beef.com | Glenda or Mehrten Homer 541/763-2333 glenda@natural-beef.com | 1996 | 6,000 | N/A | none | 1 | QG | Choice YG3 |
| Performance Plus-Retained Ownership | Don Cain Jr. 888/269-8387 performance@alltel.net | 1993 | confidential | $29.49/hd | $7.50/hd | 1 | both | N/A |
| Performance Plus-Sale Barn | Don Cain Jr. 888/269-8387 performance@alltel.net | 1993 | confidential | $22.33/hd | $8/hd | 1 | both | N/A |
| Power Genetics www.powergenetics.com | Jason Anderson or Mark Tracy 308/493-5604 | 1993 | confidential | confidential | none | 35 | both | confidential |
| Premium Quality Foods Inc./Red Oak Farms Premium Hereford Beef www.pqfinc.com | Pete Hudgins or Steve Berendes 712/623-9224 steveb@pqfinc.com | 1996 | 41,000 | N/A | none | 1 | QG | Select YG3 |
| Ranchers Renaissance | John Butler 303/662-1945 | 1997 | 100,000+ | confidential | confidential | confidential | confidential | confidential |
| Red Angus Feeder Calf Certification Program www.redangus.org | Ann Holsinger or Blake Angell 940/387-3502 ann@redangus.org blake@redangus.org | 1995 | 96,000 | depends on location | $1.25/hd | 1 | QG | Choice YG3 |
| U.S. Premium Beef Ltd. www.uspremiumbeef.com | Tracy Thomas 866/877-2525 tlthomas@uspb.com | 1996 | 700,000 | over $25/hd average, top 251 = $45/HD | membership and share access | 20 | both | 50% Choice YG3 |
| Western Beef Alliance Inc. | Terry O'Neill 406/373-6016 tomahawk@mcn.net | 1994 | 2,200 | $58/hd | $0-7/hd | 40 | both | YG2.8 and Choice - Select + |
| WRB All Natural Premium Beef | Carolyn Carey 530/233-2334 Carolyn@hdo.net | 1998 | N/A | $130/hd | $3/hd | 1 | both | Choice YG3 |
| Western Grasslands Beef | Carolyn Carey 530/233-2334 Carolyn@hdo.net | 2002 | N/A | $270/hd | $3/hd | 1 | N/A | N/A |
| Calf-Based Programs | ||||||||
| Agri-Beef www.crinet.com | Jon Janssen 715/526-7551 jjanssen@crinet.com | 2000 | 6,000+ | $4.50/cwt. over market | none | none | CAB/Both | N/A |
| Land O' Lakes/Farmland Beef Connection | Doug Stanton 620/276-0992 dstan@landolakes.com | 1999 | 15,000/hd 2001-2002 | work with several grids | $3/hd | 20 | N/A | N/A |
| MFA Health Track Beef Alliance www.mfahealthtrack.com | Mike John 573/876-5573 mjohn@mfa-inc.com | 1998 | 41,000 | $27 | none for members | 1 | N/A | N/A |
| Montana Beef Network www.mtbeef.org/beefnetwork | Adrienna Hines 406/442-3420 adrienna@mtbeef.org | 1999 | 8,000 | N/A | $2/hd | 1 | N/A | N/A |
| Piedmont Cattle Producers Association www.pcmabeef.com | Phil Slay 334/864-0407 slayfarm@mindspring.com | 1994 | 2,100 | 8¢ over market | $1.25/hd | 20 | N/A | N/A |
| KEY: Grids geared to QG = quality grade, YG = yield grade, Both = quality and yield grade Practices Required: S = source verification, W = weaning, P = preconditioning, N = natural (i.e., typically prohibit the use of antibiotics and growth hormones) | ||||||||