Feed-to-finish beef producer Mark Pankonin, Lamberton, MN, stops at a feed bunk to examine a pen of calves he bought this fall from a Montana rancher. He says the calves, like others he's bought from five different ranchers the past few years, have the right genetics to bring the premiums he needs to participate in the PM Beef Group LLC Ranch to Retail program.

“Quality is our No. 1 concern, particularly in the genetic traits the cattle display,” says Pankonin, who finishes about 2,000 head of beef annually in southwest Minnesota. “The industry is trending towards elimination of poor-quality products, but right now our reputation is on the line, and we want to instill consumer confidence.”

PM Beef's Ranch to Retail system rewards producers for meeting or exceeding quality standards. The USDA Agriculture Marketing Service (AMS) Process-Verified Program certifies these standards. PM Beef is the only source-verified beef supplier and the first gate-to-plate beef company using USDA's process-verified system, says Jim Riva, branch chief of USDA's AMS Audit, Review and Compliance Branch.

Consumer-Driven Program

“The purchaser is driving this and other programs like it because the public wants to be more educated about where their food comes from,” Riva explains. “In this particular program, we can verify whether (PM Beef) is doing everything it says it's doing all along the production process to the original source of the cattle.”

Product traceability, extensive documentation and verification of genetics, animal health records, feed composition and residue testing are the main features of PM Beef's Ranch to Retail program. The program also features a grid system that examines and scores important factors such as ribeye and backfat measurements, marbling, yield, color and appearance.

Other groups are developing similar programs. The Red Angus Association of America, the National Bison Association and four pork companies also have USDA-approved Process Verified programs in place that certify certain standards of quality.

“These programs level the playing field for smaller producers and suppliers,” Riva says. “Anyone can participate [and be rewarded], if they're dedicated to producing a quality product.”

Gary Smith, Monfort-endowed chair in meat science at Colorado State University, calls value-added meat programs such as these “futuristic” in that they enable producers “to be paid for something they did that was extra special.” From the retail side, it enables supermarkets to charge more for the “warm and fuzzy feelings” they give to consumers who are relationship and quality oriented, he says.

“Consumers are willing to pay more for beef when they know the cattle were raised by people who really cared and took additional measures to make it safer or better,” says Smith. “They also want to feel good about what they feed to the people they love.”

Premium Power

Such programs boost producer income by paying premiums for products that meet customer and consumer specifications. For instance, Pankonin says he averaged $20-$60/head last year in premiums from all the cattle he sold in PM's Ranch to Retail program. He's in his third year as a PM Beef “family feeder.”

Pankonin plans to increase the percent of cattle he sells under the program this year from 50% of his calves to as much as 60%. There's no guarantee, however, his cattle will score well enough to pocket premiums.

“Not only do I have to source-verify every calf, but genetically I need to have the right makeup and quality to make the grade,” he explains. “You stand to lose dollars from discounts if your cattle aren't up to the standard. They only pay a premium for the cattle that beat the standard.”

Smith encourages producers to explore any premium opportunities available to them.

“It's simply good business to find someone that will pay more for your product and then to do it,” Smith says. Programs like these also prepare producers for the day they might be excluded from the market if they don't meet a minimum standard, he adds.

Curry Roberts, PM Beef president, agrees programs like these are necessary to meet consumer demand.

“I don't believe the beef industry is going to be vertically integrated — that will take too much capital,” Roberts says. “But producers will still need to align their genetics with a program that rewards them for producing an animal that meets a certain specification.”

Having taken cattle through the Ranch to Retail system twice, Pankonin says he's better able to pick which cattle to sell on the commodity market, and which cattle to sell at the PM Beef plant in Windom, MN. Plus, the carcass data he gets back from the PM plant helps him and ranchers he works with make future production and marketing decisions.

“For the entire beef industry to benefit the carcass data need to get back to the ranchers,” Pankonin emphasizes. “They're the ones who make the greatest impact on supplying consistent-quality beef, and they're the ones who ultimately will weed out the bad genetics.”

Roberts says the beef industry has a long way to go to fully meet consumer expectations, and that the programs that develop need to be varied.

“As an industry, we need to celebrate our diversity and market our programs according to regional differences in taste and cuts of meat,” Roberts says.

Beef Quality Quest

The PM Beef Ranch to Retail program targets a lean, moderately marbled animal with good yield. Carcass data tell producers how they rate against other producers in the system and provide a benchmark for future improvement.

“Only selected types of cattle are used,” explains Leann Saunders, vice president of IMI Global, which built and designed the software system to document PM Beef's source verification system. “The focus is on a production process that promotes tenderness and consistent yield.”

Saunders says upscale domestic retail outlets like Heinen's Fine Foods and Ukrop's Supermarkets were originally driving the Ranch to Retail demand. Now, international markets in Japan and Korea are also sparking sales.

The outbreaks of bovine spongiform encephalopathy (BSE) in the United Kingdom and Japan, and more recently individual cases in Canada and the U.S., have highlighted the program's value, she says. But, she adds, product quality as well as safety was always the program's primary focus.

“We wanted to create an exceptional eating experience for the consumer,” Saunders says. “In order to accomplish that, we had to put in certain specifications all the way back to the source.”

For example, every steer passing through the system carries a “health passport” with all its vital health information, including a complete vaccination history from birth. Each steer also has its own “ranch portfolio,” which includes information on its feeding regime, birth date and breeding.

“Once you get a traceable system in place, you can start making improvements,” says Saunders, “but you can't improve on or even monitor what you can't measure.”

For cattle feeders and ranchers, such information is vital. “The better I do, the more aggressively I can bid for cattle I think will do well in this system,” Pankonin says. “I can give the rancher a premium bid if I know the data on his cattle and think they will score well.”

Conversely, if these ranchers sell to somebody else, “they won't get the data back to make improvements, and I won't have data to base bids on,” he says. “Ranchers depend on this information as much as I do.”

Pankonin says he thinks scoring and pricing cattle on a grid system is here to stay.

“This is going to snowball,” he says. “It's good for the consumer, for the rancher and feedlot operator, and for the industry.”

For more information on PM Beef and its Ranch to Retail program visit http://www.pmholdings.com/b.html. For more on USDA's Process-Verified Program visit http://www.ams.usda.gov/process/amsprocesses.htm.

John Pocock is a Minnesota-based freelance writer on agriculture topics.