ConAgra Better Beef Co. pulls added beef demand by pushing chain-linked information and incentives back to cow/calf producers.
It's simple. Just listen to Tim Schiefelbein, manager of value-based procurement for ConAgra Beef Co. "You take these cattle from ConAgra Better Beef, on average, and they will give our packing plants a consistent supply of cattle that fit our branded beef programs."
Schiefelbein is describing why ConAgra Beef continues to build upon ConAgra Better Beef Co. (CBB). CBB is a separate alliance company established five years ago to not only procure cattle for ConAgra's feedlots and packing plants, but also to procure cattle that fit the company's expanding lines of branded beef products.
"What we're trying to do is marry the producer and consumer so that we are providing consumers with what they want while supplying producers with the information and incentives to provide it," says Don Willms, ConAgra vice president of cattle feeding, fed and feeder cattle procurement.
It's real simple.
"Now we know what the target is and what our cattle will do, so we know where we need to go," says John Raftopoulos of the Raftopoulos Ranch based at Craig, CO.
He and his family have been selling cattle to, feeding cattle with and buying bulls from CBB since it first began. Throughout the process they have been able to collect feeding and carcass performance data on their cattle whether they retain ownership in them or not.
And, they've had the chance to market their cattle at a premium heading into and out of the feedlot, relative to the anticipated and actual performance of the cattle in ConAgra's grid-based value system.
In turn, the Raftopoulos crew has discovered the power of making selection and management decisions with hard data and direct involvement from their customer, in this case, CBB.
"The beauty of this thing is that you're picking bulls with them, so if they can't find value in these cattle they've had a hand in selecting, then they can't find value in anything," says Raftopoulos.
Indeed. CBB is a company owned in part by one of the world's largest beef packers (more than 6 million head harvested last year) and one of the world's largest cattle feeders (five yards with a one-time capacity of 420,000 head). So, when you buy bulls from CBB, you'd expect them to know what they want in the end-product.
Simply Connected Certainly, the comprehensive reality of ConAgra is at least part of the producer appeal that has enabled CBB to grow to the point of procuring more than 250,000 head of feeder cattle and calves last year. Each of them flowed through ConAgra feedlots and packinghouses, and many of them ended up wearing a brand in the meat case.
"We have the branded programs already established, along with several new Armour product lines," says Al Perez, CBB general manager. "We have the packing division, which is in all of the major markets. And, we have a significant enough position in the cattle feeding business, plus we offer the genetics.
"There are few companies that can offer the possibilities that we can for vertical cooperation and communication," says Perez, who helped found the company with Wendell Geeslin of Magness Land and Cattle at Platteville, CO, which is the other partner in CBB.
In other words, ownership and direct control within cattle feeding, packing, meat merchandising and genetics means it's easier to coordinate the flow of information describing product successes and failures all the way from the meat case to the pasture.
"You know exactly what your cattle are doing, so you can go from there and change them to hit the specifications," says Raftopoulos. "In my estimation, the best thing it (tracking cattle beyond the ranch) has done is made us watch our cattle through each segment. It gives us a better idea of what we ought to be raising."
Changing For A Reason The Raftopoulos family runs about 2,500 mama cows. Depending on the year and market, they'll sell the steers at fall weaning and hold heifers until late winter when they'll either sell them or retain ownership. And, they'll hold back as many as a third of them to run as yearlings.
About eight years ago, they started tracking their cattle through the feedlot for one obvious reason: "We just want to provide the feeder with something he'll be happy with and will pay extra dollars for," says Raftopoulos. "If you don't follow your cattle all the way through, you can't really make wise decisions."
Moreover, armed with information about how his own cattle were performing, Raftopoulos wanted to hedge his bets by using genetics that also had documented feeding and carcass performance. Now, along with the bulls he's buying through CBB, he's starting to buy replacement females too.
"I'm really excited about the heifer end of it," says Raftopoulos. "We bought heifers out of Montana that Al Perez had the historic information on. Their steer mates gained, converted and graded 90% Choice as calf-feds. Instead of keeping replacements this year, we put ours on feed and bought these because we have known genetics and history."
Even though he figures the heifers cost him $30-$50 more/head than raising his own, Raftopoulos believes he can recoup the added investment by selling feeder and fed cattle that will command more dollars.
After all, Schiefelbein emphasizes information is the key to helping producers improve the product on the front end.
That's one reason CBB shares feeding and carcass information with all customers at no charge, whether they retain any ownership in their cattle or not.
"To be involved in our program costs you nothing," says Perez. "The only thing that will cost you money is if you want individual carcass data. That costs $1/head for the tag transfer, the same cost to us. If you want complete individual carcass data including backfat, rib-eye size, etc., the total cost is $3/head."
Plus, Perez says CBB provides suppliers with interpretation of the data, along with suggestions for improvements in everything from animal health to nutrition to genetics.
Traveling The Flexible Path "We offer the genetic, nutrition and animal health components, but we don't insist that you buy feed, animal health products or genetics from us or our alliance partners," says Perez. "We take a pretty common sense approach to the program.
"We've addressed the whole puzzle in putting together a significant number of cattle while keeping the program flexible and easy to participate in," Perez adds. "For instance, producers can market their cattle to CBB directly, through video sales, the auction barn or the Internet."
Moreover, while the end goal is to supply ConAgra's premium programs, the cattle that can participate in the program are as mainstream as apple pie. They're all preconditioned straightbred and crossbred cattle, no Brahman influence and no more than 50% Continental breeding. Bulls offered through CBB - they sold 750 last year and expect to grow that number exponentially - include Angus, Red Angus, Charolais and Limousin.
"We're not looking at niche markets. We're looking at the entire marketplace that ConAgra serves," says Perez.
However, CBB is utilizing cutting-edge technology to identify genetics for the mainstream - everything from ultrasound on bulls and replacement heifers to establishing a DNA program by which they can trace problem carcasses back to specific bulls.
Along the way, all this information becomes part of an extensive database ConAgra can use to identify genetic and management combinations that ring the bell or those that fall flat.
Bottom line, whatever road map a producer uses to get there, ConAgra is looking for balanced cattle that can feed efficiently, and then go to the rail and both grade and yield.
"We have listened to people instead of telling them what they need to do," says Geeslin of Magness Land & Cattle. "If you truly believe you need a straightbred Angus, we have a place for you, and if you believe in maximizing pounds through heterosis with a Limousin-Angus crossbred, we have a program for you, too."
Beyond genetics and information, Raftopoulos says marketing options are one reason that he works with CBB. For instance, he can sell his cattle to them outright, retain ownership, or even contract them and decide at the time of delivery if he wants to retain any ownership in them.
In fact, if a producer has no feeding and carcass track record on his cattle, Perez says, "Let us buy them the first year and see what they'll do." Say those cattle end up performing below CBB standards. "We'll work with that producer to make improvements and to make his cattle better, and we'll continue to share information as part of that improvement effort," says Perez.
"The strategy is not necessarily to be the biggest, but also the best. That's a huge departure from the old commodity days," says Perez.
Schiefelbein says average carcass and feeding performance of the CBB cattle, including specific premium program conformance, is running well ahead of the other cattle moving through the ConAgra system.
"Don't tie yourself down," advises Perez. "Over the years, I've seen so many premiums dangled in front of producers that they gear up their herd for a particular program only to see it disappear. We're working to help move the producer forward. Whether he stays with us or decides to go to a competitor, his cattle should consistently hit the target."
Editor's Note: See our BEEF Feeder section in this issue or visit our Web site, beef-mag.com, for a one-on-one interview with Don Willms, vice president of ConAgra Beef Co. Willms, who oversees the firm's cattle feeding and cattle procurement programs, sat down to discuss what he sees for his industry sector.