Giving consumers what they want

From the Cattlemen's Beef Board:

Consumers are always in the driver’s seat when it comes to selling products, beef included. That’s why success in the beef industry during the coming decade will depend so heavily on the industry’s ability to give consumers what they want – no matter how often they change their minds.

That was the message from Dr. Gary Smith, distinguished agricultural professor at Colorado State University, during the beef checkoff’s 2010 Innovative Beef Symposium in Denver last week.

“If you do what you’ve always done, you’ll get what you’ve always gotten,” Smith told the 80-plus processors, manufacturers and retailers who participated in the two-day event. “Innovation matters,” he said, if you want to have any chance of attracting new customers and entering new markets.

Innovation can come in various forms – including a company acting spontaneously, investing in a breakthrough and branding it, designing success into new products, or through in-depth research and “homework.”

To date, Smith said, the Beef Checkoff Program has done extremely well with innovation through research that leads to development of new beef products that meet consumers’ changing demands. At the heart of that innovation is muscle profiling, which has developed new cuts from the shoulder clod, the chuck roll and, most recently, the round.

“I think the Beef Checkoff Program … has done a tremendous job of looking down the road,” Smith said, “plucking steaks out of the chuck and round and making something between ground beef and traditional steaks.” Beef Value Cuts created through muscle profiling have truly maximized the value of the chuck and the round – turning previously ground product into profitable steaks.

Looking forward, Smith said, it is important to remember that businesses and industries fail for two reasons: their inability to escape the past and/or their inability to invent the future.

During the next five years, Smith said, the beef industry will experience decreased demand domestically and increased demand on international fronts, and stakeholders will have to become more “consumer-centric and export-minded” if they are to succeed.

“We will differentiate to drive demand, with more product branding and increased innovation,” he said. “Give the consumers what they want – give them product diversity!”

Will GIPSA help or hurt young producers?

U.S. Agriculture Secretary Tom Vilsack has made a big deal about wanting to entice young people to stay in agriculture, and in particular ranching, where the number of producers is reportedly dwindling.

But the National Cattlemen's Beef Association raises this question about the rule proposed by the Grain Inspectors, Packers and Stockyards Administration.

Will cattle producers be helped or hurt by the proposed GIPSA regulation that is intended to provide protection for producers against unfair, fraudulent or retaliatory practices in the livestock business?

That is the question that many in the cattle business are asking now, less than two months after the rule was proposed. Many of the smaller cow-calf producers that the rule is supposed to benefit are expressing serious reservations about the profound impact it could have on their livelihoods.

Meet Robbie LeValley, a lifelong cow/calf producer who operates a ranch with her husband Mark and two sons in Hotchkiss, Colorado. Her family operation is one of six that together own Homestead Meats, which offers natural beef for sale direct to consumers, retailers and restaurants. The six families also own a USDA inspected packing plant where they market their own animals and provide custom processing. LeValley is also president of the Colorado Cattlemen's Association.

She is worried the proposed rule could have a negative impact on her family business. One concern for Robbie is the long term impact of the proposed rule on the next generation of livestock producers, like her two sons who represent the fourth generation in her family business.

"We operate on a very thin margin already, so the potential for additional government intervention or increased litigation just reduces that margin even more," she said. "Is there enough of a margin to bring in that fourth generation?"

LeValley would like to see an in-depth, cost-benefit analysis done on the proposal before it is rushed into implementation.

"Where is the research that shows there is problems in the marketplace and that these proposed rules will do anything to address those problems?"

The 70-30 nation

Blogger and radio talk show host Hugh Hewitt writes for the Washington Examiner:

The American Enterprise Institute's Arthur Brooks has quite accurately described America as a 70/30 nation, with the 70 percent presently massively underrepresented in the federal government, the Manhattan-Beltway media elite and academia.

The 70 percent is appalled by the placebo economics practiced by the president and the Congress over the past two years, shocked by its profligacy with the wealth of the republic, and sickened by the looting of the next generation's opportunities.

The 70 percent did not want Obamacare, but it has been thrust upon them.

The 70 percent did not want federal judges to declare "game over" in the complex discussion of what marriage is and means.

The 70 percent want a fence on the border that works, and do not want their concern over unregulated immigration dismissed as nativisim.

The 70 percent are not ashamed of their belief in God, deeply resent being labeled bigots because they view ground zero as land that ought not to be exploited for "messaging" of any sort by any group, and are enraged by the scorn which they encounter everywhere in media except Fox News and talk radio.

The 70 percent believe that the federal government is remote and clueless, and that the Constitution's principles of enumerated and limited powers and the sovereignty of the states are vibrant, important core values to the republic.

The 70 percent think Iran is in the grip of an evil, theocratic fascism, and that Israel is our true friend and ally deserving of our full-throated support.

So taking this idea to heart, do 70 percent of those involved with the beef cattle industry want the federal government to keep its mitts off their marketing agreements? Judging at least by the membership numbers of the industry's respective organizations, I would say that's probably about right.

Quote of the Week

In the Denver Post's coverage of Friday's Fort Collins livestock hearing:

Celebrate the good news and recognize that everyone in the cattle industry is dedicated to offering the greatest product, said Robbie LeValley, a Hotchkiss rancher and president of the Colorado Cattlemen's Association, cajoling her peers to work toward solutions.

"We should not be circling the wagons and shooting inward," she said.

Calls for reform in Fort Collins

From the National Farmers Union:

WASHINGTON (Aug. 27, 2010) – Amid much anticipation, the U.S. Department of Agriculture (USDA) and Department of Justice (DOJ) held a joint workshop focused on competition in the livestock industry in Fort Collins, Colo., today. The workshop had 1300 individuals registered, including Farmers Union members and staff from at least 12 states.

“A lot of attention has been drawn to this workshop based on the recent disputes on the Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule,” said National Farmers Union (NFU) President Roger Johnson. “NFU is pleased to have two members on the speaker panel representing U.S. family farmers and ranchers, who are in favor of the proposed rule. It is vital to have speakers from groups that represent the family farmer, not just the packer-producer organizations.”

Chris Peterson, Iowa Farmers Union president, and Armando Valdez, Rocky Mountain Farmers Union member, both livestock producers, spoke at the workshop. Peterson and Valdez each highlighted the need for reform in the livestock industry, with an emphasis on the increasing consolidation and vertical integration in the livestock and poultry marketplace, resulting in a tougher environment for independent producers.

“GIPSA has put forth the revisions as called for by Congress in the 2008 Farm Bill,” said Johnson. “The rules reinforce the existing Packers and Stockyards Act and amount to a Farmer and Rancher Bill of Rights.”

Editorial: 'Us vs. them' nothing new

Today's Capital Press editorial weighs in on the infighting that's going on among national beef organizations, which we detailed last week. It starts with some history:

Back before the turn of the last century, the nation's farmers got all worked up over the power of the railroads, their only ticket for moving large quantities of fruit, grain and livestock from rural areas to urban centers, where their customers lived.

And here's another snippet:

The beef industry is set up for "us vs. them" mind sets. There are over 900,000 cattle producers in the country, most of them in the business of raising calves for sale. Then there are margin operators, who get a percentage of the price, regardless of whether the cost of calves is up or down. Both cattle feeders and meat packers are targets of complaints -- sometimes justified.

Everyone complains about the bankers, who call the shots when the line of credit is maxed out.

Read the editorial here.