AUGUST 2009
CattleFax Says ■ Cow/Calf Talk ■ Risk Tools ■
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Leadership & Solutions 4
There’s a Need for Grassroots Action
L
ast month, I had the chance to catch up with some of you at our Summer Conference. I understand that NCBA President there is never Gary Voogt really a good time to leave your operation, so I really appreciate all of you who took the time to travel to Denver to discuss NCBA’s policy and get to know your fellow producers. I know that most of our members couldn’t join us in Denver. I hope you are all still actively following NCBA’s policy discussions, however. The policy voted on at summer and winter conventions determines NCBA’s actions on your behalf in Washington, D.C. Frankly, the direction you provide is more important now than ever. If we are going to protect our industry from harmful actions, then it is going to take all of us working together. We also need you to work directly with your representatives, both at the state and national level. NCBA has a strong voice in Washington, D.C., because of our grassroots producers like you. Due to the phone calls and e-mails sent into the members of the Senate
Environment and Public Works Committee, we were able to push back the vote on the Clean Water Restoration Act of 2009 for almost two months. Even though the bill did pass the committee, there is enough opposition from other senators that we have been able to further delay a vote by the full Senate. Without these calls, the bill might have easily moved from committee to the floor without much of a fight. Contacting Congress is something that everyone can do. NCBA makes it simple by providing a Web site you can visit that lists the most current issues the government affairs staff is working on and directs you to ways you can contact your members of Congress to express your opinions on issues. To get involved, visit http:// capwiz.com/beefusa or visit www.beefusa.org and click on the “Call to Action – Make Your Voice Heard” button in the upper right hand corner. If you still have questions or don’t have Internet access, contact the NCBA government affairs office at 202347-0228. As cattle producers, we strive to protect and promote our cattle within the market. Let’s not forget that we must also do this by standing up to some of the harmful actions proposed by Congress. When we join our voices together, no one can ignore America’s cattle industry.
If we are going to protect our industry from harmful actions, then it is going to take all of us working together.
August 2009 l National Cattlemen
NATIONAL CATTLEMEN The Journal for America’s Cattle Producers
AUGUST 2009 Volume 24, Issue 11 2009 Officers President President Elect Vice President Chairman Federation Division Chairman Policy Division Chief Executive Officer NCBA Publishing Staff Editor Assistant Editor
Gary Voogt Steve Foglesong Bill Donald J.D. Alexander Tracy Brunner Forrest Roberts Curt Olson Joe Snyder
To Learn More About NCBA Call 1-866-BeefUSA (1-866-233-3872) or visit www.BeefUSA.org. To receive e-mail updates from NCBA, contact Sheryl Slagle at sslagle@beef.org. Contributors Heather Vaughan Elizabeth Bostdorff How To Contact National Cattlemen’s Beef Association: P.O. Box 3469, Englewood, CO 80155 (303-694-0305); Washington, D.C.: 1301 Pennsylvania Ave. N.W., Suite 300, Washington, D.C. 20004 (202-3470228). National Cattlemen is a monthly publication of the National Cattlemen’s Beef Association.
Published by Naylor, LLC 5950 NW 1st Place Gainesville, FL 32607 Phone: 800.369.6220 | Fax: 352.331.3525 Web site: www.naylor.com Naylor Publisher Kathleen Gardner Naylor Editor Elsbeth Russell Project Manager Troy Dempsey Publication Director John O’Neil Advertising Sales Robert Shafer, Paul Woods Marketing Associate Lauren Williams Pagination Catharine Snell Advertising Art Julius Muljadi ©2009 National Cattlemen’s Beef Association. All rights reserved. The contents of this magazine may not be reproduced by any means, in whole or in part, without the prior written consent of the National Cattlemen’s Beef Association.
your ncba
Who Am I? Jason McCann of Shining Cross Cattle Co. near Miller, Mo., is 1st vice president of the Missouri Cattlemen’s Association and serves on the NCBA Policy Division Board of Directors.
Around NCBA
Cow Strategies • Cull Alternative Revenues •
Young Cattlemen’s Conference
There were 54 participants in NCBA’s 2009 Young Cattlemen’s Conference, May 28-June 4. Each year participants nominated by their state affiliate make a crosscountry tour visiting locations along the way that represent all industry segments. Since its inception in 1980, more than 1,000 cattlemen and women have graduated from the YCC program, a cornerstone of leadership training efforts within the cattle industry.
Stockmanship & Stewardship
The Stockmanship & Stewardship Tour uses live cattle demonstrations to inform cattlemen about the benefits of proper cattle handling and its critical role in increasing consumer confidence in beef. The tour, which features Curt Pate and Ron Gill, includes special hands-on training sessions at livestock auction markets where employees are coached in stockmanship methods. Also look for the tour at other industrysponsored field days. The sessions teach handling methods that improve gathering, penning, chute work, and hauling.
Aug. 4
Aug. 29
U niversity of Tennessee Experiment Crossville, Field Day Tenn. David Kirkpatrick, 865-974-7294, fkirkpatrick@utk.edu Oklahoma Range Oklahoma City, Roundup Okla. Steve McKinley, 405-235-4391
Sept. 6-12 Clark, Colo.
The Home Ranch
Sept. 17
University of Missouri Columbia, Mo. Phillip Brooks, 573-823-7930
Sept. 19
Clark, Colo.
Horse Sale
Raymondville, Oct. 11-17 Golden Hills Resort Mo.
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Coming in September’s National Cattlemen
August 2009 l National Cattlemen
Industry Summer Conference
Look for coverage of the Cattle Industry Annual Summer Conference in the September issue of National Cattlemen.
July’s National Cattlemen
The print version of the July issue of National Cattlemen was canceled due to financial concerns. The magazine was distributed electronically to members who receive a free, weekly electronic newsletter from NCBA. Information about how you can receive that follows.
• Technology • Wind Farms
initiative to strengthen the future of the beef industry. The Bright Futures Scholarship fund will help develop future leaders and inspire young people to pursue careers in agriculture and the beef industry. “A Bright Futures contribution is an investment,” said Bob Josserand, chair of the Board of Trustees for the National Cattlemen’s Foundation. “The return on that investment is helping preserve our legacy.” The National Cattlemen’s Foundation is seeking contributions from individuals, corporations, associations and foundations with a vested interest in supporting young people who will strengthen the beef industry. Every single gift, no matter its amount, is important. The goal of the Bright Futures initiative is to raise several million dollars for an endowed general scholarship fund. Revenue generated from the fund will be awarded as academic scholarships in undergraduate and graduate programs, veterinary medicine and culinary arts. For information on the Bright Futures, go to www. nationalcattlemensfoundation.org or call 303-694-0305.
Free eUpdate Every Week
More than 7,000 NCBA members each week receive the NCBA newsletter called Member eUpdate. Each Monday the newsletter delivers the latest NCBA and industry news, market information, producer education, a heads up on industrywide meetings, and reminders about membership benefits. To receive this free service to members, call 1-866-BEEFUSA or e-mail agraham@beef.org or sslagle@ beef.org.
Bright Futures Scholarship The National Cattlemen’s Foundation is launching a new
NCBA’s Cattlemen to Cattlemen TV Show on RFD-TV Airs Tuesdays at 8:30 p.m. Wednesdays at 10:30 a.m. and Saturdays at 9:00 a.m. (all times Eastern). Check your local listings.
About the Cover This month’s cover, “Down Ruby Lane,” is from Snidow Studio in Ruidoso, N.M. Contact the artist at www.gordonsnidow.com.
member spotlight
Member Spotlight Montana Celebrates Stockgrowers’ 125th Anniversary
Cattle producers and industry leaders from across Montana and the nation gathered in Miles City, Mont., June 10-14 to celebrate the 125th Anniversary of the Montana Stockgrowers Association (MSGA). Over 1,000 people participated in one or more of the events throughout the week. Events Photo by Donna Faber included committee and business A wagon train crosses the Tongue River as it meetings, a joint 125th Anniversary makes its way to Miles City to join the parade. dinner at the Miles City Club, the Evelyn Cameron Breakfast honoring 100-year-or-older ranches, the Five Star Kick Off history review, the Cow Pasture Golf Scramble, tours of Miles City attractions, the Stockmen’s Ball, the Five Star Parade, the MSGA Ranch Rodeo and a street dance. “I think our 125th Celebration will be an event people remember for a long time,” said Tom Hougen, MSGA’s president. “We were hoping that this event could help us start to unite the industry in Montana and this was a great first step. It was a great time to come together to celebrate 125 years of shared history in the cattle business.”
Spitzer Ranch Receives Brangus Association’s Top Award
The Spitzer Ranch, Dr. John and Patricia Spitzer, Fair Play, S.C., have been honored with the prestigious Breeder of the Year designation by the International Brangus Breeders Association. They were recognized for their avid promotion of the Brangus Breed and tireless dedication to performance testing, strict adherence to data collection and marketing efforts primarily aimed at putting Brangus genetics to work to produce crossbred cows and profitable steers for the commercial cattle industry. Doc and Patricia are strong NCBA supporters and both have been heavily involved with the South Carolina Cattlemen’s Association, S.C. Farm Bureau, Southeast Brangus Breeders
Association, the International Brangus Breeders Association and Patricia with the S.C. Farm Woman’s Forum. The Spitzers were South Carolina’s Purebred Cattlemen of the Year in 2003 and were the Poultry Federation Outstanding Poultry Grower in 1996.
Buell into Hall of Fame
Homer Buell of Bassett, Neb., on April 24 was the 75th member inducted into the University of NebraskaLincoln Block and Bridle Hall of Fame. The Hall honors individuals who have made commendable contributions to Nebraska agriculture through leadership, service, youth projects and community activities. Homer has been an NCBA member since 1987.
Engler and Farr Named as Inaugural Inductees
In recognition of vision, inspirational efforts and leadership that has helped shape today’s cattle feeding industry, Paul F. Engler and the late William D. “W.D.” Farr were honored as the inaugural inductees into the newly established Cattle Feeders Hall of Fame. While each has a list of accomplishments that spans decades, Engler, 79, is most recognized as founder and chairman of Cactus Feeders, the largest privately owned fed-cattle producer in the United States. Farr, who passed away in 2007 at age 97, was considered by many to be the pioneer of Colorado agriculture because of his innovative work in the cattle feeder business and environmental stewardship. Engler and Farr were chosen by fellow cattle feeders for the honor. They were among a group of 12 distinguished individuals nominated by members of the cattle feeding industry.
Lloyd, Daley Honored by BIF
Renee Lloyd and David A. Daley, Ph.D., were honored by the Beef Improvement Federation with a Continuing Service Award at the group’s annual meeting on May 1. Renee is an account executive for McCormick Company in Johnston, Iowa. David operates a commercial cow-calf and seedstock operation in Oroville, Calif. The BIF award recognizes major contributions to the beef industry. Renee is pictured above receiving the award from BIF outgoing President Tommy Brown.
www.NationalCattlemen.com
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your business
Staying Profitable in Tough Times By Joe Snyder
W
hen it comes to seeking answers, NCBA has a wealth of resources. Chief among these are NCBA members, who include some of the smartest, most perceptive businesspeople in the nation. For a look into what some of the most successful ranches are doing to survive and thrive during these challenging times, NCBA turned to three well-respected ranch managers. Mike Milisevic of Okeechobee, Fla., is general manager of ranch operations for Lyke’s Brothers, Inc., one of the largest land owners in the United States. Trey Patterson of Ranchester, Wyo., is chief operations officer at the Padlock Ranch, where 43 employees raise and market more than 11,000 calves a year on nearly 500,000 acres across Wyoming and Montana. Kenneth “Chip” Ramsay, Ashby, Neb., manages Rex Ranch, a stocker/cow-calf operation located in the western Sandhills of Nebraska. NCBA: How are you adapting to these economic times? Milisevic: We’re currently looking at trying to reduce input costs such as supplemental feed or fertilizer on the pastures, but we do it without hurting Mike Milisevic our production. We’re doing soil and forage analysis to see what the soil needs, and a pH test is part of the soil test. If the pH is too acidic, you need to add lime to the pasture, but lime is cheaper than fertilizer so that helps us get more value out of the dollars we’re spending. There is money to be saved in repairs and maintenance. Repair a fence as opposed to completely replacing it — make the repairs while
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it’s still functional and make it last longer but save replacement until prices come back. Another more minor thing: We’re not going to as many meetings as we used to, not getting as many magazines or publications as we used to, trying to cut back a little here and there. If you get four different magazines all saying the same thing, do you need all of them? We’re looking at holding labor hours down. We work a general work week but have reduced or stopped overtime and weekend work. If it’s calf work time, we got to do what we got to do. But in other instances, we’re trying to keep the hours down as much as possible. Shop around and find the best prices, don’t go to same feed store you’ve always gone to without looking for better prices. Partner with a neighbor and buy in bulk. Consider anywhere you can save money without hurting production. Don’t sacrifice production because it will only put you further behind. Maximize production and minimize costs wherever you can. Patterson: In our case, the process of preparing for tough economic times started about seven years ago. When Wayne Fahsholtz took over as CEO, he began a Trey Patterson series of business practices to help the ranch in volatile times. There are three primary ways we are securing our business during tough times. 1) Risk management and marketing: We have a large portion of our feeder cattle committed through an alliance program, Country Natural Beef. This program allows cattle to be moved
through established markets and beef prices, mediating some of the fluctuations realized in selling cattle on a commodity market. We also breed first calf heifers to Wagyu bulls and establish contracts for those calves. We use a variety of marketing avenues on the balance of our cattle, selling some as yearlings and retaining ownership on some. We are opportunistic in this approach and use risk management techniques to protect break-evens when appropriate. We put a lot of emphasis on cull cow and bull marketing as well. 2) Generating business activity other than cattle. We have just initiated a “working ranch vacation” business that will generate additional income for the company. We are looking at other business ideas, such as selling gravel or other recreation ideas to generate additional income without adding significant overheads. 3) Drive towards efficiency. We have moved our calving season to May and June and range calve all cows and heifers. Most cows are wintered out with little to no hay feeding. We have converted some irrigated fields to pasture and run replacement heifers on these fields during the summer. Instead of haying, we let the cattle harvest the feed. We are wintering some replacement heifers out on grass during the winter to lower production costs. We are also utilizing corn silage to put weight on calves in our feedlot at very competitive cost of gains. In addition, we are using strategic supplementation practices, such as timing and amount of nutrients offered, to lower production costs. Ramsay: There is no panacea that we can implement at this point to all of a sudden make us better. We Chip Ramsay
YOUR BUSINESS are constantly adapting to economic times by looking for ways to make our systems more efficient and profitable each year. Over the years we have tried to: 1) hire and train quality people to think and adapt; 2) focus on reducing or spreading our costs over more units of output (examples: decrease labor and equipment needs, increase stocking rate but not at the expense of range health, reduce feed feeds through timing of calving with range nutrient availability); 3) retain as much flexibility in operations as possible in order to adapt to changes in weather and market variation (examples: 20-30% production from stocker enterprise, ability to retain ownership through the feedyard, utilize heterosis, do all we can to stay out of debt); 4) produce a quality product that works well for the buyer (examples: follow BQA guidelines, source and age, genetic progress); 5) develop income from enterprises other than beef production (examples: wildlife, perhaps carbon sequestration, mineral leases). NCBA: What opportunities do you see for cow-calf producers at this time? Milisevic: Producers ought to be looking at some kind of diversification on the ranch, whether it’s guided hunts, fishing on the property, renting out a cabin — any other type of income you can generate off the property besides cows. For example, if you have a field in the back with a little extra grass, get it cut and baled for hay and sell it. There are opportunities for cow-calf producers when marketing calves. There are ways to maximize the value of calves through the natural program, certifying calves for source and age, or Beef Quality Assurance. The sooner we enlist these into our programs, the better off we all will be. Patterson: Out of tough times come better managers. These ideas of
improving efficiency, a focus on good marketing and risk management, and generating additional ranch income are practices that will improve profitability regardless of the economic situation. The market will fluctuate, but producers that are paying attention to production costs and break-evens, as well as those who are positioned to be opportunistic in marketing, will have some real opportunity for profit in years to come. Ramsay: Invariably, hard times force us to think of ways to survive, which opens our minds to possibilities that we would have never considered before. Therein lies the greatest opportunity for those who have been unwilling to consider change to this point (examples: buy pregnant cows instead of raising replacements, move calving date, wean earlier or later, run stockers instead of selling calves or visa versa, retain ownership through the feedyard). For those who have managed their equity well to this point, expansion opportunities may present themselves over the next few years. NCBA: What is your forecast for the cow-calf business over the next decade? Milisevic: With the current cattle inventory, I think the cow-calf business is going to have a pretty bright future. Maybe not this year, possibly next year it will start looking better. As the economy starts picking up, we’ll start selling more beef. Supply and demand will kick in and will stimulate more demand, so producers will begin to expand the herd again. By retaining heifers, they will put more of a pinch on supply so that demand will get even stronger for what product we have. I think we’ll continue to struggle with high grain prices; the price range has moved to a new level. If inflation kicks in, we’ll have to struggle with that. It’s not clear sailing for the future, but we have a lot of bright spots. We’ll have to work through
the storms as they pop up. Patterson: I think we will see a period of tough times. Some producers will continue to exit the business. The future should be bright for those who are well positioned. I’m sure you will see more consolidation, primarily driven by the need to dilute overhead costs. Ramsay: Partly cloudy with intermittent showers. Let’s face it, up until last fall, the market has provided cow-calf producers with a pretty good run of profitability. I can’t help but think that with the current increase in input costs the next decade may be tougher to be profitable than the last. While all of us will need to focus on improving every facet of our business, small to mid-size operators will need to put more emphasis on purchasing and marketing in order to take advantage of the market’s inefficiencies (examples: make money on the buy then add value, pool calves to form truckloads, be able to sell at any point the market offers you a reasonable profit). Large operators, who by their size may not be as nimble in entering and exiting markets, will need to continue improving production efficiencies that come from economies of scale (examples: large purchasing contracts, spread regulatory costs over larger numbers, vertical integration, genetic progress). We can only hope that survival and success over the next decade continues to be dependent on our innovation and abilities rather than government subsidies. NCBA: Are you considering herd expansion — why or why not? Milisevic: No, we’re not. I’m trying to maintain our herd size at the moment. We’re constantly looking at higher margin crops and other opportunities for us to utilize our property in a way that will return more than the cattle do. The ethanol programs, depending on what the Obama Administration does, may lead to us putting more Continued on Page 10
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Your business Continued from Page 9 crops in for ethanol production than for cattle. We’re going to maintain what we’re doing and see what the Administration is going to do with ethanol. We are barely breaking even now on cattle. The situation we’re in with a corporate-type business — cattle have never had a high return on our operation — we’re always trying to justify the cattle herd. Patterson: We destocked significantly in the early part of the decade due to drought. We have been building numbers back primarily because we have had some precipitation. We do not foresee a large expansion of our herd, but want the ranch to be fully stocked while maintaining or improving the range condition. Good grazing practices, such as planned, time-controlled grazing, allows for more efficient stocking of rangeland while allowing management of pastures for improved range condition. We will not expand
numbers for the sake of expanding. We will continue to manage cattle for a low-input system, with minimal hay feeding and labor efficiency (high cow-man ratios). Ramsay: We are always considering herd expansion within the parameters of the land we own. If we can figure a way to run more cows and/or stockers on the land that we currently manage without being detrimental to the long term health of the range or other enterprises that offer higher margins, we will do that regardless of our market opinion. NCBA: Any other thoughts about this? Patterson: You get to some point when you’ve realized all the big changes you can make. We continue to strive to be more efficient and lower costs. You need to continue to work on those things. But you reach a point when you realize you have to significantly impact the bottom line.
Simply changing calving seasons sometimes won’t do it, it won’t be worth the half a million dollars you need to save. So you look at other areas. Marketing is one. Increasing turnover on natural resources you control. You look for ways in your system, if it’s afforded to you, to lower fixed costs and have less reliance on fuel and labor. We are seeing a lot more activity in the marketplace for people who want to work. We get more applications because of our name and size, than we used to. Applicants have a wide variety of qualifications, from seasoned cowboys who have worked here in the past to people who have not ranched before but have always dreamed of doing it. It’s a symptom of the economic times. However, finding skilled employees for middle management is still challenging, as it has always been.
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3/24/09 5:19:06 PM
In this day and age, why in the world would you wait several days for a BRD first-line therapy to kick in?
Maybe a mass med can take its time, but a BRD first-line therapy has to work fast, like single-dose Baytril®100 (enrofloxacin). It doesn’t mess around; it goes directly to BRD-causing bacteria and kills them. Not in a week, not in a couple of days, but in a matter of hours, getting cattle better and back to work in a day.* It’s high-tech therapy for a fast-paced cattle business. Baytril 100. Right the first time®. Extra-label use of this product in food-producing animals is prohibited. Cattle intended for human consumption must not be slaughtered within 28 days from the last treatment. *Clinical Evaluation of the Efficacy and Safety of enrofloxacin Given as a Single Dose for the Treatment of Bovine Respiratory Disease. Bayer Study Report 74653. © 2009 Bayer HealthCare LLC, Animal Health Division, Shawnee Mission, Kansas 66201. Bayer, the Bayer Cross, Baytril and Right the first time are trademarks of Bayer. BL07036
Your Business
Differentiate Your Cattle By Curt Olson
C
attle for sale! Good quality cattle for sale! Just about every producer will make this claim, but when you extend it to all your neighbors, your state and the other 760,000 beef producers in the country, what makes yours different? Even though there’s a relative shortage of cattle with a national herd of 94 million head, it is important to find ways to stress the good qualities about your cattle to your buyers. Seedstock producers have been doing it for years. Armed with data and family trees, they do their best to remove the guesswork from buying a live animal. Phil Osborne, a West Virginia Extension agent, discussed marketing a dozen years ago during a different downturn in the cattle business, urging producers to develop an identity for their cattle. There were similarities to today’s market: prices were down and input costs were up, especially feed, fertilizer and fuel. There also were large supplies of competing meats. “Above all else, marketing is creating value for the customer that is worth more than the cost of providing it,” he said. “It is essential that producers understand the difference between sales and marketing. ‘Sales’ are acquiring orders for the cattle currently being offered. ‘Marketing’ is the planning that will get future orders for cattle and/or for services not now offered.”
Your cattle are your brand. What do you know about them that you can promote? Your records come in handy here, especially if you know how they do further down the production line. Everyone is interested in health records. Verified programs (source and age) and Quality System Assessment programs allow producers to qualify for receiving added value. See USDA’s Agriculture Marketing Service web site at www.ams.usda.gov for more about these programs. Individual animal identification can potentially open new marketing opportunities. Ultimately, your cattle have to line up with what the market wants. Unless they’re committed through an alliance program or forward contracted, you want them eligible to fit into different programs and make sure you attract buyers to bid on them who know that they qualify for these different programs. At the sale barn, there are things you can do to increase your pool of potential customers and chances for a better payout. For instance, don’t keep it a secret that you’re getting ready to sell. Contact former buyers and let them know what you’re selling, when and where. Ultimately, you’re trying to give them reasons to buy your cattle rather than someone else’s. Remember: Everyone wants a consistent, predictable product!
It is essential that producers understand the difference between sales and marketing.
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YOUR BUSINESS
Options at Sale Time By Curt Olson
B
y now you probably know how you are going to sell your cattle this year. There is a difference between selling them and marketing them and if you want to make any changes in what you do, you can start thinking about your 2010 calf crop. Today there are more options than ever in how to sell cattle. This growth in choices is a direct reflection of changes in the market, where consumers, global and domestic, increasingly demand products that meet certain specifications. To deliver those products, a host of alternative marketing arrangements have sprung up. Chris Bastian, agricultural marketing specialist for the Department of Agricultural & Applied Economics at the University of Wyoming, writes: “… at a minimum, feeder cattle producers will have to gather information to differentiate and advertise their cattle amongst buyers or face market penalties in the future. More probable is that feeder cattle producers will have to make some serious choices about who they are going to sell their cattle to and manage their production accordingly.” What follows is a list of some different ways you can sell your cattle, and some of the advantages of each. Sale Barn/Livestock Auction Market – This is where most cattle still are sold and there’s usually a sale about every week. The sale barn is bonded so you can count on a check. They’re counting on a commission from you. If this is the way you go, work with the barn. Talk to them in advance and let them know what you have and when you’re thinking of selling. That information may
help them attract buyers. The sales volume and thus, the competition, will vary from week to week. Also, if you have any documentation, such as age- and source-verified or health records, let the barn know. This may help direct the cattle into a program that will pay you more. If you’ve been selling this way for awhile, they know you and your cattle and that can be an advantage. Commingled, Graded Sale – This can be a good route for smaller producers, especially if they can’t fill a truck. It usually costs more but your cattle are more competitively priced. Everyone wants uniform cattle that are consistent in size and grade and this is what this process does. Your cattle will come into a selling point where they will be grouped with other cattle of similar size and quality to create truckloads of like-sized cattle. Generally, the seller will get more for his cattle this way than if they were sold in an individual, smaller lot. You also will pay the standard commission and perhaps an association fee since these sales often are organized with the help of local cattlemen’s groups. Satellite Video Sales – This venue
can attract buyers from across the country and allow you to establish a bit of a reputation, if you’re looking for one. More buyers, no matter where cattle are sold, tend to make the bidding more competitive. These are bonded operations so you will get paid. You usually will have a higher cost with commissions, shooting video of your cattle and the broadcast. If you do this, you need to plan in advance so your cattle can get filmed in time for the sale. This may not be the best venue for smaller lots of cattle, or herds without a lot of consistency. If you don’t like the bid, you don’t take it and your cattle haven’t gone anywhere. Internet Auctions – These can function a lot like a satellite sale or a livestock market except the means of media delivery is different. If you are going to use this option, you will need a good Internet provider and the equipment that can handle the video transmission. Parts of rural America still aren’t well equipped for this. Depending on the sale, tie bids may go to the bidder present at the auction. Commission fees are what the barn normally charges. Continued on Page 14
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your business Continued from Page 13 Private treaty – It’s just you and the buyer. If you can’t reach an agreement, your cattle are right where they were yesterday and you haven’t paid to haul them anywhere. Everything is negotiable in this setting, but remember: The price you heard on the radio at the market 25 miles away may not be what you get offered. Those cattle were sold in a different market, in different conditions. Your offer even could be different than your neighbor’s. On the other hand, if you have established a business relationship with a buyer, this can be a convenient way to sell that is cost effective for you. Don’t forget: Know how and when you will be paid. Beef Export Verification – This is one of the aftershocks of the 2003 BSE incident. Most countries we ship beef to now don’t find “Made in the USA” enough of a product guarantee. They have restrictions on what they’ll buy from us, usually age related. The BEV was started as a way to ensure global customers that what we said we would deliver, such as cattle under 30 or 20 months of age, could be achieved. That was done by groups that organized Quality System Assessment programs that guaranteed that its supply chain had protocols in place that delivered the desired end product. In reality, if you have 30 head of cattle, you probably won’t be eligible for one of these programs. It has become the domain of the large supplier. Source and age – This is a relatively new program area that continues to grow. Supplying the source and age of animals can make them eligible for different programs, such as export programs where the beef must come from age restricted cattle. Some alliance programs also work in these areas. Expect ID requirements, often electronic. Process Verified Programs – Production practices may be part of a marketing claim on a product label and whoever is making the claim
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must have written standards that his suppliers (you) agree to adhere to. If you say it is true on the label, you have to be able to prove it. USDA will audit you to make sure you comply. The payoff could come in increased premiums if you can meet the requirements without doing an extreme makeover on the ranch. In exchange, someone else will tell you how to raise the cattle. They have to. That’s what their customers expect. All sizes of producers can participate. Alliances – These usually exist to produce branded beef products
If you don’t know how your cattle do on Quality or Yield grade, you might have better luck in Las Vegas. – natural, guaranteed tender, organic, hormone free, grass fed, no antibiotics, etc. As such, those who wish to sell through alliances do so with the hope of achieving premiums to the cash market. For that, there will be restrictions on some of your production practices. There are premiums for cattle that fit the parameters and steep discounts for those that don’t. Before going down this road, you must know if your cattle can make the grade in the alliance you want to join or if you need to make changes to your operation. Producers also have to determine if those changes are going to be worth the effort — literally. In many alliances, animal ID, sometimes electronic, is part of the cost of doing business. Natural – USDA is working on this term and it can mean many
different things depending on who is using the label. Almost all commodity beef at one time could fit under the natural label as long as it hadn’t been marinated. The rule published in the Federal Register calls for a voluntary standard, but the rule has yet to be accepted. It says: The naturally raised marketing claim standard states that livestock used for the production of meat and meat products have been raised entirely without growth promotants, antibiotics (except for ionophores used as coccidiostats for parasite control), and have never been fed animal by-products. The voluntary standard will establish the minimum requirements for those producers who choose to operate a USDA-verified program involving a naturally raised claim. Preconditioned/health – It’s almost a standard part of business now. Feedyards want cattle that are weaned, know how to eat out of a bunk, drink water from a trough and have had their vaccinations, usually 45 days prior to shipping. This also is known as a VAC 45 program in some areas. With the right promotion, you may be able to get a little more for providing health records. If you have this information, don’t keep it a secret. Let the buyers know. Retained ownership – You better know what is going on in the market if you use this method. Here the producer can choose to own his cattle all the way through the feedyard or onto the rail in the packing plant and get paid accordingly. Value-based grids – Cattle sold this way are sold “in the meat” and measured against a very specific set of grading criteria. It’s not what you want to bet the whole herd on the first time you do it. In fact, if you don’t know how your cattle do on Quality or Yield grade, you might have better luck in Las Vegas. For those that score within the grid parameters, the rewards can be good. However, those that don’t take severe Continued on Page 20
YOUR management
Preparing for Your Future By Curt Olson “More than anything, we believe the best way to predict the future is to invent it.” -John Scully, CEO of Apple Computers
I
t’s seems like a cliché to talk about change, but it may be the one constant anyone can count on these days. Normally in these pages, talk about change is followed by talk about your business — risk management, the need for good records, etc. This article assumes you do that. This piece attempts to pass along the highlights of a free, 45-page workbook developed by South Dakota State University and Texas A&M–Kingsville. In those pages, they supply some tools that will help you see where and how you and your business fit in the future, defined as 10 years down the road. You can find the full version online at http://agbiopubs.sdstate.edu/articles/EC924.pdf. The book focuses on integrating strategic planning and scenario planning to help you achieve the vision statement that you write for your ranching business. The reader will be asked to use some tools discussed before, such as a SWOT analysis (strengths, weaknesses, opportunities and threats). The vision statement is about your dreams for the business, a description of the situation where you want to be in five to 10 years. The authors say that the statement should include these three key points: 1. A statement about the business’ values and reason for being. 2. An envisioned future describing what the business will be like if it achieves its goals. 3. A recognition of how the business serves its stakeholders (which might include owners, employees, customers, community and/or society as a whole.) The exercise requires you to take the time to think about what you want and put it down on paper, along with the steps you’re going to take to get there. To get started, answer these questions. • W hat do we want? • W hat is the family and business willing to make a strong commitment to? In developing your vision statement, make sure everyone involved in operating the ranch has input into the process and that they express their dreams for the ranch. Getting comments from outsiders involved with the business might be helpful. Here are some other questions from the worksheet to consider.
1. If our ranch could be anything we can imagine eight years from now, what would that be? 2. W hat new activities will our ranch business be pursuing? What business(es) will we be in? Are there new products we would like to produce or activities we would like to be involved in? 3. W hat will be the important concerns of our customers eight years from now? How do we meet their demands and desires? 4. How will our ranch business excel? 5. What will be the roles and responsibilities of family members and ranch employees? 6. W hat is of greatest value to family members? To the ranch business? Once you come up with a vision statement that is the “shared vision” of those responsible for making the operation work, don’t just throw it in a drawer. You still have to come up with strategies that will get you from here to there. They will build the bridge to your vision of the future. But this isn’t a perfect world and the plan isn’t chiseled in stone. It has to be a living document and you have to be able to adapt to unforeseen changes. You have to begin putting the plan into action so start by looking at your strategies and determine which have the best chance for success and will deliver the best return. You also have to play soothsayer. While it’s important to know past performance and historical trends, it’s just as important to look to the future and try and anticipate the new trends and issues and how they might impact you. For instance, what if consumers suddenly demand more natural beef or age- and source-verified cattle? The clues to what is coming are everywhere — in government regulations, consumer concerns or even on your own operation. Finding labor may be a growing concern for you, or perhaps it’s pasture conditions. Scenario planning allows you to identify issues and solutions for them before they become too big of a problem. Similar to the strategic planning process, select a couple of the scenarios that seem the most likely you’ll have to address. Pull your information together. Perhaps run a SWOT analysis. In the end, look for your solution. The workbook provides a section where you merge your strategic and scenario planning. With everything in line, now you get to make it happen and make sure Continued on Page 20
Planning won’t stop change, but it may make you better equipped to handle it.
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CattleFax
Your MArket Update
Macro Economics and Cattle By Brett Stuart
S
hifts in the U.S. and global economies over the past year have shifted key trends in the cattle and beef industry. U.S. consumers have shifted buying behavior as the economy has slowed. While energy prices were sharply lower in the fourth quarter of 2008, so were cattle futures prices. Current monetary policy and stimulus legislation hold the potential to cause significant shifts in interest rates and inflation. The main factors for consumers are the housing market bust as well as unemployment. The housing boom began somewhere in the 1990s and the mantra became, “house values always increase.” This led consumers to feel very safe about second mortgages and equity lines-of-credit because increasing house values provide an additional cash flow without losing equity. Year after year proved the theory true. As aggressive construction saturated the housing market, the tinder was set. Credit freezes were the spark. As house values fell, the theory was broken and equity plummeted, drying up credit lines. Consumers were faced with only one option: spend less. As the recession grew, business faced the same. Layoffs became imminent. Unemployment swelled. The real factor at play is fear. Scared consumers were forced to budget. Eating out is an easy target and that is where consumers have downsized. Restaurant traffic has fallen for two consecutive quarters. The damage to the beef industry is that while consumers have been bigger buyers of hamburger and lower-valued roasts, higher-
valued steak cuts have suffered. This is not an ideal business model for profitability. As the chart above shows, growth in foodservice sales has diminished. While the recent numbers showed positive growth over the prior year, in May, the growth rate hit zero. The billion-dollar question is: “When will consumer spending resume?” If resumption is gauged against prerecession levels, I am very comfortable with the response, “not in the next three to five years.” What happened with the expansion of consumer spending while house values increased was unprecedented. Consumers are now facing the punishment and will bear scars for years to come. However, even a slight correction will fuel improved beef/ cattle prices. It will likely be slow steady growth, unlikely to begin in 2009.
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6/30/09 10:21:53 AM
Capitol Concerns
NCBA, Working for you in D.C.
Who’s Who at USDA By Heather Vaughn
W
hile Agriculture Secretary Tom Vilsack makes most of the headlines for USDA, it is often the lower-level positions that interact most with members of the livestock industry and NCBA staffers. Here is a closer look at some of the influential appointees at USDA.
The Senior Staff
Staff members are important because they dictate who gets in to see the secretary and how long the meeting lasts. They are the gatekeepers for USDA. USDA Chief of Staff John Norris - In 1999 Norris was then-Iowa Gov. Vilsack’s chief of staff. He also chaired the Iowa Utilities Board. He has extensive political experience, having worked as Sen. John Kerry’s Iowa Caucus campaign manager and as national field director for the Kerry-Edwards campaign. He was also the Democratic nominee for Iowa’s Third Congressional District in 2002. USDA Deputy Chief of Staff Carole Jett - Jett was the Farm Bill coordinator for USDA’s Natural Resources Conservation Service before leaving to campaign for President Obama. She led the NRCS 2002 Farm Bill implementation effort and served on assignment with the U.S. House of Representatives Agriculture Committee. USDA Chief of Staff to the Deputy Secretary Doug O’Brien The Office of the Deputy Secretary manages the day-to-day operations of USDA, with a budget of $120 billion. O’Brien has an agricultural background, having served most recently as assistant director of the Ohio Department of Agriculture. His responsibilities included
development of the department’s biofuels, bioproducts and renewable energy efforts.
The Sub-Cabinet
USDA Deputy Secretary Kathleen Merrigan - Deputy Secretary Merrigan came to USDA from Tufts University in Boston, where she was director of the Agriculture, Food and Environment M.S. and Ph.D. Program at the Friedman School of Nutrition Science and Policy.
Her background and focus is on organics. She’s smart and tenacious. She served in the Clinton Administration as administrator of USDA’s Agricultural Marketing Service. In the early 1990s, she was a staffer on the U.S. Senate Committee on Agriculture, Nutrition and Forestry. In that role, she helped develop the Organic Foods Production Act of 1990, which mandated national organic standards and a program of federal accreditation. It was the first set of standards for organic production. “I was a Senate staffer at the same time,” says NCBA’s Chief Environmental Council Tamara Thies. “Her background and focus is on organics. She’s smart and tenacious.” USDA Senior Advisor to the Secretary for Environment and Climate Robert Bonnie Bonnie comes to USDA from the
Environmental Defense Fund, where he focused on conservation incentives and markets that reward farmers, ranchers and forest owners for land stewardship. This advisory position is a new role at USDA, developed to help guide broad policy and program decisions with an emphasis on those concerning the nation’s natural resources and climate issues. USDA Under Secretary for Farm and Foreign Agricultural Services Jim Miller - Under Secretary Miller left his job as chief of staff for the National Farmers Union to join USDA. He worked with NCBA’s Chief Economist Gregg Doud earlier in his career as vice president for government relations for the National Association of Wheat Growers. “Jim has an understanding of production agriculture and commodity issues,” Doud says. “NCBA signed a letter of support for his confirmation because we value the experience he brings to this job.” USDA Under Secretary for Marketing and Regulatory Programs Edward Avalos - Under Secretary Avalos served with the New Mexico Department of Agriculture for 29 years where he established the New Mexico Specialty Crops Program. He has extensive foreign experience and worked in Mexico, Japan, China, Canada and Latin America promoting New Mexican crops and livestock. USDA Under Secretary for Rural Development Dallas Tonsager - Under Secretary Tonsager came to USDA from the Farm Credit Administration. His experience in rural development dates back to his service as South Dakota State Rural Development Director under President Clinton. He also served Continued on Page 18
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Your Capitol Concerns Continued from Page 17 as executive director of the South Dakota Value-Added Agriculture Development Center, where he coordinated initiatives to better serve producers who developed value-added agricultural projects. USDA Under Secretary for Research, Education and Economics Rajiv Shah, MD Dr. Shah was the director of the Agricultural Development Program at The Bill & Melinda Gates Foundation, where he worked to reduce global hunger and poverty and raised $5 billion for child immunization. REE guides USDA’s research efforts and encompasses the Agricultural Research Service (including the National Agricultural Library), Economic Research Service, National Agricultural Statistics Service, and Cooperative State Research, Education and Extension Service. USDA Under Secretary for Food, Nutrition and Consumer Services
Kevin Concannon - Under Secretary Concannon has served as director of health and human service agencies in Iowa, Maine and Oregon. In these positions, he worked to make food stamps more accessible to needy populations.
Ag Gets Exemption in Climate Change Bill
exclude that. NCBA has been the only ag group fighting for the agricultural exemption so producers would not be required to use currently non-existent technologies to reduce greenhouse gas emissions. NCBA continues to be concerned about the effects this bill could have on the costs of fuel, electricity, feed, fertilizer, equipment, and other inputs.
Agriculture likely will be exempt from regulation under a proposed climate change bill. The exemption was brokered by House Agriculture Committee Chairman Collin Peterson. He said: “The climate change bill will include a strong agriculture offset program run by the U.S. Department of Agriculture that will allow farmers, ranchers, and forestland owners to participate fully in a marketbased carbon offset program. This agreement also … exempts agriculture and forestry from the definition of a capped sector.” Peterson worked to put USDA in charge of agriculture offset programs instead of EPA and to allow past users of carbon sequestering practices to participate. NCBA was concerned that feedyards may be regulated under the bill and this compromise seems to
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August 2009 l National Cattlemen
Major Players in Livestock Issues
USDA Administrator of the Agricultural Marketing Service Rayne Pegg - Pegg most recently served as deputy secretary of Legislation and Policy for the California Department of Food and Agriculture. Prior to that, she worked for the California Farm Bureau. Matt Byrne, executive director of the California Cattlemen’s Association, was supportive of her nomination. “We’ve had good experiences working with Rayne,” Byrne says. “I believe she will be a good addition to the department and will serve as a knowledgeable voice on livestock issues.”
Food Safety Bill Moving
The House Energy and Commerce Committee passed a manager’s amendment to the Food Safety Enhancement Act of 2009 that appears to address some of NCBA’s concerns about the bill. NCBA was concerned that the bill would undermine USDA’s regulatory authority in ensuring the safety of meat and poultry products by authorizing the Food and Drug Administration to conduct on-farm
AMS focuses on ensuring a level playing field for U.S. agricultural exports in the world marketplace. The agency is in charge of implementing country of origin labeling. USDA Administrator for the Grain Inspection, Packers and Stockyards Administration Dudley Butler - A trial lawyer from Mississippi, Butler is an active member of R-CALF. He also claims membership in the Coalition for Sustainable Agriculture and the Organization for Competitive Markets. He has testified before Congress on matters involving agriculture and arbitration and served on a mandatory price reporting task force that lead to the passage of a mandatory price reporting law by Congress. GIPSA facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and promotes fair and competitive trading practices for the overall benefit of consumers and American agriculture. inspections. NCBA will remain in close contact with the Committee to ensure clarifying language does not authorize duplicate regulatory authority for meat products between FDA and USDA.
Clean Water Act Land Grab
The Senate Environment and Public Works Committee on June 18 passed S. 787, the Clean Water Restoration Act. Cattle producers now must ask their senators to stop this legislation if it comes up for a full Senate vote. Under current law, the federal government has jurisdiction over “navigable waters of the United States.” However, by removing “navigable” from the definition, the legislation would expand federal regulatory control to unprecedented levels, essentially putting stock tanks, drainage ditches, any water feature found on family farms and ranches
Your Capitol Concerns — potentially even ground water — under the regulatory arm of the federal government. The bill was amended to exempt prior-converted croplands from federal jurisdiction. As cattle generally are not grazed on priorconverted croplands, this does nothing to mitigate the potential damage to livestock production from this legislation. NCBA and the Public Lands Council strongly oppose this bill. It infringes on private property rights and limits the state partnerships and flexibility that have made the current Clean Water Act so successful.
EQIP Program Extended to Public Lands
USDA has released a final rule authorizing the use of Environmental Quality Incentives Program funds for conservation efforts on public lands. NCBA and the Public Lands Council had requested this language from USDA in March. Although the program is principally intended to serve production agriculture and address natural resource concerns on private lands, in many Western states production agriculture occurs on private, state and federal lands. The final rule acknowledges the importance of conservation practices on public lands as a necessary tool to improve the condition of resources and benefit surrounding private lands.
Maintain Support for Free Market Principles
A bill has been introduced that would severely hinder the ability of the U.S. cattle industry to compete in a free marketplace. The so-called Livestock Marketing Fairness Act (S. 1086) would impose government intrusion on the livestock industry — potentially destroying the value-added marketing alliances that the U.S. cattle industry has established. The Livestock Marketing Fairness Act would amend the Packers and Stockyards Act so that it
limits producers’ opportunities to participate in alternative marketing arrangements — such as forward contracting — and negotiate private business transactions. Some alternative marketing arrangements offer producers the freedom and flexibility to market their cattle in ways that provide the best return on their investment.
EPA Should Re-evaluate Its Science
An Environmental Protection Agency finding released in April is the first step in a process that could require greenhouse gas regulation under the Clean Air Act — a move that would be devastating to agriculture and the U.S. economy. NCBA and an informal coalition on June 23 submitted comments to EPA regarding its proposal to find that human-caused greenhouse gas emissions endanger public health and welfare. The groups are urging EPA to postpone regulation until climate science can address the profound uncertainty that exists in climate data and modeling. “With so much scientific uncertainty surrounding the question of whether human activity is responsible for climate change, it is inappropriate for the EPA to only consider one side of the debate — especially considering the devastating consequences that their actions could have on an already struggling U.S. economy,” says Tamara Thies, NCBA chief environmental counsel. The EPA has said that manure management facilities associated with livestock production account for less than 1% of total U.S. greenhouse gas emissions. Regulating these emissions would be inconsequential to the climate change equation.
Mexico and Canada File COOL Complaints
Mexico and Canada have filed complaints with the World Trade Organization claiming that the U.S. country of origin labeling law is
inconsistent with U.S. obligations under the WTO. Mexico and Canada are America’s top two trading partners. Beef trade with Mexico was worth nearly $1.4 billion in 2008 and trade with Canada came in at $716 million. Together, the markets account for 58% of U.S. beef export trade.
Ag Funding Under Attack
NCBA and the Public Lands Council joined 50 other groups urging House and Senate appropriators to maintain mandatory conservation funding levels agreed to in the 2008 Farm Bill. The Obama Administration has proposed $500 million in cuts in fiscal year 2010 to the Environmental Quality Incentives Program, Wetlands Reserve Program, Farmland Protection Program, Wildlife Habitat Incentives Program, Agricultural Management Assistance Program, and Healthy Forest Reserve Program. Additional long-term permanent cuts have been proposed. Demand for participation in conservation programs routinely far outstrips available funding. NCBA, the Public Lands Council and nearly 75 other organizations sent a letter to Chairwoman Rosa DeLauro and ranking member Jack Kingston of the House Appropriations Subcommittee on Agriculture urging them to support Wildlife Services funding in the fiscal year 2010 Appropriations bill. The program has come under attack by activist groups that want to eliminate its funding. It consistently is funded through a 50-50 cost-share between federal and cooperative dollars. Wildlife Services works to prevent, minimize or manage an estimated $12.8 billion in annual wildlife damages, as well as protect human health and safety from conflicts with wildlife. It is part of pest and disease control and is often the first line of defense in reducing and eliminating West Nile virus, avian influenza, chronic wasting disease, pseudorabies and other diseases.
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Dairy Impacts Cow Slaughter
Total cow slaughter so far this year has averaged above last year due to a larger number of dairy cows in the slaughter mix. The dairy industry has self-funded a buyout program. However, smaller numbers of beef cows in the mix have helped to offset the annual increase in dairy cow slaughter. As of mid-June, federally inspected total cow slaughter on a weekly average basis was about 3% higher than last year and nearly 16% larger than the 20032007 average. Federally inspected beef cow slaughter for this period was down on average about 6% from 2008, but still around 13% larger when compared to the prior five-year average. At the same time, dairy cow slaughter through mid-June was 15% above a year ago and nearly 20% larger than the 20032007 average. Of note, dairy cows have accounted for nearly half of the total cow slaughter mix this year, which is up from about 40% for the same timeframe last year. Slaughter cow imports from Canada factor into the total U.S. cow slaughter mix as well. Year to date through June 13, slaughter cow imports have been slightly above last year, about 2% or 1,100 head. Most of the year-to-year increase was in the first quarter of this year as U.S. weekly cow imports have been well below a year ago since the start of April. U.S. slaughter cow imports could increase this summer, as drought in western Canada has been severe. Source: Livestock Marketing Information Center
Corn Acreage Up
The planted corn acreage crept up in USDA’s June 30 acreage report, and if realized, will be the second largest planted acreage since 1946. USDA says that corn planted for all purposes in 2009 now is 87 million acres. This is 2 million acres more than the agency predicted in its March 31 report and up 1% from last year, but 7% below the record setting year in 2007.
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August 2009 l National Cattlemen
Continued from Page 14 discounts. It is equally important that you know the criteria for the grid premiums and discounts as they may extend beyond quality and yield. For instance, part of the equation may include a factor such as the “plant average for Choice beef ” based on the previous week average. Another factor to watch is the Choice/Select price spread. The greater the difference between those, the more potential for premiums and discounts in that grid. The closer the spread, the less volatility there is between the top and bottom of the grid prices. In the end, it might have been better to sell them through another program or in the cash market. Forward contracts – These can be used to minimize your financial risk exposure. More than 40% of all fed cattle sold in the United States are sold through some
Continued from Page 15 it’s going according to plan. You want to measure your performance and evaluate it. The workbook provides you with a tool called the Balanced Scorecard, a concept used by businesses that was developed by Harvard Business School professors. It categorizes key management areas into what it calls “perspectives.” For a ranch, the categories are: 1. Learning and growth 2. Natural resources 3. Ag commodities/production 4. Customers 5. Financial 6. Lifestyle Learning and growth is the foundation on which the other perspectives in the Scorecard are built. After using the worksheets provided, the Scorecard gives you a quick snapshot for measuring
form of forward contracting. The contracts can be as different as each producer but they supply the mechanisms to determine price and delivery. Basis contracts – A feeder and packer agree to market a specific number of cattle during a specific period for an agreed basis, + or the futures market. It later will be in a contract.
Basis Contract Example
Oct. 30 - Packer and feeder agree to five loads (120 head or 144,000 lbs.) during last week of January at -$1 to February Live Cattle Contract Jan. 25 - Feeder delivers the five loads of cattle at $71/cwt. (Feb. futures $72 - $1) This story was based in part on an article by Virginia Tech University.
your success based on the goals you defined and your strategies for achieving them.
Why Plan?
Remember what corn was doing just a year ago? Ethanol has taken a bite out of just about everyone it touches, including those producing it. It looked like a “can’t miss” deal with the price of oil at a record high and a government mandate for production. But oil prices have retreated dragging down ethanol prices with them. Still, the ethanol production mandate increases. What does this mean for your feed costs or cattle prices? Planning won’t stop change, but it may make you better equipped to handle it.
Saddle Up to
January 27-30, 2010
What’s the best way to improve your business?
Leave it!
Leave it long enough to come to the most rewarding cattlemen’s convention of the year! At the 2010 Cattle Industry Annual Convention and NCBA Trade Show: + Outstanding speakers will challenge you to rethink how you do business. + Industry experts will share their secrets of success. + The Trade Show will boost your use of cutting edge tools and information.
Join your fellow cattlemen in San Antonio, January 27-30, 2010. For more information visit www.beefusa.org or call 303-694-0305 For information on exhibiting, contact Kristin Torres at 303-850-3335 or ktorres@beef.org.
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YOUR business
Pests Fly Away with Your Money By Curt Olson
H
orn flies are more than a nuisance. These little blood suckers are literally everywhere in the United States. USDA puts the economic cost of the flies at $700 million a year, according to Dr. Jason Cleere of Texas A&M University. Flies cause loss of weight gain, less effective use of forage and then there is a cost to control them. “They feed almost exclusively on cattle,” says Dr. Ralph Williams on his YouTube video. He is an Extension livestock entemologist with Purdue University. “The adult flies are going to stay right on the animal at all times. Only the females will leave to lay eggs in very fresh cattle manure then get right back on the animals. They lay about 400 eggs in a lifetime at 20 to 24 at a time.” The life cycle is completed in eight to 45 days, depending on temperature and humidity, according to North Carolina State Extension. With such a short life cycle, it may be possible to complete as many as a dozen generations during the warm months. As few as 200 flies per animal is considered the point where there are enough to cause an economic loss. Williams says in Indiana a typical count is 1,000 to 4,000 flies per head. In Oklahoma, he has seen counts as high as 10,000. Cleere says a way to estimate how many you have is to look at the palm of your hand. Figure that area holds 25 to 50 flies. If you have four or five patches of flies that size on your cattle, some form of control probably is needed. Williams says flies can cause as much as a 7.7% loss in feed efficiency. Cleere says on a cow/calf operation, milk production can decrease as much as 20%. Weaning weight can be affected by 10 to 20 pounds
Source: ADM Alliance Nutrition
if no control is used. In a stocker operation, the difference could be 10 to 25 pounds over 100 days. Depending on where you live, you may have one or two peak seasons for flies. Northern areas like Indiana are likely to have just one population peak in mid-summer. Warmer climates may have two peaks, early and late summer. “When we’re talking 1,000 to 4,000 flies per animal, it is very justifiable to go ahead and initiate a control program,” Williams says. There are a lot of options for control programs: insecticide sprays, dusts, pour-ons, oilers, dust bags, ear tags, oral larvicides in minerals and blocks and controlled release boluses, says North Carolina. The key is to find what works best on your ranch. There are three classes of drugs for treatment, Cleere says. He suggests producers talk with their local vet to get an opinion on what would work best in individual situations. Experts advise that the best fly control program may be an integrated one. That way the flies never develop resistance to any one treatment. An integrated fly control program uses two (or more) products that
complement each other. Producers should consider rotating the products used each year to guard against developing resistance. Consider using sprays, dusts, pour-ons, oral larvicides, etc. in the early part of the fly season, then putting slow release insecticide ear tags (containing a different family of insecticides than in the products used earlier) in later. This will extend the effectiveness of the ear tags. Two tags should be applied per animal to ensure that a lethal dose of insecticide is delivered. Cleere says that using a pour-on product will give you an effective, fairly immediate knock down of the fly population. After that, the insecticide ear tags should work for the next three to five months. He also recommends producers remove them at the end of the season to prevent resistance buildup, and use a single chemistry in the ear tags for the same reason. For more information, go to cattlementocattlemen.org. Click on archives and select the June 17, 2008, show. To see Dr. Williams’ video, go to: http://purduephil.wordpress. com/2009/03/24/control-of-horn-fliesand-stable-flies-in-beef-herds/
www.NationalCattlemen.com
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Your MArket Update Steer Weights
Seasonally, cattle dressed weights decline through the first quarter of the year, falling to a yearly low usually in late April to mid-May before climbing for most of the remainder of the year. That pattern held true this year as steer dressed weights declined each week from mid-March until mid-May, when weights began to modestly rise. Average U.S. steer dressed weights have remained above a year ago, caused by heavier placement weights, good feeding performance, and are on track to set another yearly record in 2009. According to USDA’s weekly data for steers, average dressed weights were somewhat variable in May, falling to a low of 820 pounds at the end of April. By the end of May, average steer dressed weights were 825 pounds. Thus far this year, steer
dressed weights on average have been about 2% higher than 2008 and nearly 40 pounds heavier than the 2003-2007 average. Year-to-year increases in cattle dressed weights are forecast to continue through 2009 and will help pull U.S. beef production above a year ago this summer and fall. For the summer and fall quarters, U.S. steer dressed weights are forecast to be about 856 and 863 pounds, respectively. If realized, those weights would be about 7 pounds (nearly 1%) above 2008’s. Source: Livestock Marketing Information Center
U.S. Cattle on Feed Down
The U.S. cattle on feed report continues to set records or flirt with them for all the wrong reasons. Fed cattle marketing numbers
in May at 1.95 million were the lowest for the month since the price reporting series began in 1996. May placements of 1.64 million were the second lowest figure for that month. Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.4 million head on June 1. The inventory was 4 % below last year. May marketings of fed cattle were 9% below 2008. May placements in feedlots were 14 percent below 2008. During May, placements of cattle and calves weighing less than 600 pounds were 395,000; 600699 pounds were 305,000; 700-799 pounds were 433,000; and 800 pounds and greater were 505,000. Source: Livestock Marketing Information Center
Buckle Down
and Help Your Industry The 2009 Top Hand Contest ends next month (Sept. 30) but you still have time to recruit 10 new NCBA members to win one of these exclusive belt buckles. Top Hand Club members win valuable prizes in addition to having the satisfaction of boosting NCBA and the cattle industry.
Remember, there is strength in numbers!
Here is what you can win:
3 New Members (2 for Renews) - Top Hand Plaque, Year Plate and Lapel Pin 10 New Members - Exclusive 2009 Top Hand Belt Buckle 20 New Members - One Airline Ticket to Annual Convention or Summer Conference 30 New Members - One Registration for Annual Convention or Summer Conference 40 New Members - Three Nights Lodging at Annual Convention or Summer Conference 50 New Members - Additional Airline Ticket to Annual Convention or Summer Conference Top Recruiter - $2,000 Cabela’s Gift Card
National Cattlemen’s Beef Association 1-866-BEEF-USA • BeefUSA.org
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August 2009 l National Cattlemen
Save green on yellow. Enjoy NCBA special offers on yellow John Deere equipment. John Deere Construction and Commercial Worksite Products equipment take heavy lifting off your plate. From putting up hay and moving materials to working your land, you’ll get the job done with these Deere dozers, backhoes, crawlers, graders, excavators, and other productive full-sized and compact machines. What’s more, Ơexible Ɵnancing and purchasing programs are available to NCBA members. To put our full-sized or compact construction iron to work on your farm or ranch, Ɵnd your nearest dealer at www.JohnDeere.com/Dealer.
www.NationalCattlemen.com
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T
hese are companies that have teamed with NCBA as Allied Industry members, demonstrating their commitment to the beef industry. Their involvement and investment strengthens our future. NCBA members are urged to support these partners in turn by purchasing their products and services. Those who would like to become Allied Industry partners with NCBA (securing a premium booth placement at the next annual convention and trade show), please call the Association Marketing team at 303-694-0305.
Directory Allied Industry
Gold Level Sponsors (minimum $100,000 investments) AgriLabs www.agrilabs.com Bayer www.bayer-ah.com Caterpillar www.cat.com
Dow AgroSciences, LLC www.dowagro.com Elanco Animal Health www.elanco.com Fort Dodge Animal Health www.fortdodge.com
Intervet/ Schering-Plough Animal Health www.intervetusa.com www.spah.com John Deere www.deere.com
Merial www.merial.com Micro Beef Technologies www.microbeef.com Pfizer Animal Health www.pfizer.com Purina Mills, LLC www.cattlenutrition.com
Allied Industry Council Allflex USA, Inc. Alpharma Boehringer Ingelheim Vetmedica, Inc.
Cargill Animal Nutrition Health Central Life Sciences CME Group Leo Burnett USA
Monsanto Novartis Animal Health U.S., Inc. Novus International
Pioneer, A DuPont Company Y-Tex Zinpro Corporation
Allied Industry Associates ADM Alliance Nutrition, Inc. AgInfoLink American Live Stock Inc.
Beef Magazine Lextron, Inc. Midwest PMS, Inc. Nutrition Physiology Co., LLC
Priefert Manufacturing Company Ridley Block Operations SmartLic Supplement
U.S. Premium Beef, Ltd. Vigortone Ag Products Walco International, Inc.
Allied Industry Partners Agriculture Engineering Associates Albion Advanced Nutrition Alltech, Inc. AniPro Certified Angus Beef Certified Hereford Beef Cline Wood Agency Croplan Genetics Destron Fearing
Faegre & Benson, LLP Farm Journal/Beef Today Grow Safe Systems, LTD Hartford Livestock Insurance Kunafin “The Insectary” Lallemand Animal Nutrition Meat & Livestock Australia, Ltd. Miraco/Gallagher Moly Manufacturing New Holland
Noble Foundation Nova Microbial Technologies Phibro Animal Health PlainJan’s Quali Tech, Inc. Rabobank International Ritchie Industries Inc. Roto-Mix Stone Manufacturing Temple Tag
Teva Animal HealthTru-Test US Bank Vitalix The Vit-E-Men Co. Inc./ Life Products Western Farm Credit Association WW Livestock Systems Varied Industried Corp. Z Tags North America
Product Council Members American Foods Group Applebee’s International Beef Products, Inc. Booker Packing Company Cargill Meat Solutions
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August 2009 l National Cattlemen
Darden Restaurants DuPont Qualicon Gilroy Foods & Flavors IEH Laboratories Kraft Food/Oscar Mayer
Lobel’s of New York McDonald’s Corporation National Beef Packing Outback Steakhouse Sam Kane Beef Processors
Smithfield Beef Group, Inc. JBS Swift & Company Tyson Fresh Meats Wal-Mart Stores Wendy’s International
Accuration, Sup-R-Lix, Sup-R-Block, and Impact are trademarks or registered trademarks of Purina Mills, LLC. ©2008.
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