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HUNTIN' DAYLIGHT -- FACT-FOCUSING

by: Wes Ishmael

Where do these knuckleheads come from?

The latest high-profile antic carried out by People for the Ethical Treatment of Animals (PETA) is their headline-grabbing and successful petition of the National Collegiate Athletic Association (NCAA) to replace leather basketballs for synthetic ones in championship games. This, presumably, has to do with their aversion to animals being anything other than national pets of some kind that should be left to their own devices to starve, run amuck and have less quality of life than they do now in the hands of stewards who actually care about their welfare.

Of course, this also has plenty to do with money and organizations like PETA drumming whatever drum of sensational fiction they can in order to get more people to give them more money, lots more.

According to the Center for Consumer Freedom (CCF), PETA's 2000 income tax return (as a 5013C non-profit organization, the information is public) cites $13.8 million in income with a year-end net worth of $4.48 million.

Back to the basketball game, though, never mind that PETA is a public supporter of domestic agri-terror groups. Never mind that NCAA represents a number of land grant universities that got their start as institutions of higher learning for all things natural, including agriculture and its livestock. Nope. Even if NCAA had already pretty well adopted synthetics in the name of performance, as some folks have suggested, they did nothing to dissuade the public from thinking that they basically support PETA on the issue.

Wonder what kind of people these folks are? According to CCF, here's what Bruce Friedrich, PETA's vegan campaign coordinator had to say at the Animal Rights 2001 conference:

“If we really believe that animals have the same right to be free from pain and suffering at our hands, then, of course we're going to be blowing things up and smashing windows.… I think it's a great way to bring about animal liberation, considering the level of suffering, the atrocities. I think it would be great if all of the fast-food outlets, slaughterhouses, these laboratories, and the banks that fund them exploded tomorrow. I think it's perfectly appropriate for people to take bricks and toss them through the windows. ... Hallelujah to the people who are willing to do it."

Say what you will about basketball superstar-turned-commentator, Charles Barkley — the round mound of sound who has had more than one well publicized scrape with fans and the law — but he did have the guts as part of his halftime show during the NBA playoffs, when the NCAA move was announced, to chow down on a hamburger in front of the cameras, announcing that a meal wasn't a meal without meat, while deriding PETA as a bunch of loonies. When a fellow commentator laughingly mentioned to Barkley that PETA members might be waiting for him after the show, he said he hoped they would, that he'd run them over with his truck like a bunch of dogs. Go Chuck!

Maddening as this example of lunacy is, it underscores the trap that consumers of information fall into. Lulled into complacency by schedules of business that run longer than time, plenty of us will blindly accept as fact what we hear or what we read.

While there are no doubt contributors to organizations like PETA who truly understand their mission, legal and otherwise, chances are many of the contributions come from well meaning folks who simply believe what they're told, no matter how ludicrous, because they have no frame of reference, nor do they take the time to check the facts. In a world of integrity, no one should have to do that. Unfortunately this is not that world.

Of course, the beef industry is no different. Especially during times like these when markets are extra volatile and the future seems extra uncertain, some folks are too eager to tell people what they want to hear, for whatever reason, while others are willing to accept what they want to hear, no matter the facts.

As an example, during the past six months I've had folks e-mail (most anonymous) and phone from time to time calling me everything from a packer posterchild, to an enemy of the family rancher. Far as I can tell the accusations have come about from trying to present factual information about such contentious issues as packer consolidation (which the facts say across the board has been better for the industry than worse), mandatory price reporting (which turned out to be exactly what anyone reading the proposed law rather than wishing would have expected it to be—an impediment rather than a help to market transparency), captive supplies (which are not the root of all industry evil and did in fact come about because of marketing arrangements producers lobbied for and received from the packers) and on an on. There was even one irate veterinarian lambasting facts I presented about the growing problem of lead and steel shot in carcasses, facts presented by food manufacturers who buy millions of pounds of beef each year.

On each count, there have also been folks patting me on the back and saying I'm the coolest thing since socks with elastic for sharing the facts. I'd like to think these are folks agreeing with the facts presented and less with the fact that what's been said happens to agree with their own perspective. Who knows?

For what it's worth, though, here are an assortment of facts, best as I can verify them, facts that have shaped and will likely continue to shape industry evolution over the next several years, facts that lead to questions worth asking, no matter how unpopular:

Supply and Demand

*      The total cattle inventory in 1976 was 130 million head.

*      The total cattle inventory last year was 97.3 million or about 25 percent fewer than in 1976.

*      In 1976, we produced approximately 26.6 billion lb. of beef

*      Last year and this year, we produced about the same tonnage.

*      In 1975, the production per cow in this country was 415 lb. It was 610 lb. last year.

*      Average carcass weight was 738 lb. last year; over time growing about 6 lb. per year.

*      In 1980 per capita consumption and supply was 76.6 lb. of beef (retail weight).

*      Last year it was 66.7 lb.

*      In 1980, total meat consumption was 196.4 lb. per capita.

*      Last year 225.1 lb.!!

Questions:

*How much meat will American consumers eat at any price?

*Given efficiency, relative to total red and white meat supplies, how many cows do we need?

*Have we already seen the most cows that we'll ever again see in this country?

Consolidation:

*      Yes, basically four packers harvest about 85-90 percent of the fed cattle each year.

*      1,775 feeding organization currently account for 85-90 percent of all cattle fed in this nation; 25 cattle feeding organizations account for about 40 percent.

*      Based on the last census of agriculture in 1997, there were approximately 800,000 beef cattle operations in the U.S.—Average herd size is 40 head.

*      3.4 percent of producers (27,450) have 200 or more cows and control a third of the cowherd.

*      9.1 percent (73,000) of producers have 100 or more cows and control about 51 percent of the cattle.

*      The top five retail chains account for approximately 41 percent of all food sales in this nation; the top 10 account for almost 60 percent; globally it's much the same and it's expected to accelerate.

*      Within five years, top 5-7 expected to account for 70-75 percent of sales

Questions:

*Since 96.6 percent of beef cattle operations have 200 or fewer cows, meaning fewer than 3.4 percent have enough cattle to think of making a living solely from cattle production, what forces besides profit are driving the decisions and management of the rest?

*While there is a spread between the least and most profitable cow/calf operators, over time, on an average basis, a cow/calf enterprise is basically a breakeven business. Is that fact alterable? If it isn't, do individual financial expectations of beef cattle production fit the reality?

Shifting Dynamics

*      Non-cash cattle—there were 25 percent of fed cattle trading away from spot cash markets in 1997, about half of what they're expected to be this year; some predict as many as 75 percent will trade away from cash within 5 years.

*      Best as I can tell, 15-20 percent of the cattle trading this year will be part of vertically coordinated systems; and branded beef is growing rapidly to account for 7-12 percent of the market.

*      Alliances -- In the Alliance Yellow pages that appears in BEEF each August, there were, 36 retail-based alliances last year; those reporting numbers accounted for approximately 2 million head of cattle—that doesn't include the 1.9 million of CAB cattle that traded. So, round numbers, let's call it 4 million head or about 13.8 percent of the 29 million total heifers and steers harvested.

*      The move to case-ready from boxed beef—due in part to a declining trained labor force and transfer of liability—should increase the value of red meat yield.

*      Emotion—ground in differences in basic business and philosophical issues—has arguably split the industry wider that at anytime in modern history.

Questions:

*Will the industry ultimately diverge into separate industries, one based on average-based commodity marketing and the other feeling its way through the frontier of value-based discovery and marketing?

*If demand is increasing for branded beef marketed within vertically coordinated supply chains, what are the odds commodity cattle will gain in value compared to today?

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