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FOUR ISSUES FACING PACKERS WILL HAVE IMPACT ON FUTURE

by: Eric Grant

No doubt the beef industry is changing, and changing fast. And, as it becomes more responsive to consumers, producers will shoulder increasing responsibility in ensuring their cattle are bred for consistency and quality, managed with food safety and humane handling practices in mind, and marketed in ways to reduce quality defects, like bruises and dark cutters.

Packers, who've come under increasing pressure to deliver safe, wholesome and value-added products to the marketplace, are driving much of this change.

Feedlot magazine recently visited with several packers, and talked with them about how changes in the packing business will impact commercial and seedstock production. Here's what they had to say.

Food Safety

Hands down, the single-most pressing issues facing packers is food safety. “Food safety is paramount,” says Excel Corporation's Glen Dolezal. “If you don't have it, you don't have a market.”

While beef remains one of the safest and most wholesome products on the market, industry experts agree producers will probably shoulder an increasing burden for ensuring contamination of beef carcasses doesn't take place.

But this is a sticky point. Many packers believe concerns over food safety will drive development of an industry-wide, individual animal identification system. This would allow problems caught in the packing plant or beyond to be traced back to producers. Whether it's a government-mandated program, or a voluntary, industry-driven program remains to be seen.

“We have to have the ability to trace-back problems,” says one packer under condition of anonymity. “You solve problems like E-Coli contamination by eradicating it at the source, not by washing product in the plant.”

Others aren't so convinced, pointing out the difficulties of determining when and how contamination actually took place, and then tracing that problem back to an individual producer. Producers would be unfairly targeted, some say, especially if they're one or two steps removed from the kill floor. Factor in, too, that many E-Coli outbreaks have been associated with ground beef. Meat grinders can contain beef from dozens of carcasses – and dozens of sources. So who's ultimately responsible for that problem?

There is a movement afoot, however, to encourage improved animal health record-keeping, and no doubt producers will need to provide more comprehensive animal health records that document when, how and where pharmaceutical products were administered on an individual-animal basis.

Another area where producers might be able to help is ensuring the cattle they bring in for slaughter are free of hide contamination. But this, too, may be easier said than done.

“I need cleaner cattle. And the industry needs research on how to control mud and manure in a simple and inexpensive way,” says Steve Van Lannen of Packerland Packing Company, a beef processor based in Green Bay, Wisc. “Mud that's on legs and bellies of cattle, that's where the problem is,” he explains.

Van Lannen says mud and manure problems have become such a pressing issue that Packerland has begun investigating different ways of removing hides. In fact, the company may begin removing hides by cutting down the backs of cattle, instead of down the belly as is current industry practice. Doing it this way would reduce potential for contamination on bellies and legs coming in contact with carcasses, says Van Lannen.

Animal Rights

Animal right issues are becoming an increasingly important issue for packers. It especially came to the forefront in 1999 after McDonald's set animal-handling standards for its meat suppliers, helped develop industry training videos and started auditing the plants. The fast-food chain suspended purchases from two cattle-slaughtering plants that failed its inspections.

"Plants started to realize this is part of doing business, like food safety is part of doing business," said Temple Grandin of Colorado State University, the nation's leading authority on humane livestock handling. McDonald's audits "sent a big message out to the industry," she says.

The audits assess how cattle are handled and whether they are properly stunned before being bled and skinned. A plant automatically flunks if auditors find an animal is bled while still conscious.

Grandin and others expect increasing pressure on packing plants in the future. And, plants that specialize in processing fed beef, not just beef produced by cows and bulls, will come under scrutiny. “Humane treatment will become an enormous issue for us in the near term,” says IBP's Charlie Mostek.

Case Ready Product

Deemed the most significant advance in the packing business since the advent of boxed beef, packers are lining up to deliver case-ready products to the marketplace.

In the past, packers have simply sold raw product to processors, retailers and restaurateurs, allowing these industry sectors to “add value” to the product on their own.

Certified Angus Beef, long an innovator in beef production and marketing, has been a leader in this area. CAB has developed several product lines, ranging from precooked roast beef to fresh, ground beef.

Other companies have followed suit. Farmland National Beef (FNB) moved into the case-ready market last fall when it reached an agreement to become a supplier of case-ready beef products to Wal-Mart's Supercenter stores. Wal-Mart claims more than 100 million customers at its stores each week, and the company projects even more growth in the coming years.

During the first quarter of 2001, FNB will be packaging and marketing its own case-ready product produced at its facilities. And, during the next 18 months, the company will add three new case-ready beef plants to fulfill its agreement with Wal-Mart.

Even IBP, Inc., the world's largest beef processor, got into the case-ready business last year. It launched a line of brand name products known as Thomas E. Wilson, which includes more than 90 beef and 40 pork items, ranging from closely trimmed steaks and chops to roasts and spareribs.

“We've found this was a necessary step to help our customers make money on the product,” says IBP's Mostek.

IBP even printed a 1-800 line on its packages to handle customer complaints. At first, the company received one complaint for every 30,000 packages it produced. Now, because of improvements in processing, that's fallen to one in 79,000. “If they don't like the product, we send them a check,” adds Mostek.

Packers believe the shift to case-ready beef will have a profound impact on producers. The pressure to producer consistent and high-quality products will force packers to reach back further into the production system than they ever have before, identifying producers and genetics that best suit their production needs.

Information Management, Flow and Usage

Few would argue that it's become essential for seedstock and commercial producers to collect feedlot and carcass information on their cattle.

Packers believe information flow will play an even greater role in the future.

Trouble is, carcass data are often incomplete, and packers themselves are often unwilling to slow production speeds so in-depth, individual-identified carcass data can be taken.

James Henderson, who coordinates supply for B3R Country Meats, a branded beef company based in Childress, Texas, spends a great deal of his time working directly with producers. He teaches them how to understand carcass and feedlot information, and how to use it when making breeding and culling decisions.

“A major challenge for our industry is learning how to interpret all of this data,” Henderson says. “The one thing I've learned is that you can give producers all of this information, but oftentimes they don't know what to do with it. It's overwhelming for them.”

More often than not, even when information – or market signals – are available, the varying terminology used to describe product quality and consumer perceptions, says Henderson.

In some cases, market signals that consumers give retailers or restaurateurs often retailers often gets clouded by the time it reaches producers.

Case in point: “When our industry went to consumers in the 1980s and heard they wanted lean beef, we found our definition was different than theirs,” Henderson explains. “We've had to rethink what it was we heard, because the kind of product we ended up producing was not really what the consumer wanted. They didn't want trimmable fat. They didn't want to buy product then leave a bunch of it on their plate. But the industry responded by producing a product that lacked marbling, which got too tough when they cooked it. That mistake cost the industry 10 or 15 years of progress. We simply didn't understand what consumers were telling us.”

Henderson believes the industry needs to adopt a “common language” that all sectors understand and use to communicate with each other. “We've learned that if we can get even a little bit of information, we can service that client much more effectively. We need to figure out how can we get that information in a uniform way for all segments across the industry,” says Henderson.

Information is a powerful tool – and can lead to significant product quality improvements -- especially when all sectors are reading off the same page, says Henderson.

“We spend a lot of time with producers looking at returns on individual cows,” Henderson explains. “When we take this time, we have good results. For instance, one of our producers sent me a Christmas present last year. He was so happy that for the first time in 50 years when he culled cows last fall, he knew which ones to get rid of. He could see right there, in the information we gave him, which ones had the poorest return on investment. That's the kind of progress the industry can and should be making.”

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