Cattle Today

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CATTLE TODAY

I.D. CAN HELP SUPPLY INFORMATION CONSUMERS DEMAND

by: Stephen B. Blezinger
Ph.D, PAS

Part 2

In the last issue we began a discussion of factors concerning the Animal Identification programs currently being put in place. As discussed, the program in general has been a response to food safety and disease issues that have arisen here in the U. S. and around the world over the last few years. Much of this stems from a need to be able to track an affected animal back through the marketing channels it went through in an effort to determine where the animal may have contracted a disease or what other animals it may have come in contact with and potentially exposed. Additionally, the animal identification and related electronic and paper trail should make the tracking process fairly rapid thus reducing potential lag time in identifying affected animals. Given the transient nature of the beef industry in the U. S. a program of this nature, if properly administered, should be useful in accomplishing the set goals.

Additionally, the beef industry is moving rapidly from days past when producers could expect consumers to trust that they were producing a good product to a new time when consumers expect producers to prove what they are doing. It will take animal identification that is documentable and traceable to keep the ranch welcome in the home. This is not just pointed at the cattle industry, the entire food industry has come under great scrutiny as various food sources have encountered health related problems due to contamination with pathogens or other chemicals. In an information intensive culture as ours has become, the consumer is demanding to be informed and that steps are taken to ensure a provable, safe food supply.

In a presentation to the Cattlemen's College at the Texas and Southwestern Cattleraisers Cattle Industry Annual Convention & Trade Show in San Antonio, Texas (March 2006), Iowa State University ag economist John Lawrence said the retail sector is becoming "more demanding and powerful" in requiring branded, verifiable meat products. He pointed out how three companies control more than 25 percent of the market and that Wal-Mart Stores Inc. alone controls nearly 20 percent of the market through its Wal-Mart Supercenters and Sam's warehouse stores' sales, referencing an article in Feedstuffs, July 5, 2004. These retailers want brands in the meat case -- national, packer, private -- because consumers want brands, he indicated.

However, brands put reputations on the line, he said. "If there's a problem, if the beef product is tough, if someone gets sick from eating it," a brand and reputation may be greatly harmed or destroyed, which is the reason retailers want to be able "to check down the line" with audits and inspections to make sure that brand protocols were followed. In other words, they want to be able to trace the animal through the marketing pipeline to its source if necessary and make sure all the i's were dotted and t's were crossed with reference to the production of a given animal

The day will come, Lawrence advised, when major restaurant and retail systems will buy only from suppliers who can trace their brands "back to the animal." These same restaurants and retailers will use this tracing ability as a marketing tool to convince the product on their plates or shelves are safe and have been produced with high quality, exacting standards. The day will also come when this traceability will be required as a condition to be in the export market, he added.

In this article we'll consider the potential effectiveness of the program as well as what it can mean to the producer in a positive light above and beyond the anticipated added cost and hassle.

Implications for the Producer

While the implications of this program are not hammering on the producer's door, they are beginning a steady knock. Those producers who accept the coming ID requirements early and take steps to get a program into place now will find the overall process simpler than waiting for the day when it will be forced upon them.

Consumers recognize differentiation as established by a number of studies. For this differentiation, these consumers are also willing to pay premiums for products they believe are higher in value and quality. By not proving one's product in this case beef the producer remains only a commodity producer in a segment where the minimum will continue to increase and make it necessary to become a lower- and lower-cost producer thus continuing to erode profit margins. Other costs will be missed opportunities to be eligible for and participate in the value-added segment and the lost market share to pork and poultry producers and to those beef producers who can prove their product. This simply means that those producers not willing to prove what they produce, where it comes from and how it was done will receive lower and lower prices for their product an unhappy prospect.

In a nutshell several key points are established:

1) Identification, documentation and traceability will be required.

2) Detectable differences will be rewarded (participation in marketing programs providing price support to source and process verified animals.

3) Animal identification is the pathway to this differentiation and verification.

4) Following the path will be necessary to successfully do business in this marketplace.

Data Management

Along with the identification aspect of this program some additional doors are opened to the producer. Along with tracking and verifying the location where a given animal is produced and what processes were utilized (castrating, dehorning, vaccinations, antibiotics, etc.) producers can utilize one of a number of systems to collect and track other performance data as well. This can include gains, feed efficiencies, carcass characteristics, sire and dam information, EPD data, etc. As we discussed in the last issue, a number of companies provide electronic tagging systems for cattle. Many of these companies also provide data collection and management equipment and software that will interface with the tags. Other companies exist that focus primarily on the data management aspect and do not offer tags but will interface with these systems. The products and programs offered by these entities are varied and should be researched carefully to determine which works the best in a given operational situation. Based on information from www.beefstockerusa.org, some of these companies include:

AgInfoLink USA

Boontech Pty Ltd

Cattlesoft, Inc.

CowSense Software (Midwest

MicroSystems LLC)

Digi-star

Feedlot Solutions

Gallagher Power Fence, Inc.

Global Animal Management,

Inc.

GrowSafe Systems Ltd.

Idlogic

IMI Inc.

Lion Edge Technologies Inc.

Livestock Supplies

Micro Beef Technologies, Ltd.

Optibrand Ltd, LLC

Red Wing Software

Reliable Scale Corp.

Research Management Systems

(RMS)

ScoringAg

Turn Key

Tru Test

The beefstocker.org web page provides an assortment of data on each of these companies including programs and features offered and even cost information.

One of the most powerful opportunities a producer may realize is the ability to trace his data from the pasture to the feedlot and to the packer. This can help an individual operation 1) determine how effective his overall breeding program is and 2) provide verification of performance for marketing purposes. This goes back to differentiation of product what makes the cattle on your operation more productive and valuable than others? Secondly, over time, as more of this information can be readily accessed and because of the competitive nature of the market, significant improvements should be seen in the overall quality of beef.

Integration with Marketing, Branded Beef, All Natural or Other Programs.

Adoption of an electronic identification system facilitates participation in many of the variety of cattle marketing alliances to be found in the U. S. today. Many industry experts have said that the day may come when the vast majority of all cattle marketed will be through a marketing alliance of some type. While this topic is substance for a completely different article, mention of the affiliation of marketing alliances with EID usage is warranted.

For a review of many of the alliances go to http://beef-mag.com/mag/BEEFAlliance06.pdf. This is a table detailing many of these organizations. Most, if not all of these programs will require participants to utilize and EID system of some type. They may specify the system. But most, if not all, will require identification of the animal, verification of its source location and verification of the processes it has undergone. Depending on the program, it may require breeding data and if it is an all-natural or organic alliance, more detailed information may very well be required. The point of the alliances is to provide a marketing outlet that will pay the producer for his efforts whether it be in breeding, genetic selections, overall management, quality assurance, and so on. In general, the Alliances provide a platform to showcase the value that a given type of animal (one that fits into their format) possesses.

Conclusions

The thing that producers need to understand is that we are in the FOOD business. And we are marketing to an informed (sometimes misinformed) customer base that will use it's dollars as leverage to get what they want. The marketplace has spoken and above all else it is demanding a safe supply of food and it is up to the beef industry to provide the information needed to prove that the product we are delivering is above reproach in terms of safety and quality. An effective implementation of the identification systems and participation in existing and developing programs will be steps in the right direction as productivity, profitability and bringing a product to the customer that is demanded is considered.

Dr. Steve Blezinger is a management and nutritional consultant with an office in Sulphur Springs, TX. He can be reached at (903) 352-3475 or by e-mail at sblez @verizon.net. For more information please visit www.blnconsult.com.

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