Cattle Today

Cattle Today

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by: Wes Ishmael

“In 1968 if you didn't have the money to pay full price for a school lunch meal, you didn't eat,” said Ambassador George McGovern. He went on to explain to participants at the recent Agricultural Publications Summit—a gathering of some 400 livestock and agricultural editors and writers—that not only didn't you eat, but you were often forced to be a lunchroom wallflower, standing on the sidelines as you watched those who could afford full price eat their meal.

As a senator visiting a school lunchroom at the time, McGovern asked one little boy who couldn't afford lunch how it made him feel to stand their and watch his classmates eat. Rather than be angry as McGovern expected, the little boy told him that he was ashamed that he didn't have enough money.

McGovern still shakes his head at the memory, saying the little boy shouldn't have been ashamed, but as a six-year senator oblivious to the reality of hunger in his own country, he was. Keep in mind, this is a man who says he got his first look at true hunger as a 22-year-old B-24 pilot riding a ship into Italy for a WW-II assignment that would become one of the war's bloodiest battles—you can read about it and McGovern's role in Stephen Ambrose's acclaimed The Wild Blue. Starving Italian children lined the docks begging McGovern and the other GIs to toss them food. The ship's PA told the men not to, though. Men on the first ship that had arrived a day earlier had been generous. Children drowned diving into the water to get the food that hadn't made it to the dock.

Long story short, McGovern went to work with Bob Dole, putting together what would become this nation's school lunch program guaranteeing that all school children could have a nutritious meal—a program that also happens to be a major customer for agricultural producers in this country. Subsequently, McGovern was named and serves as the United Nations' World Food Program's first Global Ambassador on Hunger, which seeks to implement a global school lunch program. It's not a matter of simple improvement, either. McGovern points out that in countries where the program has begun—some 38 countries—the first thing that happens is that school enrollment almost doubles. Kids stay in school longer and they put off having children longer. Plus, with more education under their belts they're more likely to have only as many children as they think they can care for, rather than playing the game of volume and attrition.

For perspective, according to the Food Research and Action Center, 10 percent of all U.S. households—some 31 million people (19 million adults and 12 million children)—were either “food insecure” or suffered from hunger in 1999. That's based on a U.S. Census Survey conducted by the USDA. By the way, “food insecurity” is defined as lack of access to enough food to fully meet basic nutritional needs because of a lack of financial resources.

On a global basis, according to the World Hunger Education Service, protein-energy malnutrition affects 25 percent of all the world's children, and malnutrition plays a role in at least half of the 10.9 million child deaths reported each year.

What's the Goal?

Unfortunately, the realities of economic survival often shift producer focus away from the bottom-line importance of the work they do day-to-day, feeding people. To be fair, you also can't ignore the fact that the hunger problem revolves, at least in part, around who has enough money to buy food.

In some ways, it all seems so simple: grow and harvest a particular product, as long as there is enough economic incentive to do so, or don't.

In other ways, the equation is only slightly more complicated than calculating Expected Progeny Differences on a helium atom. If there isn't enough economic incentive to keep enough producers producing, then who grows the food? Who feeds the world, and in this country, who feeds them so cheaply?

Depending on how you're abacus is geared, left to its own devices, a market will find its way, whether or not participants in the market like the direction and the destination. Left alone, a market will determine what has value and to whom, and it will do so in such a way that there is enough economic incentive to keep enough players involved for the market to survive. That's what markets do.

With that in mind, Dillon Feuz, a University of Nebraska agricultural economist made a salient observation during this years Beef Improvement Federation (BIF) meeting. He noted simply, “I'm not sure the beef industry can survive as both a commodity and specification product industry.”

Certainly, much of the industry's deepening division comprises this very question. In fact, a strong case could be made for the fact that part of the market confusion the past 18 months, along with misinterpreted fundamentals, has everything to do with a market trying to find its way from a dying orbit to one that ensures its survival.

At the risk of generalization, on one side of the fence are folks who believe segments beyond the ranch gate—feedlots, packers, retailers and the like—should be controlled in such a way that profitability is guaranteed in the cow/calf sector. Some seem to embrace government intervention that limits operation size, pre-harvest ownership of cattle and the list goes on. Others stake their flag in the belief that if all cattle were traded live and on the average, then everyone would have the same opportunity to make a living. In this world, cost is king in the profit equation because averages equate to a one-size-fits-all commodity world. A commodity world, by the way, that was the centerpiece of the industry losing 20 percent of consumer market demand over the course of 20 years.

On the other side of the fence are folks yearning to be paid specifically for the product they bring to market. Many of them believe the only way to truly make a profit is to build exactly what diverse consumers want, price their product closer to them and participate in more of the consumer dollar. Along with individual producers, this camp has given rise to the producer-alliance-feedlot-packer-retailer partnerships forged over the past 10 years, especially in the past five. These folks seem adamantly opposed to any government intervention other than business rules, such as anti-trust, that have already been in place.

Though simplistic, understand only the gist of these opposing viewpoints and it's easy to understand why there is such a gaping division within the cattle industry today. To Fuez's point, safe money says over the long term there isn't room for both of these dichotomous business philosophies within the same industry. If that's so, then one has to win out in the current industry, or it must divide and become two distinctly different and competing protein industries.

A prediction? Nope. Suggested pondering to better understand the divisive forces at work today? You bet.

However it goes, Connie Quinn, outgoing BIF president, offered up a completely unscientific, must-read poll at this year's conference.

Seems she had lots of hours to kill, speeding along the long road between New Mexico and Nebraska, accompanied by some of the industry's “name” players in the cattle feeding business, folks who end up being the primary customer for most cow/calf operations in this nation. She simply asked them, “What will a pen of cattle look like in the next 5-10 years?”

Isolated and respectful of one another's opinions—understand that the cattle feeding industry is just as divided as the rest of cattle production on the points mentioned above—just searching for logical answers, here's some of what they came up with:

*Fed cattle will sell on a pricing grid; feeder calves and cattle may be purchased on pricing grids headed into the feedlot.

*No feed grade antibiotics or implants will be used.

*Color won't matter.

*Permanent individual animal identification will be standard.

*A larger portion of cattle will be directed from consumer level.

*Corn will still be the cheapest energy source.

*Calves will be weaned earlier.

*Carcass specifications will exist within a narrower window.

*Ultrasound will be used more to sort cattle.

*Pens of cattle will enter the yard with indicators of feed efficiency.

*Seedstock suppliers will have to be more accountable for the performance of their genetics.

If you play a game of what-if with these predictions, as in what-if these things come to pass, then you can get a feel for how your own approach to the business might have to change, based on where your operation exists today.

Of course, the one question never posed in current industry debate is this: Are you in business? Are you in the business of surviving or are you in the business of trying to feed people?


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