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RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

That Can’t Do Attitude

Oct 04, 2010

There are different ways to approach a challenge. Any challenge.

I had a high school age hired hand helping me clean junk one summer. Stout kid; outweighed me 30 pounds probably. I’m a little scrawny guy and even then I was old. But what we found was that when we were moving junk, just lifting stuff, I could lift more than he could. Time after time he would say, “you’re going to need the front end loader” to move something. But often, I’d grab it and lift it.

We visited about that a lot. I think it’s because I knew the thing had to be lifted. He knew that if he couldn’t lift it, I would find a way to move it.

You can approach a challenge as something you can deal with or you can throw up your hands and say, “it can’t be done. I need help.”

Do you know what I’m talking about? Most people who’ve had hired help know what I mean. There’s a “hired help” attitude and an “owner” attitude.

Let me explain how it pertains today.

Back in the 1990s the bottom fell out of the pig market and hundreds of hog producers went out as well.

Now, presuming you are depending on small hog farmers for your living how do you approach a challenge like that? For some that challenge was answered with “it’s somebody else’s fault and we need government help to keep it from happening to cattle producers.” Their evidence is not convincing. They’re forever seeing cause where others see effect.

Meanwhile, others had the same problem but reacted differently. Near Jackson, Mo., Gerald Shinn, had a similar problem. His feed business, Performance Blenders, relied on pig and cattle producers. His reaction was different.

He began helping his cattle customers market their cattle. A lot of them fed cattle, and many others sold feeders. He recalls many of them didn’t know what marbling or yield grade were.

“They would put them in the pen, feed them 180 days and go,” he said. He began helping them aggregate their cattle into load lots to be finished in a high-tech commercial Kansas feedlot and marketed through U.S. Premium Beef’s grid program.

That was a decade or so ago, and there have been 150 of his customers take advantage of the program. They stay in the top 25% of USPB’s premiums and have taken home more than $60 per head over the cash market since the program started. These are small producers, mind you with limited opportunities by most standards. Most, he says, are 25 to 75 head herds.

But since they got into the program, they pay more attention to their cattle health programs. They pay more attention to genetics. And they make more money. One of his customers last year—armed with feedlot and packer feedback on his steers—averaged $1,700 on the commercial bred heifers he sold.

As the cattle go on feed, Shinn’s outfit calculates the value based on local auctions. Since the program started—thousands and thousands of cattle ago—Shinn says they’ve “lost” money feeding cattle only once—and that was the year corn prices went through the roof.

It’s the sort of program that offers independent producers a way to pull themselves UP to compete rather than trying to pull others DOWN.

And Shinn would be the first to tell you the main reason it works is because of the premiums and the ability to know those premiums are out there. Ask him what he thinks about the GIPSA plan to limit contracts and you can hear him go red in the face clear from Texas.

I know that you’ll find Dr. Max arguing on this very page that packers are getting so filthy rich that they’ll happily absorb the costs associated with the GIPSA plan. He argues we’re dupes to believe they will back away from contracts when the litigators show up at their doors. He says we’re “naïve” to believe their bluff.

But those packer boys were buying cattle all for one price and sorting boxes to different markets for years and years before cattle producers—PRODUCERS—finally talked them into trying some value based marketing. If anybody wants to throw around the word “naïve” I’d suggest he use it on somebody who believes they won’t be happy to do it again.

The people who benefit from value based marketing are not packers, but producers like those who work with Shinn and other innovators. There are other systems being tried and invented every day. Purebred breeders. Feeders. Innovative auctions. They’re  helping independents produce better cattle and better beef. They represent progress. Yes, it’s different. Not so easy maybe. A little more demanding perhaps.

Innovation and adaptation are seldom an easy lift. It will be too heavy a lift for many. But that kid finally learned he could lift more than me if he grunted more and gave up less. And he sure was proud once he did.

I’d like to hear about others who are figuring out ways to adapt. There’s no reason that small and independent producers can’t adapt and survive in this market. But that “adapt” is the key word. If you know of such a system or program, drop me a line at scornett@farmjournal.com or call me at 806-220-4588.

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COMMENTS (2 Comments)

millerw2k2010 - faridabad, CA
it is about the individual but it can be with I appreciate the concern which is been rose. The things need to be sorted out because everyone. people should be help of every person whoes r tourble.............

easy loans company
12:17 AM Oct 6th
 
Bill Bullard - Billings, MT
Hello Steve,

You can’t possibly expect your readers to be so naïve as to believe your claim that packers are not among the people who benefit from value based marketing. Even National Beef Packing Company, which is primarily owned by U.S. Premium Beef, attributes its significantly increased net income in part to an “increase in the average sales prices per head of approximately 14.8% during this reporting period,” meaning that it is receiving more revenues from the beef derived from each animal. It is fundamentally wrong to assert that value based marketing does not benefit the entire beef supply chain, from cattle producers to packers to retailers (consumers also benefit from the availability of high-quality beef). That is why other packers, including those not owned by producers, also have instituted value based marketing programs. There is no language in the GIPSA rule that would restrict value based marketing. Instead, the rule would assist producers involved in value based marketing by ensuring that the base price of their animals involved in value based marketing is a competitive price and not a manipulated price. It does this by prohibiting packer procurement practices that effectively lower the live-weight cash price of cattle, which is the base price used in value added marketing programs, including U.S. Premium Beef. To misrepresent such a fundamental fact regarding the beneficiaries of value based marketing is a disservice to the entire industry.

9:56 AM Oct 5th
 

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