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OSU Extension

College of Food, Agricultural, and Environmental Sciences

February 20, 2018 - 8:00am -- Anonymous

Participants in the February 8 Wayne County Extension Beef School session heard Bill Tom, Executive Vice President, Livestock Marketing of United Producers Inc. and Dr. Henry Zerby, Senior Director of Protein Innovation for Wendy’s talk about beef cattle marketing expectations and what beef cattle producers need to do to gain greater market access.  In this column, I’ll attempt to summarize some of the discussion highlights.

Bill Tom from United Producers began the session by saying that buyers of feeder calves have increasing expectations for low risk cattle.  Low risk cattle are those calves that are weaned, pre-conditioned and ready to enter the feedlot.  Buyers expect pre-conditioned calves to have had two rounds of shots and be bunk broke to a grain ration, generally for a 45 to 60 day period, before they come to market.  Henry Zerby, from Wendy’s said that the way beef cow/calf producers need to think about this is to ask the question; am I selling the buyer an opportunity or a challenge?  Unfortunately, according to Bill Tom, around 80% of the calves that come to UPI auctions are bawling calves that are weaned when they are placed in a truck and hauled to the auction.

While some producers are asking if they get paid a premium for pre-conditioning their calves, Bill Tom says the conversation is not about premiums but rather avoiding discounts.  The new normal for the market will become the low risk, pre-conditioned calf.  Bawling, weaned-on-the-truck calves do have a market and a buyer, but they are discounted, sometimes heavily, to reflect the risk or challenge that buyers are taking.  Henry Zerby used a push vs pull marketing analogy.  It is hard to market your calves if you are pushing them into the market, trying to convince the market to buy something that is not a desired product.  Pull marketing, on the other hand, is much easier and results when the market desires your calves and buyers seek you out.

Consumer expectation are influencing buyer expectations and creating the need for producer certification.  Consumers expect that cattle are raised in low stress environments with quality care. To satisfy consumers, buyers along the food chain are beginning to demand certification from cattle producers. Bill Tom says he expects in the near future that the cost of entry into the calf market for beef calf producers will be Beef Quality Assurance (BQA) certification.  Henry Zerby said that Wendy’s is already requiring BQA certification to market to their system.

Looking ahead to this changing market, what do beef cattle producers need to do to remain competitive and assure access to this market?  An important step according to Henry Zerby is to replace a commodity production mentality with one of marketing information.  Buyers, reacting to consumer expectations, want information about how that calf was raised and delivered to the point of sale.  That information includes things such as vaccinations, feed records, time of weaning, pre-conditioning program etc.  Essentially the calf producer is creating a story regarding their production system and documenting attributes that consumers desire.  Records provide the documentation for this story.  Record keeping is one of the “pillars” of beef quality assurance certification.

Another trend in the market is audits.  Audits involve a non-biased third party coming on to the farm and checking off the farm production system against some kind of standard.   While audits are the expectation of some buyers, at this point the beef industry needs to move towards a standardized audit that is accepted across all companies and buyers, rather than each developing its own.   Producers may not like or welcome production audits, but according to Henry Zerby, production audits are the future and those producers who are early adopters will be rewarded.  At some point, audits will become an accepted practice and the new normal.  Once that happens, compliance is necessary and rewards are gone.   

Both Bill Tom of Producers Livestock and Henry Zerby of Wendy’s agree that change has come and will continue to come regarding acceptable practices of beef production.  Producer’s must make a decision, undergo a mindset change, if they want that change to result in profit in their operation and allow them to build an economically sustainable model that can be passed on to the next generation.  The future of marketing beef cattle is the establishment of production transparency and trust between buyer and seller, between producer and consumer.

For more information about Beef Quality Assurance certification, contact the Wayne County Extension office at 330-264-8722.