MOOSE JAW, Sask. – There is room for smaller beef producers in a consolidated industry, a Colorado State University professor told cattle producers here recently.
Gary Smith said even retail giants like Wal-Mart – which has a goal of obtaining 50 percent of grocery purchases by 2010 – are interested in local livestock alliances.
Sysco, the leading food service company, pays premiums for cattle carcasses under 725 pounds.
“There are opportunities to fit even though there is consolidation,” Smith said.
The reaction of smaller producers and packers to a more concentrated industry has been to try to produce for regional supermarkets, or to produce natural or “story” beef.
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Story beef, Smith explains, is beef that offers consumers a value proposition.
“It’s basically, ‘I’m going to tell you a story about my beef,’ ” he said.
The story of how and where the animal was raised, what it was fed, and other aspects of its life gives consumers a reason to buy.
Smith said grocery stores differentiate themselves from others through the perishables they offer. They like story beef because it gives them a way to do that.
Natural beef can fit into this category or stand on its own brand.
Remember the basics
Smith said cow-calf producers can also compete by remembering they are in business and run their ranches accordingly.
Those who don’t want to be in an alliance or part of a group building a packing plant have to improve the value of what they produce.
“So many people just don’t remember the basics. Believe it or not, if you take an animal to the auction yard that’s dehorned, they’re worth more,” he said tongue in cheek.
“Take male calves that are castrated. They’re worth more. Wormed, they’re worth more. Implanted, under some circumstances, worth more.
“You can pay a veterinarian to do all those for you and net $20-$32 a calf. You can do it yourself and net in the $40s.”
Smith also reminded producers to meet the requirements of beef quality assurance programs to get better grades and more money.
He said preconditioning cattle can lead to more revenue, but only if someone is willing to pay a premium.
“Don’t do this and just hope you’re going to go to the local auction barn and somebody’s going to recognize how wonderful your cattle are and pay the premium. That will not occur.”
Smith suggested smaller producers band together so they have market power when they buy and sell things.
