fbpx

Ducks Unlimited

The Cattle Contribution

Collaborations on conservation lead to ranching wins.

By: Abbie Lankitus

January 2022

North Dakota’s landscape was carved by glaciers, scraping the surface and leaving potholes like cleats to a muddy football field on Friday night. Filled with water and surrounded by grass, this land is known as part the Prairie Pothole Region, home to an estimated 2 million breeding duck pairs and 1.83 million cattle.

More than half of North America’s duck population migrates to the broader Prairie Pothole Region to breed and nest. It’s critical waterfowl habitat maintained largely through ranching.

“Rotationally grazing cattle is one of the best ways to manage this landscape for waterfowl, for other ground nesting birds, for the general public, and for ranchers themselves,” says Tanner Gue, a Ducks Unlimited biologist. It’s why he and many other Ducks Unlimited staff across the country work hand in hand with ranchers to collaborate on projects that benefit the cattle, land, water, and in doing so, the ducks.

The Key

Third generation ranchers, the Spickler brothers, run independent Angus seedstock operations near Glenfield, North Dakota, in the heart of the Prairie Pothole Region. Justin and his wife Sara run Spickler Ranch North, on the same land their grandfather purchased in the mid 1900s. Nathan and his wife Emily run Spickler Ranch South only a few miles from the homeplace.

“We live in the area where the tall grass and the short grass prairies meet,” Justin says. “It’s really, really good grass and very productive. There’s a wide species variety and we can raise heavy calves without supplemental feed.”

Justin says 90% of the grass they run on is native. He does rotational grazing in a twice-over system and his forage cropland is 100% no-till. He keeps cattle on sections three to four weeks and rotates.

Nathan manages similarly, grazing 25, 80-acre parcels every 10-14 days before rotating. His cropland allows him flexibility to manage his native grass effectively.

The grasses in this area evolved under the bison, growing after heavy grazing and relying on natural fertilizer. Grazing stimulates plant root growth and the nutrient cycle of the prairie.

The only way to mimic it is with cattle.

“Wetlands act like sponges, cleaning our water and decreasing the severity and frequency of flooding,” Gue says. “Grasslands do the same thing. By rotationally grazing perennial grasses and keeping our soils functional and healthy, it improves the soil’s ability to infiltrate water and reduces surface runoff. Grazing surrounding grasslands helps maintain wetland hydrology, functionality and biological value for waterfowl and hundreds of other species that depend on those wetlands.”

This natural cycle requires a focus on what’s beneath the surface.

There are five principles of soil health: minimize disturbance, keep it covered, living plant root, plant diversity and livestock integration.

“We cannot complete all five soil health principles without livestock,” Gue says. “Without livestock integration, folks trying to improve soil health hit a plateau. You can only build so much soil without getting cattle involved.”

According to Gue, profitable family ranches raising high-quality beef on the native grasslands is the best way to preserve a precious wildlife resource.

The Spickler brothers’ land management practices prove why.

“When I graduated from North Dakota State nearly 20 years ago, we were conventional tillage farming,” Nathan says. “But our soils were light and more susceptible to erosion so we shifted to a complete no-till system where it essentially functions and responds like the grasslands next to it.”

He tries to keep something growing on the land at all times, seeding alfalfa, winter rye, oats, barley, sorghum Sudan and millet. For species diversity and flexibility of grazing, he always seeds turnips, radishes or kale in the event that his primary crop fails or they don’t get enough rainfall.

“All of our tillable land stays tillable because it allows the flexibility of being able to rest our native grasses,” Nathan says. “If that land was native pasture, we wouldn’t have lush rye, turnip and radish with the fall rains we’ve got. We’d have a native pasture we’re trying to rest – especially in a drought year like this one.”

Progressive management requires added expertise, that’s where Gue provides assistance.

“At their request, we stepped in to help improve their ability to build soil, enhance management of important wetlands and perennial grasslands,” Gue shares.

Ducks Unlimited Justin Spickler

Justin Spickler and wife Sarah, children Wyatt, Will, Jess and Watson

Tanner Gue Ducks Unlimited

Tanner Gue

Ducks Unlimited Nathan Spickler

Nathan Spickler, wife Emily, children Haylie, Trace, Kadence and Quaid

Stewards of the Prairie

The partnership began in 2017 when Justin reached out to Ducks Unlimited after learning they had cost-sharing programs for ranchers.

Justin’s not new to collaborating with conservationists. He’s worked with Natural Resource Conservation Service to re-build several fences on his property through the Environmental Quality Incentives Program. The programs have been a tremendous benefit, he says. Especially early on in his career when he couldn’t afford to do it out of pocket.

When he began working with Ducks Unlimited, Justin was grazing residue with a single electric wire fence.

“When it would snow and the cows were not done grazing, but done with the stuff they really liked, I would have trouble keeping them in,” he says. “They’d also absolutely take every bit of grass on the adjacent pasture to get to water.”

The pasture surrounding the cropland was rented, so he, the landowner and Gue sat down at a kitchen table and came to a solution. In the end, Ducks Unlimited cost-shared the fence to separate the cropland and pasture as well as water tanks for grazing both.

A solar powered water pump and winter tank at Nathan Spickler’s ranch.

“With the drought, we got eight days out of that field with 150 yearling heifers that would’ve normally lasted us three to four weeks,” Justin says. “If we didn’t have that good fence, I would have been hesitant even to try to make them eat what was there. Those eight days got us eight days further into an epic drought. The advantages are immediate, but also long-term just because of the versatility it has allowed us when things aren’t perfect in the environment.”

Justin recommends taking advantage of programs that’ll help.

“If there’s a program available and that funding appropriated to the rancher, why not do it?” he says. “If it truly is a benefit, if you need the fence anyway and they’ll cost share it, you should put it up.”

Nathan began working with Ducks Unlimited on a project in 2019.

“We worked with them to put in two different solar well systems to allow us to have water access on cropland to keep cows off of adjacent pastureland that had water on it,” he says.

That added security knowing he could rest his native pastures and graze the crop fields.

All in all, Ducks Unlimited cost-shared the well drilling, the pump, solar panels and fencing.

“By starting in our rye, we essentially hit our native grass about a month later than normal,” Nathan says. “It allowed us just to rest our grasses way more than what we typically would and allow them to be that much more rested in the drought.”

He says they’re just trying to be sustainable and maximize profitability at the same time. To find the nexus of what is best for their land, but to get the most out of it.

“We think just being open-minded to change and evaluating what can we change to make everything we do hopefully run better,” Nathan says. “What could really allow you to enhance the environment, your total profitability and to make you more sustainable? Because ultimately, if those two things can go hand in hand, it should be a win, a success for everyone.”

Justin says from the perspective of improving grass, his and Ducks Unlimited’s missions are similar.

“The improvement to rangeland helps us both,” he says. “It isn’t purely financial other than if we want to do this for our way of life or want our next generation to do it – then it becomes financial, but also sustainable in that we’ve improved infrastructure, pasture and cropland.”

Ducks and cattle may seem an unusual combination, but when it comes to grassland management, turns out they’re a perfect pair.

 

Getting Cattlemen Credit for Conservation

Striking a new narrative that highlights the benefits of cattle production requires direct investment in the environmental effect of the Certified Angus Beef ® brand supply chain. Part of the brand’s overall sustainability strategy includes a collaboration with Ducks Unlimited on a three-year project in the Northern Great Plains. The partnership demonstrates a commitment to improving the environment through programming focused on preserving working grasslands, soil health, biodiversity, clean water resources and carbon sequestration.

“One of the byproducts of high-quality beef production is thriving ecosystems,” says Nicole Erceg, Certified Angus Beef director of communications. “We’re working to showcase the benefits of sustainable ranching.”

What’s good for the grass is good for the cattle is good for wildlife. Responsible, sustainable agriculture and conservation go hand in hand.

It’s why keeping cattle on the land is a shared priority.

“Working in this landscape for almost 85 years, we’ve recognized that working proactively with private owners—namely farmers and ranchers—we can achieve a lot more win-wins,” says Billy Gascoigne, associate director of conservation strategy at Ducks Unlimited.

The brand’s area of expertise is beef quality. Erceg says by collaborating with Ducks Unlimited, the brand is able to access environmental science professionals to benefit ranchers, preserve working grasslands and gather data to support a narrative where raising beef is part of a healthy planet.

“On a cattle operation, you have vets, nutritionists, risk managers, bankers and tax accountants,” she says. “Why not have somebody who can help you navigate soil health, biodiversity, carbon credits or other conservation opportunities?”

Gascoigne says Certified Angus Beef’s expertise is their experience driving value back to the ranch.

“I recognize that fundamentally, these ranches are not sustainable if they’re not financially sustainable,” he says. “That’s what’s so powerful about this partnership, to have a diversity within the sustainability views of economics, environmental, social and cultural.”

The organizations’ shared value of sustaining working grasslands requires maintaining family ranches. A unique partnership for a unique time, meeting the calls of the consumer without sacrificing the family ranch.

This story by Abbie Lankitus originally ran in the Angus Journal. 

You May Also Like…

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ was developed as part of a strategic cattle care partnership between Sysco and CAB. The collaboration focuses on supporting farmers and ranchers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production.

You, Your Cows and Their Feed

You, Your Cows and Their Feed

Expert guidance from Dusty Abney at Cargill Animal Nutrition shares essential strategies for optimizing cattle nutrition during droughts, leading to healthier herds and increased profitability in challenging conditions.

Marketing Feeder Cattle: Begin with the End in Mind

Marketing Feeder Cattle: Begin with the End in Mind

Understanding what constitutes value takes an understanding of beef quality and yield thresholds that result in premiums and/or discounts. Generally, packers look for cattle that will garner a high quality grade and have excellent red meat yield, but realistically very few do both exceptionally well.

feedyard cattle in the sun

Throwing shade on your herd

It pays to do something about heat stress

by Morgan Boecker

March 2021

The last anyone knew, heat stress cost the U.S beef industry $369 million a year – but much has changed since the 2003 study. That’s why a Colorado State University (CSU) scientist is working now to quantify the need for shade throughout the beef supply chain.

Heat stress occurs when an animal can’t dissipate heat as fast as it’s incurred. Any stress can affect performance and health, but also well-being and behavior, a special focus for CSU’s Lily Edwards-Callaway. Her team’s literature review found shade benefits vary by geographic location, structure type and weather patterns.

When it’s hot and sunny, cattle look for shade. Nature often provides trees to fill that need at the cow-calf level, but shade can be scarce in feedyards. That’s where Edwards-Callaway focuses her research.

“We want to provide animals a good quality of life where positive experiences outweigh negative,” she says. “If there is an economic relationship to animal welfare pointing toward improvement, there’s no reason not to get better.”

In the 2020 paper titled “Impacts of shade on cattle well-being in the beef supply chain,” Edwards-Callaway says animal welfare has three parts: biological function, natural behavior and affective (mental) state.

When feedyard cattle get all they need to thrive, they realize their full potential in life and then produce the highest quality beef possible.

Providing shade when needed is one way to mitigate stress and ensure more good days.

“Cattle management practices have progressed and technology has changed,” Edwards-Callaway says. “I’m sure producers have a lot of innovative, cost-effective ways to shade cattle to improve performance. I think there’s a great need to dig a little deeper.”

feedyard pen with shade structure

A closer look

Key indicators in shade studies include cattle performance, health, behavior and mortality rates in groups provided with shade versus none. Shade systems differ across the studies as they do in feedyards. Still, no matter the system, results favor the shaded groups. Effectiveness wasn’t based on having “the best” shade but simply any shade at all.

Weather complicates matters. The easiest place to identify as needing shade is where it’s hot and humid, but need doesn’t always mean a practice is adopted.

“We just don’t know how much people are really using shade,” Edwards-Callaway says.  

The economics of need in feedlots adds to the complexity. Environments change through the seasons, influencing how long – or even if – a shade structure can withstand those changes. Over time, shade becomes less expensive as long as it’s maintained.

“It’s complicated unfortunately,” she says. “But we’re learning it’s okay to have something not be one-size-fits-all.”

“The variability in the climate really skews the data we looked at,” adds Daniel Clark, meat scientist with the Certified Angus Beef ® (CAB®) brand, who collaborated on the paper. “A big takeaway is to just be prepared.”

Know your environment and you know if your cattle would benefit from shade, the scientists suggest.

Get a price for setting up feasible shade infrastructures to compare those, versus the production and welfare losses from just one extreme heat event.

A 1995 heat event in Iowa led to 4.8% death loss in non-shaded feedyard pens, compared to 0.2% in shaded pens. With increasing temperature trends, those are likely conservative estimates today, Edwards-Callaway says.

Extreme weather fluctuation affects final carcass quality, too, but Clark says the extent of mild and severe weather change varies. More predictably, extreme heat brings high mortality.

“If you’re trying to gain every benefit of high-quality beef that you can, then you probably need to think about adding some shade and protecting cattle for when there is a major weather event,” Clark says.

Read the full article at the Journal of Animal Science.

cattle in shade graphic

At what cost

The CSU research didn’t examine cattle characteristics in the studies but future work should explore other impacting factors. For example, does shade benefit cattle in hospital pens or newly received animals at the feedlot? Problems arise when there is no heat mitigation as needed, and that becomes an animal welfare issue, too.

“What can we do that’s innovative and cost effective to provide some alleviation from heat stress?” Edwards-Callaway asks.

She’s already working with packing plants to see what kind of effect shade may have right before slaughter. This ongoing project is looking at distance cattle travel to the plant, time waiting to unload and reach the point of harvest. It’s also tracking pen density, weather and their effects on mobility, bruising and carcass characteristics.

Animal welfare is connected to every outcome, she says. Basic health and production factors ensure cattle perform to their highest potential. Cattle are motivated toward certain behaviors, such as lying, seeking shade, water, food and even playing, which overlap with performance.

“Do producers think shade is important?” Edwards-Callaway wonders. “Why or why not? What factors dictate whether cattlemen want to use shade or not?”

The answers affect everything from productivity and profitability to beef’s image with consumers, she adds.

Originally published in the Angus Journal, April 2020.

Download the infographic from the Journal of Animal Science.

You may also like

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ was developed as part of a strategic cattle care partnership between Sysco and CAB. The collaboration focuses on supporting farmers and ranchers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production.

Everything They Have

Everything They Have

Progress is a necessity on the Guide Rock, Nebraska, ranch where Troy Anderson manages a commercial Angus herd, small grower yard, his 10-year-old son, and a testing environment. Troy’s approach includes respect for his livestock, people and land. For that, Anderson Cattle was honored with the CAB 2023 Commercial Commitment to Excellence Award.

Making It Better

Making It Better

Most sane folks don’t choose to go into business with Mother Nature. She’s a fickle and unpredictable partner. So, how did two people with zero agricultural background, no generational land, wealth or genetics carve a profitable partnership with her in Southwest Kansas? By focusing on progress and a desire to leave things better than they found them – which also earned them the CAB Sustainability Award.

50-14 legislation considerations

Market update

The past couple of weeks have offered little excitement in the fed cattle trade. July and August are normally passive months where we look to put in the summer lows. In 2020 there are more obstacles to building a bullish attitude than normal as far as fed cattle values are concerned.

Last week’s federally inspected harvest was adjusted lower than the estimated 664K head to 657K head due to a smaller Saturday total than anticipated. Even so, packers appear to be committed to working through the backed up fed cattle supplies and this pace remains what we all want to see.

urner barry report

Cutout values have fallen with this week’s Choice carcass value on Tuesday closing at $206/cwt. according to Urner Barry. Some analysts have eyed the $200/cwt. price level as a critical low with concerns about further devaluation impacting cattle prices. At this time packer margins remain above $200/head which means there is plenty of cushion between their spot market cattle cost and their boxed beef revenue. The business at hand today is sales volume and the industry is primed to achieve that objective at these price levels.

Current weekly production of both beef and pork are at record levels so competition for consumer dollars at the meat case is stiff. Retailers are and will be wading into the beef market to capitalize on current prices. Look for front page beef ads at retail very soon with price points on many items that will certainly drive consumer buying.

CAB-eligible carcasses are meeting the brand’s 10 carcass specifications at a robust pace lately. Carcass marbling measurements across the fed cattle supply remain above a year ago and at all-time highs for this period in time. With this said, the brand may experience sales volumes greater than a year ago as we evaluate the past 3 to 4 weeks.

Across the CAB carcass pricing complex last week we simply marked time with further entrenchment in the month-long pattern. End meats have completed much of their price adjustment from record highs and some items are now priced cheaper than a year ago. Most of last week’s carcass devaluation came from the middle meats again with ribs leading the way lower. Strip loins and tenderloins are also trending down but tri tips and ball tips, also from the loin primal, were under pressure last week and are priced below a year ago this week.

50-14 legislation considerations

Cattle and beef markets over the past year have stamped a whipsaw of price trends on the history of our industry. This has sparked a healthy dialogue on the topic of fed cattle price discovery, focusing a spotlight on issues that have long been discussed.

By now, many cattlemen are familiar with the “50/14” legislation introduced in Congress in May by Iowa Senator Chuck Grassley (and others) plus a more recent companion bill in the House brought forward by Iowa Representatives Axne, Finkenauer and Loebsack.

The broad strokes of these proposals would require some beef packing firms to purchase at least 50% of their daily harvested head count in the spot market with a harvest date no longer than 14 days.

Stakeholder opinions are divided as to whether or not such a law would be effective in creating more efficient price discovery. Here at the Certified Angus Beef ® brand we’ll not profess to know the best answer to these questions.

CAB grid premiums

We are, however, passionate and certain that beef demand has been recaptured and strengthening in most recent decades due to enhanced product quality. This wouldn’t have happened without financial incentives to focus on genetics and management toward improved consumer satisfaction.

The above chart depicts USDA reported packer grid premiums for CAB carcasses above the weekly fed cattle price. The green line illustrates the weekly top of the price range paid by any packer while the gold line represents the weighted average premium for CAB carcasses among all CAB-licensed packers. The price signals, while variable, show strengthening premiums over time. This, even as producers have answered the call with annually increasing supplies of CAB carcasses, as seen in the chart, below.

Consumer driven economic signals have been passed back to producers because the marketplace has been allowed to differentiate price for cattle and beef product based on quality specifications and other merits. Addressing this point, we have questions of the proposed 50/14 legislation since the old idiom often rings true that the devil is in the detail.

CAB production chart

Wherever you may stand on the 50/14 legislation and accompanying issues, I encourage you to consider for yourself some important points outlined in a brief letter by CAB President, John Stika, Executive Vice President of Supply, Bruce Cobb and Board Chairman, John Grimes.

Southern quality grade trends up

The June Cattle on Feed report pointed to larger “on feed” numbers in feedyards with a capacity of 1,000 head or larger in the high plains and in the south, versus the north. In comparing the top four feeding states against their most recent five-year averages for cattle on feed, Kansas, Texas and Colorado each come in at 113%, 112% and 110% respectively, beginning June 2020. In contrast, Nebraska feedyards were filled at just 100% of their recent five-year average rate.

The trade confirms this to be the case as live steer prices in the south trailed northern prices by at least $1.60/cwt. last week. The backlog is a bit deeper from the middle of the main feeding region to the south.

The quality grade trends in the charts further confirm the notion that northern fed cattle are less burdensome as the Prime grade in Nebraska has dipped well below recent highs near 15% to 9% in latest data. Meanwhile, Texas packers saw their all-time high Prime carcass grade share just over 6% for the 3rd week in June.

percent choice by state

% prime by state

DON’T MISS THE LATEST HEADLINES!

She’s got it all

Beef cattle markets adjust

cow-calf

Resilience

Retailers in cattle country

Read More CAB Insider

$100,000 Up for Grabs with 2024 Colvin Scholarships

Certified Angus Beef is offering $100,000 in scholarships for agricultural college students through the 2024 Colvin Scholarship Fund. Aspiring students passionate about agriculture and innovation, who live in the U.S. or Canada, are encouraged to apply before the April 30 deadline. With the Colvin Scholarship Fund honoring Louis M. “Mick” Colvin’s legacy, Certified Angus Beef continues its commitment to cultivating future leaders in the beef industry.

Carcass Quality Set to Climb Seasonally

With the arrival of the new year the beef market will rapidly adjust to changes in consumer buying habits. This will remove demand pressure from ribs and tenderloins, realigning the contribution of these most valuable beef cuts to a smaller percentage of carcass value

Misaligned Cattle Markets and Record-high Carcass Weights

Few things in cattle market trends are entirely predictable but the fact that carcass weights peak in November is as close to a sure bet as one could identify. Genetic selection for growth and advancing mature size has fueled the long-term increase in carcass weights.

steer

Questions from the brand about the 50-14 legislation

Fellow Beef Industry Stakeholders:

To suggest U.S. beef producers are facing difficult times egregiously understates the extent of challenges thrust upon cattlemen during the past year. Yet, times like these often are the catalyst for ideas and innovations that bring meaningful improvements for a more sustainable future.

While it has been a topic of keen discussion for decades, the call for change in fed-cattle marketing and price discovery rarely, if ever, has been louder than it is today. The idea of creating more robust price discovery and competition in the marketplace is easy to support and can create obvious shared benefits for stakeholders.

Cattlemen widely agree that growth in beef demand means more dollars transferred back to the production sector. Yet, history proves it’s difficult to find agreement among cattlemen on how this is best accomplished. The debate around how producers share in the financial benefits of growing beef demand often focuses on the ratio of cattle sold in the negotiated spot (a.k.a. cash) market versus alternative marketing arrangements. To this point, Senator Chuck Grassley’s recently proposed 50-14 legislation centers on mandating an adjustment to an imbalance, requiring multi-plant packers to purchase at least 50% of their cattle needs for each plant in the negotiated spot market.

Owned by the American Angus Association and its Angus farmer and rancher members—whose opinions vary on the proposed 50-14 legislation—the Certified Angus Beef ® brand exists to create demand for the high-quality beef sold under our label and therefore the Angus genetics and cattle that supply it. The brand is not a political or policy-driven organization but still very much vested in where the beef industry migrates on fed-cattle marketing and how such mechanisms influence the flow of economic signals from consumers to producers.

While there are still obvious challenges in the beef industry, arguably, the business is responding far better than ever to the demands of the consumer, clearly demonstrated by the significant growth of high-quality beef demand since 2010. The economic signals drove this improvement and the emergence of grid premiums have been essential to recent gains in quality and helped producers reap rewards for responding to those signals.

Annually, cattlemen earn more than $92 million in Certified Angus Beef ® brand grid premiums for cattle accepted for our brand alone. Based on what we understand today about the 50-14 legislation, eliminating the Certified Angus Beef ® grid premiums currently paid on a large portion of cattle would muffle the consumer-driven signal the industry has benefitted from and could limit a producer’s ability to maximize carcass value and economic return.

There are advantages and imperfections to any fed-cattle marketing system. Arguably, more negotiation could potentially enhance cattle values as determined through grids given the influence on base price determination or premium/discount structure. That’s why the Certified Angus Beef ® brand is not for or against any single marketing method over another. We simply want producers to have the incentive and opportunity to be paid what their cattle are worth, not having to take an average price where the better cattle subsidize the rest.

To that end, we have questions regarding specific language in the 50-14 legislation. We have listed them below with the goal of gaining a wider understanding of the requested changes and potential outcomes. As a stakeholder engaged in this discussion, we hope you can help us do so or merely give these questions some additional thought as you engage the industry in this conversation.

  • How will negotiated grids be handled under the proposed requirements: considered part of the negotiated spot market given prices can be negotiated weekly without a written or implied contract with a packer or excluded from the spot market due to their grid structure?
  • Why are dairy and dairy crossbred cattle, cattle over 30 months of age and foreign-born cattle excluded from the proposed 50% spot market purchase requirement and how do these excluded populations factor into the 50% spot market purchase calculation for a plant?
  • What will the impact be on value-added programs such as age-and-source verified, GAP-certified, NHTC, etc., and associated feeder calf prices, if a feeder’s ability to secure a fed-cattle market is not assured prior to placing the cattle on feed?

We are confident there will be much more discussion on this topic in the months ahead. Independent of what is ultimately decided in Congress and across the industry, our team at the Certified Angus Beef ® brand will continue to focus on building consumer beef demand more than political and policy matters outside our area of expertise. Yet, we remain interested because the brand will be impacted, regardless. We feel it better to ask questions now for the sake of expanding perspectives for our brand and the industry of which we are a part.

We appreciate the opportunity to share our perspective and your consideration of our questions. If you care to visit about this topic in more detail, please feel free to call or email using the contact information provided below.

Thank you and take care.

Sincerely,

John F. Stika

President, Certified Angus Beef LLC

jstika@certifiedangusbeef.com

330-465-6172

Bruce Cobb

Executive Vice President, Production, Certified Angus Beef LLC

bcobb@certifiedangusbeef.com

806-681-8000

John Grimes

Chairman, Board of Directors, Certified Angus Beef LLC

john@maplecrestfarms.com

937-763-6000

Resilience

Moving forward from the unforeseen

By: Miranda Reiman

If you’re in the cattle business, it doesn’t take long before you face a year you don’t want to relive. Some lurk as raw memories, not buried quite deep enough to forget. Just the mention—four digits strung together to mark a certain time—can bring up the stress, the worry, the downright heart ache.

For Texas rancher Jon Means, it’s 1974. For Kansas cattle feeder Lee Borck, it’s 2003.

For almost every American producer of every major protein, it will be 2020.

“We’re used to disasters,” says Borck, chairman of Integrated Livestock Services. “The weather or mad cow disease or the Y2K drop in the market that affected our whole economy—we’re used to dealing with disasters.

“But this is of a total different sort.”

When COVID-19 entered mainstream consciousness, it brought market and supply-chain disruption the likes of which most have never seen.

“This is on a grand scale and I don’t think anybody really has a good grasp of it,” Means says.

For Iowa Angus breeder Dave Nichols, a crisis might stir memories from 1982, and Nebraska cattle feeder Harry Knobbe starts quoting data from 1964. Montana rancher Doug Arntzen recalls the 1980s.

But even as these cattlemen crunch hard-to-stomach numbers in the here-and-now, and wrestle with uncertainties that will change again before these words hit the printed page, they each hold guarded hope.

‘All we’ve ever done’

“I wouldn’t say I’m scared. I’m concerned for people, but as far as the business, we’ll come out on the other side,” Means says.

He ranches near Van Horn, Texas, not far from Mexico—an area that sees less than 12 inches of a rain an average year. A sure sign he’s an optimist.  

Just out of college, Means started ranching in 1974, when his dad passed away, leaving him to shoulder the weight of decisions. Closing out the cattle accounts that year, he had to write a check to the feedyard instead of getting one back. It’s the type of experience that might inspire the faint of heart to find a new path promising a steadier paycheck. But Means was already a cattleman.

“I’m the fourth generation here and we just didn’t do those things,” he says. “I’m sure people before us endured the hardships, and droughts, and no money, the whole situation. I wasn’t going to be the one that’s going to quit.” 

In the years that followed, Means made adjustments to dad and grandpa’s plan. He bought additional ranches to spread out environmental risk. He rebuilt in the good years and sold down when impossibly dry years like 1997 and ’98 rolled around.

“You can’t change a drought. You can’t make it rain. You can’t change this market and we can’t do anything about this virus,” he says. “We just have to take care of ourselves and take care of our people. That’s all we’ve ever done.”

‘Don’t lose your cool’

Harry Knobbe sees adversity as a great teacher.

“Any successful person has made some big mistakes, but you get to evaluate what caused it,” says the West Point, Neb., cattleman. “You just have to be right more often than you’re wrong.”  

Knobbe recalls details of an oversold futures market or times when weather intervened in economics the same way an Angus breeder rattles off historic bloodlines. Since 1960, this has been his career and his life.

“We love it,” he says.

Although digital records give him easy access, Knobbe often prefers the printed chart that spans his office wall. It’s a 52-week rolling average for finished cattle prices, and it’s not just history—it’s data that can be applied in real-time.

“You need a guideline. When you drive somewhere you look at the gas gauge. You look at the heat thermometer, the oil pressure. We don’t check the oil pressure enough with the past markets,” he says.

Even today, when some market influence doesn’t compare to an event in the past, Knobbe looks for patterns and ways to apply logic.  

“When you’re on a sports team, just because you’re behind at halftime, don’t lose your cool,” he says. It applies here. “If you panic, you can’t think. You’ve got to control your emotion.”

‘Go the extra mile’

“You’ve got to have a plan,” Nichols says.

He had a front-seat view of the 1980s Farm Crisis, and that heaviness mixed with the personal tragedy of losing his brother, his best friend and business partner in 1982. If Nichols took a souvenir from that chapter of life, it’s the mindset, “plan for the worst, but hope for the best.”

Applied this year, that’s why the breeder split up his crew and cancelled in-person meetings to reduce risks of catching and spreading the virus in March. He watched the market crash begin and called his banker to secure additional credit, just in case those bulls in the barn didn’t sell. And then he did what he knows best: he took care of those who depend on him.

“You have got to go the extra mile, now and in the foreseeable future,” Nichols says. That goes for his employees, which he considers family, and his bull buyers, which he considers his greatest asset.

“As a seedstock producer, you’re going to do about as well or as bad as the customers you sell your cattle to, and the customers I’m selling my cattle to are going to have some rough times for a year or two.

“Let’s make damn sure they’re able to get through it because the cattle are good enough.”

‘Just as much hope as I ever had’

It was right before Christmas when the call came in the early evening—Borck’s 2003 story probably starts like many others—“Lee, they found a BSE cow and it’s going to get ugly.”

Bovine spongiform encephalopathy—and the fear surrounding anything attached with “mad cow”—sent the market limit down for days.

“We were scared as hell,” he says. “We hedge most of our product most of the time, but the fact of… how do you buy back? How long is this going to last? Is it going to be permanent demand destruction that we’re looking at?”

Those are hard questions, and the answers aren’t easy when you’re living them. They’re the same hard questions cattlemen are asking now.

“Yes, I was emotional, but there wasn’t a damn thing I could do about it,” Borck says. “It had already happened. We just had to start measuring what the impact was going to be and how we could offset that risk that was coming.”

This 2020 situation is vastly different, but he’s approaching it the same: “You have to be realistic with yourself as to what you can do and what you’re unable to control and try to make the decisions that way.”

He takes a long view of the improvements made in product quality, takes heart in the creative problem solvers already addressing future challenges.

“I have just as much hope as I ever did,” Borck says. “I think we’ll come back. We’ve always had the best protein product out there.”

It’s that confidence that keeps cattlemen pushing ahead.

‘That gives me optimism’

In Montana this April, they’d already backed off their planned amount of food and lined up extra people to work the phones. But when a spring snow storm came in the day before sale day, Doug Artnzen looked out from the ring to a crowd less than one-fifth of the usual.

The rhythm of the day seemed different. There were fewer conversations between neighbors and friends, and most of the seasoned generation opted to stay home.

“My grandkids didn’t even attend. So it definitely took a toll on the feel of the sale,” he says.

But nearly 100 people tuned in online, ready to invest in the future of their herds.

That attitude, being nimble while looking forward, saw most in his country through the ’80s interest-rate frenzy and the drought years of scarce grass that immediately followed, Arntzen says.

“People just had to change their strategies and what they could buy. They had to cull and keep as much quality as they could,” he says.

Arntzen and his brother operate Arntzen Angus Ranch with his three sons and a nephew. Seeing that next generation pick up the reins in their own business and in others across the region—“that gives me optimism,” he says.

Moving forward  

Remaining hopeful in the face of hardship. Is it a mastered skill? Learned behavior? A genetic tendency?

“The older you are, the more of these disasters you experience. You never get accustomed to them, but you react differently than what you do when you’re younger because they’ve never seen it before,” Borck says. “You get over it and start looking for a way out of it.”

Perhaps it’s a trait the ag community has in greater abundance because often there’s no other choice. Or perhaps it’s because moving forward from unforeseen challenges is more fun than looking back on them.

The grass is growing in south Texas—a sign Means won’t take lightly this year.

“I have a strong faith and I think that plays a great part in it all,” he says. “We have wonderful friends and neighbors and we just know we’re going to get through this, one way or another.”

That’s resilience.

Originally ran in the Angus Journal.

You May Also Like…

$100,000 Up for Grabs with 2024 Colvin Scholarships

$100,000 Up for Grabs with 2024 Colvin Scholarships

Certified Angus Beef is offering $100,000 in scholarships for agricultural college students through the 2024 Colvin Scholarship Fund. Aspiring students passionate about agriculture and innovation, who live in the U.S. or Canada, are encouraged to apply before the April 30 deadline. With the Colvin Scholarship Fund honoring Louis M. “Mick” Colvin’s legacy, Certified Angus Beef continues its commitment to cultivating future leaders in the beef industry.

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ was developed as part of a strategic cattle care partnership between Sysco and CAB. The collaboration focuses on supporting farmers and ranchers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production.

The taste of change

by Nicole Lane Erceg

I don’t remember the first time I ate it nor the last, I just remember that it tasted terrible. My mother called it “Uschi’s Omlet,” a nod to her mother’s German name, as she passed on the mushy, messy bake recipe.

Truthfully, none of us liked it, but we didn’t dare say so because serving it every Christmas made Mom feel connected to the ones who no longer sat around the table.

It was tradition.

In the cattle business, tradition is everywhere. It’s the fence posts put down by a generation before, the tricks dad taught of how to use baling twine to “fix” a farm truck door, and how to tell when a calf is sick. It’s in the whisper of the wind through the grass, knowing the ground beneath your boots is open with opportunity because of family members you never got the chance to meet.

The rituals of those before us are the harvest we reap today.

Mom caught us all one year scraping the bits we couldn’t choke down into the garbage and we confessed our disgust for the dish. It didn’t mean she stopped making it — change isn’t easy.

Change disrupts the reliable good from the way things have always been. Sometimes, it can feel like we’re dishonoring the ones who have gone before by drifting from their trustworthy well-worn paths.

In 2020, change and disruption have been around every corner. Things look different in our newsfeeds, but the cattle in the pasture feel the same, undisturbed by the stressors swirling around us.

The cows may not know it, but it’s a different world we’re living in.

Black Ink: taste of change, cattle grazing

As the headlines fade into history, much will look the same on the ranch. But since change defines this year, let’s take a look at what should be changing in our businesses.

This calving season, does the calving barn dad built in the ’50s feel nonfunctional with the cow size you have today? If you’ve always selected for maternal performance in the cow herd and carcass traits in the calves you’ll feed, is it time to select for both? Maybe this weaning season will be extended, presenting opportunities to change up your traditional 30-day program or explore different marketing avenues.

Looking for a chance to change can highlight the best traditions we need to hold on to. These past months have shown the U.S. cattlemen’s dedication to quality and consistency is still vital to future success. As restaurants reopen, they’re looking for points of differentiation, demanding Prime beef and branded programs that drive value back to the ranch.

The ones whose legacy we carry were probably never dealt a global pandemic. They didn’t have to work to please today’s consumer. They didn’t have data and technology at their fingertips like we do today.

The repeating rhythm of the seasons offers predictability, we know what’s up ahead. The heritage and tradition grounds us and though we’ve been dealt a different hand, those who play it smart will continue to carry on. It’s a careful balance of combining the best traditions of the past with innovations of today that result in a better product for our customers at the end of the value chain.

Every year, Mom will still ask if we want her to make Uschi’s Omlet, though she knows our answer. I never met my grandmother, but the stories and the ability to sew are traditions from her that won’t die with me, though I hope the legacy of that recipe does. Now my family enjoys a holiday breakfast of cinnamon rolls, and the taste of change is sweet.

For Mom, it’s served with a small side of sadness, though she admits a better eating experience for all is worth embracing a little change.

Next time in Black Ink®, Miranda Reiman will talk about not so trivial pursuits. Questions? E-mail nerceg@certifiedangusbeef.com.

Field Trip to the Farm - CAM Ranches

Field trips to the farm

Pandemic brings out creativity in consumer communication

by Miranda Reiman

May 22, 2020

A world where families stayed home allowed them a chance to connect with rural families in a new way.

Sports tournaments cancelled. Practices and recitals—even school itself—all put on hold as COVID-19 caused a shift in schedules, and subsequent media consumption. 

Thousands of people watched online as a sloth slept at a metropolitan zoo. A children’s book artist brought people into his home studio, virtually, to doodle with him during lunch.


That sparked an idea.


“How do we bring a ranch to people?”


When Margaret Coleman, Certified Angus Beef ® (CAB®) brand digital director, asked her team, they soon partnered with cattlemen to make it happen. In the last days of winter, CAB handed over the keys to its social media account to a handful of Angus breeders, while consumers across the country asked everything from what the cows eat to the role of the ranch dog.


As of mid-May, 10 families had hosted “Field trips to the farm” in a Facebook Live format, reaching more than 130,000 viewers.  


“It was just sharing an experience and sharing a lifestyle, with a little bit of education about what happens on the farm,” Coleman said. 


When Caroline Sankey visits her barn, the three-year-old rarely has a big audience. But one sunny day in March, thousands tuned in to her family’s Economy, Ind., farm and saw her favorite part of the business.


“We have newborn baby calf,” she said with a smile. 


From Kansas to Georgia and South Dakota to South Carolina, followers got a snapshot of what it’s like to raise cattle in all different environments. Sometimes it was blue skies and cotton candy clouds, and others carried gray, overcast tones with wind—lots and lots of wind.


“It was just real life on the ranch,” Coleman said. “We’ve tried really hard to be authentic and relevant during this time.”

Field Trip to the Farm - Blythe

Regardless of where the field trips took followers, the goal was the same.

“We wanted to show that they truly are family farmers and ranchers who care about what they’re doing, care about their livestock, care about the product they’re producing,” Coleman said.


The leading branded beef team wanted consumers to see that its producers are people, too.


“Today’s situation has really brought a heightened awareness to our food supply,” said Nicole Erceg, CAB assistant director of communications. “Consumers are asking more questions than ever before about where their food comes from, but study after study shows people trust farmers and ranchers.”

When they’re unsure, connecting with a human is reassuring. Talking through everything from feeding to breeding was really a backdrop to talking about all the people it takes to get beef to their tables, Erceg said.


Lydia Yon’s granddaughters called the cows while she told the story of how it all started. 


“We moved to Ridge Spring, S.C., in 1996, and at that time we had 100 cows and three children under the age of five,” she said. More than two decades later, “It’s pretty fun to do this as a family. We all have our own independent jobs, but we are still together every day.”


The cattlemen showed their favorite animals and talked about both the best and the worst parts of agricultural careers. 


Several showed appreciation for all those essential workers involved in getting the beef they produce to consumers.


“We have a safe, secure and abundant food system, and we want to thank everyone….from those like us on the farm to the truckers on the road bringing that, and the friends there in the supermarkets who are bringing that to us every day,” said Julie McPeake, of CAM Ranches, Arnoldsville, Ga. 


The mom of two young kids identified with schedule changes and the new work-from-home scenario, but appreciated the chance to connect with consumers on a larger platform. 


“While COVID-19 has thrown us a loop, I hope some of these opportunities stay with us,” she said.

Field Trip to the Farm - Sankey Angus

You may also like

$100,000 Up for Grabs with 2024 Colvin Scholarships

Certified Angus Beef is offering $100,000 in scholarships for agricultural college students through the 2024 Colvin Scholarship Fund. Aspiring students passionate about agriculture and innovation, who live in the U.S. or Canada, are encouraged to apply before the April 30 deadline. With the Colvin Scholarship Fund honoring Louis M. “Mick” Colvin’s legacy, Certified Angus Beef continues its commitment to cultivating future leaders in the beef industry.

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ was developed as part of a strategic cattle care partnership between Sysco and CAB. The collaboration focuses on supporting farmers and ranchers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production.

Drought Impact and Cattle Industry Dynamics

As drought conditions persist across much of cattle country, farmers and ranchers are at a pivotal juncture in the cattle industry’s landscape. What impact does this prolonged dry spell have on the nation’s herd numbers? When will heifer retention begin? How will industry dynamics influence the spring bull sale season?

Rancher and dog herding Angus cattle - At the Table The Code

At the Table

The code

by Nicole Erceg

May 20, 2020

​Have you ever walked into a building and wondered about the engineer? Who verified that each beam sits right where it’s supposed to? Was he the details type of guy that checked everything to be sure gravity or a strong storm won’t harm those inside? Maybe he was a hasty type with a small budget who didn’t give any thought to how the handrail choice might one day lead to a terrible fall.

I never considered such things until I befriended an architect student in college. He enjoyed pointing out weak links, flaws and poor design choices that made me suddenly fear for my safety.

Many of our beef consumers are having the same experience. Never having considered where food comes from or walked up on an empty meat case, they didn’t imagine what services a packing plant provides. Now they have a different perspective, and it’s not a positive one.

It’s no sin to give little thought to what went into a product before buying. We’re usually focused on the product, the experience, our needs—not those who made it possible.

Until something signals that we should question it.

Those questions, increasingly pressed on agriculture in recent years, are now louder as media scrutiny during COVID-19 spotlights fragility in the meat industry. Whatever trust was built into the system behind beef has been severely strained.

Decades of quality beef at consumers’ fingertips should count for something, right? It does. There’s still comfort in a family pot-roast dinner, the simple convenience and versatility of ground beef and holidays celebrated around what comes off the grill.

The relationship, the memories, the flavor are bonds yet unsevered, though fraying with guilt for too many of our customers. There’s fear that the joy of beef might come at a cost they don’t want to pay.

Black Angus cow and calf at sunset - At the Table column, The Code

Ranchers have done their part, gone the extra mile. Making sure calves have a solid vaccine program to keep them healthy down the line. Investing in better genetics to add value from the ranch to the end user. Add the bells and whistles—if it’s what consumers want, it will pay off in the long run.

It has; beef consumption and demand have grown. But if you’re staring at red ink on a balance sheet today, it sure doesn’t feel like it.

There’s folks who say cattle bred for premium quality won’t be important moving forward. I agree. They’ll be absolutely vital.

Our consumers need assurance in their food supply. The media narrative highlighting weak links in our meat supply chain is equivalent to at least 20 Super Bowl ads.

No single PR campaign can erase the damage done.

Safety, wholesomeness, proof of care, a promise of quality, a guarantee of our commitment to our people—those are keys to guilt-free beef. Consumers won’t take our word for it—we have to show the work. We’ll also have to show our hearts.

These things can feel overwhelming, impossible, or simply outrageous when we’re still riding out this storm. But like compound interest, small investments over time grow into powerful assets. 

Meaningful change isn’t accomplished overnight. More often, it happens slowly by chipping away piece by piece until something new suddenly takes shape.

Overcoming the consumer trust challenge seems wholly insurmountable until I think of thousands of cattlemen making small improvements, one day at a time.

I’m not afraid any buildings are going to fall on me because we have building codes. There are people who enforce safety measures; there are certificates that prove someone else did their job. However, I don’t appreciate structures like I crave a medium-rare New York strip. Food is more personal.

When I think about the thing that sparked my own faith in agriculture, a commitment to this career and this life, it was a kind of code. A pledge to always make the best better.​

You may also like

$100,000 Up for Grabs with 2024 Colvin Scholarships

Certified Angus Beef is offering $100,000 in scholarships for agricultural college students through the 2024 Colvin Scholarship Fund. Aspiring students passionate about agriculture and innovation, who live in the U.S. or Canada, are encouraged to apply before the April 30 deadline. With the Colvin Scholarship Fund honoring Louis M. “Mick” Colvin’s legacy, Certified Angus Beef continues its commitment to cultivating future leaders in the beef industry.

Raised with Respect™ Cattle Care Campaign Launched This Fall

Raised with Respect™ was developed as part of a strategic cattle care partnership between Sysco and CAB. The collaboration focuses on supporting farmers and ranchers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production.

Drought Impact and Cattle Industry Dynamics

As drought conditions persist across much of cattle country, farmers and ranchers are at a pivotal juncture in the cattle industry’s landscape. What impact does this prolonged dry spell have on the nation’s herd numbers? When will heifer retention begin? How will industry dynamics influence the spring bull sale season?

Faith and flexibility

by Miranda Reiman

May 11, 2020

My parents got married in 1980 and bought the farm in ’81. Yet, from all my growing-up years, I don’t have many memories of my dad in the tractor. Instead I see the dark green Peterbilt where he worked long hours to pay for that place we called home.

Though a child of the ’80s, I didn’t know the Farm Crisis with its inflation and skyrocketing interest had an impact on me until much later, when we studied it in high school. I firmly believe that’s because Mom and Dad took care of us first, knowing everything else would follow.

As this worldwide pandemic brings another chain reaction and disruption that seemingly came out of nowhere, I find myself struggling in this career as an ag communicator. It’s not often I don’t know what to say.

Nearly everybody I love the most has income from crops and livestock on their bottom line so I feel personally invested, but I haven’t had any cattle with my name on them for more years than I like to count. So I set out to ask cattlemen what they were feeling and doing now. In trying to find what they needed to hear, I found a lot of hope. I found what I needed to hear.

“You can’t change a drought. You can’t make it rain. You can’t change this market and we can’t do anything about this virus. We just have to take care of ourselves and take care of our people. That’s all we’ve ever done,” one Texas rancher told me.

And isn’t that always the way? Come blizzard or wildfire, personal tragedy or community crisis, that’s what cattlemen do best: they take care of their people and their stock, and face head-on the next thing as it comes.

Talking to those who lived through different versions of disasters again and again, I uncovered more advice on that theme.

“When you’re on a sports team, just because you’re behind at halftime, don’t lose your cool,” one told me. “If you panic, you can’t think. You’ve got to control your emotion.”

I heard cattlemen say they were making plans and being flexible. Some are keeping cattle out to grass longer, they’re slowing down their finishing process and they’re communicating…a lot.

Then I look across this whole food chain, and I find stories with so many similar notes, except they’re taking place in towns and metropolitan Main Streets across the U.S. The world has turned upside down for people who serve beef, too.

After laying off nearly all his staff—something one chef never dreamed he’d have to do—he got out the calculator. Figuring the bare minimum he’d need just to keep the lights on, he turned his barbecue restaurant into a takeout terminal and started filling orders. Anything he made after expenses went to support those furloughed staffers.

Night after night, sales have blown past that minimum. He’s bought thousands of dollars in grocery gift cards to keep food on the tables of people who are used to being the ones putting food on the table.

That chef is taking care of those entrusted to his care. It’s what people in agriculture have always been good at, through all the generations.

It’s what my parents did when the going got rough, and it’s what those seasoned cattlemen advised, too.           

“This will pass and we’ll look back and say, ‘Oh, we should have done this, or we should’ve done that…for now we just have to keep doing what we’re doing and do it the best we can.”

They say, “Hindsight is 20/20,” but when looking back on 2020, I hope it shows faith and flexibility carried us through.

Next time in Black Ink®, Nicole Erceg will talk about moving forward.

Seasonal carcass premiums break form

MARKET UPDATE

Without question fed cattle and beef sales are currently hinged entirely on the packing sector’s ability to process cattle. Throughput has not been good lately with last week’s total federally inspected (FI) head count at 502K head. That’s a 22% reduction from the same week  a year ago.

Last week’s temporary closing of the JBS plant in Greeley, Colorado, was set to remain through the end of this week. The Cargill plant at Fort Morgan, Colorado, has eliminated one of two shifts per day.

So far this week the daily harvested head counts are smaller yet than last Monday and Tuesday.

april 22 urner barry

Last week’s small trade volume on negotiated fed cattle yielded a $105/cwt. average, steady with the week before. Packer bids ranged widely with some bids early in the week at sub-$100/cwt. prices. Fortunately, few were sold at that level.

Packers and cattle feeders are in a bind for the moment with these weekly harvest reductions. The industry structure is an hourglass shape with the packing sector representing the narrow neck of the glass. Today the neck is exceptionally narrower than normal yet the fed cattle supply remains building in the top of the hourglass.

The boxed beef market is moving in the expected direction, sharply higher, based on the dynamics noted above. Production tonnage is greatly reduced and spot market prices reflected the change last week. Urner Barry weekly average prices (0-10 day delivery) in the table do not reflect the progressive daily price increases that occurred last week. For example, the daily Choice cutout (0-21 day delivery) advanced by about $12/cwt. Monday through Friday according to USDA. Prices continued to escalate more sharply early this week.

On a cut-by-cut basis we’re seeing a further entrenchment of the patterns established since foodservice business has been stifled. In the past month we’ve highlighted the shift in carcass value away from ribs, tenderloins, briskets and skirts in favor of several end meat cuts. Early this week boxed beef pricing indicates all-time price highs for neck-off boneless chucks, chuck rolls and chuck tenders. The same is true for inside and outside rounds as well as eyes of round. Several cuts are posting a trend reversal to the upside this week.

One must thoughtfully consider a market where the not-so-tender “chuck tender” reaches a modern-era record high price while the tenderloin trades near the BSE-induced market low seen in 1994.

Seasonal carcass premiums break form

The April fed cattle market has long been a target spring “sweet spot” for cattle feeders. This is driven by a handful of reasons, the most significant of them being that the cash market in April often brings on a price rally, marking a high for the season.

The second reason is that April is generally the beginning of larger Choice/Select price spreads and larger CAB and Prime premiums. It’s at this time that spot market middle meat sales are heating up for grilling season and with that comes a normally expanding demand signal for marbling-rich steaks.

Aggregate quality grades in the U.S. also tend to drop off significantly through late April into May. In a normal year, supply and demand factors are at odds during this period, generating some of the best premiums for high quality carcasses.

The interrupted flow of cattle and boxed beef has implications now impacting the pricing structure on a carcass value basis. The most evident change is the smaller Prime quality grade premium which has slipped to $7.71/cwt. above Choice, according to USDA’s weighted average premiums and discounts report. The Prime premium has degraded by $2.51/cwt. over the past three weeks and is down by a similar gap when compared to the same week last year. The average CAB premium in the same report slipped to $3.44/cwt. last week as well, down $1.14/cwt. in three weeks.

The reason for the degradation of these quality spreads is three-fold. First, we know that packers are currently buying fewer cattle on grid pricing arrangements. Smaller harvest capacities at packing plants have decreased the size of the weekly negotiated cash trade as well as negotiated grid cattle that packers can buy. As a result, the weighted average numbers are likely skewed toward fewer grids.

Prime grid premium table

Secondly, as it relates to the Prime grade specifically, the much lower demand for rib and tenderloin subprimals has likely impacted the cutout to a large extent. Prime carcasses see the poorest utilization. Far fewer total pounds from Prime carcasses are sold specifically to fulfill Prime grade orders. The Prime premium degrades quickly as price quotes move away from middle meats even though this has improved in recent years.

Finally, carcass marbling measurements at the current time are fractionally higher than a year ago. This means we’re seeing record percentages of Choice and Prime grade carcasses this spring even though the tonnage total in all grades is significantly smaller.

The Choice/Select price spread is behaving at or above the level that we’d expect in April with a $12.22/cwt. premium in last week’s report. This means that all Choice and higher grade carcasses priced on a grid at this time will still see a decent cumulative premium.

The above factors are enough to illustrate some dynamics that are currently affecting the premium structure of value based carcass sales now and in the immediate near term. These short term fluctuations are to be expected, especially when considering the enormity of changes that have impacted the beef supply chain.

 The many challenges the beef market is facing today are serious short term problems but are not indicative of long term trends. Price and demand signals will also realign as the pandemic subsides.

Innovations arise in foodservice

New trends are emerging in food sales around the country in the wake of restricted options. The restaurant sector has been a big source of media coverage, with countless stories describing restaurants that have closed indefinitely to restaurants that have re-established their business creatively. Still, many in the foodservice segment have experienced furloughs or staff reductions.

Innovative ideas have cropped up in the foodservice sector with many examples coming from brand partners across the country. While restaurants transitioned to take-out and delivery, many have partnered with third-party delivery companies, created special menus highlighting dishes that are ideal for takeout, or created many “take and make” items, allowing customers to be the chef while the restaurant provides the items and instructions.

The foodservice distribution sector of the beef supply chain is one that receives perhaps the least focus as we think about the “gate to plate” story. However, this extensive list of vital companies have also been hamstrung by the foodservice downturn. Distributors have also had to be nimble in the ever-changing landscape. Many distributors have opened their warehouses to the public, offering drive-through product pickup on designated days. They have also established pop-up shops with restaurant customers, creating a unique opportunity for consumers to get their hands on some higher quality meat and unique cuts they might not be able to get at their local retail store. Some distributors are working with local neighborhood organizations as well, setting up shops in local business parking lots, church parking lots and more.

DON’T MISS THE LATEST HEADLINES!

Make AI work for your herd

New lens on animal welfare

Fueling your cows

 

Don’t wince

Read More CAB Insider

$100,000 Up for Grabs with 2024 Colvin Scholarships

Certified Angus Beef is offering $100,000 in scholarships for agricultural college students through the 2024 Colvin Scholarship Fund. Aspiring students passionate about agriculture and innovation, who live in the U.S. or Canada, are encouraged to apply before the April 30 deadline. With the Colvin Scholarship Fund honoring Louis M. “Mick” Colvin’s legacy, Certified Angus Beef continues its commitment to cultivating future leaders in the beef industry.

Carcass Quality Set to Climb Seasonally

With the arrival of the new year the beef market will rapidly adjust to changes in consumer buying habits. This will remove demand pressure from ribs and tenderloins, realigning the contribution of these most valuable beef cuts to a smaller percentage of carcass value

Misaligned Cattle Markets and Record-high Carcass Weights

Few things in cattle market trends are entirely predictable but the fact that carcass weights peak in November is as close to a sure bet as one could identify. Genetic selection for growth and advancing mature size has fueled the long-term increase in carcass weights.