MFA Incorporated
Cattle volatility
By Mike John

Change is the only constant in the cattle industry. Whether it's reporting-structure dynamics, foot-and-mouth disease or checkoff controversies, cattle producers have to sit up and pay attention like never before.

How did your calves sell? You hear this question at most rural coffee shops after a local cattle auction. There's a good chance every producer asked would say he or she "topped the sale." If you're familiar with the cattle business, you know they can't all be at the top. Are they lying, bragging or just plain confused?

From our perspective, the inability to measure real market value of cattle is understandable given the resources available.

Let me explain.

Any producer's calves will exhibit some degree of diversity. This can be exemplified in many ways, but the most common are weight, color, frame, muscling, finish or flesh, and fill. Some combinations of these factors create premiums; some discounts.

The vast diversity of the state's cowherd dictates that the average producer can fill the spectrum of value from a single herd. This being the case, it is entirely likely one draft of a producer's cattle could conceivably sell at or near the top, for that location, that day - maybe.

Is that a reference to the actual highest dollar per hunderedweight paid for a draft of a given weight range? Or is it the top of the reported range of prices for a 100-pound weight spread? What if there were 1,000 feeder calves sold in that weight range and a draft of eight created the advertised top?

Is that a fair comparison? Is it even ethical?

It is much more accurate to use weighted averages to determine sale price for a given weight range because it takes into account not only what sold, but how many head and pounds were sold. What if all of the cattle sold that day were not included in the weighted average calculation?

The USDA market report does not report every head of cattle sold at a given auction. The percentage reported varies with the quality of the cattle.

If you compare weighted average price received on all of the cattle you sold against the USDA reported range that doesn't include all cattle, is it an accurate comparison?

This is not criticism of the market reporters in any way. They do a tough job very well. I am merely trying to explain why it is very hard to benchmark your own production against the rest of the cattle in a given market area. It also explains one reason why the value-added program attempts of the past have had a tough time proving their worth.

The changes occurring in the beef industry, as well as a different attitude toward adding value to our customers' production, has made the MFA Health Track Beef Alliance program a resounding success.

By providing a mechanism for participants to efficiently and profitably precondition their calves, Health Track has helped prepare our customers for the future. At the same time, the program creates more income for producers by attracting buyers who had not previously been exposed to, or interested in, their calves. We have definitely created a brand identity that in most cases is worth more than local reputations. It allows small producers to market on the same scale as their larger competitors.

We aren't far from a day when sourcing and managing the data on individual calves will have great value. It may even be necessary to keep disease risks at an acceptable level. We are doing everything in our power to increase the level of communication between the segments, and we are making progress.

We have been able to capture some carcass data, and the amount available should increase rapidly due to new technology. All of this progress would be sweeter if some groups within the beef industry would just stop fighting amongst themselves.

The beef industry is in transition. Change hasn't been positive for everyone, and if you follow the industry media, it is obvious that the different ideologies involved are engaged in a full-scale public relations war.

It's a free country, but when you examine the motives of some of the combatants, they have more incentive to fight than to resolve the problem. The losers in this rhetoric are the producers who lose influence with their elected leadership as a result.

When any legislators, state or national, smell our blood and know we are not united on an issue, they have little incentive to act. With the threat of BSE, foot-and-mouth diseases and PETA always in our faces, the last thing we need is dissension in the ranks.

There are clean water and clean air initiatives that will require a unified approach to keep common sense involved. By working together, the Missouri Cattlemen's Association and National Cattlemen's Beef Association brought us successful estate tax relief.

Beef demand has been up now for almost two years and is partly responsible for sustaining these high cattle prices-proof the checkoff is working.

If you don't join and participate in these organizations, you have no right to complain about decisions being made by the producers who do. If you don't belong, they are carrying the water for you. For less than it takes to take the family out to dinner, you can join MCA and help give the second largest cow/calf state the representation it should have at the national level.

NCBA is the most influential agricultural lobby in Washington D.C., and it needs your support to create more wins like estate tax relief. Dance with the one that brung ya!

Mike John is manager of MFA's Health Track Beef Alliance. He is also chairman of the Missouri Beef Industry Council, a board member of the Meat Export Federation and past president of the Missouri Cattlemen's Association.
 AUGUST 2001
 Features:
 Tall crops
 Roll out the barrels
 Selling timber
 The unkindest cut
 Cattle volatility
 The Elsberry MFA
 Columns:
 Country Corner
 Crops
 Country Humor
 More Country Humor
 Carrot Recipes
 Viewpoint
 

Advertising
Current issue
Past issues
Subscriptions
Gift Subscriptions