Health Track keeps you in the market
By Steve Fairchild

New rules for export markets along with domestic requests for source- and process-verified cattle push programs like MFA's Health Track.

There was plenty of fanfare when Japan reopened its markets to U.S. beef this summer. And for beef producers, fanfare may have been warranted. While there are still hoops to jump through as beef travels east, Japan and Pacific Rim countries represent huge potential markets for the U.S. beef producer.

Though the major balance of beef grown in the United States is consumed domestically, export markets represent a high-value income stream.

To illustrate what happened during recent export woes, consider the export numbers from 2002 compared to 2005. In 2002, United States producers exported 2.45 billion pounds of beef worth about $2.6 billion. By 2005, those numbers had slipped to 697 million pounds of beef exported worth some $976 million.

These figures represent one facet among a web of complicated factors that affect a beef producers’ bottom line, including domestic consumption, production, size of beef herd, feed and energy prices, etc. And during the time that Japan closed its doors to U.S. beef, exporters found another cost to factor into the mix—time.

According to the U.S. Meat Export Federation, in its 3 years without U.S. competition, Australia has established an 80 percent share of the Japanese beef import market. That made it top exporter of beef to Japan last year, exporting about $2.1 billion.

Beef producers like northwest Missouri cattle producer Ron Runyan are representative of cattlemen who must combine the everyday challenges of beef production. He is subject to the ebb and tide of international trade and new demands from large-scale domestic buyers. Runyan puts the power of improved genetics to work on his farm. He takes pride in his cattle herd. And he believes that his care in rearing livestock is rewarded at the sale barn.

Still, he sees value in participating in MFA’s Health Track program to keep his market calves atop the trend for source and process verification.

“We see it in the sale barn already,” said Runyan. “Some buyers won’t buy cattle unless they are in a program, and I see a day when it will be mandatory.”

Indeed, the country’s largest beef buyer, McDonald’s has shown more interest in source-verified beef as of late, and Wal-Mart is requiring source-verification. The purchasing power of these two entities, not to mention other major retailers that are joining the trend, makes powerful ripples in the market place. While a national animal identification program designed for tracking disease still stirs controversy across the country, producers like Runyan have accepted the task of process and source verification—which would meet the requirements for national ID—as a cost of business.

“We were already weaning and doing the vaccinations required by Health Track,” said Runyan. “So the $3 extra for tags was the only extra expense. We usually feed Cattle Charge at weaning anyway, and after the 14 days, we feed TrendSetter. So other than the EID, there’s not a lot of difference for us.”

Not much difference in the daily operation of his herd, that is. But when the red tags of Health Track show up in the sale ring, order buyers know the difference. Since its inception, Health Track has enrolled 250,000 calves and sales history shows that producers gain $50 to $100 in value over non-program calves.

Runyan, who with his family manages about 580 cows said, “With the premium buyers are paying, or at least what I think I’m getting, I can’t afford not to participate. It’s practically a new truck.”

While he can chart the effect that Health Track has had over time, Mike John is more careful about predicting added value on a per basis rate.

“We often get questions like, ‘Does source and age verification get me any more money for my calves when I sell them?’” said John. “The honest answer to that is we really don’t know, and really don’t have a way of finding out. The fact of the matter is that as of today, all cattle are selling really well, and I believe that in the near future, if supply increases and prices decrease as nearly every economist in the country is predicting, there will be more price discrimination against commodity cattle (cattle with no documented age, source or process) when compared to Health Track cattle.

“Furthermore, we have always told our customers that we would keep MFA Health Track at a level that would allow participants to take advantage of the greatest level of marketing options and opportunities available in the market place.”

John added that the bottom line answer is that by virtue of the program’s requirements to participate, Health Track cattle have access to more markets than any other cattle in the country.

What do importers want?

We asked MFA Health Track manager Mike John to explain the current trading parameters with Japan and other importers to help producers understand which cattle will be eligible for export. Here’s what he had to say: The guidelines set forth by USDA in order for cattle to qualify for Beef Export Verification (BEV) are different and varied depending on the export destination country. The interest in recent years for Health Track participants and U.S. cattle producers in general has focused on export products to the Asian Rim countries, and more specifically Japan. What USDA and Japanese officials have come to agree upon is that cattle must be source and age verified through a program approved by USDA. Moreover, the Japanese require that cattle must be of 20 months of age or younger at the time of slaughter.

Source verification means that the program must be capable of verifying (through on-farm records) that the producer owned the cow at the time she calved. Simply put, only home-born, home-raised cattle will qualify.

I think it is important for some clarification on that subject. If you purchase a cow/calf pair, the first calf you sell from it will not qualify. Veal calves purchased to graft onto a cow that has lost her calf will not qualify. Purchased feeder cattle that have not already passed through a program for source and age verification will not qualify.

The age verification requirements are probably generating the most confusion among producers. To clarify, I would point out that there are two methods of age verification that will qualify: individual age verification or group age verification. Group age verification is when the age of the oldest calf represents the age of every calf. Those birthdates must be written down and kept on file for a minimum of 3 years. So consider the following when you think about age verification for your next calf crop:

The level of record keeping sophistication isn’t specified. It can be anything from computer-based records to a hand-written notebook you carry, but if you are using a computer, you will still need to keep a hard copy of the records. Records of preg checks or dates bulls were turned out will not work alone, you still need an actual birth date recorded.

The take home point is that for cattle to meet the BEV, they must pass through an approved USDA program—meaning the USDA has audited that program’s ability to maintain, manage and communicate source and age data with integrity. Health Track fits that description.