As an agricultural producer, you know the importance of producing a high quality, low cost product for the consumers of the world. In the past each farmer and rancher had to rely on his or her own skills to make a living. Farmer’s Cooperatives were formed to help take some of the guesswork and create a better market for agricultural products. Until recently, these Cooperatives were geared for the farmer who produced a crop. The meat industry on the other hand, has different approaches to marketing their product. The first, is the alliance or cooperative system, which is geared for the larger producer and in most cases, requires the producer to hold his cattle all the way to slaughter. Another approach is for a large company to lease your property and simply take over the operation of your farm. Other approaches include the selling of the construction of buildings etc. to the farmer over time where by the farmer leases back to the company the buildings etc. and the company pays the farmer a caretaker fee for producing their product (i.e. Tyson). After some time, the single use buildings are paid for and the owner has to do business with the Company to make the buildings etc. of any use. In the beef industry, we have little use for such buildings. In all agricultural endeavors producers must think about the end product of what we produce, in this case beef. Here at U Lazy 2™, we have a little different approach to raising a consistent quality product:
A surprising fact is that the producers that grow 40 head of cattle or less actually as a group produce most of the cattle in the United States. The only problem with our industry is that everyone has a different way of producing his or her product. Therefore, cattle are not uniform in quality or price. In the next few years, the cattle/beef business is going to change as a whole. Like the Hog producers, the beef producers will have a rapidly shrinking market for lower quality products. More and more packers are refusing to purchase cattle that do not produce a consistent high quality end product.
With this trend of only the higher quality products being processed in the future we created U Lazy 2 Cattle Company. U Lazy 2™ was created with the goal of growing superior cattle on smaller scale operations to result in higher quality beef in the grocery store. U Lazy 2‘s goal is to find enough producers willing to operate with the same goal. To do this, we propose some minor changes in the way we think about and handle our cattle. Under our plan the producers will all use the same procedures as outlined by U Lazy 2™. The net result is to make a better profit for the producer and U Lazy 2™. We feel that if a deal is not a good deal for both parties then it is not a good deal at all.
The following is our proposal:
U Lazy 2 believes the following areas will be very important in the very near future, and are adapting to our changing market to compensate. We are not willing to play catch up with the rest of the market. We are on the leading edge of things to come:
· Targeting animals to markets will increase along with specification buying.
· The industry will be more two-tiered than it is now. Larger producers will be genetics-driven and aligned with production systems. Smaller, part-time producers will continue to produce generic products but to a much lesser market. Larger producers will dominate the prices.
· Food safety and consumer demand will force individual animal identification through the entire system. "COOL" is about to make this happen!
· There will be fewer people producing their pet breed as a novelty, not as many breeds will be common in the commercial production area.
· There will be more specialized genetics targeting particular environments and markets.
· All breeds will have better carcass traits due to competition.
· Market share will decrease about 1 percent per year if something does not happen fast. By 2005 this will be about 24%.
· International competitors will play a major role in the price of beef in the U.S. (See: Country of Origin Labeling)
We all know that without some profit in business, our survival is doomed. The annual gross income from livestock production comes from the number of head sold times the weight of each head times the price per unit of weight minus the cost to put this weight on and keep the animal alive. The following areas of production are the most important to the producer:
1. FERTILITY – determines the number available for sale.
2. LIVABILITY – also contributes to the number available for sale.
3. GROWTH RATE – influences the weight to be sold.
4. EFFICIENCY OF OPERATION – planning and cutting costs.
5. CARCASS CHARACTERISTICS – influences the price to be obtained.
It is in these 5 areas that U Lazy 2™ is making a major contribution to the success of your operation.
Here is how U Lazy 2™ can help you be a success in today’s very technical and highly competitive cattle business.
FERTILITY is 100% more important than any of the other 4, because without fertility you can not produce the calves to sell, therefore no income, no profit, period.
Body condition score of the cow, breed of the cow, age, balanced mineral intake, and time after last calf, disease control, selection of cows based on fertility in phenotype. Bull’s breeding soundness and sperm count along with make up. The temperament of cattle and the people caring for them. Pasture conditions including noxious weeds. Genetics and countless other things that separately or together influence a cow getting bred and staying that way until she produces a live calf. We will help in selection and de-selection of both Cows and Bulls by keeping accurate records, not only of what cow had a calf but when we can determine why they did not.
LIVABILITY is influenced by many of the same things as fertility. Nutrition, disease control, predator control, management, selection pressure for livability and many other things. Our management procedures attempt to take as much risk out of the game as possible, mother nature will never be able to be overcome, but the market, and other risks should be countered anyway possible.
GROWTH RATE is influenced by sire and dams EPD’s for growth rate and the selection pressure applied. By having your cowherd identified and getting birth dates, the individual growth rates can be measured and improved. For example: you have three cows, one weans a 400-pound calf, and one a 500 pounds calf and one a 600-pound calf. 400 + 500 + 600 = 1500 or 500 pounds per calf average. If you sell the cow that raises a 400-pound calf with the calf, the average increases to 550 pounds. A 10% increase at no cost.
EFFICIENCY OF OPERATION can be influenced by understanding what you need to do to improve the bottom line by cutting costs. We treat each cow as a factory, if the product it produces does not make a profit, they we don’t produce it from that factory. By using a mini version of SPA (standardized performance analysis) you can tell if your cattle enterprise is profitable or not and what areas of concern you have. We base most of our decisions on economic values because they cover every trait we are concerned with.
CARCASS CHARACTERISTICS are mainly influenced by defects or lack thereof. When you think of the purpose of beef cattle, they have but one purpose, to be eaten by the consumer in one fashion or another. The main things which make up good carcass characteristics are the lack of injection site blemishes, lack of bruises, lack of “dark cutters”, lack of defects in size or quality grade. A high quality grade such as choice or better is the goal with a high yield grade of 3 or better. Our goal is for the dressing percentage to be as high as we can get it, somewhere around 64% of the animal being high quality red meat. We also want no more that 3/10 of an inch of back fat on the outside while having good marbling on the inside. There are other factors we are concerned with however; most are in the control of others such as packers and feedlot operators. Our methods of production in the early stages are the leading determining factors in carcass characteristics. The remainder of the industry will have to work with what you produce.
Do you have all the skills to obtain the maximum from each of the categories listed above, or have people with these skills as your employees and can you do all these things? Do you have the room or desire to maintain bulls year around? Can you or do you want to retain ownership and get carcass data on your calves? If your answer is no, to any of these questions then you will benefit from producing cattle with U Lazy 2™.
By producing cattle with U Lazy 2™ under our procedures and goals you will guarantee the highest price possible for your calves at the lowest cost possible. You will have no commissions, less shrink, no sale barn insurance charges, no feed charges, and no inspection fees and a lot less sickness. The following proposal will show you how much better your product and bottom line can be.
END OF THE CASH MARKET
by Bill Bradley
Captive cattle & the formula.
Feeders in Montana, Nebraska, Texas, Oklahoma and Kansas have been fighting this for quite some time but the days are numbered.
What this amounts to is the feedlot sells their cattle live at some unspecified price. The cattle are measured for Yield or dressing %, Yield grade (1’s & 2’s) and Quality grade, Choice or better. This is then averaged against all the other cattle killed for the week in the plant. The formula cattle are then priced plus or minus the average live price paid for all cattle killed that week, based on the 3 areas, Yield, yield grade, quality grade.
If you think this is complicated you are right!
The packer now owns these contracted or formula cattle and they are being used very effectively as a lever to adjust the over all market price of cattle every week. This is now a captive supply.
When market broke in 94 it went something like this. IBP (largest packer handling about 40% of all cattle processed) is also the firm that had most of the cattle already contracted and bought on the formula. You see the first two days of the week of each week establishes the market. These two days IBP didn’t buy any cattle and only killed formula cattle. This in effect took them out of the market and let the other two big packers and the little independents a clear field. Net result the market dropped from $77 to $59 per cwt. In 3 weeks.
Now later in the week IBP comes back in on the lower market and buy’s or contracts large numbers or all the cattle they need at this much lower price.
End of the Cash Market. Is it illegal? No. Is it a conspiracy in restraint of trade? No. Will it do feeders and producers any good to protest and wail about it? No. Does it effectively control the cash market? Yes it most certainly does.
We had the only significant cash market left in agriculture. Now its days are numbered. Formula pricing is only a stop gap along the road. The packers will force all feeders into selling all cattle in the meat. This increased number of formula cattle will make this happen sooner rather than later.
Now Yield, Yield Grade, and Quality Grade are just as important to the feeder and the producer as it is to the packer. Every move the packer has made, emerge a design to force the feeder and the producer to bear the risk of the carcass value of the cattle being processed.
For the first time producers are being called on to consider the end product value of what they produce.
It is our belief that if we do not consider this end product this industry will perish. We have been loosing market shares to swine and poultry for quite some time, mainly due to poor quality and inconsistency in our product.
U Lazy 2™ has decided to capitalize on the industries shortcomings and market where the most money is left on the table. So far, the results are better than expected by a long way. Where we expected a 6.5 dry matter feed conversion, we achieved 5.25. Where we expected to gain about 2.9 to 3.1 lbs per day with no implants, we gained about 3.5. Where we hoped we would make $50.00 dollars a head after paying our premiums we averaged over $130.00 dollars per head. U Lazy 2 Cattle Company is dedicated to making a consistent, high quality product for the consumer. We know who buys our product, and why they purchase it, and so does everyone that eats our food products. Therefore, we try to give that purchaser what they ask for. These results may or may not happen the first time out, but after the U Lazy 2™ system "weeds" out the undesirable cattle the revenues pick up quickly.
· We Cut costs through better efficiency, and less waist of resources
· We Cut through the fads, hype and garbage to get to what really makes money in the cattle business
· We track each animal as though it was a “factory” producing a product, then “closes down” the “factories” that don’t make a profit!
· At UL2 we are always looking at each element of the business and always adjusting as needed.
· We are in regular contact with our Licensed Operations, Contract Growers, feedlots and packers for performance data.
· This data comes back to the Contract Grower and Licensed Operator to better the product each time it is produced.
· U Lazy 2 ™ is also in constant contact with specialist throughout the world in the beef industry, from New York and Chicago Traders, to Extension specialist and other companies to the everyday producers to stay on top of developments. If we learn it we will let you know.
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Copyright © U Lazy 2 Cattle Company 2004