If the program fits, bear it

From the November issue of Drovers CattleNetwork.

They're not names from a fairy tale. Marketing programs such as GAP, NeverEver3 and NHTC are creating ways for cattle producers to tell their stories, access foreign markets and add value.

Over the last decade the roster of value-added and process-verified programs in the cattle industry has grown from a few, mostly affidavit-verified systems into a wide lineup of options some even influenced by divisive organizations like the Humane Society of the United States. Today's marketing programs are reaching deeper to create premium beef products labeled and verified as such which are targeted to consumers demanding more information, more individualization and more involvement in their food.

The market growth of these "program cattle" seems to beg the question whether conventional production could become a way of the past. Or at least it may appear to some people that the tail is trying to wag the dog.

Steve Peterson owns MPK Land &; Livestock, which has a finishing lot in Lebanon, Kan., as well as other interests in the boxed beef, farming and cattle sectors. He has been involved with certification programs since 2005, in particular non-hormone-treated cattle (NHTC) destined for European markets. Peterson started on a small scale with a few trial pens of NHTC and has grown enrollment to where the majority of his 5,000-head feedlot capacity is program cattle procured through a network of ranchers, grow yards, grazers and finishers. 

 "Value-added programs are the ones that work best for us," he says. "A lot of feeders don't want to spend the time to do the paperwork required to participate."

This year, due to the European debt crisis and shrinking buying power of the euro, he shifted his focus to Global Animal Partnership (GAP)-certified cattle destined for Whole Foods. A relative newcomer to the lineup, GAP certification is a tiered, five-step, animal-welfare-rating system developed by the GAP organization (not to be confused with the USDA voluntary audit called Good Agricultural Practices used by fruit and vegetable farmers).

Jerry Wulf, of Wulf Cattle (formerly Wulf Limousin) of Morris, Minn., has been involved with program cattle for more than a decade, starting with feeding all-naturals for companies like Laura's Lean Beef, Coleman Natural and Meyer Natural Angus Beef. His company spans industry segments from selling bulls and semen to raising stockers to harvesting fed cattle, and they supply all-natural and NHTC to Tyson on a weekly basis.

Wulf says verified programs are a good fit for their operation for three main reasons:

1. They feed cattle of known genetics.

2. They have a network of genetics customers to buy calves back from.

3. The geographic region where they finish cattle (they operate in Minnesota, South Dakota and Nebraska) has a lower corn basis, so any loses in efficiency can be marginalized by lower inputs.

About 70 percent of the 60,000 cattle they market annually are program cattle, including verified natural, NHTC and GAP.

Certainly the driver behind program cattle is they are worth more, although margins depend on the specific program, and prices fluctuate with the daily market just like conventional cattle. No good cattle buyer will tell you his exact margin, but research shows program calves should bring $5 to $10 per hundredweight above conventional cattle.

 "There's definitely an economic benefit," Peterson says. "But it does take a lot more time, and we give more for the cattle at the front end."

Build a base

Those cattle can't necessarily be found at a sale barn on any given day. The basis of all programs is to make a claim on the entire lifespan of an animal not just starting at a given industry segment. Both Peterson and Wulf work to build relationships with ranchers who are willing to enroll and meet specific guidelines from calving forward. For that reason, although some verified cattle do run through the ring and video, most are bought in the country.

"The challenge is in building the entire system," Wulf says. "If you're a rancher, you can't just go do it without being aligned with someone who wants your calves. If you're a feeder, you can't just start feeding all-naturals without knowing where your supply is going. We didn't just flip the switch and start to feed 45,000 program cattle a year."

But finding that continuum across the industry involves finding other producers who are willing to forego science, which offers opportunities to help cattle grow faster, produce more pounds of lean meat and prevent illness, in favor of a niche consumer base that deems this technology undesirable in their food.

Leann Saunders is president of IMI Global, a leading third-party verification company for program cattle in Castle Rock, Colo. She has been involved with process verification since 1998, helping secure the first process-verification certificate issued from the USDA to a private beef company. Today she also serves as president of the U.S. Meat Export Federation.

Markets first!

Saunders says so much of program evaluation is about looking at "science" versus "accepted science," which varies among different countries based on the development of their own systems and their acceptance of U.S. science.

 "It's about a willingness to deliver to a market it's the give and take of ‘what you give up" for ‘what you gain,"" she says. "Sometimes, that is very clear and sometimes it is not. More and more, with both domestic and global consumers, you see philosophy and science intermingled; it's not as clear cut as it once seemed to be."

Protectionism shrouded in science is also becoming more frequent by importing countries, Saunders says. So even if the reasoning may not be valid in our perception, programs have been developed as a thoroughfare to meet the requirements.

Regardless of the reason, those involved with program cattle agree on one thing: The consumer drives the market. Like it or not, Wulf says, as beef producers, we can't "die on a hill of science," if at the end of the day all we end up with is market share lost to other proteins.

Tolerate differences

"Not everything we consider sound science is going to be consumer accepted; there's a sweet spot between sound science and the science our beef consumers of today are willing to accept," he says.

Business will always have a value-based component to it regardless of whose values they are.

"You may think a Volkswagen is the best car in the world to drive; I happen to think a Buick is better," Peterson says. "Both vehicles will get you there in the same amount of time.

"It's like anything else, we have to adapt to the rules, play the cards we are dealt and acknowledge the other players."

And those increasingly analytical players aren't just in the United States.

"As consumers globally are starting to have more disposable income, they are looking for choices and certain assurances in the food they eat," Saunders says. "We see more opportunities for producers with a willingness to differentiate and verify criteria, both domestically and internationally."

For some, the realities of raising program cattle may cast a shadow of regulation and change over what is often decades of "doing it the way it's always been done." Others see the light of increased consumer relations breaking through. Either way, these programs are entirely voluntary and appear to favor the opportunists.

Regardless, whether the dog or the tail is doing the wagging, all beef markets will always be inherently connected.

Choat is a freelance writer from Terry, Mont.

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