Fear is a powerful motivator.
In the mid-1990s, the demand for beef increased and that scared the entire industry.
“Our product was bad and nobody wanted it. We lost market share at record speed, ”says Mark Gardiner, Ashland, Kan., Angus breeder.
Cattle feeders could not sell cattle. Every Monday they hoped that the display list had enough “fancy” cattle to be used as a negotiating tool to sell the remaining finished animals in inventory. Commercial growers who invested in good bulls and vaccinations found that their cattle were being sold for the same price as those of ranchers who didn’t.
That fear brought individual farmers, ranchers and ranchers together with a pool of ideas and US Premium Beef (USPB) was born.
“This team became very, very synergistic,” said Tracy Thomas, USPB vice president of marketing. To date, USPB has processed more than 17 million animals – with individual data collection for each – and paid $ 625 million in network premiums to ranchers.
USPB received the Progressive Partner Award 2021 from Certified Angus Beef (CAB) for its influence on the beef business, which is shifting to quality and value-oriented marketing.
Kansas State University brothers Steve Hunt and Mark Gardiner exchanged ideas over a Pizza Hut buffet lunch, and more and more alums joined their cause over the next several months.
“We really got into it because we lost a lot of money on feeding the cattle at the time,” says commercial rancher Roger Giles from Ashland, Kan will be killed if you sold them. ”
Near Scott City, Kan., Cattle feeders discussed everything from building their own facility to hiring a tsar to sell their fat cattle.
“I’ve said it before, but the success of a rain dance has a lot to do with timing,” said Joe Morgan, Poky Feeders, a founding member of USPB. “One night we all shook hands that we would go as friends every night, no matter how upset we were during the meeting. I think that was a real key. ”
In late 1995, a formal group gathered and started selling an idea. Soon ranchers from across the country pledged support for the evolving business model.
They signed a letter of intent to purchase up to 50% of what was then Farmland National Beef Packing Co. LP (FNB). It was the fourth largest beef processor in the United States.
The USPB share offering went live in October 1997, and in December the new company was buying up to 10,000 cattle per week from its producer members. Each share had the “right and duty to deliver a head to your processing facility,” says Thomas, and the minimum entry point was 100 shares.
“It was a very, very big investment, rolling the dice and putting it all in one basket,” said John Fairleigh, Fairleigh Feedyard and founding member. “When we started with US Premium Beef, we all thought our cattle were much better than those of our neighbors – and certainly better than the industry.”
Nationwide, less than half of the beef it fed was rated a Choice, and the USPB soon found that its harvest was even smaller.
“In the first few years it was very difficult for us to accept that they had to make genetic changes,” says Morgan.
An initial grace period with FNB guaranteed them at least the market average every week, and the ranchers got to work with individual carcass data and a grid target to be met.
It has been more than two decades since the USPB grid was introduced and now every major packer has marketing options to sell cattle by individual carcass values.
In 1997 about 40% of all USPB cattle received the Choice Rating and less than 10% qualified for CAB. Last year, USPB cattle averaged 89% Choice and Prime – a record high – and the annual CAB percentage averaged 28% over the past five years, with an additional 3% CAB Prime.
“We had a complete set of information to support our guesses about what consumers wanted,” says Fairleigh.
The cattle have changed from the “rainbow coalition,” says Gardiner, to a more solid group of uniform cattle. The Angus breed led the improvement.
“We have now developed a great product and we have gained consumer confidence, consumer acceptance and we now have the demand,” says Morgan.
The USPB members have collectively made $ 2.1 billion in payments, network rewards, and cash distributions from property in processing. Today, USPB has more than 2,900 members and partners in 38 different states and an approximately 15% stake in National Beef Packing Co.
The USPB mission includes increasing both beef quality and the long-term profitability of beef producers. The demand for beef has increased by more than 30% year-on-year.
“We’re just getting started,” says Gardiner.