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John Henn, Livestock and Meat Marketing program manager in the Wyoming Business Council Agribusiness Division, discusses the importance of adding market value through verification in the beef industry.
Adding Market Value through Verification
There are a number of things that can impact the market value of livestock, including the current low inventory numbers and increase in export demand. Market value can also be influenced by adding marketing claims to a group of cattle. These can include genetics, performance records, production or management practices, natural, age and source verification (ASV), or non-hormone treated cattle (NHTC). The goal is to attract additional buyers interested in these claims to supply their needs and markets.
Verification has been a buzz word in the beef industry for close to 10 years. Why is it needed or important? Verifying any marketing claim differentiates the product in the marketplace by adding credence to the claim and acceptance that the claim is true or valid. In other words, trust but verify.
The loss of export markets after December 2003 had a negative impact on the value of the beef products that were exported, especially to Japan. According to the U.S. Meat Export Federation $177 per head was lost on fed cattle due to the loss of our export markets at that time. To regain access to that market ASV of the animals the beef products came from had to be done through an independent third party audit process approved by the USDA. Japan now requires that imported beef products from the U.S. must come from animals that are 20 months of age or younger when slaughtered. This can be done through a Quality Systems Assessment (QSA) program or a Process Verified Program (PVP), which is more commonly used. Producers adding ASV have seen an increased value to calves. In 2010 Superior Livestock Auction reported $1.74 per hundred weight more for calves that were age and source verified compared to those that were not, adding $8.70 to a 500 pound calf.
Food safety, the feeding of animal products, and antibiotic and hormone residue in beef are target markets for some meat companies, providing an opportunity for producers who supply cattle that meet those requirements. “Natural” can have a varied meaning to different end users. Meat companies that market natural beef have specific production practices for the cattle they purchase. A producer that markets feeder calves or yearlings as natural can add credence to that marketing claim by having the natural production practice verified through an independent third-party audit process. This helps to eliminate the risk for the feedlots and meat company buyers ensuring that the cattle produced meet their guidelines and protocols. The NHTC market for the European Union requires an audit on the producer conducted by a USDA approved entity.
There are other management or production practices that can add value to cattle, especially when verified. One specific practice that feeders are looking for is a pre- or post-weaning mineral nutrition for calves they purchase. The positive impact of mineral nutrition on the calf’s health after arrival has generated an increasing interest by feeders, and is directly related to the increasing placement cost of calves, and costs related to ones that are pulled and treated. Feeders have documented that when a calf is pulled and treated once the loss per head is $80-90 due to drug costs, loss of performance, and decrease in percentage of carcass quality grade.
The Wyoming Verified program through the Wyoming Business Council can help Wyoming producers add value to their cattle, and help capture that added value through verifying these types of marketing claims. In 2010, Wyoming Verified had 155 producers with 59,000 head enrolled in the program. Producers participating in the program averaged $9 per head more for their cattle. The ASV and the NHTC claims are through AgInfoLink’s USDA Process Verified Program. For the ASV there is no cost for the on-site audit the Business Council conducts.
Producers do have to purchase the required RFID tags for $1.75 with a $.75 per head enrollment fee. The independent third-party verified marketing claims include Natural, BVD-PI Free, and a newly added Calf Nutrition Program at no cost to the producer. Cattle enrolled in the Wyoming Verified program are listed on the Wyoming Beef Cattle List at www.wyobeef.com, which is promoted to potential buyers in the cattle feeding areas.
Verification of how and where our beef product is produced will become an increasingly more important practice in the future as the market and consumer demand for such information continues to grow domestically and globally. If you would like to learn more or enroll in the Wyoming Verified program contact Business Council Livestock and Meat Marketing Program Manager John Henn at 307-777-2847 or email john.henn@wybusiness.org.
The mission of the Business Council is to facilitate the economic growth of Wyoming. The Business Council, a state government agency, concentrates its efforts on providing assistance for existing Wyoming companies and start-ups, helping communities meet their development and diversification needs, and recruiting new firms and industries targeted to complement the state’s assets. For more information, please visit www.wyomingbusiness.org.
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