How Cow-calf Producers Can Leverage Their Position in the Beef Supply Chain

Imagine a beef industry where commercial cattlemen and women have the power to negotiate prices and the ability to collaborate without losing their independence and ability to make their own management decisions. Truthfully, some cattlemen and women already live in this world. There’s more than one way to achieve this but one example is the collaboration between Jorgenson Land and Cattle and Breedr. Jorgensens are the largest seedstock supplier in the United States which puts them in the position to help hundreds of commercial producers raise and market profitable cattle. Breedr is a data collection app that also helps cattle producers find different supply chains to join. Together, this partnership is redefining the roles and relationships between commercial cow-calf producers and seedstock suppliers in the United States beef industry.

Let’s break down the roles of these two types of cattle operations starting with seedstock suppliers. Seedstock suppliers are not directly supplying much beef that enters the supply chain, they are supplying genetics to improve the quality of the cattle and ultimately the beef that will be sold to consumers down the line. They are genetic consultants for their customers. On the other hand, commercial cow-calf operators have a greater impact on the beef that consumers purchase. The management decisions they make determine how calves will perform up to and after weaning. From genetic selection to nutrition or even herd health, these decisions impact the performance of cattle as they travel through the supply chain and the quality of beef consumers purchase. “We've seen that in the last few years the commercial cow herd has dropped off, which reduces supply. But the other thing that we're starting to see is really a demand from retailers, and food service for consistency and quality. All that starts with seedstock and commercial cow-calf operators. For us to produce a higher quality product that earns everyone through the supply chain more money, we've got to work with those commercial cow-calf producers.” said Ian Wheal – founder of Breedr. If this is the role of the commercial cattleman, the question still remains. How do they leverage their position, when they are typically known as price takers?

A key component that allows commercial cow-calf producers to leverage their position in the beef supply chain is data collection. This can be as simple as ensuring each calf has an individual ID, to pairing this ID with health and weight records or getting more in-depth and adding genomics to the equation too. Sky’s the limit on which data points you choose to collect, however always keep in mind which ones will add value to the cattle through each segment of the supply chain. “There are probably three different case studies that I've seen about capturing data on cow-calf operations and how it helps the feed yard to sort and understand which animals to feed. We see this data adding value automatically to the feed yard in terms of being able to track feed conversion and year-over-year improve the profitability of those animals. Some of this is due to animal health feedback but then you add genomics to that, and we're seeing around $50 to $100 improvements in terms of cost of gain. And then for example, you can go to the packer and retailer and share how you are stepping up prime rates from 6% to 15%. And you know, actually, the biggest step up with a lot of the Packers we work is taking the select from 15% to 2%. That's what drives the return for those guys,” said Wheal. It’s also important to remember that the data you are collecting can be leveraged in more than one way. Cattle producers will see an ROI by being able to more accurately cull out their bottom 10% and by using this knowledge for negotiating power. “If you're not tracking your data, that guy that's buying your cattle is. So, I would suggest you want to know that. You could let the buyers know all the information, but there is an element of tracking some of it yourself, and understanding what performs what doesn't perform just to know how your cattle are doing,” said Wheal.

Supply chain collaboration is critical to ensuring data doesn’t get lost between segments of the beef industry. This can look like, buy-back programs, retaining ownership or value-added programs just to name a few opportunities that are out there. “This is about everyone sharing in the upside of what we can do through collaborating. It's not vertically integrating, let's be very clear. This is about vertical collaboration, and how do we collaborate through the industry to actually make the beef industry better?” said Nick Jorgensen – CEO of Jorgenson Land and Cattle.

So you have the data and countless tools to collect it, but where does the negotiating power come into play? “At large, commercial cattlemen are price takers with little amount of bargaining power on an individual basis. When you take your individual small amount of bargaining power and put it together with that of 500 other producers or 50,000, or 100,000, other head of animals, you all of a sudden become part of a unit that does have power to negotiate grids or other favorable purchasing options just as a few examples. Supply chain systems create additional value for you that you wouldn't more than likely be able to do yourself.” One of the nice things about these programs is that you aren’t necessarily locked in for long periods of time. You can enroll only a portion of your calves or try different programs each year to see which one best fits your goals and resources. 

There are many opportunities to collaborate with others. Find one that makes sense as a starting point for you and be open to the doors that collaborations can open. “Probably the only requirement you'd have to think about is how do you tag these cattle? They have to be tagged, there's no doubt about that. That’s how we link the data back to you afterward. But that's the only real requirement to get started. And everything else is mindset,” said Wheal. Take some time to think about what value your cattle offer to your buyers and how data collections and collaborations fit into your business model.