Date of this Version
The reason I have been invited to speak about Strategic Alliances at the Range Beef Cow Symposium is because of our involvement with a couple different Alliances the past two years. As a type of introduction I feel it may be beneficial to provide you with background information about our alliance experiences.
Our first involvement with any type of alliance format was as a participant in the Stragegic Alliance Project that was sponsored by the National Cattlemans Association in 1993. The Stragegic Alliance Project was, in part, a follow up to the National Beef Quality Audit, a project also sponsored by the NCA.The National Beef Quality Audit revealed a startling $280.00 loss for every steer and heifer slaughtered in the United States due simply to non- conformities. Money that basically slipped through the cracks and was recovered by no one. The main goal of the Strategic Alliance Project was to determine how much of this $280.00 could be retrieved if there were a coordinated effort on the part of everyone involved from the producer on through the feeder, the packer, and the retailer. This was a project the NCA devoted a tremendous amount of time and capital investment in. We were one of fifteen ranches who represented the producer portion of the alliance. We all delivered a pot load of preconditioned weaned calves to Decatur County Feedyard in Oberlin, Kansas, which is owned and operated by Warren Weibert. Our packer participant was Excel. These three entities were equal partners in ownership of the cattle involved in the field study. Our retailer participant was Safeway Stores Inc. who marketed the finished product through their chain of stores. Without going into a lot of detail the end result of the field trial revealed that $63.00 of the $280.00 lost was recovered when all segments of the industry worked together.
One of the major inefficiencies of our business, in my opinion, is the fact that we are so segmented. I think this segmentation will be a major obstacle on the road to making our industry more profitable. Unfortunately, but in most cases the rancher, who sells his calves off the cow, is very apathetic toward the backgrounder who takes them from 500 pounds to 800 pounds. The backgrounder who sells 800 pound feeders really doesn't care if the finishing feeder makes any money with them. The feedlots that sell finished cattle really don't care if the packers make any money, and the packers really don't care if the retailer makes any money. The pork and poultry business have some real efficiency advantages over us because they are more integrated. There are fewer ownership changes. This scenario will be difficult to overcome, but if it is possible to unify the segments, alliance type formats may be the answer.