Relationships are created and grown by enabling MARKET ACCESS opportunities for the network participants by coordinating the cattle production model with the most lucrative marketing model relative to a given set of resources.
The PBN was created to provide an opportunity for independent beef producers to access the added value of a vertically integrated beef marketing system while maintaining separate and distinct ownership within the different segments of the beef/cattle industry. The network also offers the option to overlap ownership into other segments. Opportunities initiate with the development of the differentiated products offered to the consumer in the retail meat case.
Market research is continuous and ongoing at National Beef. This “consumer demand” information is used to supply specific products for the different market segments of the retail counter. Examples of the branded (Label) products are:
CAB® Prime
Certified Angus Beef®
Certified Premium Beef®
National Angus Beef™
Black Canyon Beef®
Certified Hereford Beef®
Naturewell™ Natural Beef
In addition, many variety meats or specialty cuts are fabricated specifically for the Pacific Rim and Mexico.
The value added system is used to its total advantage. Per Plate Retail Value is enhanced from a vertically coordinated designed supply system that delivers product differentiation. The value incentive from these products is passed back to the producer who delivers the cattle via the premiums paid for carcass merit. The information from the carcass merit is then traced back to a sire or sire group. This knowledge is then used to make breeding and management decisions at the seed- stock and production level.
As a recent example, a 981-pound, Prime, Yield Grade 3 heifer carcass produced a premium of $426 and a total carcass pay out of $2,047.59 (October ’03). It is not to be implied that a whole herd of these animals can be produced or procured. The point is to see the potential for improvement and economic return from an information transfer used to identify management opportunities at the production level. While cattlemen should not expect to readily produce animals with a $400 per head premium, it is entirely within the producers’ grasp to create cattle, carcasses and premiums of economic significance.
If we at least know the sire groups of the top-producing animals we have a mechanism for affecting economic return directly at the ranch management level by using sires or sons of sires whose progeny have superior carcass value performance in addition to the other important economic [production] traits. If we can trace back the individual dam the economic power of selection is magnified. The benefit of trace back of the individual sire and the individual dam is exponential.
To put it lightly, the power of the information transfer is real. It is the purpose of this network to create a chain of trade relationships connecting the different stakeholders for proper information dissemination thus affecting the economic impact of the local beef and cattle economy. Remember the old adage: One dollar of gain circulates 7 times within a given trade community ($100 per head incremental benefit times a 20,000 head cow trade region multiplied by seven turns of the dollar is an economic impact of $14,000,000 annually). This is an example of how an integrated production system can create more value for all the motivated stakeholders.
Information dissemination is powerful and has economic force. The motivated stakeholder can effect change so as to benefit the whole of the economic region thus solidifying and increasing the value of the individual stakeholder. A point not to be overlooked is the opportunity for the cattle feeding investor in this program. An understanding of the complete system can greatly enhance the value differentiation in the procurement effort where there are value added options in the marketing plan.
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Top Ten Network Advantages
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1.
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Proven Pioneering People You Can Trust |
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2.
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Accurate and Real Time Information Transfer from the Consumer Level |
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3.
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CARCASS DATA • CONVERSION DATA • PREMIUM DATA
– Interpretation and Consultation |
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4.
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Value Genetics in Volume |
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5.
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Feeder Cattle Contracting and Partnering |
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6.
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Significant Corn Basis Advantage |
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7.
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Access to Premium Carcass Grids
CME Pricing & Delivery/Forward Contracts
Negotiated Cash Sales w/wo Carcass Data
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8.
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Freight Cost to the U.S. Premium Beef Packing Plants is F.O.B. at all Premium Beef Network Feedyard Locations |
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9.
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Risk Management Expertise and Performance |
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10.
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Financing Options Available
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Elaboration
The power from participating in the Premium Beef Network is achieved by converting the information transferred into real time management decisions. These management decisions must then affect the economic impact of the producer and the community of stakeholders. To be more specific this information transfer will encompass branded retail products, grid performance, feedlot performance, feeder cattle procurement, risk management, animal health, seasonality of markets, financing/cash flows and client relationship. The PBN will provide the interface with all pertinent measurement criteria and vertical integration so as to facilitate the mechanism of information transfer for the network participants. The PBN participants then have the power to disseminate accurate and real time information into their local network.
A passing note, many cow-calf producers have participated knowing that their cattle may not be at the pinnacle for carcass merit. These, in fact, are the producers who have the most to gain. To minimize the risk involved from delivering unproven cattle, there are no discounts for quality grade to a threshold of 40% Choice on the USPB grid. In addition, other marketing alternatives exist that may return a competitive and more advantageous result for different types of cattle.
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Our Invitation
The touring of our management, facilities and cattle will allow us the opportunity to elaborate further. It is our genuine wish that interested beef stakeholders would accept our sincere invitation to visit our management and facilities to witness the complete package of economic benefits available from utilizing the Premium Beef Network. Please contact us today to schedule a tour or learn more.
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