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Beef Potpourri: Johnson vs. Rhoden, Beef Check-Off, Supply for NBP

I wander through the pasture this morning and throw together some beef potpourri (hey, there's a market expander the Beef Board should promote: bottled fragrances to bring the satisfying smell of beef to your house all day long!):

Depends on Whom You Talk To: Senator Tim Johnson says West River ranchers hit hard by this month's blizzard are mad at the federal government and are "pleading for help." Yet State Senator Larry Rhoden, who wants to take Johnson's job next year, insists, "I have yet to receive one phone call from a rancher asking about federal relief or federal assistance. They have a strong sense of independence and responsibility."

Think about it, Larry: why would anyone call you to get federal assistance? You're not in Washington; you can't help! And they know that if you go to Washington, you'll be about as useless as Rep. Kristi Noem and the House GOP.

Spock, Chekov, Slim Jims
Whom are you calling illogical, Mr. Spock? We Russians inwented hand-held beef and forced union membership!

Beef Check-Off and Right to Ranch: An eager reader suggests the Beef Council help West River ranchers by returning the beef check-off dollars it extorts by law from ranchers. A beef check-off refund wouldn't go far: the national Beef Board drew $42 million in revenue in 2012. $1.5 million came from South Dakota. Blizzard losses are estimated at $1.7 billion. So if the national Beef Board dropped all of its propaganda efforts and dedicated every check-off dollar toward West River rancher relief, it could make whole maybe two or three out of every 100 affected ranchers.

But the beef check-off gets me thinking: how does South Dakota let the beef check-off stand? We claim to be a right-to-work state. It is illegal to require employees to join unions and pay union membership fees. Yet if you want to work in ranching, you have to surrender one dollar from every critter you sell to the Beef Board. What gives?

Blizzard No Big Deal for NBP Auction? We lost an estimated 15,000 to 30,000 cattle in the October blizzard. The beef check-off numbers above suggest total sales last year of 1.5 million cattle. That means the blizzard losses constitute maybe 2% of total annual sales in South Dakota.

Will that drop in supply hurt the chances of selling and restarting the bankrupt Northern Beef Packers plant in Aberdeen? One interested Ipswich stockgrower says nope:

Herman Schumacher, part-owner of LDL Cattle Company in Ipswich, said there is an ample supply of cattle in the region.

"It is definitely not a good situation West River, but there is still plenty of supply," he said.

Schumacher, who furnished cattle to Northern Beef Packers before it closed, said other companies are interested in buying the plant.

"I have been contacted by a few entities to see if I would furnish cattle to them," Schumacher said. "They are trying to gauge the support of cattle producers in the area" [Jeff Natalie-Lees, "Plenty of Cattle Available to Feed Northern Beef Packers," Aberdeen American News, 2013.10.22].

I don't know if we should take Schumacher's word as an accurate assessment of the market or an attempt to prime the auction crowd to bid up the plant and help his own business. An SDSU extension expert backs his claim and says beef production is moving our way. But that keeps me wondering: if South Dakota's beef supply is so strong that even the October blizzard won't impact it much, why wasn't Northern Beef Packers able to stay in business?


  1. Mark 2013.10.24

    That NBP went out of business so fast suggests that state-of-the-art facility wasn't sufficiently capitalized for its overhead. From bonanza to bust in such a short time is incredible to me.

    Charlie Hoffman knows that part of the state and the cattle business better than most. I'm hoping he weighs in here about NBP and the check-off program, because while I fully enjoy a good steak, I don't fully grasp this aspect of ag economics.

  2. TG 2013.10.24

    I think you read a bit too much into Rhoden's statement "I have yet to receive one phone call...asking about..." In that part of the country, people would naturally call their own legislators or anyone they think would know anything about a given topic. Especially in this case where two of them are rancher/legislators. People out there communicate even though separated by miles. Since he helped many neighbors during that storm and was around many other ranchers, I also suspect he could've just said "I have yet to hear one rancher ask about federal relief". Maybe then you wouldn't have misconstrued it? After all, he said "...asking about...", not "...asking ME FOR..."

  3. Charlie Hoffman 2013.10.24

    Mark I saw my friend Herman Schumacher quoted here and was going to write something concerning his lifetime of knowledge in the cattle business. Herman is the smartest non-degree'd person I have ever met. The guy could write a book on cattle cycles and the profit/loss associated with them and trust me he can out talk even me.

    Right now for the first time in my life weaned heifer calves are bringing a higher price per pound then their brothers. The loss of the female bovine factories West River is the pressure behind this. Once that need is filled the steers will become the high sellers again. I'm not sure though if the beef check off numbers represent the actual number of SD cattle as the seller pays the fee every time the animal goes through the ring. And one animal could be sold three or four times in one year in any given sales barn. The slogan "Where's the Beef?" came from check off dollars and it is the most recognized slogan in the world. It does stand for American Beef which is the most trusted beef in the world. I'm not sure the rules in play within the check off would even allow a gift covering a disaster.

    As to the fate of NBP's plant sadly we lost one of the few folks who could have written a book on it when Rich Benda died. From what we all knew the start up would require fat cattle from multiple states to fill the plant once it was up at full capacity. That said there were many contemplating building onto existing feed lots and even some new yards once the demand was there for fats to fill the plant.

    So Herman is spot on (and he's a Democrat too:) in his assessment of local cattle available to fill NBP once the tracks start rolling again.

  4. caheidelberger Post author | 2013.10.24

    I don't think I'm misconstruing, TG. It's perfefctly logical to think he might not be hearing about it because he's not the guy who could deliver it.

  5. caheidelberger Post author | 2013.10.24

    Someone who can outtalk Charlie? Let me get my waders... ;-)

    Funny the heifers don't usually bring a good price for their reproductive capabilities. Permit me to expose my complete ranch ignorance, Charlie, but don't we eat beef from those lady cows as well? Is it just a matter of the males producing more beef per head?

    Numbers and NBP: you're right, Charlie: the AAN article cites 2007 USDA figures to estimate 800K cattle slaughtered in SD each year. NBP would take 375,000 cattle a year at full capacity. Charlie, you and your friend Herman are saying Brown County and the surrounding region have enough cattle to meet that demand, right? So why was NBP not able to access that supply... and why would it be able to next year under new management?

  6. Charlie Hoffman 2013.10.25

    CAH it really boils down to two things which in my mind caused the failure of NBP. And I'm just listening looking in from the outside like everybody else. One the contracts for age verified boxed beef fell apart when the floods and subsequent delays in construction kept pushing the start up further and further down the road. Two the business men who dumped money in to gain resident status did not continue on as investors in NBP once they got what they wanted. In essence we had the perfect storm. Loss of a market for the product and a lack of capital to run the business day to day. Bills kept coming yet the revenue stream was stymied from the start.

    Trust me if NBP pays a premium for age and sourced good well fed cattle; and shares in the boxed premiums of the high quality product they surely will get in the Northern Plains, the cattle will come.

  7. Charlie Hoffman 2013.10.25

    CAH obtainable eatable muscle tissue grown per pound of feed fed. Steers put on more then heifers. Simple math to a feed yard.

  8. Charlie Hoffman 2013.10.25

    Another fact of market value bull vs cow CAH is what happens at nearly every production sale of high quality every year. Say my good friends the Gardiners from Ashland, Kansas; who raise tremendous Angus cattle, decide to sell some of their power females which they have pulled embryo's from and found to be very consistent in their genetic lineage. The bulls come through the ring with the Number One bull bringing the highest sale price. That could be anywhere from $40 thousand to $100 thousand. After all the bulls sell they crack the flush cows with their number one cow selling first. She will bring anywhere from $75 thousand to $300 thousand depending on genetics and quality and the hype her calves have gotten in the Angus World.
    So the females truly run the power in cow herds but most bovine sales are for eating and not breeding nationwide. The skip in the market here pushing heifers above steer prices is a direct response to the loss of the cow power West River in the blizzard disaster.

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