2008 NCBA Convention Report

Saturday, February 10

Closing General Session

Today, details were wrapped up on committee work for final presentation at the closing General Session.

At today's General Session, the big discussion was about the mandatory Beef Checkoff.  There are many concerns that 20 years of inflation has eaten into the $1/hd checkoff.   It will literally take an act of Congress to change the Beef Promotion and Research Act that established the Beef Checkoff.  It was decided at this convention to ask Congress to approve a process that will allow producers to vote on enhancements for the Beef Checkoff program.  A specific rate was not included in the resolution, but the prevailing attitude at the Convention was that $2/hd would be a proper amount.  Other checkoff discussions revolved around simplifying the petition process for a mandate of the checkoff, and whether checkoff dollars should be used to promote only U.S. born and raised beef.

NCBA renewed it's policy that Congress should not extend the tariff on imported ethanol, nor the blenders credit beyond their 2009 and 2010 deadlines.

Members reaffirmed existing policy to that NCBA work with all segments of the beef industry and with federal officials to reduce the prevalence of E. coli 0157:H7.

We were reminded that all policies now adopted at the convention are subject to approval by over 30,000 NCBA members nation wide through a mail in ballot process.

Policy was updated to recognize the benefits provided by premise registration in light of an animal health emergency, provided such systems to did not interfere with normal animal movements.

Andy Groseta, a rancher from Cottonwood Arizona was elected as the new President of the NCBA.  Gary Voogt of Marne, MI is the new President Elect, and Steve Foglesong of Astoria, IL was elected Vice President.  Alan Albright of Lytton, IA was selected to succeed Voogt as the Chairman of the Federation of State Beef Councils.

Also at the closing General Session, it was announced that the Yolo Land and Cattle Co. of Woodland California was named as the Environmental Stewardship Award Winners for 2008, and that Barbara Jackson of Tucson Arizona was named the Outstanding CattleWoman of the Year.

Friday, February 9

Opening General Session

This session opened with a special award.  Paul Hitch was recognized for his lifetime service and commitment to the cattle industry and the NCBA.  Paul had been President Elect of the NCBA for the past year, but an on-going battle with cancer has kept him from taking the helm as President this year.  In an emotional moment for everyone there, Paul spoke how he now understood Lou Gehrigs famous words, and that he too could say "today I am the luckiest man in the world, because I have you."

The BeefBacker awards were presented at this session, for those businesses that have done an outstanding job in promoting beef for the past year.  This years winners were:

Beef Magazine then presented two awards.  Editor Joe Roybal presented the Beef Trailblazer award to Carl Crabtree of Grangeville, ID.  This award is sponsored by Beef Magazine and New Holland, and recognizes those that have broke new ground.  Mr. Crabtree was an early proponent of the BQA program.  Beef Magazine and Elanco then presented the National Stocker Award to Shawn Mercer and his family, of Richton Mississippi.

Secretary of Agriculture, Ed Schafer.

Secretary Schafer recognized the cattlemen as a vital part of the national economy.  As the former governor of North Dakota, he felt he knew the needs of the beef cattle industry.

Secretary Schafer reported on the animal abuse case at the cow kill in Chino, CA.  That processor has been suspended as a supplier to the school lunch program, with additional evidence if violations of humane handling guidelines.  The commitment to food safety was reinforced, and he announced an investigation into the elevated number of cases of e. coli in 2007.

Secretary Schafer revealed that during his interview with the President, he was encouraged to wade into the trade issues that are so important to the country.  He is working diligently on increasing beef exports and he is encouraged by the attitude of the new president of South Korea, and also optimistic about opening Japan to increased exports.  He reported that overall Ag Exports have been at record levels 4 years in a row.  NAFTA has contributed to this, and Mexico and Canada are now our #1 and #2 customers for exported US Beef.

He reported that the Farm Bill is now in conference between the House and the Senate.  The Administration is concerned with both versions, and does not want to increase tax dollars going into subsidies.  They would also like to see the programs limited so that subsidies are not going to those that don't it, or those that aren't directly involved in production.  Both the House and Senate versions contain language on Country of Origin Labeling.

The Secretary shares his concern on high feed prices, and acknowledged that the commitment to renewable fuel was part of the cause.  He reminded everyone that cellulisic ethanol production is the focus of the current research and asked the cattle industry to be patient until this took some of the pressure off of ethanol demand.  He indicated that switchgrass was a promising source of ethanol, and that it could be grown on ground set aside for conservation protection.

Committee Work

I sat in on a couple of key committee meetings.  I am always encouraged by the grass roots work done in these meetings, as feeders and ranchers, large and small, get together to hammer out policy.

In the Property Rights and Environmental Management committee, we had an attorney from the Pacific Legal Foundation report to us.  Reed Hopper has been involved in several environmental lawsuits, protecting citizens from an over reaching government in the form of the EPA or the Corps of Engineers.  He started with some basic Constitutional Rights and reminded everyone that property rights were paramount in the Constitution and that the War of Independence was fought against an over-intrusive government.  The key issues that have caused us problems are abuse of the Takings Clause of the 5th Amendment and oversight of Navigable Waters of the U.S. (which they are trying to define as any water in the U.S. since virtually all water eventually leads to a navigable water). 

Dr. Brent Auvermann from Texas A&M reported on research work he was involved with to set measurement standards for air pollution from feeding operations.  The primary concerns are dust, ammonia, hydrogen sulphate, odors, and Volatile Organic Compounds that are pre-cursers to ozone.  The primary work was being done at a 40,000 hd yard in the Texas Panhandle, with additional data being collected at other Texas and Kansas sites.

The Cattle Health and Well Being Committee covered topics such as US/Canada health issues, BVD, the Veterinary Public Health Workforce Expansion Act of 2007, an update on tick problems, and an APHIS update.

The rest of the day I spent in the trade show.  This year, the hot topics in the trade show were animal identification (visual, electronic, and DNA) and technologies that improved feed efficiency.  This is always a great trade show, with a wide variety of vendors and a large number of producers browsing through the aisles.  Reunion of old friends are commonly seen as people bump into each other at the trade show.

Thursday, February 8

Cattle Fax Outlook

As usual, the session started with the Weather outlook.  We are currently in a La Nina, which might be weakening.  For those concerned about global warming, the Artic Ice Cap is twice as large this winter as last, and there is more Antarctic ice then ever before.  The long term forecast is for normal precipitation and temperatures in the Corn Belt for the spring, and normal to slightly wet conditions during a cooler then normal summer.  The drought will continue in the Southeast, and China will experience a hot, dry summer.

On the grains and feedstuff report, they expect corn acres to be down 4 million with beans and wheat taking up the slack.  Ethanol expansion has slowed down with the tight margins.  Evidence that we are in a global market was presented, as internationally corn use has outstripped production in 6 of the last 7 years.  Again, we heard that stocks to use will be below 10% for the 2008/2009 crop.  In addition, the wheat stocks are the lowest they have been in 45 years.  Hay stocks are the lowest they have been in 30 years.  In 2008 expect the BOT trading range on corn to be $3.75 - $5.60.

For international trade, all food commodities are up dramatically based on demand.  Ethanol has added to the demand, but is not the sole cause of it.  Foreign buying power is up with the weak dollar; if Korea starts to import beef, the Korean consumer can buy 28% more beef for the same money compared to 2003.  At the same time, Australian beef costs 50% more.  Global demand drives global supply, so Brazil is up 60% on beef production and China is up 68%.  The United States is still the largest producer, but we are loosing ground.  However, we will remain the key supplier of grain fed beef for the foreseeable future.  We have made back 70% of the trade we lost in 2003, the remaining 30% is what needs to be gained back in Japan and Korea.  Combined, these two would mean another $80-90 per head in demand value.

Domestic demand is steady, but supply will cut per capita consumption.  As the economy tightens along with supply, expect to see the average consumer eat more hamburger and less steak.  Total meat consumption is flat to declining.

Even though we are reducing the cow herd, we remain productive.  We are producing more beef now then in 1972 when we had about 15 million more cows.   Weather patterns, feed and land costs will prevent cow expansion for now.  Beef production will be up in the first half of 2008, and down in the second half.  Average fed price in 2008 will be $92 - 94, with a probable range of $85 - 102.  Yearlings will average $105 and calves will average $115.

Following the Cattle-Fax Outlook, I attended several educational forums.

New Tactics for Anti-Beef Activists

We have a lot of enemies out there, and they have a lot of money.  The Humane Society of the US has emerged as our greatest foe, led by the brilliant and charismatic vegan Wayne Pacelli.  The HSUS has an annual budget of over $200 million, compared to our annual Beef Check-off of less then $90 million.  This is just one of many well funded organizations that are working intently to put an end to animal agriculture.  Farm Sanctuary is a group that acts as foot soldiers for the HSUS.  PETA pulls high visibility stunts, that allows the HSUS to look like a moderate and reasonable group.

We need to be passionate about defending our industry against such attacks.  When misleading articles are in the paper, write a letter to the editor.  If you are a web surfer, get involved with sharing information on blogs and web forums.  You can get all sorts of support information from http://www.beeffrompasturetoplate.org/ .  Consumer trust will be reinforced when they hear from real people like you addressing these issues.

The Tightening Grip of Government Environmental Action

Just when we thought we were getting ahead, our government has taken new steps to make it more difficult for us to do business.  Presented in this forum were some key issues that must be fought though our legislators.

CAFOs are considered as point source polluters.  It was thought that we did not need an NPDES permit if it was proven the CAFO was not discharging, and the storm-water exemption was upheld.  Now it looks like they want to impose a $32,500/day fine if you do discharge, and the fine would double if you don't have a permit.

Dust has been regulated for 20 years, but ag has been exempt.  Out of a "precautionary principle", the EPA has now decided to include agriculture.  Taken literally, the new regs would mean that zero dust could travel beyond your property line.  This is simply an unattainable goal, and the NCBA along with other farm groups are fighting this.

Other threat issues were manure as a hazardous waste under Superfund legislation,  livestock enterprise being subject to ozone controls, a redefinition of the waters for the United States to include all waters everywhere (including puddles on your property), and cattle targeted as greenhouse gas emitters.

Beef Quality, Driving Consumer Demand

In taste panels, the consumer has stated loud and clear that they are willing to pay nearly twice as much for an excellent eating experience compared to an average eating experience.  Tenderness and flavor are the two key issues, and every part of the cattle production chain (from genetic suppliers to processors) have a hand in this.  From a management standpoint, the 3 key things that reduce desirability (about 15% each) are tough genetics, multiple doses of an estradiol/TBA combination implant, and use of a beta₂ agonist.

Current feed costs could work against our quality goals.  We will likely see more days on grass and less days on grain, more co-products in the diet and less corn, and greater use of growth promotant technology.

Cargill also demonstrated their Vision (instrument) Grading system.  They have been working on this in some form for the last twenty years, and there are currently 4 plants in a pilot project with USDA where the Vision Grading is being used side by side with the USDA graders.  They believe we will see more consistent grading of carcasses, and they will have the ability to get a tenderness measure without cutting the carcass.

Livestock Marketing Counsel

Dr. James Mintert of KSU demonstrated the http://beefbasis.com/ website to the group.  This can be used to estimate a basis on your feeder cattle at a number of locations across the US.

A sample of a Beef Quality Assurance DVD was shown, which was designed to train employees of livestock markets to handle cattle in a low stress manner.

There was some open floor discussion on the Beef Check-off, and it was reported that several states have already raised the check-off amount.

The need for consistent cattle transportation laws was discussed next.  Every state has a different weight limit, and the weight limits within a state often vary between state roads and interstate highways.  In Australia, they use triple trailer combinations that can haul 165,000# to be more fuel efficient.  It was also pointed out that safety is usually the reason cited for keeping weight limits lower, but that a 7 axle rig hauling 95,000# had better stopping power then a two axle truck hauling 32,000# due to less weight per axle.

Greg Douds, the Chief Economist for the NCBA was next on the agenda and the first thing he did was to state that we were without a doubt in a recession.  He is very concerned about the enormous amount of mortgage defaults effecting the economy.  For perspective, he pointed out that the value of 12 months of recalled loans would exceed the GDP of 93% of the countries in the world.

Specifically to the cattle industry, he reported that feeders lost money 33 out of the last 47 months, and the average cow/calf producer hasn't realized his costs have risen 20% in the last 5 years.

He was very clear that the government mandate on ethanol is the leading cause of our feed costs problems, and he predicted higher and more volatile feed prices as we go under a 1 billion bushel carryover next year.

It was reported that a ban on cooked chicken from China will cause the end of all ag trade negotiations with that country.

NCBA Officers Forum

An opportunity was given for question from the floor to the NCBA officers.  Topics included concerns about packer concentration and vertical integration, concern about beef being pulled from school lunch programs, and concerns about marketing alliances that could lead to more packer control.

After the question and answer period, presentation and discussion was held on enhancing the Beef Check-off.  Included in the proposal is a regular validation by the producers (say, every 10 years or by petition) and increasing the Check-off to $2 per head.  It was pointed out that inflation since the 1986 inception of the Beef Check-off has eroded the buying power of $1 per to half it's value.  This will be debated further during committee meetings tomorrow.

Speaking of tomorrow, we will start the day with a presentation by our new Secretary of Agriculture, Governor Ed Schafer of North Dakota.  Come back and read up on what he had to say when I update the Beeflinks BeefBlog tomorrow night.

Wednesday, February 7

Today started with Cattleman's College.  This is the 15th year of this educational program.

There were sessions on profitability, employee management, reproduction, BRD prevention, products for food service, selling into export markets, calculating the cost of keeping a cow, estate planning, disease control plans, ethanol's impact, marketing streams, land stewardship, business communications, low stress handling, and market cow & bull audits.  As you can see from this wide range of offerings, this educational program is well worth the money.  Each attendee can choose three sessions to attend.

BRD Control

The session on BRD prevention focused on identifying problems, preventative management, and strategic treatment.  The first step is to insure proper passive immunity to the calves.  Other management practices that reduce BRD incidence were early vaccination (before exposure), early castration of bulls (significantly reduces morbidity in the feedlot), pre-weaning vaccination, fenceline weaning, and pasture vs dry lot backgrounding.  An interesting point was made that feeding a pound of a protein supplement to pregnant cows improved the growth rate and reproductive performance of their daughters even if the cows showed no difference in BCS.  For calves that did need to be treated, the recommendation was to stick with one drug long enough to calculate a case fatality rate (calves that die divided by total calves treated) to determine what treatments work the best in your operation.  It was reported that there is no existing data to show any advantage to using a combination of drugs, and that there is no advantage to using ancillary treatments in addition to the antibiotic.

Ethanol, Corn and Cattle

Here is the current picture on ethanol production:

97% of the ethanol is currently produced from corn.  In 2002, 10% of the corn crop went towards ethanol, in 2006 it was 20%, and in 2008 it is expected to be 30%.

Because of government mandates, ethanol is not expected to go away soon and economics don't effect it's use.

Dr. James Mintert of Kansas State University presented a case that with expected corn acres in 2008 (down a little from 2007) expected yields in 2008 (up a little due to technology trend) and increased demand for corn we could have carryover stocks below 10% - this is always an indicator of price spikes and volatility.  Add to that the increasing odds of having a dry year and there is real concern about having enough corn to go around.

It was also reported that the genetics companies are hard at work to bring new varieties that yield better and handle drought better then current varieties.a

Creating Value with your Calves

This session was about looking for more creative ways to market your calves for greater revenue.  The primary recommendations were to precondition, source verify, produce natural beef, and find a market with good demand and short supply.  I also heard in this presentation (and for the second time in two weeks) how we have lost our appreciation for hybrid vigor in our race to make all cattle one color.  Cross breeding is an easy way to improve weaning weights and feedlot performance of calves.  It was also reinforced that the first step in an effective business plan with a cow herd is to analyze the resources you have at home and then optimize use of those resources in how you select and manage your herd.

Opening General Session

The General Session started with a welcome to Nevada from Donna Rise, Director of Agriculture.  Nevada is an interesting state.  It has one of the highest urban dweller populations, as 2/3's of the population lives in the Las Vegas valley.  It is one of the driest states, with 4-7 inches of precipitation per year.  87-90% of the land in Nevada is Federal land, so working with the BLM or Forestry department is a way of life here.  Agriculture is dominated by the cattle industry, but crops as diverse as alfalfa, zucchini, garlic and potatoes are also significant here.

Fort Dodge Animal Health presented the NCBA with $30,000 to be used towards scholarships for students in beef studies.

NCBA Staff and Committee chairs then presented information on the Focus for 2008.  The 4 key areas would be Policy, Beef Safety, Nutrition, and Beef Marketing.

For policy, NCBA will focus on getting a farm bill that meets our needs, on increasing exports of beef products, and on keeping federal environmental policy real for ranchers and feeders.  Our current risk is proposed legislation called the Clean Water Act of 2007; this legislation would in effect make all waters federal waters.

The emphasis on Beef Safety comes in response to the slight increase seen in E. coli cases in 2007.  Even though up slightly from 2005 and 2006, it is down nearly 80% from 2001.  For every check-off dollar spent on Beef Safety, your industry is spending an additional $210 on Beef Safety measures and testing.

On the Nutrition front, there is a need to counter act claims that red meat is leading to increased cases of colo-rectal cancer.   Check-off dollars funded a scientific review by third party scientists that refuted this and found no connection between red meat and cancer.  The Cattleman's Beef Board also successfully kept beef out of the headlines when the study was released on dietary influences on cancer.

As for Beef Marketing, a new ad campaign was shown focusing on the superior quality protein that beef supplies in a diet, and Matthew McConaughey was unveiled as the new spokesman for the beef industry.

Keynoting the opening general session was author Dan Burrus, who writes on adapting technology and future developments.  Dan accurately forecasted the use of GPS and biotech crops as early as 1987.  Dan showed us how to separate Hard Trends (what will happen) with Soft Trends (what might happen) and reminded us not to bet the farm on a soft trend.  He also demonstrated technological change with the example that computing power doubles and computing costs drop by half every 18 months.  The power in last years Sony game system is equivalent to a multi-million dollar super-computer 10 years ago.  Rapid technological change is a fact, we choose whether to treat it as a friend or a foe. 

Two other nuggets from Dan: 

Bad news isn't bad news if you see it coming.

Focus on the visible future (especially those Hard Trends); you can't base a successful strategy worrying about what you don't know.

Tomorrow, I will report on the CattleFax 2008 Outlook, as well as the Issues Forums.