Cattle Feeders Group Launches
Cooperative Marketing Project

By David Bowser

AMARILLO — Consolidated Beef Producers Inc. started meeting with cattle feeders this week in the Texas and Oklahoma panhandles in an effort to form a large enough marketing system to negotiate with a diminishing number of packers on what cattle feeders feel is a more level playing field.

"The goal of Consolidated Beef Producers is to sell cattle in a way that results in true value-based, negotiated pricing," says Paul Hitch, president of the Texas Cattle Feeders and chairman of the new Consolidated Beef Producers Inc.

While Consolidated Beef Producers is a separate entity, officials with TCFA say they will provide office space and support for the new organization until it is ready to stand by itself.

Consolidated Beef Producers is a non-profit marketing association open to feedyards in Texas, Oklahoma, New Mexico, Kansas and Colorado. It is also open to feedyard customers and others who want to sell their cattle in such a manner.

Texas Cattle Feeders Association members are aware of the new organization, Hitch says. Letters went out last week to TCFA members, though participation in the new venture is not limited to TCFA.

"Membership is open to people who are not members of the Texas Cattle Feeders Association," Hitch emphasizes. "If somebody says, 'I live in Nebraska and I want to join,' they're welcome to."

He says there are no plans at present to make any presentations in Nebraska, but he wouldn't rule it out.

Consolidated Beef Producers, Hitch says, was established in such a way that it wouldn't be limited by geographic concerns. It can be expanded beyond the area covered by TCFA.

"Not only is there the possibility it can be expanded," Hitch says, "I think it would be desirable to expand."

The initial presentations, however, will be made in the cattle feeding region around the Oklahoma and Texas panhandles.

"You've got to start close to home," Hitch says. "We're starting in Oklahoma, Texas, New Mexico, Kansas and Colorado. If that gets to rolling good, I see no reason why we can't go to Nebraska and say, 'do you guys want to help us, too?'"

He admitted, however, that other states, like Nebraska, may start their own programs. That could result, however, in too many sellers and not enough buyers, the situation cattlemen face now.

"We don't want to replicate little co-ops all over the country," Hitch says, "but we'd sure help them."

The idea of the new organization is to pool a large enough inventory of cattle to be in a better position to deal with packers.

The goal, Hitch says, is to gather 750,000 head in marketing rights before the sign-up period ends Oct. 1.

"Everybody who wants in needs to be in by the first of October," he stresses.

Previous studies have indicated that such a marketing effort would need to have an inventory of about one million head of cattle to be effective, but Hitch doesn't think that will be a problem.

"We have some commitment from those people who are on the board of Consolidated Beef Producers," Hitch says. "Clearly, we have several hundred thousand head represented by people who are on our board."

Incorporated in April, Consolidated Beef Producers has a nine-member board made up of Steve Denny of Wildorado, Texas; Paul Hitch of Guymon, Okla.; Scott Keeling of Hereford, Texas; Virl LaMunyon of Perryton, Texas; Neal Odom of McLean, Texas; Jim Schwertner of Schwertner, Texas; Bob Sims of Hereford, Texas; Leo Vermedahl of Texline, Texas, and Guy Walker of Dawn, Texas.

The new organization is the result of a January meeting in which TCFA directors authorized Hitch to appoint a committee to finalize a consolidated marketing program.

"It may seem a bit unusual," Hitch says, "but the founding directors of Consolidated Beef Producers firmly believe that to remain independent cattle feeders, we must consolidate our marketing power. We asked ourselves if we were satisfied with the way we were selling cattle. We all believed we could improve."

No specific requirements or standards have been set for the cattle, Hitch says, but eventually he sees the inclusion of beef quality assurance programs or some kind of HACCP program among the feedyards involved.

"There's a direction that we need to go," Hitch says. "We want every 'I' dotted and 'T' crossed as far as how these cattle process."

As far as requiring certain breeds or types of cattle, Hitch says, he doesn't see that happening.

"Now, we may find we can negotiate a better price based on certain kinds of cattle," Hitch says. "One of the visions is to sell the cattle on some kind of value-based negotiated grid basis."

That information will be passed back to the participants, he adds.

"We need to close that loop where that information goes back to the guy who owns the cattle," Hitch says.

The owner may then decide to change his genetics or management based on the information he gets.

"I hope that's what happens," Hitch notes. "There should be a financial incentive to have better cattle. We're going to let the market determine that."

Hitch expects to work with packers to produce the best product and to get a reasonable return.

"It's not our intention to take a big club and beat the packers over the head with it," Hitch insists. "That's not the way this organization will work. We want to do a job for the packers and have the kind of cattle they want and furnish them a reliable supply of a quality product that's produced under the very best of conditions. In return for doing that, we expect to be paid for it. That's a fairly simple concept."

He says it is a straightforward scenario.

"There's nothing in this initial agreement that says you're required to have a certain kind of cattle," Hitch explains. "I can't imagine that that would happen, but there's nothing that would preclude it. It's not our intention to dictate to people."

Cattle producers can join Consolidated Beef Producers by paying a $3000 membership fee and purchasing a minimum of 5000 marketing rights at one dollar per head. Once Consolidated Beef Producers hires a general manager, negotiates marketing agreements with packers and begins marketing cattle, members will pay an annual one dollar per head service fee for each animal marketed.

Marketing rights, similar to those used by other groups such a Premium Beef, can be leased, sold or used to market cattle through CBP.

"We're going to bring this story to cattlemen and ask them to join us," Hitch says.