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Premiums paid through USPB nets producers an average of $34 above the cash market for the top quarter of cattle processed. U.S. Premium Beef (USPB) was formed in 1996 with the goal of providing U.S. beef producers an opportunity to retain ownership of their calves from the ranch to the retail market. In just one year, patronage of $3.2 million, or $10.14 for every head delivered, exceeded all expectations of the founders. They tribute the success of USPB to the commitment of the members and the processing company to produce and market better quality beef. USPB is entirely owned by beef producers. As of August 29, 1998, USPB realized a net income of over $4.1 million, representing a return on investment of more than 10 percent before grid premiums. With grid premiums, USPB members realized an average return on investment of over 30 percent. For those who delivered cattle in the top 25 percent, in terms of premiums on the USPB grid, the return on investment was more than 70 percent. USPB also made several grid improvements that took effect on Dec. 1, 1998. The Prime premium was increased from $8 to $9 per cwt. of carcass. The Certified Angus Beef premium was also increased from $3.50 per cwt. to $4.50 per cwt. In the first six months of 1999, USPB members earned $4 million in premiums above the cash market on their quality-based grid. This was accomplished with approximately 140,000 fewer cattle than were delivered during all of 1998. Factors leading to this increase include higher quality cattle delivered in 1999 over 1998, better genetics and higher premiums for Prime. According to USPB, almost $8.5 million in premiums have been paid over the cash market. The premiums averaged more than $11 per head on cattle delivered since the program began in 1997, and $14.06 per head on all cattle delivered in 1999. So far in 1999, the top 75 percent of USPB members' cattle have averaged $22.05 per head above the cash market, the reports states, with the top 25 percent averaging $34.77 above the cash market. To date, 1999 USPB cattle are a better quality than their 1998 peers in almost every category. They are yielding almost a quarter percent higher; the number of Prime carcasses has increased almost 0.75 percent; Choice carcasses are up about four percent and Certified Angus Beef carcasses have increased almost 3.25 percent. Producers have marketed more than 760,000 cattle through USPB since beginning operations Dec. 1, 1997. USPB has more than 800 members from 25 states and has had cattle delivered from more than 300 feedlots in 12 states. USPB closed its stock offering on Jan. 23, 1998; however, hundreds of producers from all areas of the United States have since joined by either leasing or purchasing stock from original stockholders. "We had a group of producers who purchased excess stock with the intention of expanding their operations in the coming years," explains USPB CEO Steve Hunt. "They did that, in part, because they believed they would not have an opportunity to purchase sufficient USPB stock, to allow for growth of their operations, at the company's initial stock offering price of $55 per share. In the meantime this group and others are leasing their excess stock--which we help coordinate through our office. This enables new producers to participate in USPB. "In some cases, our original members have sold stock to new members," he adds. "That is primarily the case with our original feedyard members who've used their stock as a marketing service for their customers. Many of those customers are cow/calf producers who retain ownership of their calves and use the individual carcass data we provide at no cost to improve their genetics. "The interest from new producers has been tremendous, especially during the most recent two months. More producers have heard about our patronage dividend and the increased premiums we've paid recently, and are recognizing the benefits of owning their cattle all the way through value-added processing," Hunt notes. For more information on U.S. Premium Beef call 620-767-7041 or visit their web site at www.uspremiumbeef.com. |
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