Feed Lot Magazine Online, CBP Nailing Down Details of Operation

While the Consolidated Beef Producer board of directors may be able to select a manager or chief executive officer for the newly formed marketing group, it will be 2001 before they will be able to get into full operation, according to their chairman.

Paul Hitch, chairman of Consolidated Beef Producer's board, says the board is in the process of searching for a chief executive officer.

"We kept referring to a manager, but that didn't quite sound elegant enough," he shrugs.

Hitch says the board has retained a search firm in Los Angeles to find viable candidates and develop profiles on them.

"This is not one of those hugely expensive firms," Hitch says. "There are some that are hugely expensive that do a lot more than we're asking to be done. They would cost $150,000. This one is not going to be nearly that expensive, and they're not going to do quite as much, but I do think they'll come up with viable candidates."

It's important, he says, that the right person be selected.

"It's certainly going to be after the first of the year before we put this program into effect," Hitch says. "I'm sure we'll prorate the number of cattle that you're obligated to send through it so if you bought 10,000 head of marketing rights, and there's only half a year left, your obligation is 5,000 head to stick with our Oct. 1 deadline."

Meeting in Oklahoma City in conjunction with the Texas Cattle Feeders Association, who was key in the marketing group's formation, Consolidated Beef Producer board members were working to iron out details and refine policy decisions as they wound down the start up phase and begin to concentrate on operations.

Hitch says Consolidated Beef Producers is part of the restructuring of the beef industry.

"There are a lot of other alliances that are going down the same path," Hitch says. "They're all being driven by a need to produce more desirable, consistent consumer product."

He says Consolidated Beef is just one step in getting the production system lined up so that a better product will be produced.

"We've got to keep in mind that our competition is not the feedyard in Kansas or Nebraska or the feeder down the road," Hitch says. "The competition is not the packer. Our competition is poultry and pork. Those are the guys we have to beat. We're not competing with the packer. We're competing with Tyson's poultry production."

He says he thinks Consolidated Beef Producers is going to help the beef production chain.

"Certainly, it's going to help the cattle feeder," he says. "I also intend for it to help the packer."

Hitch says he thinks the industry needs to get to the point where it's a win-win situation for everyone along the beef chain.

"I didn't create it to help the packer," he says, "but Consolidated Beef has to do something good for the packer. I want to do something good for the packer. I want the right cattle at the right plant at the right time that will work for that packer. I want to perform a service for them, and I want to get paid for performing the service."

He says he has told that to all the major packers.

"I don't know whether they believe it," he says. Hitch admits that the packers were chilly to the idea at first.

"At least one of them was pretty antagonistic," he says, "but they've thawed out a lot. They are warming to the idea that they are going to do business with Consolidated Beef, and they're going to find a way for the Consolidated Beef program to work for them. I think it can be done, and I think it should be done."

It was Jan. 13, that the Texas Cattle Feeders Board directed Hitch to form a committee to explore the formation of a marketing group.

On May 23, they held their first public meeting with producers in an effort to get a commitment for 750,000 head of cattle, the number they felt it would take to make the organization viable in the marketplace.

By the Oct. 1, deadline, they had commitments for 2,140,900 head, but that number has dropped by about 22,000 head. Hitch said they ended up with three Nebraska feedyards joining the group, but because of the locations, Hitch told them he didn't think that CBP could properly serve them and sent their money back. He thinks there is an opportunity to bring them into the fold in the future.

In addition to smoothing out the details in the new organization and selecting a new CEO, the board is moving forward on the physical steps that have to be taken to make the group a viable entity.

For the time being, they will be housed in the same building with the Texas Cattle Feeders in Amarillo, Texas.

Hitch says they have settled on a data processing system. "Obviously, it's not installed yet," he says, "but we know who we're going to be dealing with."

Among the things the board is still debating is whether marketing rights can be sold to nonmembers. While Oct. 1 was the deadline for selling marketing rights, memberships are still for sale.

While Hitch considers CBP his major accomplishment as chairman of Texas Cattle Feeders Association, he says he can't claim total credit for it.

"I had a board that I'd asked to serve," he says. "Everyone of them agreed. I told them I want you to understand this is a working board. This isn't a ceremonial title that you hold.' They performed admirably."