Take a Look at the Record

By Bob Strong

U.S. Premium Beef is one premium program that has proven to be successful. One of its members, HRC Feedyard takes a look at how the program has worked over the past four years.

What you hear, regardless of the subject, may be somewhat biased for one reason or another. It's always good to get the facts from the original source. In this case, the subject is U.S. Premium Beef.

In a discussion with Bill Miller, Director of Communications for U.S. Premium Beef, on how well the program was working out for the participants, he suggested I talk to some of the people who have delivered cattle and see what they have learned, as well as their experiences. He also said, "Just as important as our financial success is the guaranteed access our members have to market their cattle on USPB's grid - regardless of the packing industry's need for cattle in any given week - because USPB and its members own the company."

One such participant is Terry Ryan, manager of HRC Feedyards in Scott City, Kansas. HRC has delivered cattle from the beginning of the program in December 1997, and has excellent records of what the feedyard has delivered and the premiums earned. Here are Terry's answers to some pertinent questions.Overall, how has the U.S. Premium Beef program worked for HRC and its customers?

The records - for the total program to date - show we have delivered 173,000 head, mainly heifers, for a net return of $17.24 per head - or $17,000 short of $3,000,000 premium paid on the grid, plus the dividends paid by U.S. Premium Beef.

Are there restrictions or special requirements for the program?

We did ultrasounding early on, but not anymore. We sort them by sight, and that works out satisfactorily for us. We feed mainly heifers. They dressed out on the average at 738 pounds after 139 days on feed. This compared to an industry average of 680 pounds dressed weight and 154 days on feed. According to the industry average we're adding about 60 pounds to the dressed weight, but doing it in about 15 fewer days on feed.

Are there any differences between HRC and other feedlots that would affect the U.S. Premium Beef program?

Like any feedlot, to get good results you have to start with good cattle. We're a 30,000 head yard and probably quite typical for that size of feedlot. We get some local cattle, some from the North and some from all over. The performance is in the cattle. For example, a set of cattle from the Northeast came in at 738 pounds, were on feed 139 days, with an out-weight of 1196. They dressed at 64.14 percent, 63.34 percent were Choice with 37 percent Select. The money they put back, or net return was $51.00 per head.

When the customers have the genetics in their cattle and have taken care of them, with the U.S. Premium Beef program they can realize a financial advantage.

According to your USPB ranking report for the first quarter of 2001, you have a low percent of dark cutters - 0.23%. How was this accomplished?

When we load the fats out, we actually load all the trucks ourselves. We load the trucks for the drivers, and they just stand at the end of the truck. We handle the cattle as gentle as possible all the way through in the yard, processing and loading.

How about the medical situation, is that much of a problem for you?

Not really, we get most of our cattle in as yearlings and the majority are well straightened out, in fact, the average weight is 728 pounds.

Do your customers feel it has worked for them?

As far as our customers - everybody is more than satisfied with what it has done for them and the potential it has for the future.

The latest update on U.S. Premium Beef Ltd. gives a very impressive set of numbers since beginning operations on December 1, 1997 through May 2001. USPB has processed more than 2 million head, (12,000 head per week) of cattle. They have paid out more than $26 million in grid premiums, average $16 per head above the cash market, and realized more than $32 million in patronage dividends for its members. During the same time span, grid premiums and company earnings have exceeded $58 million.

USPB members are comprised of more than 1,500 producers located in 33 states. To date 800 feedlots from 14 states have delivered to USPB plants in Liberal and Dodge City, Kansas.

Initially offered at $55 per share in November 1997 USPB stock has recently traded for $100 per share- a 82% increase in value.

This is an impressive record. In fact, it's considerably better than most investments in the stock market. It is definitely a change in the traditional way of marketing cattle. U.S. Premium Beef producers sell product under several brand names, including Farmland Black Angus Beef(TM), Farmland Certified Premium Beef(TM), and Black Canyon Cattle Company(TM).

In addition, USPB members are also marketing beef direct to consumers through Kansas City Steak Company, a high quality, portion control and mail order company owned by Farmland National Beef Packing Company.

Considering these statistics the alliance from the producer to the brand name products is a good way, if not the only way, for the producer to share in the value added to beef.