If you’re going to stay in business, you need to buddy up with others in your business network.

by Vern Pierce, PhD. University of Missouri

The Livestock marketing system has seen tremendous change in the last few decades. The poultry industry was first, followed by swine and now cattle. It is no coincidence that the people who helped turn the poultry sector into a consumer driven value chain are now the main drivers behind changes that are occurring in the beef sector.

Prior to only a few years ago, our product marketing momentum was driven more by a need to clear the beef through the system than providing a product that has the greatest value to consumers. The reason for this change has partially been due to industry funded efforts at new product development, and partly by retailers recognizing that they were leaving money on the table by not capturing as much value from the meat case as consumers were willing to spend.

They have convenience-targeted foods that command a premium in every section of their stores except the meat counter. They began partnerships down the beef supply chain in an effort to develop and market new product lines that would capture that value, and they are succeeding. The final success that will bring value back through the system will come from that same partnership, building all the way back to the cow-calf producer and his seedstock supplier.

Against that background, retail operators are competing with the restaurant industry to recapture where the consumers food dollar is spent by helping deliver meal solutions to consumers. They are working with supply chain partners at an ever-increasing rate to develop and market branded meal solutions to attract the convenience minded consumers.

Once consumers have been attracted to a particular branded meal solution, the supply chain must move to ensure a steady supply of consistent quality animals to feed their system and grow sales. This changing environment will attract feedlots, producers, livestock markets, lenders, veterinarians, and other input suppliers to work in concert to provide and service the system that will deliver source and process verified animals to the system. There will be more money on the table to reward those in the system and a dwindling demand for commodity type animals.

The question for you becomes, “How long will it take me to make the necessary changes in my business to develop relationships through the each phase of the production process I need to thrive in this new system?” Whether the answer is one year or five years, it will take you that long whether you start now or in two years. The problem will be if you wait too long, and then by the time you are ready, the changes you need to make will be completed too late.

This is a process not an event. Start developing your plan. It will change as you implement it, and that is fine. But is it hard to adjust a plan that doesn’t exist. The simple message is Buddy Up! It would be very unusual to see the heads of GM, Ford, and Chrysler bowling together. Everyone would assume the worst. They are just using a friendly game to make their evil plans to extract more money from consumers. They would likely be answering to a Senate oversight committee for that little friendly game.

But the feedlot business doesn’t have the same rules. Develop a way to bring your clients and your buyers into the same room. We must find a way to end the old game of keeping those two groups of people separate, in fear of them going around us the next time. If you are providing value, you will remain in the system. If you are not providing enough value, the others will find a way to work around you whether you resist or not.

Think about the marketing system that you are involved in. Who are the people that are part of your network, the suppliers that you purchase from and the upstream businesses that you sell to? Have you ever been in a room with those people at the same time? A partnership in this sense means simply people that influence your bottom line. That would include people who you buy inputs from and those you sell to. The market system has a cold lesson that has been true in all businesses and is very true in the beef business, “Lead, follow, or get – “ well you know the rest. ©