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by Teres Gatz Lambert Future Beef Operations isn't your ordinary U.S. beef industry business. It's a unique, forward-thinking company that has assembled an elite set of genetic seedstock suppliers, progressive cow/calf producers, stock-grower operators and five feedyard partners who work together to supply cattle for a product center located in Arkansas City, Kan. The ultimate goal: to provide Future Beef's primary customer, Safeway, with a high quality, consistent product. Those behind Future Beef are industry movers and shakers, people who seek improvement in the beef industry and individuals who are optimistic rather than pessimistic. One of those non-conventional thinkers and doers is Dr. Ronnie Green, who was recently named vice president of supply for Future Beef. During an interview with Feed*Lot magazine, Dr. Green candidly shared his view concerning the future of Future Beef Operations and what challenges the company has faced since its conception. Q: Who is Future Beef? A: Future Beef is a company that is building a coordinated, process-verified, supply-verified, closed loop supply chain that provides a small customer base with branded products. We have one primary customer, Safeway, and a few smaller customers. Future Beef Operations officially launched operations in June 2000. With our five feedyard partners identified and already in place, our first year was devoted primarily to developing our supply base at the cow-calf level and building our product center. Our Ark City product center opened for processing cattle on Aug. 8, 2001. We're now processing 1,600 to 1,800 head a day, with all plant level units functioning.
While many of our cow-calf suppliers have been identified during the past 18 months, we will continue to identify more partners that will fit our program. Our feedyard partners have staging points and sorting systems for the management of individual cattle in place. Our pet treat division is up and running, with shipments going out to PetSmart. Our case-ready ground beef facility is functioning but is not at planned throughput. We're still ramping that up. Our cooked meat division for premium deli meats went on line in mid to late January. While our tannery is in full production, it has not been operating with dehaired hides. By the time your article is in print, I anticipate the bugs to be worked out and the dehairing process to be in full production. Things are looking great right now. If an assessment were to be given as to where we are - having everything the way we want it in our model, we're probably at 90 percent right now (mid February). Q: What key challenges and surprises has Future Beef faced? A: What we initially thought to be our No. 1 challenge was that of laying in the supply on the cow-calf side. While that has been a challenge, it has not been the challenge we thought it would be. That was a nice surprise. We certainly have had challenges in terms of structuring ourselves to be at an acceptable level of risk, and this fall no one was free of that. In a system like ours where we have to guarantee a supply and have to build that supply, an acceptable level of risk is an element that can be tough. While we did things right on the risk management side of things, we owned a lot of cattle and the risk is that the market might crash. Well, the market did crash and greatly impacted us, no matter how well we were protected. Thus, we have had to think through our process and make changes. Another challenge is figuring how to communicate true value back through the chain. We want a system that has pull-through and encourages people to make changes to arrive at that value. This challenge has been much greater than any of our people ever dreamed. We're challenged on how do we connect what we know at the production center to what we know at the feedyard to what we know at the cow-calf level so we have a cost of production. How do we take that and figure out true value? Until now we didn't have all the pieces to the puzzle because we were just in the start-up. We now have a system in place and can learn how to figure a cost of production that will be fair for all players involved in the system. It requires patience. Getting the data system to function the way you want it to function in a closed loop system of this size and magnitude, with this number of players in it, is a challenge many said would never work. Well, we're to the point where we can show people that it works. It's exciting. We won't be presenting just data to producers; we'll be presenting highly useful, easy-to-understand information that gives producers the power. We both will know the value of their product. New product center technology such as the dehairing process has been a definite challenge also. Although the science for the dehairing process has been around since the National Beef Quality Audit days 10 years ago, no one had engineered the process to make it feasible at a processing plant stage. We're the first to put dehairing as a standard operating food safety practice. Q: Who is the new CEO and what does he bring to the table? A: Future Beef's new CEO is Thad York, who grew up on the Silver Spur Ranch near Saratoga, Wyo. Thad went to the University of Wyoming and has a background in finance and accounting. Prior to coming on board at Future Beef, Thad worked in the area of international acquisitions and mergers with TCI, a cable company, and served as ranch operations business manager for various ranches owned by John Malone. Thad has been on the board of directors of Future Beef Operations as an equity holder since the company's beginning, representing the investment of the Silver Spur Ranch. When things got tough in the fall, the board made the decision in November that, in the best interest of the company, the board should become more involved in day-to-day affairs of the operations. At that point in time, Thad became the company's chief operating officer. In mid December, the board named Thad the CEO and Dr. Russell Cross became the chairman of the board. Thad is an astute businessman who is extremely savvy and has thorough, first-hand knowledge and experience when it comes to start-up and implementation of new companies. Q: What was the original goal of Future Beef? Has the goal changed? A: The original goal was to build this coordinated supply chain for a primary customer and to capture the efficiencies and value-added by doing that. That is still our intent today. As we go down the road and undergo some restructuring, we intend to come out the other end with the same goal in mind: coordinated production, process verification, supply development, etc. While we may do it with a little bit different structure and change with whom we do business, our original goal has not changed. We are in this for the long haul. Our board of directors is committed to making Future Beef succeed, for the good of the beef industry. © |
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